U.S. GOVERNMENT PRINTING OFFICE

49–051 CC WASHINGTON : 1998

OVERSIGHT HEARING ON OUTER CONTINENTAL

SHELF OIL AND GAS LEASING

OVERSIGHT HEARING

BEFORE THE

SUBCOMMITTEE ON ENERGY

AND MINERAL RESOURCES

OF THE

COMMITTEE ON RESOURCES

HOUSE OF REPRESENTATIVES

ONE HUNDRED FIFTH CONGRESS

SECOND SESSION

MAY 14, 1998, WASHINGTON, DC

Serial No. 105–87

Printed for the use of the Committee on Resources

(
(II)

COMMITTEE ON RESOURCES

DON YOUNG, Alaska, Chairman

W.J. (BILLY) TAUZIN, Louisiana

JAMES V. HANSEN, Utah

JIM SAXTON, New Jersey

ELTON GALLEGLY, California

JOHN J. DUNCAN, JR., Tennessee

JOEL HEFLEY, Colorado

JOHN T. DOOLITTLE, California

WAYNE T. GILCHREST, Maryland

KEN CALVERT, California

RICHARD W. POMBO, California

BARBARA CUBIN, Wyoming

HELEN CHENOWETH, Idaho

LINDA SMITH, Washington

GEORGE P. RADANOVICH, California

WALTER B. JONES, JR., North Carolina

WILLIAM M. (MAC) THORNBERRY, Texas

JOHN SHADEGG, Arizona

JOHN E. ENSIGN, Nevada

ROBERT F. SMITH, Oregon

CHRIS CANNON, Utah

KEVIN BRADY, Texas

JOHN PETERSON, Pennsylvania

RICK HILL, Montana

BOB SCHAFFER, Colorado

JIM GIBBONS, Nevada

MICHAEL D. CRAPO, Idaho

GEORGE MILLER, California

EDWARD J. MARKEY, Massachusetts

NICK J. RAHALL II, West Virginia

BRUCE F. VENTO, Minnesota

DALE E. KILDEE, Michigan

PETER A. DEFAZIO, Oregon

ENI F.H. FALEOMAVAEGA, American

Samoa

NEIL ABERCROMBIE, Hawaii

SOLOMON P. ORTIZ, Texas

OWEN B. PICKETT, Virginia

FRANK PALLONE, JR., New Jersey

CALVIN M. DOOLEY, California

CARLOS A. ROMERO-BARCELO ́ , Puerto

Rico

MAURICE D. HINCHEY, New York

ROBERT A. UNDERWOOD, Guam

SAM FARR, California

PATRICK J. KENNEDY, Rhode Island

ADAM SMITH, Washington

WILLIAM D. DELAHUNT, Massachusetts

CHRIS JOHN, Louisiana

DONNA CHRISTIAN-GREEN, Virgin Islands

RON KIND, Wisconsin

LLOYD DOGGETT, Texas

LLOYD A. JONES, Chief of Staff

ELIZABETH MEGGINSON, Chief Counsel

CHRISTINE KENNEDY, Chief Clerk/Administrator

JOHN LAWRENCE, Democratic Staff Director

SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES

BARBARA CUBIN, Wyoming, CHAIRMAN

W.J. (BILLY) TAUZIN, Louisiana

JOHN L. DUNCAN, JR., Tennessee

KEN CALVERT, California

WILLIAM M. (MAC) THORNBERRY, Texas

CHRIS CANNON, Utah

KEVIN BRADY, Texas

JIM GIBBONS, Nevada

CARLOS ROMERO-BARCELO ́ , Puerto Rico

NICK J. RAHALL II, West Virginia

SOLOMON P. ORTIZ, Texas

CALVIN M. DOOLEY, California

CHRIS JOHN, Louisiana

DONNA CHRISTIAN-GREEN, Virgin Islands

——— ———

BILL CONDIT, Staff Director

MIKE HENRY, Professional Staff

DEBORAH LANZONE, Professsional Staff
(III)

C O N T E N T S

Page

Hearing held May 14, 1998 ..................................................................................... 1

Statements of Members:

Boxer, Hon. Barbara, a United States Senator from the State of California .............................................................................................................. 14

Prepared statement of ............................................................................... 16

Capps,Hon. Lois, a Representative in Congress from the State of California .............................................................................................................. 17

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

Cubin, Hon. Barbara, a Representative in Congress from the State of

Wyoming, prepared statement of ................................................................. 1

Cunningham, Hon. Randy ‘‘Duke’’, a Representative in Congress from

the State of California .................................................................................. 12

Prepared statement of ............................................................................... 13

Goss, Hon. Porter J., a Representative in Congress from the State of

Florida ............................................................................................................ 31

Prepared statement of ............................................................................... 43

Jones, Hon. Walter B., a Representative in Congress from the State

of North Carolina .......................................................................................... 2

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

Lampson, Hon. Nick, a Representative in Congress from the State of

Texas .............................................................................................................. 26

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

Miller, Hon. George, a Representative in Congress from the State of

California, prepared statement of ................................................................ 19

Pallone, Hon. Frank, Jr., a Representative in Congress from the State

of New Jersey ................................................................................................ 24

Prepared statement of ............................................................................... 25

Pickett, Hon. Owen B., a Representative in Congress from the State

of Virginia, prepared statement of .............................................................. 48

Regula, Hon. Ralph, a Representative in Congress from the State of

Ohio ................................................................................................................ 7

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

Riggs, Hon. Frank D., a Representative in Congress from the State of

California, prepared statement of ................................................................ 38

Scarborough, Hon. Joe, a Representative in Congress from the State

of Florida ....................................................................................................... 20

Prepared statement of ............................................................................... 22

Taylor, Hon. Gene, a Representative in Congress from the State of Mississippi ........................................................................................................... 36

Prepared statement of ............................................................................... 37

Statements of witnesses:

Holman, William, Assistant Secretary for Environmental Protection,

North Carolina Department of Environment and Natural Resources ...... 5

Prepared statement of ............................................................................... 40

Quarterman, Cynthia L., Director, Minerals Management Service, Department of the Interior ............................................................................... 33

Prepared statement of ............................................................................... 44

Whitfield, Estus, Environmental Advisor to Governor Lawton Chiles of

Florida ............................................................................................................ 29

Prepared statement of ............................................................................... 41
(1)

OVERSIGHT HEARING ON OUTER

CONTINENTAL SHELF OIL AND GAS LEASING

THURSDAY, MAY 14, 1998

SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES, COMMITTEE ON RESOURCES, Washington, DC.

The Subcommittee met, pursuant to notice, at 2:24 p.m., in room

1334, Longworth House Office Building, Honorable Barbara Cubin

(chairman of the Subcommittee) presiding.

Mrs. CUBIN. The Subcommittee on Minerals and Energy will

please come to order.

The first panel would please come forward.

In the interest of time, since we don’t any more votes this afternoon, and I know members all have planes to catch and other

places to be, I’m going to submit my opening statement for the

record, and we’ll just be in recess until the Ranking Member has

an opportunity to give his opening statement. So, if you’ll just bear

with us, it’ll just be a minute. Actually, why don’t we go ahead and

start, Congressman Jones, and then we’ll come back to his opening

statement so that we can get moving.

[The prepared statement of Mrs. Cubin follows:]

STATEMENT OF HON. BARBARA CUBIN, A REPRESENTATIVE IN CONGRESS FROM THE

STATE OF WYOMING

The Subcommittee meets today to review Outer Continental Shelf oil and gas development issues, primarily from the perspective of Members from coastal States

and congressional districts. Such Members, be they Republicans or Democrats, represent constituents who are often very passionate in their views about offshore drilling near their State’s coastline—and the passion is reflected in these Members’ efforts as manifested in legislation to ban a range of activities by the Secretary of the

Interior from pre-leasing studies, through the auctioning of OCS tracts, to in some

instances a bar on approving drilling or development permits for already leased

shelf areas.

On the other hand, occasionally Members support measures to provide incentives

to companies to risk the huge sums of money necessary to explore for, drill and

produce oil and gas from the OCS, such as the Deepwater Royalty Relief Act of

1995, which has been an unqualified success in stimulating bidding for central and

western Gulf of Mexico tracts. For the five lease sales post-enactment of this relief,

the Federal treasury has been enriched to the tune of $3.2 billion in high bids—

not exactly chump change. And the leases that have been awarded will likely contain oil and gas fields upon which production royalties of far greater magnitude will

be forthcoming as the thresholds in the deepwater relief Act are exceeded. And let

me remind everyone, that a large portion of these receipts are dedicated to the Land

& Water Conservation Fund, to which many Members look for funding of environmentally sensitive lands within their States.

The Members we are scheduled to hear from today are predominantly of the view

to restrict OCS development, at least in certain geographic regions. Several of our

witnesses have sponsored authorizing bills to do so which are referred to this Committee. The need to act upon these bills has largely been supplanted by moratoria

in the annual appropriations bill for the Department of the Interior, via limitations

of funds provisions—sometimes derisively called ‘‘riders’’ by those opposed to legis-
2

lating policy matters on spending bills—at least those policies which they don’t support. But I’ve learned in my three and one-half years here that the OCS moratoria

‘‘riders’’ have a life of their own. Our colleague from Ohio, Mr. Regula valiantly tried

to avoid these riders in the first bill he reported from his subcommittee, only to be

amended in the full Appropriations Committee by an overwhelming margin. So

much for not legislating in the context of a spending bill.

Two years ago when a similar hearing was held, the Minerals Management Service reported to us the OCS provides 15 percent of domestic oil production and 25

percent of natural gas output. Those fractions have now increased to 18 percent for

oil and 27 percent for gas, no doubt because of burgeoning activity in the central

and western Gulf of Mexico. Management of the nation’s offshore oil and gas resources is governed by the Outer Continental Shelf Lands Act (OCSLA), which

specifies the conditions under which the Secretary of the Interior grants rights to

explore for, develop, and produce those resources.

The OCSLA requires the Secretary to prepare an oil and gas leasing program that

indicates a 5-year schedule of lease sales determined to best meet domestic energy

needs. Areas for which the 5-year plan does not recommend leasing activity are effectively under moratoria. And even for areas that are so recommended, the planned

sales may be postponed, or diminished in area, such as has occurred with a Beaufort

Sea sale scheduled for this August. Given the technical revision of the limitations

of funds ‘‘riders’’ in the fiscal year 1998 Interior Appropriations Act from that of previous years, Congressional dictates and the Department’s 5-year plan for 1997-2002

are now consistent with one another.

There should be little cause for alarm by Members concerned about near-term decisions by the Administration about where leasing may occur. There are concerns

by some of us who believe an opportunity to increase revenues is being postponed

by this plan, and the corresponding Congressional moratoria, but we are obviously

of the minority view. A 1995 Clinton Administration analysis of the OCS estimated

over four billion barrels of oil equivalent resources are subject to moratoria. Even

using today’s depressed price of $15 per barrel, this means approximately $8.5 billion of potential Federal royalties are locked out of the Treasury.

Given the passions of this debate, it seems unlikely that the entire OCS will ever

be opened, nor is it likely that the very productive western and central regions in

the Gulf of Mexico will be shut in, so the debate is really about the remainder. As

we approach the end of the current plan in 2002 perhaps Congress and coastal

States can engage in rational discourse about the next phase. Canadian development in the North Atlantic is coming on stream now. Perhaps some northeastern

Members whose constituents will clearly benefit from trans-border deliveries of natural gas will become advocates of exploration in U.S. Atlantic waters when MMS

proposes the 2003-2008 plan. Or perhaps not. I won’t speculate as to the future of

OCS development off the California coast—except to say that its likely to be a campaign issue for a long time to come.

STATEMENT OF HON. WALTER B. JONES, A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF NORTH CAROLINA

Mr. JONES. Thank you, Madam Chairman and Committee members. I’d like to thank you and the staff for scheduling this hearing

on Outer Continental Shell Oil and Gas Leasing, and for allowing

me to speak on behalf of H.R. 2615.

On a daily basis, coastal citizens are presented with the threat

of drilling off their coast. And as one can imagine, these citizens

tend to be strongly opposed to this environmental and economic

threat to their way of life. These concerns have been prevalent in

North Carolina since the early 1980’s when leases were first purchased. Again, they are being vocalized today with the recent announcement of Chevron’s intention to drill off the State’s coast.

To ensure that our fragile coast is being properly protected, I,

along with Senator Faircloth, introduced the Outer Banks Protection Act last year in hopes of providing an additional layer of protection. This legislation does not ban drilling—I’d like to repeat

that—this legislation does not ban drilling. It simply prohibits the
3

Federal Government from issuing any permits relating to drilling

without the consent of the State.

This legislation is important because it provides a layer of economic and environmental protection for our coast, while ensuring

the rights of North Carolina. Quite frankly, drilling will have a detrimental effect on the booming tourism industry which is dependent on a healthy coast, clean water, and an abundant fishery.

Right or wrong, due to the perception that offshore drilling will

contaminate the waters, it is widely believed that tourism will be

directly affected. This effect would have a devastating effect on a

large number of Eastern North Carolina families and businesses.

Tourism has become the shot in the economic arm for the area.

The industry continues to grow by leaps and bounds. Last year in

Dare county, tourists spent more than $400 million, making the

county one of the largest tourism destinations in the State. Nearly

6 million people visit the Outer Banks annually and 52 percent of

all jobs in Dare County are tourism related.

There is always an environmental threat with offshore drilling.

However, I tend to believe there is a greater threat to drilling off

the North Carolina coast due to the depth of the water and the unpredictable weather conditions. The drilling would occur more than

40 miles off the coast in approximately 2,600 feet of water with a

steep drop-off just beyond. This area is known as ‘‘The Point’’ because it is where the Gulf Stream and the Labrador Current meets

and collides, creating fierce currents and unpredictable conditions.

The Point is popular fishing ground due to the abundance of fish.

The Point attracts more fish than any other location along the entire Atlantic Coast. Specifically, the area has become a breeding

ground for a number of different species. To lose this environmentally valuable area would have a devastating effect on the entire Atlantic Coast fisheries that are already stressed. I think drilling in this location is an environmental gamble and should not be

taken.

As a proponent of States’ rights, I believe that it is essential that

the State has the final say on whether drilling should occur. Currently, the State is allowed to voice its support or opposition on

management plans. However, the Mineral Management Service

makes the final decision on if a drilling permit is issued.

H.R. 2615 reverses this trend by granting the State this authority. I believe there is precedence for legislature of this nature. For

example, the Coastal Zone Management Act and the Clean Water

Act transfers Federal authority to individual States. To be exact,

the Federal Government has transferred authority under the Clean

Water Act to 38 States. Further, it seems reasonable that the State

of North Carolina gain this authority since it has been held to a

different level than other States for numerous years.

In 1989, President Bush placed a moratorium on new oil and gas

development along the United States, excluding North Carolina,

Florida, and Alaska. Clearly, North Carolina has been singled out

by Federal regulations and energy companies. If an accident should

occur, North Carolina would suffer the environmental and economic consequences—not the Federal Government. The bottom line

is that drilling is the wrong industry for the Outer Banks of North

Carolina.
4

Madam Chairman, thank you again for providing me this opportunity to speak on behalf of H.R. 2615. Also, I would like to thank

the Subcommittee for allowing a very good friend of mine from

North Carolina, Bill Holman, who is sitting to my left, who will be

speaking today on behalf of Governor Jim Hunt, the Governor of

North Carolina. Thank you.

[The prepared statement of Mr. Jones follows:]

STATEMENT OF HON. WALTER B. JONES, A REPRESENTATIVE IN CONGRESS FROM THE

STATE OF NORTH CAROLINA

Good afternoon, Madame Chairman. I would like to thank you and the Subcommittee staff for scheduling this hearing on outer continental shelf oil and gas

leasing and for allowing me to speak on behalf of H.R. 2615.

On a daily basis, coastal citizens are presented with the threat of drilling off of

their coast. And as one can imagine, these citizens tend to be strongly opposed to

this environmental and economic threat to their way of life. These concerns have

been prevalent in North Carolina since the early 1980’s when leases were first purchased. Again, they are being vocalized today with the recent announcement of

Chevron’s intention to drill off the State’s coast.

To ensure that our fragile coast is being properly protected, I along with Senator

Faircloth introduced the Outer Banks Protection Act last year in hopes of providing

an additional layer of protection. The legislation does not ban drilling—it simply

prohibits the Federal Government from issuing any permits relating to drilling

without the consent of the state.

This legislation is important because it provides a layer of economic and environmental protection for our coasts while ensuring the rights of North Carolina.

Quite frankly, drilling will have a detrimental effect on the booming tourism industry which is dependent on a healthy coast, clean water and an abundant fishery.

Right or wrong, due to the perception that offshore drilling will contaminate the

waters, it is widely believed that tourism will be directly affected. This effect would

have a devastating effect on a large number of Eastern North Carolina families and

businesses.

Tourism has become the shot in the economic arm for the area. The industry continues to grow by leaps and bounds. Last year in Dare County, tourists spent more

than $400 million, making the county one of the largest tourism destinations in the

state. Nearly six million people visit the Outer Banks annually and 52 percent of

all jobs in Dare County are tourism related.

There is always an environmental threat with offshore drilling. However, I tend

to believe there is a greater threat to drilling off the North Carolina coast due to

the depth of the water and the unpredictable weather conditions.

The drilling would occur more than 40 miles off the coast in approximately 2,600

feet of water with a steep drop off just beyond. This area is known as ‘‘The Point’’

because it is where the Gulf Stream and the Labrador Current meet and collides,

creating fierce currents and unpredictable conditions.

‘‘The Point’’ is popular fishing ground due to the abundance of fish.

‘‘The Point’’ attracts more fish than any other location along the entire Atlantic

coast. Specifically, the area has become a breeding ground for a number of different

species. To lose this environmentally valuable area would have a devastating effect

on the entire Atlantic coast fisheries that are already stressed.

I think drilling in this location is an environmental gamble that should not be

taken.

As a proponent of state’s rights, I believe that it is essential that the state has

the final say on whether drilling should occur. Currently, the state is allowed to

voice its support or opposition on management plans. However, the Mineral Management Service makes the final decision on drilling if a drilling permit is issued.

H.R. 2615 reverses this trend by granting the state this authority. I believe there

is precedent for legislation of this nature. For example, the Coastal Zone Management Act and the Clean Water Act transfer Federal authority to individual states.

To be exact, the Federal Government has transferred authority under the Clean

Water Act to 38 states.

Further, it seems reasonable that the State of North Carolina gain this authority

since it has been held to a different level than other states for numerous years. In

1989, President Bush placed a moratorium on new oil and gas development along

the United States, excluding North Carolina, Florida and Alaska.
5

Clearly, North Carolina has been singled out by Federal regulations and energy

companies. If an accident should occur, North Carolina would suffer the environmental and economic consequences—not the Federal Government.

The bottom line is that drilling is the wrong industry for the Outer Banks.

Madame Chairman, thank you again for providing me this opportunity to speak

on behalf of H.R. 2615. Also, I would like to thank the Subcommittee for allowing

Bill Hollman who is here today speaking on behalf of Governor Jim Hunt.

Mrs. CUBIN. Thank you, Mr. Jones. And now, I will recognize

William Holman, the assistant secretary for environmental protection in North Carolina Department of Environment and Natural

Resources.

STATEMENT OF WILLIAM HOLMAN, ASSISTANT SECRETARY

FOR ENVIRONMENTAL PROTECTION, NORTH CAROLINA DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES

Mr. HOLMAN. Thank you, Madam Chairman, members of the

Committee. I am Bill Holman. I’m assistant secretary for environmental protection at the North Carolina Department of Environment and Natural Resources. I’m pleased to be here today on behalf of Governor Hunt and the State of North Carolina.

I want to thank Congressman Jones for this opportunity to participate in your discussions, and to comment on Outer Continental

Shelf issues.

I’m here today to deliver two basic messages: First, it is critically

important that States like North Carolina have a strong and clearly defined role in the management and stewardship of our offshore

resources. Second, it is essential and possible for energy and mineral resources of the Outer Continental Shelf to be managed in a

coordinated and progressive manner that maximizes benefits to

both our economies and our marine and coastal environment.

Mr. Jones asked the State to participate here today to convey our

views on his legislation, the Outer Banks Protection Act, which require concurrence of the Governor of North Carolina as a condition

for exploratory drilling off the Outer Banks of North Carolina. We

greatly appreciate the recognition this bill embodies of the responsibility that States have for safeguarding the marine and coastal

environment, and their coastal tourism economy. We are gratified

by its title and its content, and we believe that bill makes a very

strong statement that the Governor has a central role when making decisions that affect our citizens on the Outer Banks.

As members of the Subcommittee know, the current process for

State review of offshore energy exploration proposals is based on

the States’ coastal protection planning responsibilities provided

under the Coastal Zone Management Act. Through a consistency

review and determination by the State, the exploration plans are

examined by the State for consistency with our approval coastal

management plan. If the State finds the plan inconsistent, no permit can be issued unless the Secretary of Commerce overrides the

State’s determination that the project is inconsistent.

We appreciate Mr. Jones’ concern that this may not provide a

sufficiently strong voice for States in reviewing drilling proposals.

We—that is North Carolina—are currently awaiting detailed proposals regarding proposed exploratory drilling on the Outer Continental Shelf off the Outer Banks, in an area known as The Point,

that Mr. Jones talked about.
6

The Committee may be aware that The Point off Cape Hatteras

is also under consideration for designation as a ‘‘Habitat Area of

Particular Concern’’ under the Essential Fish Habitat provisions of

the Magnuson-Stevens Fisheries Management Act that Congress

enacted last session. This area has become recognized, as Mr.

Jones said, a unique mixing zone. Larvae of some 300 fish species

that are native to coastal waters, the Labrador Current and the

Gulf Stream are found at The Point, all in one place.

I’m told that this concentration of fish species is far higher than

might be found in typical OCS areas, and it reinforces the importance of assuring both economic and environmental values are fully

evaluated in assessing any drilling proposal. This is new information that we believe must be considered by both the State and the

Nation in making appropriate decisions on whether and how to

proceed in the pursuit of energy resources of the coast of North

Carolina. Though we view it as the part of duty and responsibility

of the State to assure that if any such drilling is to occur, that it

be done in a manner that is sensitive to and protective of this

unique marine environment, and our coast. We do not have firm

word from the Minerals Management Service that they will in fact

grant us consistent review that we strongly feel is our right.

The reason for this is in 1982, when much less was know about

the environmental characteristics and significance of The Point, the

State made a determination that a previous different exploration

proposal was consistent with our coastal management plan. That

exploration proposal was never carried out. Unless the Minerals

Management Service finds that the potential environmental impact

of the new exploration plan is significantly greater than the prior

proposal, and that new permits are required, then under the Minerals Management Services rules the State will not be granted a

new consistency review.

The legislation proposed by Mr. Jones assures that the State

have a voice in a project proposal that is 16 years old, in the context of substantial new information about use of resources in the

area.

The State is working cooperatively with the Minerals Management Service, and I want to say to them here today that we appreciate the collegial approach that they have taken. However, we do

feel a firm commitment is needed to the concept of strong State

role in this decision process. We see Mr. Jones’ bill as a constructive part of this ongoing dialogue.

Let me conclude for the record by stating that the State of North

Carolina has in no way reached any predetermined decision on proposed exploratory well off the Outer Banks. We are eager to have

as much information as possible to reach a conclusion that will reflect and balance the many issues that are presented by the preliminary proposal we have seen in regard to such drilling. We need

a full proposal. We need as much information as can be gained on

the particulars of the plan, and the emerging importance of The

Point as fisheries habitat. We need to carefully and vigilantly assess potential impacts on our famous Outer Banks and our coastal

communities. We also need a continued recognition and commitment of the role of the State in this decision process.
7

We thank you for the opportunity to speak today, and will be

happy to answer any questions.

[The prepared statement of Mr. Holman may be found at end of

hearing.]

Mrs. CUBIN. Thank you for your testimony, Mr. Holman, and excuse my whispering up here. We have members that are trying to

catch planes and we’re trying to accommodate them.

I would like to compliment you, Mr. Jones, on your legislation

upholding States’ rights. I have never seen a law at the Federal

level that I didn’t think a better decision, or as good a decision,

could have been made at the State level. So, thank you very much

for that.

Now, I will recognize—you’re dismissed. You can go and grab the

plane if you want to.

[Laugher.]

I don’t have any questions. Are there any questions from the

panel?

Mr. ROMERO-BARCELO ́. No questions.

Mrs. CUBIN. And now I’ll recognize the Ranking Member for his

opening statement.

Mr. ROMERO-BARCELO ́. Chair, in the interest of time—I know

that Senator Boxer and several other Members of Congress are

there to testify—I’ll submit my statement for the record. Obviously,

most of the people who are here today to testify are going to be

backing the extension of the moratorium. I don’t see how I would

go any other way than with the desires of the elected members of

those States.

Mrs. CUBIN. OK, the next panel that I’ll call—what the Ranking

Member and I have decided to do is to call the members in the

order in which they arrived. So, the next panel I’m going to call for

will be Duke Cunningham, Ralph Regula, Senator Boxer and Mrs.

Capps. Congressman Regula, would you like to start?

STATEMENT OF HON. RALPH REGULA, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF OHIO

Mr. REGULA. Thank you, Madam Chairman. I ask unanimous

consent that I may submit my full statement for the record.

Mrs. CUBIN. Without objection.

Mr. REGULA. I will summarize. There is not much doubt as to

where I stand on this issue. I oppose any permanent moratorium.

I have included a moratorium in our Interior appropriations bill

each year, and I think this is the appropriate way to do it. But to

make it permanent is taking away a right that exists for the people

of these United States.

We have heard about States’ rights, and States’ rights extend

three miles offshore, but beyond that the 260 million Americans

own the right to the minerals. They also own the rights to the minerals on the Federal lands.

If you follow the logic of today’s testimony to the conclusion, we

would not drill on any Federal property, which is 30 percent of the

United States.

Today we drill on the timberlands and on the BLM lands, and

I’m sure that there are people who would prefer we not do so. But

these are Federal lands in Federal ownership, and I think the peo-
8

ple have a right to their resources. We give the States a portion

of the revenues. There’s a great resource out there with new exploration and drilling techniques. It doesn’t really become offensive. I

know a lot of the opposition is ‘‘viewscape’’: people don’t want to see

a drilling rig in the sunset. But it’s been demonstrated clearly that

there’s very little risk from spills and many more risks from tankers than from drilling platforms. We’re spending $200 million a year in the Interior Appropriations bill to maintain the SPR, which is a strategic petroleum reserve to give us security in case we are cutoff from petroleum in

the middle east, because over 50 percent of our petroleum resources are imported. To suddenly take a huge portion of our domestic production off the table as we would propose in a permanent

moratorium makes no sense at all in terms of our national security.

We use these Federal lands all over the United States for many different purposes to serve the public. For all of those reasons, I think

the policy matter of making moratoria permanent would be a great

mistake.

Certainly, a moratorium is appropriate at this time, and we plan

to continue the moratorium in our bill again this year. The world

conditions are fragile, and things could change overnight as far as

access to mineral assets to petroleum. To make it a permanent

moratorium, to me, doesn’t make any sense in today’s world.

Madame Chairman, I thank you for giving me an opportunity to

be heard. I thank the other members of the panel for the courtesy.

[The prepared statement of Mr. Regula follows:]

STATEMENT OF HON. RALPH REGULA, A REPRESENTATIVE IN CONGRESS FROM THE

STATE OF OHIO

Madam Chairman and distinguished members of the Subcommittee, I appreciate

the opportunity to express my strong opposition to legislative initiatives that constrain the development of our nation’s energy resources. Restricting the exploration

and production of oil and natural gas on the Outer Continental Shelf (OCS) takes

our country in the wrong direction because it artificially and unnecessarily denies

the American people access to an essential natural resource.

Since the early 1980’s, Congress has used the appropriations process to impose

moratoria on leasing offshore. This policy has restricted the oil and gas industry’s

access to over 600 million acres. These appropriations moratoria have impacted almost all of the best prospects for major new offshore discoveries outside the central

and western Gulf of Mexico. Congressional moratoria and other deferrals have

placed one third of the OCS’s oil reserves, and 20 percent of its natural gas reserves,

off limits to exploration and development.

In 1990, President Bush issued an executive order canceling all scheduled lease

sales off California, southern Florida, portions of the North Atlantic, areas off Washington and Oregon, and withdrew those areas from leasing until after 2000.

Now, Madam Chairman, some of my colleagues in Congress advocate permanent

bans on oil and gas drilling in vast areas of the OCS. That would have two adverse

impacts. First, it would restrict future opportunities for increased Federal revenues.

And second, it would put our nation’s energy security at risk.

When government lands are leased for oil and gas development, they first produce

bonus bids and rents on the lease until drilling occurs. If the drilling is successful,

a stream of oil and gas means a stream of revenue to the Federal Government and

to participating state governments. Permanent moratoria would further restrict the

amount of revenue that can be generated.

The OCS Is A National Resource

The OCS is a rich resource. The U.S. Department of the Interior (DOI) reports

that the OCS holds oil reserves of 14.4 billion barrels and natural gas reserves of

72.5 trillion cubic feet. Moratoria on the appropriations bills year after year, however, have prevented the oil and gas industry from developing a significant portion

of these resources. We will not know their ultimate value until the OCS is fully ex-
9

plored. However, in 1995, the Department of the Interior estimated that 26 billion

barrels of oil equivalent (oil and gas) are under moratoria.

As a vital national resource, the oil and natural gas beneath the Federal OCS are

there for the benefit of all Americans—and development of these resources is needed

as demand for both fuels increases. The U.S. Department of Energy’s Energy Information Administration (EIA) expects the demand for oil in the United States in the

year 2015 to be 4 million barrels a day higher than in 1995, when consumption was

18 million barrels per day. The Gas Research Institute has predicted a market of

30.9 trillion cubic feet for gas in 2015, compared to a demand of 22.2 trillion cubic

feet in 1996. Mr. Chairman, bans on offshore production would adversely affect our

ability to meet the nation’s growing need for the new sources of oil and natural gas.

Federal Revenue

The OCS moratoria prevent new revenue from coming into the Treasury at the

very moment the U.S. has ended decades of damaging annual budget deficits. Cutting off future OCS production would diminish the revenue stream and make balancing the budget more difficult as existing production declines without replacement.

Consider what the revenue from offshore operations has already produced. Since

the Federal offshore leasing program began, offshore oil and gas activities have generated over $120 billion in Federal Government revenues. This total includes over

$18 billion for the Land and Water Conservation Fund, over $2.5 billion for the National Historic Preservation Fund and over $2.5 billion to the coastal states. In 1997

alone, participating states received over $116 million. Bans on OCS exploration and

production preclude opportunities for new revenue, and the opportunity to help keep

the budget balanced in the 21st century.

Other revenue that accrues to the Federal Government from offshore operations

is that collected in payroll, Social Security and Medicare taxes from those employed

in the industry, and those who supply them with goods and services. Yet over the

past several years, employment in the domestic offshore industry has declined.

Moreover, just 10 years ago, 70 percent of the capital spent on exploration and production was invested here at home. Today, a growing percentage is being invested

abroad. Other countries are, understandably, taking advantage of our shortsightedness. Earlier this month, officials from Brazil, Great Britain and Nova Scotia came

to the Houston Offshore Technology Conference to invite offshore operators to explore for oil and gas in their waters.

Madam Chairman, the bans deny American workers and American companies in

virtually every state an essential opportunity for better jobs and for economic

growth here at home. Creating jobs offshore creates jobs onshore. The OCS Policy

Committee, part of the OCS Advisory Board established by the Department of the

Interior to advise the secretary, established that in addition to the jobs created offshore, ‘‘OCS activities indirectly provide about 2.5 jobs for every person directly employed by industry.’’ Whether it is fabricating steel in Ohio, or making computer

chips in California, almost every state in the Union benefits because the offshore

industry buys from them.

Despite the fact that a significant portion of exploration and production investment had been driven overseas, a 1996 study by the American Petroleum Institute

found that companies involved in exploration and production of oil and gas in the

Gulf of Mexico spent almost $6 billion with 6,600 vendors in the 49 states. While

much of that $6 billion was spent in states adjacent to the Gulf, tens of millions

of dollars, and sometimes hundreds of millions, were spent with vendors in New

York, Pennsylvania, Illinois, Florida, and North Carolina. In Ohio, vendors invoiced

over $16 million in offshore business. In New Jersey, vendors invoiced almost $7

million in offshore business. And in California, vendors received over $80.7 million

from Gulf activities alone in 1996. It is ironic that many in California’s congressional delegation are among the most zealous advocates of ban on oil and gas operations on the OCS, and some have sponsored bills that would even close down existing production, despite the business offshore activities in the Gulf have brought to

the state.

I have attached a table to my testimony that identifies that 10 states whose companies have the largest sales to the offshore industry. But let me emphasize that

vendors and their employees in the 49 states benefit from this business. These vendors add value at every stage of the process. Their employees earn wages and benefits from their families, and they all pay taxes. In sum, offshore drilling produces

jobs, paychecks and benefits for American families from the Gulf of Mexico to the

Pacific Ocean. Even though American-based oil explorers employ U.S. workers

abroad, our economy does not benefit nearly as much as when drilling and production occur here.
10

Protecting the Environment

Oil and gas provide about two-thirds of the energy consumed in the United States.

Producing the energy requires a careful balancing of economic benefits and environmental safeguards. Exploration and production activities offshore are managed so

as to protect the marine and coastal environment and to protect communities onshore. Federal OCS oil and gas operations are among the most tightly regulated economic activity in the world. And the offshore industry has made meeting those

stringent environmental standards part of its daily business plan.

Existing Federal statutes and regulations that govern the industry offshore are

numerous, complex, comprehensive and successful in producing domestic energy

while protecting the environment. The laws that affect offshore operations include

the Outer Continental Shelf Lands Act, the National Environmental Policy Act, the

Clean Water Act, the Clean Air Act, the Oil Pollution Act, the National Marine

Sanctuaries Act, the Marine Mammal Protection Act, the Coastal Zone Management

Act and the Resource Conservation and Recovery Act.

The oil and gas industry offshore has a strong and vigorous record of protecting

the quality of our waters and safeguarding marine life. Offshore drillers are required to obtain 17 major permits and follow 90 sets of Federal regulations. The results of those regulations, which have been gathered by the Department of the Interior’s Minerals Management Service, speak for themselves: Offshore drilling and

production, and the pipelines that carry those resources ashore, have been shown

to be environmentally sound operations. Since 1975, when current Federal offshore

safety regulations went into effect, the industry has had a environmental record

that is 99.999 percent safe. Only an infinitesimal amount of oil produced offshore—

less than one-thousandth of a percent—has been spilled. Even during Hurricane Andrew in 1992, the offshore industry’s safety devices worked, shutting down production. Major spills were avoided, contrary to predictions of catastrophic spills from

Gulf hurricanes.

In addition to all the laws and all the rules and regulations, the exploration and

production of oil and gas is a high tech industry that uses the latest advances to

protect the environment. Horizontal drilling, for example, today allows for many

more wells to be drilled from a single offshore platform. As new exploration and production techniques have further reduced adverse impacts on plant and animal life,

production platforms serve as artificial reefs that attract marine life for spawning,

feeding, and shelter.

Bans on the OCS would not significantly improve the environment. Oil and gas

operations are subject to the highest standards of environmental regulation, and

represent successful and compatible multiple uses of this nation’s resources. These

operations actually enhance the environment by increasing the desirable habitat for

marine species.

Energy Security

Restricting oil and gas exploration and production in the United States had jeopardized our energy security and increased our energy dependence on foreign sources.

Over half the petroleum products consumed in the United States today come from

abroad. Continued restrictions on OCS operations would mean that we would increase our dependence on those suppliers, giving them added powers and added incentives to interrupt our supplies and affect prices.

Moreover, making our country more vulnerable to foreign suppliers could complicate our foreign policy since policy makers would then have to consider the effects

a decision would have on our future supply from the foreign power in question. In

addition, foreign supplies add to our defense burdens. Every barrel of crude oil produced here at home is one less barrel that has to be imported in exchange for U.S.

dollars that flow out of the country.

Conclusion

Madam Chairman, permanently preventing oil and gas leasing in the OCS will

not significantly improve the environment, but will restrict government revenues

while destroying jobs, and will endanger our energy security while denying the

American people the use of a public resource. We need more offshore development,

not more restrictions.
11
12

Mrs. CUBIN. Thank you, Mr. Regula, and thank you for your

work on the Interior appropriations bill.

Mr. MILLER. Could you stay and answer a few dozen questions.

No, no——

[Laughter.]

Mr. REGULA. George, you want that project funded?

[Laugher.]

Mrs. CUBIN. I want George’s project funded.

Mr. MILLER. I thought we could negotiate that plane flight.

[Laughter.]

Mr. REGULA. Off the record, use land and water conservation

money produced from offshore drilling.

[Laughter.]

Mrs. CUBIN. Mr. Regula, Mr. Regula——

Mr. MILLER. You’d spend it all; we’d get you more.

[Laughter.]

Mrs. CUBIN. I think you should fund George’s project to whatever

it was, because, as I recall, at the hearing he came right in and

said he thought you should fund mine.

[Laughter.]

Mr. REGULA. OK.

STATEMENT OF HON. RANDY ‘‘DUKE’’ CUNNINGHAM, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

Mr. CUNNINGHAM. Before I speak, I’m going to let him leave.

Mrs. CUBIN. Pardon me?

Mr. CUNNINGHAM. Before I speak, I’m going to let him leave on

that case.

[Laughter.]

Chairwoman Cubin, and members of the Committee, thank you

for holding this hearing. I rise in strong support of the moratorium

on oil and gas development of the OCS. I believe—my own personal

opinion, and I think many agree—that these kinds of decisions

should be based first on good science; second on peer review; and

then the constituents of the State on how they feel about the issue.

My friend just testified that there’s a 3-mile limit, but if oil spills

inside that 3-mile limit and damages—even if it’s beyond there and

it damages the environment—then I think we have a responsibility,

even though it’s on Federal land, inside that to protect our environment.

Californians have made themselves very clear. And as we look at

good science, the National Academy of Sciences study shows that

there would be detrimental damage to the environment and to the

seabed, if we drill on the OCS.

The dumping of oil muds—I’m a diver, a scuba diver, and harvest

abalone right off the coast of California. I’ve been up to Long Beach

and I’ve seen the oil that’s on the beaches up there; and I live right

on the beach, and I sure don’t want to see that in our community,

or the wildlife that I harvest abalone and spearfish to be damaged

as well.

Every year I’ve offered H.R. 133, which focuses on the entire

State of California. It prohibits the sale of new offshore oil leases

in southern California and central California and northern Califor-
13

nia through 2007, or until they could prove that the problems of

the 1989 National Academy of Science study were addressed and

resolved. My legislation would ensure that no drilling or exploration along the coast until the most knowledgeable scientist peer

review, and a vote of the constituents.

I’d like to submit the rest of this for the record, but I rise in

strong support of the moratorium. In many cases, I don’t go along

with extreme environmentalists agenda, but in this case, there’s

good science on it; there’s peer review; and the constituents of California, I believe and support this legislation.

[The prepared statement of Mr. Cunningham follows:]

STATEMENT OF HON. RANDY ‘‘DUKE’’ CUNNINGHAM, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF CALIFORNIA

Chairwoman Cubin, members of the Committee, thank you for holding this hearing. I rise today to speak in support of the moratorium on oil and gas development

on the Outer Continental Shelf (OCS). This moratorium is vital to the environment

of our coastal communities, and I believe Congress has a responsibility to ensure

that it is maintained.

The people of California have made it clear that they favor this moratorium. In

fact, the State of California has enacted a permanent ban on all new offshore oil

development in the State’s coastal waters. The environmental sensitivities along the

California coastline make the region an inappropriate place to drill for oil using current technology.

Academy Study

A 1989 National Academy of Sciences (NAS) study confirmed that new exploration

and drilling on existing leases and on undeveloped leases in the same area would

be detrimental to the environment. In addition, offshore drilling can impact other

parts of our communities. The visual impact of offshore platforms is a continuing

concern among my coastal communities, especially those with a strong tourism economy.

The dumping of drilling muds and cuttings could affect our recreational fishing

industries and impact our marine mammal populations. Oil spills would threaten

our beaches.

All these impacts remain unresolved using current drilling technology. While I

recognize that technological advances may alleviate some or all these concerns, at

this time I believe that we must continue the current moratorium on offshore oil

drilling and exploration.

Legislation

For that reason, I have for the past three Congresses introduced legislation to address the offshore oil drilling issue for California. My bill, H.R. 133, focuses on the

entire state of California. It would prohibit the sale of new offshore leases in Southern California, Central California, and the Northern California planning areas

through the year 2007. New exploration and drilling on existing active leases and

on undeveloped leases in the same areas would be prohibited until the environmental concerns raised by the 1989 NAS study are addressed, resolved and approved by an independent peer review.

My legislation will ensure that there is no drilling or exploration along the California coast unless the most knowledgeable scientists inform us that it is absolutely

safe to do so.

H.R. 133 is currently pending before this Committee with eight bipartisan cosponsors. My legislation is supported by the Board of Supervisors for San Diego County

and the City of San Diego. I have attached San Diego County’s resolution supporting the moratorium.

Passage of this legislation would be a vast improvement over the current annual

process of enacting a moratorium as part of the Interior Appropriations legislation.

A more permanent ban would provide our coastal communities more stability in

managing their ocean resources.

Closing

I believe Congress must operate in accordance with California’s interests and respect the opinions of the people of California. I encourage this Subcommittee to
14

maintain the current moratoria on offshore oil drilling, protect our beaches, and preserve our quality of life. Thank you.

LETTER TO MR. CUNNINGHAM

The Honorable RANDY CUNNINGHAM,

U.S. House of Representatives,

2238 Rayburn House Office Building,

Washington, DC

Dear Duke:

Thank you for sponsoring H.R. 133 to enact a temporary moratorium on leasing,

exploration, and development on the Outer Continental Shelf (OCS) land off the

coast of California. I am writing to reiterate the County’s support for your bill as

expressed in my February 1997 letter to you. Your legislation would protect San

Diego County and other coastal counties from potentially significant environmental

hazards and serious risks to the public’s health and safety related to the OCS activities mentioned above. Because five tracts off the San Diego coastline could become

eligible for drilling within the next three to five years, County officials and the San

Diego community are concerned that such activity may result in air quality degradation, potential oil spills, the presence of oil industry traffic, and support facilities

along San Diego’s scenic coastline. All of these would threaten public health and adversely impact our local economy.

Please ask your colleagues on the committee to expedite action on H.R. 133 as

soon as possible to protect San Diego and other coastal counties from potential significant environmental hazards, public health impacts, and economic risks associated with on leasing, exploration, and development on the Outer Continental Shelf

(OCS).

Sincerely yours,

ROGER F. HONBERGER,

Washington Representative

Mrs. CUBIN. Thank you, Congressman.

Senator Boxer.

STATEMENT OF HON. BARBARA BOXER, A UNITED STATES

SENATOR FROM THE STATE OF CALIFORNIA

Senator BOXER. Thank you very much, Madam Chair——

Mrs. CUBIN. And welcome to our humble abode.

Senator BOXER. Thank you. Well, you need to know that I’ve

served in this very room on the then Merchant Marine and Fisheries Committee when I got to the Congress in 1983. And at that

time, I teamed up with my friend George Miller who, when I

walked in the door, said, ‘‘Hurray, reinforcements in trying to ban

offshore oil drilling in new areas off the California coast.’’ We already have a large number of rigs off that coast, as Congresswoman Capps could tell you. So, I’m back here and it’s very nostalgic, but it’s also frustrating in another way that we haven’t really resolved this issue because we lean on these yearly moratoria.

I would like to just say to you that I’m glad you’ve given me this

opportunity to testify today because I’ve introduced legislation,

along with Congresswoman Capps and Congressman Miller, which

essentially says this: When a State establishes a drilling moratorium on part or all of its coastal water, that protection should be

extended to adjacent Federal waters. Then it goes to your comment, Madam Chair, that you made before in which you praised

the fact that we would in fact defer to a State. I think when State

does take a strong stand on the environment, such as our State has

on State waters, that we ought to follow suit, because Congressman

Cunningham is exactly right; the first three miles are fine, but if

you’re drilling five miles off there’s not going to be any boundary
15

between that demarcation and the State waters. You’re going to

foul State waters; you’re going to go against the moratorium. I

think because Congressman Regula reminded me, when I walked

in, how many years we’ve been battling each on this, I wanted to

respond to some of his points.

Tourism is one of the biggest industries in my home State, and

I’m sure many of you visited our State, and we pride ourselves on

that tourist industry. The beauty of our coastline is of enormous

importance, and is a huge draw to the tourist, not only from this

country but from all over the world. So if you compare the economics of moving forward with offshore oil—additional offshore oil drilling—versus the possibility of destroying this incredible ocean resources, the ocean resource comes out way on top. And the people

have put a value on this that can’t even be counted, and I think

that needs to be taken into account.

I would like to make a couple of other quick comments, and then

I’ll close.

President Bush issued a statement directing his Secretary of Interior to cancel several existing leases and withhold any further

leasing in California waters for 10 years; and that was shortly before he left the White House. So I think this is a real bipartisan

issue. I think we have colleagues on both sides of the aisle that understand (a) the aesthetic value of this, (b) the real economic value

of this and the importance of moving forward.

Now, clearly, the strongest protection would be a permanent

sanctuary off the coast. And someday, I hope I live long enough to

see that we do that, because a value is a value and feel sure of this

value. And we should make certain that our children and grandchildren can enjoy it as much as we have.

I will close in telling you this: The oil companies—the oil companies hold out the whole fact that there could be so much more revenue coming into the Federal Government as a result of drilling.

While as you’ll hear from a many of us in another debate, they’re

not even paying us the royalties they owe us. We are in court this

very day essentially fighting to get more than $200 billion—$200

million in payment; $200 million. And a lot of that money goes

straight into the classrooms. In our State of California that’s where

these royalties go.

So it seems to me we ought to take a deep breath; we ought to

look at the fact that they owe us all this money; we ought to look

at what Congress did in the dead of night in stopping the Department of Interior from coming up with a fair rule to go after these

royalties; and not even considering opening up this coastline—or I

should say these magnificent coastlines.

I wanted to point out to you that just in the one day I’ve introduced my bill, we already have on the Senate side, Senators Murray, Lautenberg, Graham of Florida, Robb, and Sarbanes on as cosponsors in the Senate. That’s pretty good without even a ‘‘dear colleague’’ letter going out. So I think there’s a lot of support for this.

I want to again thank Congressman Miller for his years and

years of leadership. I want to thank Congresswoman Capps for

being our reinforcement. And I want to thank you, Madam Chair,

for giving me this opportunity.

[The prepared statement of Senator Boxer follows:]
16

STATEMENT OF HON. BARBARA BOXER, A SENATOR IN CONGRESS FROM THE STATE OF

CALIFORNIA

Mr. Chairman, I want to thank you for this opportunity to discuss an issue which

is so important to all of us here today—preservation of our ocean resources.

After many years of hard work to prevent further oil drilling in the Outer Continental Shelf (OCS), I am very pleased to see the broad bi-partisan support that now

exists for this issue. I began fighting for ocean protection on the Marin County

Board of Supervisors, continued during my 10 years in the House of Representative,

and as a United States Senator representing California.

Today, I am introducing the Coastal States Protection Act—legislation which I

also introduced in the 104th Congress. This Act will provide necessary protection

for the nation’s Outer Continental Shelf (OCS) from the adverse effects of offshore

oil and gas development by making management of the Federal OCS consistent with

state-mandated protection of state waters. I am pleased that Representatives Capps

and Miller are introducing the House version of this legislation.

Simply put, our bill says that when a state establishes a drilling moratorium on

part or all of its coastal water, that protection would be extended to adjacent Federal waters.

It does a state little good to protect its own waters which extend three miles from

the coast only to have drilling from four miles to 200 miles in Federal waters jeopardizing the entire state’s coastline—including the state’s protected waters.

An oil spill in Federal waters will rapidly foul state beaches, contaminate the nutrient rich ocean floor upon which local fisheries depend, and endanger habitat on

state tidelands.

My legislation simply directs the Secretary of Interior to cease leasing activities

in Federal waters where the state has declared a moratorium on such activities thus

coordinating Federal protection with state protection.

The bill has a very fundamental philosophy—DO NO HARM to the magnificent

coastlines of America and respect state and local laws.

But I am pleased to be here today not only to discuss my legislation, but to also

express my strong support for the current protection of our precious marine resources.

The major portions of fragile California coastline is currently protected from the

dangers of oil and gas drilling in offshore waters by several provisions of law. The

State has a permanent moratorium on oil and gas leasing, which covers state waters

up to 3 miles out. U.S. waters, up to 200 miles out, have been protected by a succession of one-year leasing and drilling moratoria enacted by Congress each year since

1982.

In addition, in 1990, President George Bush issued a statement directing his Secretary of the Interior to cancel several existing leases and withhold any further

leases in California waters for 10 years. With this directive, President Bush showed

his commitment to prohibiting offshore drilling in areas where environmental risks

outweigh the potential energy benefits to the Nation.

The strongest protection would be a permanent ban on further offshore oil and

gas leases in California waters, and I have asked the President to consider this.

California, and the rest of the nation, need a clear statement of coastal policy to

provide industries, small businesses, homeowners and fishermen more certainty

than can be provided by yearly moratoria. Annual battles over the moratoria make

long-range business planning difficult, divert resources and attention from the real

need for national energy security planning, and send confusing signals to both industry and those concerned about the impacts of offshore development.

I understand that some feel that we are losing revenue because of these moratoria. I have two thing to say about that. First, the public strongly supports the

moratorium. And second, if the oil companies paid the royalties that they currently

owe the Federal Government we could make up for the so-called ‘‘lost revenue’’

caused by the moratorium. Oil companies currently owe the Federal Government

millions upon millions of dollars. It does not make sense to give oil companies access

to more Federal oil when they are already cheating the American taxpayer out of

millions of dollars.

As we celebrate the United Nations Year of the Ocean, we have a prime opportunity to strengthen our commitment to environmental protection by giving Americans a long lasting legacy of coastal protection.

We must recognize that the resources of the lands offshore California, and the

rest of the country, are priceless. We must recognize that renewable uses of the

ocean and OCS lands are irreplaceable elements of a healthy, growing economy.

These moratoria recognize that the real costs of offshore fossil fuel development far

outweigh any benefits that might accrue from those activities.
17

Mrs. CUBIN. Thank you very much for being here with us, and

thank you for your comments.

Congresswoman Capps, welcome. This is the first time you’ve

been here and we’re glad to have you.

STATEMENT OF HON. LOIS CAPPS, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF CALIFORNIA

Ms. CAPPS. Thank you very much for the welcome, Madam

Chairwoman, and members of this Subcommittee. Thank you for

holding this important hearing today. I appreciate the opportunity

to testify on an issue of such importance to the residents of my district, and the State that I live in. I have written testimony that I

have submitted for the record, and I would like to briefly summarize that for this Subcommittee today.

As you know, today with my colleagues from California, Mr. Miller, Mr. Farr, and Mrs. Harmon, I am introducing the House

version of Senator Boxer’s Coastal States Protection Act. This Act

will place a Federal moratorium on new offshore oil and gas development where there is an existing State moratorium in place. I

want to commend Senator Boxer for her unflagging leadership on

this issue for so many years. That is so important for all Californians.

For me, this is an issue about local control. California residents

have decided that they do not want new oil and gas development

off of our beautiful coastline. We already have a State moratorium

signed into law in 1994 by Governor Wilson, the California Coastal

Sanctuary Act. I have oil drilling off the Coast of Santa Barbara,

and this community does not want any new development.

In San Luis Obispo County, there is no offshore oil drilling, and

residents want to keep it that way. You know oil doesn’t know

boundaries, and the Federal law would put into place in a permanent way what the State has already decided. These positions are

supported by environmental organizations, the county board of supervisors, and the Chamber of Commerce in both counties that I

represent.

California has a broad and varied economy. The tourism and

recreation industry annually contribute more than $27 billion to

the State’s economy. And the California coastline is, as Sen. Boxer

mentioned, a very big reason for this.

We are also home to two of our Nation’s national marine sanctuaries, one of them being the Channel Islands National Marine

Sanctuary. This is in my district.

Is it worth risking all of this for new offshore oil development?

Obviously, the people of California do not think so. Very recently,

San Luis Obispo County and Santa Barbara County, the Mineral

Management Service conducted a study. The findings of this study

were reported and hearings were held in San Luis Obispo and

Santa Barbara counties. Overwhelmingly, the residents came out

very strongly opposed to offshore oil drilling.

Just by coincidence in the audience today is a resident of my district, Bob Sollen. He has written a book entitled, An Ocean of Oil:

A Century of Political Struggle Over Petroleum Off the California

Coast. I’m pleased that he could be here to hear this testimony

with his wife Toni.
18

The protection of the environment is critical for California’s economy and the quality of life we all enjoy. I hope that this Subcommittee can help us do that and support this very important legislation. Thank you very much for your time.

[The prepared statement of Ms. Capps follows:]

STATEMENT OF HON. LOIS CAPPS, A REPRESENTATIVE IN CONGRESS FROM THE STATE

OF CALIFORNIA

I want to thank the Chairwoman for holding this hearing on the development of

oil and gas leases in the Outer Continental Shelf (OCS). I appreciate the opportunity to testify on an issue of such importance to the residents of my district, the

state, and the nation.

I am pleased to announce that today, with my colleagues from California, Mr. Miller and Mr. Farr, I will be introducing legislation to protect America’s precious

coastline. Our bill, the Coastal States Protection Act, amends the Outer Continental

Shelf Lands Act to direct the Secretary of the Interior to cease mineral leasing activity of the OCS that is adjacent to a coastal state that has a moratorium on mineral

exploration, development, or production in adjacent State waters.

The State of California leads the nation in coastal protection. We have in place

a permanent moratorium on offshore oil and gas leasing, which covers state waters

up to three miles out. However, at the Federal level, the coast has no permanent

protection. Rather, we rely on successive yearly moratoriums. My legislation would

make that protection permanent.

Santa Barbara residents know too well the harmful effects of offshore oil. The

City holds the unfortunate distinction of being the home of one of the worst oil spills

in our nation’s history, the 1969 oil well blowout in the Santa Barbara Channel.

This event is often cited as the catalyst for the modern environmental movement.

San Luis Obispo County residents also know the risks of offshore oil and have consistently opposed any efforts to open the coastline to development. This view is

shared by the entire community, including environmental groups, the Chamber of

Commerce, and the Board of Supervisors.

One of my constituents, Robert Sollen, who has devoted his life toward protecting

the coastline in Santa Barbara, recently gave me a copy of his book, An Ocean of

Oil. This book depicts the continuous struggle over petroleum policy off the California Coast. Individuals like Mr. Sollen represent the strong voice of Central Coast

residents who do not want to risk the protection of California’s majestic coastline

with further offshore oil development.

California’s coastline is a priceless treasure, enjoyed not only by our residents, but

by tourists from around the world. Our economy depends on protecting this spectacular coastline because multimillion dollar industries such as recreation, fishing and

tourism rely on this vital protection.

The California coastline is home to a rich ocean species habitat, a migration route

of the endangered Blue Whale. It is also home to two of our National Marine Sanctuaries, including the Channel Islands National Marine Sanctuary, which is in my

district.

I thank the Committee for working on such a critically important issue. I hope

that you will soon conduct a hearing on this bill and that Congress will move quickly to enact a Federal moratorium on oil leases into law.

Mrs. CUBIN. Thank you for your testimony.

Mr. MILLER. Madam Chairman, might I ask permission to insert

my record into the statement at this time?

Mrs. CUBIN. Your record into the statement would be great.

Without objection.

[Laughter.]

Picky, picky.

Mr. SCARBOROUGH. She’s tough, George. I hope she’ll be nicer to

me.

George, I’ve always been with you brother. Royalty relief, whatever, you name. Don’t act shocked. You have a short memory. Don’t

remember royalty relief last year?

Senator BOXER. The house has really changed since I left.

[Laughter.]
19

Mr. SCARBOROUGH. George and I are good buds.

Mrs. CUBIN. Will you get with it?

[Laughter.]

Mr. SCARBOROUGH. I’m waiting—Madam Chairwoman, George

has taken over your Committee.

Mrs. CUBIN. Well, he’s use to that.

[The prepared statement of Mr. Miller follows:]

STATEMENT OF HON. GEORGE MILLER, A REPRESENTATIVE IN CONGRESS FROM THE

STATE OF CALIFORNIA

Today, I join Senator Barbara Boxer and Representative Lois Capps as a sponsor

of their legislation to extend the moratoria on oil and gas leasing in the Outer Continental Shelf off the coast of California. These moratoria have been in place since

1982 and should be made permanent. I congratulate Senator Boxer and Representative Capps for taking the lead in this important effort to safeguard California’s

coast.

According to the Chair’s letters of invitation to the Administration, the purpose

of this hearing is to review existing moratoria and to investigate the revenue impacts of unrealized income to the Federal Treasury resulting from these actions.

There is a wealth of information being disseminated to suggest that the areas

barred from leasing under the moratoria cost the government significant amounts

of money in lost royalties and other revenues. But, before this Subcommittee moves

forward with any proposal to open the California coast to oil development, consider

two facts.

One, the overwhelming majority of citizens that would be directly affected by oil

and gas development in these areas oppose such development.

Two, it makes no sense to consider opening up new areas for oil and gas leasing—

let alone open the California coast—when we have massive amounts of evidence

that the oil industry is cheating the American people out of hundreds of millions

of dollars on existing leases.

It is to this second point that I will address my comments today.

Last week Senator Boxer and I introduced legislation to repeal an eleventh-hour

rider attached to the Emergency Supplemental Appropriations bill. This rider was

an effort to further shield the oil industry from fair market value assessments of

the oil and gas extracted from public lands. It was not passed by this Committee,

which has jurisdiction. In fact, it was never considered by the House. It was

sneaked into an emergency spending bill at the last moment, and that action has

rightly been condemned by newspapers and media across this country.

The provision stops the Interior Department from implementing plans developed

over the past 21⁄2 years to assess crude oil at fair market value rather than the undervalued assessment the industry has imposed on itself for years. The Department

estimates that the rule would have increased revenues by $66 million a year. Our

bill, H.R. 3820 in the House, would repeal the rider and allow the Department to

finalize the much needed regulation.

The Emergency bill also includes report language relating to the issue of oil and

gas extracted from deepwater reserves in the Gulf of Mexico. Congress was wrong

in 1995 when we provided a royalty free-ride on the first 88 million barrels of oil

and gas extracted from these so called deepwater tracts to spur development in the

Gulf. As I pointed out at the time, the holiday was not needed since the boom was

already on and the technology available to make the investment more cost-effective.

But, small consolation though it was, we were assured that if the holiday turned

out to be too generous to the oil industry, the royalty rates could be adjusted so we

could recoup some of the loss in the future. However, once it became known that

the Department was considering raising those post-holiday rates, the Congress

quickly stepped up to protect its special interest supporters again by adding report

language to the Emergency bill to prohibit the Interior Department from raising the

rates on royalties from deepwater leases. Again, instead of looking at opening up

areas off New Jersey, Florida and California, this Congress should be taking steps

to assure that the American taxpayer is not cheated out of its fair share.

But, so far, this Congress has chosen a different route. Critics of the current system assert that oil companies owe the American people more than $2 billion in underpaid royalties. The States of Alabama, Louisiana and Texas, along with a group

of private citizens, have made such a compelling case against the major oil companies that the U.S. Department of Justice has intervened in their litigation. Some
20

of the oil companies have already settled with the litigants, and one, ARCO, actually

volunteered to correct their underpayments, offering up $524 million.

But, instead of supporting these efforts for the taxpayers, this Congress has spent

its efforts looking for ways to shower additional public benefits on the oil industry.

In addition to the Emergency bill’s provisions, the fiscal year 1998 appropriations

bill also included a rider that prevented the MMS from requiring a minimum bid

on offshore leases. And, as Senator Boxer, Representative Maloney and I work to

make sure taxpayers receive a fair return on Federal oil and gas leases, the oil industry is pushing a bill in this Committee that will permanently reduce royalties.

Under this plan, royalties would be paid ‘‘in-kind’’ instead of cash. So far, the States

of Alaska, Texas and New Mexico have all voiced strong opposition to this bill. The

Minerals Management Service says it would cost a minimum of $357 million per

year.

If this Committee wishes to investigate the revenue impacts of national policy toward the oil and gas industry, I would suggest we begin with correcting problems

in the existing system and not promote opening the California coast to development.

In addition to repealing the royalty rider, Congress should:

• Eliminate the percentage depletion allowance for independent oil and gas companies. This will save about $2.4 billion over 5 years according to the Congressional Joint Committee on Taxation.

• Repeal the 15 percent credit for ‘‘enhanced oil recovery’’ and disallow expensing, or immediate write off, of so-called tertiary injectants until proper environmental regulations for the industry are adopted and the current waste and inefficiency in the oil and gas industry are dramatically curbed. These special tax

breaks cost the treasury $500 million over 5 years according to the Congressional Joint Committee on Taxation.

• Repeal the tax provisions permitting oil and gas producers to immediately deduct ‘‘intangible’’ drilling and development costs (IDCs). Instead, require IDCs

to be deducted over time. This reform would raise approximately $1 billion over

5 years according to the Congressional Joint Committee on Taxation.

• Eliminate the ‘‘passive loss’’ tax shelter for investors in oil and gas. This

change would save $665 million over 5 years according to the Office of Management and Budget.

• Disallow corporate income tax deductions for future costs associated with illegally released pollution. Cleanup of existing pollution or contamination should

be exempted. This reform could save taxpayers at least $1.5 billion over five

years.

Instead of making it easier for oil companies to pay less than the fair market

value of oil and gas extracted from public lands, and looking for new areas for oil

companies to cheat the American taxpayer on, Congress should be assuring that the

laws and regulations that govern these activities are effective and enforced. That

job should begin in this hearing room, not on the California coast.

STATEMENT OF HON. JOE SCARBOROUGH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA

Mr. SCARBOROUGH. Thank you, Chairwoman Cubin, and members of the Subcommittee, and George, for your invitation for me

to share my thoughts on such an important subject as oil and gas

leasing and development issues.

As George and the rest of you are well aware, offshore drilling

in Florida is an issue of serious concern to me and has been a top

priority of mine since coming to Congress a few years ago.

I represent the First Congressional District of Florida, which

prides itself in its beaches, its white sands and its crystal clear

water. In fact, four of our Gulf Coast beaches have been ranked

among the top 10 in the country. Tourism is by far the largest industry in Florida, and our coastline economies are dependent on

the condition of our coastline. As a result, we are very concerned

with efforts to develop the OCS in the Eastern Gulf.

Congress in the last several administrations have understood our

opposition to further leasing in the Eastern Gulf Planning Area off

Florida’s coast. Since the 1980’s, Congress has passed, and the
21

President has signed, a moratorium on leasing and pre-leasing activities within 100 miles of Florida’s Western coast within the annual Interior Appropriations Bill. The entire Florida delegation, the

Governor, the cabinet, the legislature, and virtually all other local

governments in Florida support a drilling moratoria. As you can

imagine, there are very few, if any, issues that elicit such broad

support among such diversion segments of Florida’s population. It

transcends party, ideology, age, race, and economic status.

In addition to the annual moratoria, Representative Goss and I

have introduced legislation to reach a more permanent solution. I

fully support Representative Goss’s bill, H.R. 180, which would

delay any drilling or leasing activities until adequate environmental analyses have been completed and would establish a joint

Federal-State task force to fulfill this objective.

Last summer, I introduced H.R. 1989 with the full support of the

entire Florida congressional delegation, to address a pending threat

to our no-drilling policy. The Florida Coast Protection Act, identical

to a bill introduced in the Senate by Senators Mack and Graham,

calls for a permanent moratorium on leasing activity within 100

miles off the coast of Florida, basically writing the annual moratorium into permanent law.

It would have also canceled 6 leases just 17 miles off of Florida’s

Panhandle Coast and set forth a process to fairly compensate the

lessees. We included this language in the bill to address an oil company’s desire to sink an exploratory well on their block just 17

miles off the coast. Fortunately, they subsequently notified MMS

that they did not intend to proceed with exploration and would instead allow the leases to revert back to the government.

While this section of the bill is no longer relevant, we remain

concerned with future exploration with Chevron’s development of

the Destin Dome. Chevron has discovered a large gas deposit just

25 miles offshore of Pensacola and are moving forward with a development plan. We in Northwest Florida remain concerned over

this site, and certainly support the State of Florida in their challenge to Chevron’s proposed plan under the Coastal Zone Management Act. Chevron has appealed the challenge which will ultimately be decided by the U.S. Department of Commerce.

I share many of the concerns in this debate on the possible environmental threats of drilling just 25 miles off Pensacola. Florida is

home to most unique and beautiful coastline in the country. And

any threat to our coastal environment must be taken seriously. We

in Florida maintain that there is inadequate scientific information

available on the effects of drilling to warrant a change in our ‘‘no

drilling’’ policy. In addition to the obvious concern of an oil spill,

there are other pressures on the environment from both oil and gas

development. As it’s been stated previously, environmental studies

are not complete and drilling effects on Florida’s coastline are

therefore not fully known. As the Florida delegation stated in a letter to Secretary Babbitt, ‘‘Until these studies are completed and the

scientific information is available and analyzed, no decisions on

pre-leasing, leasing, and drilling should be made about Florida’s

waters.’’ And we stand by that statement today.

With the recent passage of the Royalty Relief Act, which I opposed, development in the Gulf of Mexico has exploded. Each new
22

lease sale brings record bids, increases in the incentives to explore

new areas, and puts increased pressure on the Eastern Gulf. And

I may add right here that during the Royalty Relief debate last

year, we were told time and time again that nobody would go into

that area unless Royalty Relief was passed. And our lessons over

the past year show that to be false.

In closing, I urge the Committee to consider seriously more permanent legislative protection for Western Florida’s coast. According

to the Department of Interior’s own estimates, the Eastern Gulf

contains only a very small amount of the country’s natural gas. I

strongly believe that it would be foolish to jeopardize Florida’s pristine coast, at least until the full effects of drilling are known. Writing the current moratorium on leasing in the Eastern Gulf into

law, which my legislation would do, would offer a more permanent

solution to the question of future leasing. We must also consider

the options for dealing with the more urgent concern of the more

than 150 existing leases in the remaining Eastern Gulf of Mexico.

Without any intervention, Chevron could be in production on the

Destin Dome as early as the year 2000.

I stand ready to work with the Subcommittee to address these

matters of great importance to the State of Florida. I thank you,

Chairwoman Cubin, for the opportunity to testify here today. I appreciate your holding the hearing and look forward to working with

the Subcommittee in the future. Thanks a lot.

[The prepared statement of Mr. Scarborough follows:]

STATEMENT OF HON. JOE SCARBOROUGH, A REPRESENTATIVE IN CONGRESS FROM THE

STATE OF FLORIDA

Thank you, Chairman Cubin, and members of the Subcommittee for the invitation

to share my thoughts with you on such an important subject as oil and gas leasing

and development issues. As you are aware, offshore drilling in Florida is an issue

of serious concern to me and has been a priority of mine since coming to Congress.

I represent the First Congressional District of Florida, which prides itself in its

pristine beaches, sugar-white sands, and crystal clear water. Four of our Gulf Coast

beaches have ranked among the top ten in the country. Tourism is by far the largest

industry in Florida, and our coastal economies are dependent on the condition of our

coastline. Florida’s beaches are its most valuable natural resource and the overwhelming majority of Florida’s residents and tourists believe strongly that offshore

drilling at this time is incompatible with an economy based largely on tourism,

recreation, and commercial and recreational fishing. Florida’s dependence on tourism and recreation cannot be overstated. As a result, we are very concerned with

efforts to develop the OCS in the Eastern Gulf.

Congress and the last several Administrations have understood our opposition to

further leasing in the Eastern Gulf Planning Area off Florida’s coast. Since the

1980s, Congress has passed, and the President has signed, a moratorium on leasing

and pre-leasing activities within 100 miles of Florida’s Western coast within the annual Interior Appropriations bill. The entire Florida delegation, the Governor, the

Cabinet, the legislature, and virtually all local governments in Florida support drilling moratoria. As you can imagine, there are very few, if any, issues that elicit such

broad support among such diverse segments of Florida’s population. It transcends

party, ideology, age, race, and economic status.

In addition to the annual moratoria, Rep. Goss and I have each introduced legislation to reach a more permanent solution. I fully support Rep. Goss’s bill, H.R.180,

which would delay any drilling or leasing activities until adequate environmental

analyses have been completed and would establish a joint Federal-state task force

to fulfill this objective.

Last summer, I introduced H.R. 1989 with the full support of the entire Florida

Congressional delegation, to address a pending threat to our no drilling policy. The

Florida Coast Protection Act, identical to a bill introduced in the Senate by Connie

Mack and Bob Graham, calls for a permanent moratorium on leasing activity within
23

100 miles of the coast of Florida, basically writing the annual moratorium into permanent law.

It would have also canceled six leases just 17 miles off Florida’s Panhandle coast

and set forth a process to fairly compensate the lessees. We included this language

in the bill to address Mobil’s desire to sink an exploratory well on their block just

17 miles off the coast. Fortunately, Mobil subsequently notified the Minerals Management Service that they did not intend to proceed with the exploration and instead would allow the leases to revert back to the government.

While this section of the bill is no longer relevant, we are concerned with future

exploration and with Chevron’s development of the Destin Dome. Chevron has discovered a large gas deposit 29 miles offshore of Pensacola and are moving forward

with a development plan. We in Northwest Florida remain concerned over this site

and certainly support the State of Florida in their challenge to Chevron’s proposed

plan under the Coastal Zone Management Act. Chevron has appealed the challenge

which will ultimately be decided by the U.S. Department of Commerce.

I share the concerns of many in this debate on the possible environmental threats

drilling just 29 miles off Pensacola. Florida is home to some of the most unique and

beautiful coastline in the country. Any threat to our coastal environment must be

taken very seriously. We in Florida maintain that there is inadequate scientific information available on the effects of drilling to warrant a change in our ‘‘no drilling’’

policy. In addition to the obvious concern of an oil spill, which does not apply to

the Chevron site, there are other pressures on the environment from both oil and

gas development. As has been stated previously, environmental studies are not complete and drilling’s effects on Florida’s coast are therefore not fully known. As the

Florida delegation stated in a letter to Secretary Babbitt, ‘‘Until these studies are

completed and the scientific information is available and analyzed, no decisions on

pre-leasing, leasing, and drilling should be made about Florida’s waters.’’ I stand by

that statement today.

With the recent passage of the Royalty Relief Act, which I opposed, development

in the Gulf of Mexico has exploded. Each new lease sale brings record bids, increases the incentives to explore new areas, and puts increased pressure on the

Eastern Gulf. While our moratorium passes each year with broad, bipartisan support, we need a more permanent solution. In addition, we must address efforts to

develop and further explore pre-moratorium leases.

In closing, I urge the Committee to seriously consider a more permanent legislative protection for the Western Florida coast. According to the Department of Interior’s own estimates, the Eastern Gulf contains only a very small amount of the

country’s oil and natural gas. I strongly believe that it would be foolish to jeopardize

Florida’s pristine coast, at least until the full effects of drilling are known. Writing

the current moratorium on leasing in the Eastern Gulf into law, as my legislation

would do, would offer a more permanent solution to the question of future leasing.

We must also consider the options for dealing with the more urgent concern of the

more than 150 existing leases remaining in the Eastern Gulf of Mexico. Without any

intervention, Chevron could be in production on the Destin Domes early as the year

2000. I stand ready to work with the Subcommittee to address these matters of

great importance to the State of Florida.

Thank you, Chairman Cubin, for the opportunity to testify here today. I appreciate your holding this hearing and look forward to working with the Subcommittee

in the future.

Mrs. CUBIN. Thank you, Congressman Scarborough. Now I just

want—your testimony was compelling, but I want to just put your

mind at ease a little bit.

You know that Chevron area is at least 20 miles out, that’s gas.

So if there’s a leak, it’ll be bubbles; it won’t be a big gas spill or

oil spill to come onto your shore. So, you can sleep better tonight,

right?

Mr. SCARBOROUGH. You know the fact that you, from the Chair,

would make a statement like that is going to make me very nervous as I fly back to the pristine coastline of Florida this evening,

but have a good weekend in Wyoming, or wherever you’re going to

be.

[Laughter.]

Mrs. CUBIN. Congressman Pallone.
24

STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW JERSEY

Mr. PALLONE. Thank you, Madam Chairman, and members of

the Committee. I know you’ve been listening to us for a while here

and I appreciate the fact that you’re willing to bear with each of

us as we make a presentation. I’m going to try and summarize my

statement—you know—if I can include the whole thing as part of

the record, I’d appreciate it.

I wanted to say that the first bill that I introduced when I became a Member of Congress back in 1988 was legislation to prohibit the Department of Interior from spending any funds for any

activity related to mid-Atlantic OCS oil and gas lease sale. In fact,

I framed the bill and I have it in my office on top of my bookshelf.

I’ve once again joined with our Resource Committee colleagues, Mr.

Jones and Mr. Hinchey, and with other members representing the

mid-Atlantic States to introduce legislation establishing a mid-Atlantic moratorium on offshore oil and gas leasing. This bill, H.R.

2555, is similar to the legislation I first introduced 10 years ago.

The bill prohibits the Department of Interior from spending any

funds for any activity related to mid-Atlantic offshore gas or oil

lease sales. It would protect waters offshore of Connecticut, New

York, New Jersey, Delaware, Maryland, Virginia, and North Carolina. And I’ve also joined as an original co-sponsor of Mr. Riggs’ legislation, H.R. 3074, which has the similar effect for both the entire

east and west coast of the United States.

I mention these because I think there are about 6 bills in the

house that collectively would prohibit OCS oil and gas lease sales

off all the 18 States coast lines, and these bills are supported on

a strongly bi-partisan basis. It just basically show the adversity

that exists to opening up our shores to drilling.

Now, over the years a lot of us haven’t been too concerned because, as you know, and I think Congressman Regula mentioned

it earlier, every year there has been a moratorium in the Interior

Appropriations Bill, and we all go and testify there. Even though

he doesn’t know he’s agreed with it, we manage to get it into the

bill. But I notice that he said that he is again against any permanent moratorium. I think that’s unfortunate. I think that’s in fact

what we need and I would urge the Subcommittee to move in that

direction.

I’m not going to go into too many more details because it’s in my

statement. But I just wanted to say that they’re really three reasons why I and, I think so many others continue to oppose these

kinds of sales and leases. And one is that we really don’t believe

that the offshore drilling is necessary for reasons of national or energy security. Second, we oppose exploiting the OCS simply as a

new source of revenue when we continue to give away our other

natural resources through out of date sea royalty and leasing programs. And third, I believe that drilling off of our shores poses severe threat to our marine environment.

I’m not going to get into points one or two. It’s in my statement,

and I know that Senator Boxer talked about that article in the

Washington Post about the four oil companies that are being sued

by the Federal Government. And I’m obviously concerned about
25

that. I just wanted to say on the last point about the environmental and economic point of view.

In New Jersey, we’ve learned very well, I think, that a healthy

coastal environment also means a healthy coastal economy. New

Jersey’s coastal zone—I represent about a third of it, along with

Jim Saxton and Frank LoBiondo. Our coastal zone as a whole contributes tens of billions of dollars to State coffers. About half of

New Jersey’s gross State products comes from the coastal zone.

People don’t usually realize that.

I guess our concern is that all of this could be jeopardized by the

environmental consequences of offshore drilling. We saw what happened back in the late 1980’s when we had all the sewer, the

washups of medical waste and dredge materials, and material that

was coming from combined sewer overflow in New York. For years

we lost billions of dollars in our State economy, and basically we

feel that the risk of drilling off the mid-Atlantic coast far outweigh

the benefits; that in the long run what would happen is that our

State economy would suffer severely.

I want to say in conclusion, it’s not just an environmental concern. It’s also an economic concern. I think the feeling—the reason

why so many of us from the coastal States would like to see permanent moratorium in effect is because of the impact not only on the

environment, but also our fear about the impact on our economy.

Thank you.

[The prepared statement of Mr. Pallone follows:]

STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE IN CONGRESS FROM

THE STATE OF NEW JERSEY

Thank you, Madam Chairwoman and Mr. Romero-Barcelo ́, for holding this hearing and inviting me to testify today on the issue of Outer Continental Shelf (OCS)

Oil and Gas Leasing.

The issue of offshore drilling is one that has concerned me since I first came to

Congress almost 10 years ago. In fact, the very first bill I ever introduced was legislation to prohibit the Department of Interior from spending any funds for any activity related to a mid Atlantic OCS Oil and Gas Lease sale.

As you know, I have once again joined with our Resources Committee colleagues,

Mr. Jones and Mr. Hinchey, and with other members representing mid-Atlantic

states to introduce legislation establishing a mid-Atlantic moratorium on offshore oil

and gas leasing. This bill, H.R. 2555, is the great, great grandchild of my original

legislation.

The legislation that we have introduced is simple. The bill prohibits the Department of Interior from spending any funds for any activities related to a mid-Atlantic

off-shore gas or oil lease sale. The bill would protect waters offshore of Connecticut,

New York, New Jersey, Delaware, Maryland, Virginia, and North Carolina.

In addition, I have joined as an original cosponsor of Mr. Riggs’ legislation, H.R.

3074, which would prohibit the Secretary of the Interior from issuing OCS oil and

gas lease sales on both the east and west coasts of the United States, including New

Jersey.

In total, I believe that there are at least 6 bills in the House that collectively

would prohibit OCS oil and gas lease sales off of all 18 states along the east and

west coasts of the U.S. These bills are supported on a strongly bi-partisan basis and

with significant geographic distribution as well. I think that this, in and of itself,

clearly shows the adversity that exists to opening up our shores to drilling.

Over the years, the Department of Interior’s Minerals Management Service has

made several proposals for a mid-Atlantic OCS oil and gas lease sale. Each time,

legislators from the mid-Atlantic states, regardless of party affiliation, have joined

together to oppose these proposals.

I have opposed, and will continue to oppose, any proposal of a mid-Atlantic OCS

oil and gas lease for three main reasons: (1) I do not believe that offshore drilling

is necessary for reasons of national or energy security, (2) I am opposed to exploiting

the OCS simply as a new source of revenue, when we continue to give away our
26

other natural resources through out of date fee, royalty, and leasing programs, and

(3) I believe that drilling off of our shores poses a severe threat to our marine environment and therefore to the economies of our coastal states.

With respect to our nation’s energy security, I feel strongly that we need to focus

more on diversifying our sources of energy, not just diversifying our sources of fossil

fuel. We need to be actively developing alternative, renewable energy sources. A

greater diversity in energy sources will reduce our need for off-shore drilling, decrease our dependence on fuel imports, and protect against future oil price shocks.

Continued development of efficient and renewable energy sources also will free up

capital for increased domestic investment that will spur economic growth, and ensure continued technological innovation and global competitiveness in these areas.

In addition, technological development in these areas is necessary to make our current primary energy sources as safe as possible. Further, using renewable energy

sources will reduce damage to natural resources and will result in fewer emissions

of greenhouse gases and other pollutants.

From the standpoint of creating new sources of Federal revenue, I feel that the

American people would be better served by eliminating the natural resource subsidies that are still on the books, rather than initiating additional public resource

giveaways and, increasing the drain on taxpayer dollars, and encouraging environmentally damaging development activities. Just two weeks ago, it was reported in

the Washington Post that 4 oil companies are being sued by the Federal Government, and 10 other companies are under investigation, for understating the value

of crude oil produced on Federal and tribal lands. According to the project on government oversight, the oil companies have shortchanged the U.S. Government to the

tune of more than $2 billion in underpaid royalties.

MMS is in the process of trying to resolve this problem, which the agency proposes to do by basing royalty fees on an independent measure: the world market

price for oil. Yet language just included in the Emergency Supplemental Appropriations bill prohibits the Minerals Management Service from making these changes

to the program, thereby allowing big oil companies to continue robbing the American people of billions of dollars in revenues. Before we open up new public natural

resources to development, I think we should work on eliminating existing subsidies,

including subsidies for mining, grazing, and logging on public lands as well as existing irrigation subsidies.

And finally, I am opposed to offshore drilling from both an environmental and an

economic standpoint. In New Jersey, we have learned very well that a healthy coastal environment also means a healthy coastal economy. New Jersey’s coastal zone as

a whole contributes tens of billions of dollars annually to state coffers—or about half

our gross state product. Within that, coastal tourism accounted for more than $14

billion in 1997, over half of the state’s travel and tourism revenues. In addition, an

American sportfishing association study recently showed that in 1996, the total economic impact of angler expenditures in New Jersey exceeded $2 billion. Recreational

fishing in New Jersey also supported almost 22,000 full-time jobs and generated

$69.5 million in state revenues and $63.3 million in Federal tax revenues. New Jersey’s commercial fishing industry is estimated to add an additional $700 million to

the economy as well as to support tens of thousands of jobs.

Unfortunately, all of this could be jeopardized by the environmental consequences

of offshore drilling. Put simply, Madam Chairwoman, the risks of drilling off the

mid-Atlantic coast far outweigh the benefits. This is one of those unique facts that

is recognized by all sides: commercial and recreational fishermen, environmentalists

and business interests, Republicans and Democrats. We need to ensure all sectors

of the coastal economy that are dependent on coastal environmental quality, both

in my state and in other coastal states, that the government will not impose unwanted, unsound, and unneeded oil and gas development off our coasts.

In conclusion, I again thank the Chairwoman for holding this important hearing,

and strongly urge the Subcommittee to move H.R. 2555 and H.R. 3074. Thank you.

Mrs. CUBIN. Is Mr. Whitfield here? Would you like to just come

forward and join the last witness? Congressman Nick Lampson, I’d

like to recognize you for your testimony.

STATEMENT OF HON. NICK LAMPSON, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF TEXAS

Mr. LAMPSON. Thank you, Madam Chairwoman. I hate to sit

here and follow my very good friend, Mr. Pallone, and take a little

bit of a different view, but that’s what I’m getting ready to do.
27

The gas and petroleum reserves under ultra deep water on the

continental slopes of the Gulf of Mexico have demonstrated in the

past several years to be of absolute enormous economic and strategic significance to the United States. The rising interest is evidenced by the recent offshore natural gas and oil lease sale in the

Western Gulf of Mexico in which the Minerals Management Service

received some $800 million in high bids. There are currently over

150 companies with over 3,800 producing platforms active in the

Gulf of Mexico.

As industry moves into deeper water, new technology, safety, and

environmental challenges will need to be met by the Mineral Service in its role of supervising the exploration, development, and production of gas, oil, and minerals on the Outer Continental Shelf.

Oil and gas operators are subject to the highest standard of environmental regulations. The Federal Government’s stringent environmental regulations on the oil and gas industry are protecting

the quality of our waters, coastal areas, and marine life. Offshore

drillers are required to obtain 17 major permits and follow 90 sets

of Federal regulations. The Department of Interior’s Mineral Management Service says that since 1975, when current Federal offshore safety regulations went into effect, the industry has had an

environmental record that is 99.999 percent safe.

The implementation of further restrictions, and their minimal

impact on the environment must be balanced against their potential harm to our economy and national security.

Today, over half of the petroleum products we use come from

abroad. Bans on the Outer Continental Shelf operations mean that

the United States increases on foreign oil. That increases our dependence on foreign suppliers, giving them added powers and

added incentives to interrupt our supplies and to affect our prices.

Making our country more vulnerable to foreign suppliers could add

to our defense burdens and put our national security at risk.

Restrictions also stop new revenue from coming into the Treasury while we are trying to end decades of damaging budget deficits.

Offshore leasing in Federal waters has been highly productive for

the Federal Treasury. Since the offshore leasing program began,

offshore oil and gas activities have generated over $117 billion in

revenues to the Federal Government. A continuing stream of revenue is needed to keep the Federal budget balanced.

Offshore operations afford American workers and American companies in virtually every State an essential opportunity for jobs and

economic growth. A 1996 study by the American Petroleum Institute found that companies involved in the exploration and production of oil and gas in the Gulf of Mexico spent almost $6 billion

with 6,000 vendors in 49 States. While much of that $6 billion was

spent in States adjacent to the Gulf, tens of millions of dollars, and

sometimes hundreds of millions, were spent with vendors as far

away as New York, Pennsylvania, Illinois, and California. Offshore

drilling produces jobs, paychecks, and benefits for American families.

In summary, Madam Chairman, we must balance further restrictions on oil and gas operations and their environmental impact

against economic growth. Restrictions endanger our energy security

and could add new burdens to maintaining our national security.
28

They close off opportunities for new revenue to help balance the

Federal budget, and they restrict opportunities for working people

in 49 States. We must take a closer look at greater regulation.

I think as we go through all of this, there are ways that we can

find to increase greater benefits to the coastal regions who are willing to be involved in these kinds of businesses. There is a sacrifice;

and there is always the potential of a danger. But there’s also a

danger in many, many other ways in our life every day. So there’s

hope on my part that we will be able to go forward with a good

balance and look for the ways as, even Mr. John and others are

working on in the State of Louisiana and other coastal States, particularly on the Gulf of Mexico, to make this work and to make

other areas of our coastal needs work, and work very efficiently.

Thank you.

[The prepared statement of Mr. Lampson follows:]

STATEMENT OF HON. NICK LAMPSON, A REPRESENTATIVE IN CONGRESS FROM THE

STATE OF TEXAS

Mr. Chairman, the gas and petroleum reserves under ultradeep water on the continental slopes of the Gulf of Mexico have demonstrated in the past several years

to be of enormous economic and strategic significance to the United States. The rising interest is evidenced by the recent offshore natural gas and oil lease sale in the

Western Gulf of Mexico in which the Minerals Management Service received $800

million in high bids. There are currently over 150 companies with 3,800 producing

platforms active in the Gulf.

As industry moves into deeper water, new technical, safety, and environmental

challenges will need to be met by MMS in its role of supervising the exploration,

development and production of gas, oil and minerals on the Outer Continental Shelf.

Oil and gas operators are subject to the highest standard of environmental regulations. The Federal Government’s stringent environmental regulations on the oil and

gas industry are protecting the quality of our waters, coastal areas, and marine life.

Offshore drillers are required to obtain 17 major permits and follow 90 sets of Federal regulations. The Department of the Interior’s Mineral Management Service

says that since 1975, when current Federal offshore safety regulations went into effect, the industry has had an environmental record that is 99.999 percent safe.

The implementation of further restrictions and their minimal impact on the environment must be balanced against their potential harm to our economy and national security.

Today, over half the petroleum products we use come from abroad. Bans on OCS

operations mean that the United States increases its dependence on foreign oil.

That increases our dependence on foreign suppliers, giving them added powers and

added incentives to interrupt our supplies and affect our prices. Making our country

more vulnerable to foreign suppliers could add to our defense burdens and put our

national security risk.

Restrictions also stop new revenue from coming into the Treasury while we are

trying to end decades of damaging budget deficits. Offshore leasing in Federal waters has been highly productive for the Federal Treasury. Since the offshore leasing

program began, offshore oil and gas activities have generated over $117 billion in

revenues to the Federal Government. A continuing stream of revenue is needed to

keep the Federal budget balanced.

Offshore operations afford American workers and American companies in virtually

every state an essential opportunity for jobs and economic growth. A 1996 study by

the American Petroleum Institute found that companies involved in exploration and

production of oil and gas in the Gulf of Mexico spent almost $6 billion with 6,000

vendors in 49 states. While much of that $6 billion was spent in states adjacent to

the Gulf, tens of millions of dollars, and sometimes hundreds of millions, were spent

with vendors as far away as New York, Pennsylvania, Illinois, and California. Offshore drilling produces jobs, paychecks, and benefits for American families.

In summary, Mr. Chairman, we must balance further restrictions on oil and gas

operations and their environmental impact against economic growth. Restrictions

endanger our energy security and could add new burdens to maintaining our national security. They close off opportunities for new revenue to help balance the Fed-
29

eral budget. And they restrict opportunities for working people in 49 states. We

must take a closer look at greater regulation.

Mrs. CUBIN. Thank you for your testimony, spoken like a true

Republican.

Mr. LAMPSON. Give me a break.

[Laughter.]

Mrs. CUBIN. I just couldn’t help myself. I really do agree with

your testimony. You know my State of Wyoming, while it is a different kind of beauty, certainly is a spectacular place to live and

to visit, and tourism is an extremely important industry there. As

Chairman Regula brought forward, we do allow drilling in the forest, and on the BLM lands, and it can and is done in a balanced

manner. So I think we need to keep our minds open. Thank you.

Mr. LAMPSON. We even create greater opportunities for people to

enjoy the good things that are going out there because of much of

this activity that is going on. If we can find ways to use some of

those resources, ultimately, to help protect the coastal wetlands,

which is something that is dramatically important for all of the

whole United States—even though the great predominance of those

wetlands fall in the States of Louisiana and Texas, and even Florida. If we can begin to use some of those resources to address the

national assets that we have along there that we are rapidly losing,

then I think that we gain tremendous amount for our environment.

And again, it’s a matter of balance, it’s not a matter of going so

far one way or the other that we lose the opportunities that we

might create for ourselves along the way.

Mrs. CUBIN. That’s right. I don’t think anyone would argue that

there are areas where there should be no drilling. Absolutely, those

need to be reserved and maintained, but we do need to keep an

open mind about it, I think. Thank you for your testimony.

Mr. LAMPSON. You’re very welcome.

Mrs. CUBIN. I see Mr. Goss just came into the room. Now if you

would prefer, Mr. Whitfield can go first while you gather your

thoughts. But if you’d please just take a seat at the table. Or you

can go first because you’re the man.

Mr. GOSS. He’s been waiting, thank you very much.

Mrs. CUBIN. Thank you. I’d like to recognize now Mr. Whitfield,

the Environmental Advisor, the Office of the Governor of Florida.

STATEMENT OF ESTUS WHITFIELD, ENVIRONMENTAL

ADVISOR TO GOVERNOR LAWTON CHILES OF FLORIDA

Mr. WHITFIELD. Thank you, Madam Chairman, members of the

Subcommittee. I appreciate the opportunity to come and testify on

behalf of Governor Lawton Chiles. With your permission, I’ll submit a written statement and make some comments orally.

We wish to voice concerns about the negative effects of oil and

gas development, particularly off the coast of Florida. These concerns come from across the broad spectrum, citizens interest, elected officials, and the scientific community. And, I want to lend support to H.R. 180 by Congressman Goss.

Florida has three Outer Continental Shelf areas. Two of these,

South Atlantic and the Straits of Florida, that basically cover the

eastern and southern part of the State. There are no leases scheduled during the 1997–2002 program, and there are no active leases
30

in these areas. So these two areas are not under immediate threat.

However, the panhandle, which is the eastern Gulf of Mexico, the

potential remains high. There are 150 leases which cover 864,000

acres off Florida that have been leased. In fact, there’s one that has

been referred to earlier, about 25 miles off the coast of Pensacola,

by Chevron, it’s a major production proposal that is currently

under appeal by Chevron under the Coastal Zone Management Act

Consistency Program.

The environmental and economic importance of Florida’s marine

and coastal habitats is extraordinary. And these areas are pristine,

basically, off the entirety of Florida. These are the habitats of many

species of both ecological, endangered and threatened, and economic importance. For example, 90 percent of the reef fish, mostly

snapper and grouper, of the Gulf of Mexico are caught off the coastline of Florida. And there are over 50 State and national recreation

areas along this area of Florida, including the Gulf Island National

Seashore.

Over 70 percent of Florida’s population lives and works in the

coastal zone. We’re second only to California in recreational and

tourism expenditures. In 1996, the cities of Panama City, Pensacola, and Fort Walton realized a $1.5 billion taxable sales in tourism and recreation.

Oil spills and blowouts are the obvious major visible concern that

a State has with oil and gas drilling. But it’s the every day adverse

effects of chronic pollution from effluent discharges and pipeline installation and operation that we really worry about; it’s the chronic

effects.

The environmental studies and analyses are not yet complete.

The environmental impact statement on the precedent setting development and production operation of the Chevron proposal off the

coast of Pensacola is not yet complete. And yet the State of Florida

has been required by Federal law to take the position on consistency. And the Federal coastal zone consistency is the strongest

legal measure a State has in trying to affect a decision on oil and

gas, and we are required to do that prior to the completion of an

environmental impact statement. We think that H.R. 180 will help

us in that regard.

H.R. 180 will not allow oil and gas activity in Florida until all

of the studies are complete, and by the Mineral Management Services’ own admission and data and information, they’re not complete. There are lots of studies that need to be done, not to mention

the Environmental Impact Statement.

So these kinds of things need to be completed prior to a decision.

H.R. 180 will help that—help us avoid the adverse consequences.

Thank you very much.

[The prepared statement of Mr. Whitfield may be found at end

of hearing.]

Mrs. CUBIN. Thank you for your testimony.

Congressman Goss, welcome. I understand you were here a couple of times earlier. Sorry we weren’t on time. Welcome.
31

STATEMENT OF HON. PORTER J. GOSS, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF FLORIDA

Mr. GOSS. Thank you, Madam Chairman. It’s a pleasure to be

back again. And, in fact, I spent many happy years in this room

as part of my time in Congress, and it’s particularly nice to be back

among familiar faces and familiar places. So thank you for the welcome, and I’m sorry the schedule put me elsewhere. I appreciate

the accommodation to be here today, and I very much appreciate

you having this hearing.

Mr. Whitfield has made a lot of good points that I wanted to

make, so I would ask that my formal statement be accepted without objection in the record. Thank you. And I would then like to

just make a couple of brief points.

Primarily, on H.R. 180, and why H.R. 180 even exists. I think

that back in 1983, the annual moratorium that was put in place

to deal with this question that we have wrestled with in Florida

about what’s the right way to approach oil exploration off our coast

in Federal waters. The moratorium was put in to buy time; well

we bought 15 years. And it seems to me that after 15 years, we

ought to be making some progress on setting up a policy. So H.R.

180—which had predecessors in previous Congresses—was trying

to sort of jolt us away from the annual moratorium process, and

we had a lot of encouragement from the Appropriations people to

do that and come up with a better approach than the annual moratorium.

So that’s way we put H.R. 180 in, and we’ve refined it considerably over the years. There have been a lot of interested parties, of

course—State, Members of Congress, appropriate committees, people in the oil and gas industry, a lot of the environmentally concerned people, and business communities, chambers of commerce,

local government as well. And virtually everybody agrees that Florida has a special case and we need to do something special. But

if we’re going to make a decision, we’ve got to make it on the basis

of good facts—scientific facts hopefully—and we’ve got to come up

with something that’s fair for everybody because there’s a lot of

players. So we want a comprehensive plan that’s based on good information, and that’s what H.R. 180 is designed to get us.

The concerns that we have in Florida—I would just underscore

again what Mr. Whitfield has said that the devastating impact of

an oil spill on our Mangrove forest is regrettably a known fact. It’s

something we can’t tolerate; it effects our economy very badly, and

I’m certainly not one to say that just because you have oil and gas

industry, you’re going to have leakage; or you’re going to have a

spill or anything like it. But the possibilities are there—and I want

to understand what the consequences are before we go much further down the road—on the oil and gas exploration that’s already

there. And I believe everybody feels that way because we have had

a couple of incidents and it’s been very unhappy.

The second thing is from the oil and gas perspective. I think we

owe the private property owners some certainty in what they do

here. I think that the idea of doing a study based on what the exact

scientific data in the Eastern Gulf primarily is will benefit and give

certainty, and give us a way to go forward and allow business people to make sound business decisions.
32

I think finally we’ve got to recognize that in southwest Florida,

taking care of the environment is a very important requirement for

political service. It is expected of you in government there. People

recognize, as in your own State Madam Chairman, what a wonderful place it is. We just don’t have anything that goes that far above

sea level in Florida. And in fact, the highest point in my home

town is 14 feet above sea level, and that’s a very short stretch of

beach indeed. We have a wonderful place also, but it is very sensitive to the vicissitudes of Mother Nature and things like oil leaks.

We’ve worked very closely with the State of Florida, and a whole

lot of other people. We think we’ve got a good plan under H.R. 180.

We’ve brought, I think, a good joint Federal/State proposition to the

floor. We certainly have the representative agencies. We’ve got the

Governor; we’ve got National Academy of Sciences; and if we’ve got

it wrong, we certainly welcome any advice or guidance that the

Committee or anybody else would like to make. We don’t claim full

wisdom on this. We felt we’ve done it fairly and wisely.

What we have planned to do is to take advantage of the 5-year

lease period and basically extend a moratorium through that period—and do our study work at that time, and then go forward

once we have some good information. I think everybody comes out

ahead if we do it this way rather than the annual moratorium,

which is solving nothing, and causing some consternation because

it is a Catch 22 for the business interest; and it’s also an uncertainty and an annual chore for those of us in government. We

would rather do a study and know what we’re talking about rather

than putting a hold on things saying we’re not sure. As I say, 15

years is enough in that mode.

The questions that have been asked of us before by the Resources

Committee are very fair questions. I’m sure these and others are

questions we’re prepared to answer. Why do we need to do something. I think I have given you some indication that both the business community and the stewards of the State’s responsibilities of

our environment would like to be dealing with better information.

That’s why I think the study is very important. We would like to

have some certainty.

Secondly, we’ve been asked the question, what’s the effect of H.R.

180 on funding for the Land and Water Conservation Fund, a question that I know is dear to everybody’s heart. And the answer is,

I suspect if we stay in the annual moratorium mode, we aren’t getting anywhere on that. If we come up with a plan, we may have

more, we may have less, but at least we’ll be dealing on the basis

of good fact. And I firmly believe that we are going to have an oil

and gas industry, but I want to have it on a sensible terms. Rather

than being unfair to the people who have invested now in the oil

and gas industry with the moratorium, and allowing for no further

progress one way or the other on it—either buy-back or any other

of the schemes that we’ve talked about—it seems to me that we

ought to open up the whole subject because the Land and Water

Conservation Fund contribution question is a totally legitimate

question for the U.S. Congress, and I think we’re going to get it on

the base of fact through the proposals of H.R. 180, and I don’t see

any other alternatives out there to deal with the subject. But I

think we’d all like to deal with it.
33

Finally, the third question we’ve been asked is the make-up of

the task force. We are trying to provide a scientific panel that has

all the necessary interest on it. If we haven’t got it right, as I say,

we’ll look at a different way. We have the Federal agencies represented, the State represented, obviously responsibly, and what I

think is a group of good qualified scientists.

So we think we’ve come up with a pretty good solution. We’ve

had a couple of hearings on it over the years. We’ve moved it along,

and I think now is the time that we could move it even further.

I thank you very much for your attention.

[The prepared statement of Mr. Goss follows:]

Mrs. CUBIN. Thank you for your testimony.

Do any members of the panel have any questions of all of these

witnesses? OK, thank you very much.

Mr. GOSS. Thank you very much; thank the panel.

Mrs. CUBIN. Next witness we’ll call is Cynthia Quarterman, the

Director of the Minerals Management Service. And thank you for

being with us as well. We do appreciate it.

Ms. QUARTERMAN. Good afternoon. Thank you. Madam

Chairwoman——

Mrs. CUBIN. It’s not you; and we’re not insane—with everyone

leaving.

Ms. QUARTERMAN. I’m sorry. I’ll get some water then.

Ms. CHRISTIAN-GREEN. Madam Chair, Madam Chair. While we’re

waiting, may I ask unanimous consent to enter my opening statement to the record as well?

Mrs. CUBIN. Without objection, so ordered.

[The prepared statement of Ms. Christian-Green follows:]

Mrs. CUBIN. We’re not timing you, Ms. Quarterman, so you can

just begin whenever you want.

STATEMENT OF CYNTHIA L. QUARTERMAN, DIRECTOR, MINERALS MANAGEMENT SERVICE, DEPARTMENT OF THE INTERIOR

Ms. QUARTERMAN. Madam Chairwoman, and members of the

Subcommittee, I appreciate the opportunity to appear before you

today to discuss the issue of OCS moratoria. As you may recall, I

appeared before your Subcommittee almost two years ago and presented testimony on the same issue. My testimony at that time described in some detail the history of Federal offshore oil and gas

activity, and the associated conflicts and controversies that lead to

moratoria. I also described the Department’s approach to managing

the OCS program and resolving some of the problems that we inherited.

Today, I’d like to discuss the Department’s approach to moving

the OCS program from conflict toward consensus—including the

role of OCS moratoria in that approach—and to update you on the

progress of some of our efforts.

As the Subcommittee is well aware, the OCS program provides

significant energy and economic benefits to the Nation. These benefits go hand-in-hand with an excellent offshore safety and environmental record. And MMS has made safety and environmental protection its No. 1 priority for the offshore program. This emphasis
34

will help ensure that the benefits the OCS program provides will

continue.

These benefits notwithstanding because of the way the OCS program was managed in the past, it led to conflict, controversy, and

ultimately moratoria. I will not detail the history of moratoria. Instead, I would commend to you two reports that our OCS Policy

and Scientific Committees put together to document this history.

One is Moving Beyond Conflict to Consensus, which they put together in 1993, and the other is the Environmental Studies in OCS

Areas Under Moratoria, which was put together in 1997.

The first report has played a significant role in the Department’s

approach to managing the OCS; and the second report, which is

more recent—I’d like to submit for the record today, since it contains information pertinent to our discussion——

Mrs. CUBIN. Without objection, so ordered.

[The information referred to may be found at end of hearing.]

Ms. QUARTERMAN. When this administration assumed management of the OCS program in 1993, there were substantial problems

facing it. For example, there were congressional leasing moratoria

on the Atlantic and Pacific coasts, Eastern Gulf of Mexico, and

North Aleutian Basin off Alaska. There were also congressional

drilling bans on previously issued leases in the southeastern part

of Eastern Gulf of Mexico, and the North Aleutian Basin, and offshore North Carolina. And there was litigation pending regarding

those leases. There were also leases issued in areas currently

under leasing moratoria off the Florida Panhandle, and off California that demanded our attention.

Finally, there were lease sales scheduled around the coast that

were generating controversy. The Department knew that if the

OCS program was to remain viable, it would have to rethink its approach to managing the program.

Therefore, we undertook several steps. First, we undertook the

challenge of resolving existing controversies as a way of setting the

stage for consensus building. One of the tools that we employed in

that approach was to endorse the existing annual congressional

moratoria as a way of ensuring our stakeholders that the status

quo would be maintained while discussions ensued. We believe

strongly that it was important to ensure that no new leasing occurred in areas where we were attempting to resolve intense disputes concerning already existing leases, as well as some controversial areas where leasing was contemplated.

The annual congressional moratoria helped us to do several

things, including settling litigation concerning leases in the North

Aleutian Basin and the Eastern Gulf of Mexico, which resulted in

their relinquishment; settling litigation on the majority of leases

offshore North Carolina, which resulted in their relinquishment,

while still preserving the promising ‘‘Manteo Unit’’ for possible exploration; canceling proposed lease sales in the Atlantic and Eastern Gulf that were precluded by moratoria, thereby allowing us

and our stakeholders to concentrate on resolving issues related to

potential exploration and development of the remaining existing

leases; and focusing efforts off California on discussing the possible

development of existing leases without the distractions that proposals for new leasing would engender.
35

In short, annual moratoria and the actions we were able to take

with them in place, helped us to begin the difficult process of building trust and making strides to put the OCS program on firm footing. We also decided to cancel three lease sales off Alaska, since

there was low industry interest and some concerns were expressed

concerning other resources there. However, the sales were canceled

with the knowledge that this administration would soon have the

opportunity to formulate its own 5-year program, and could consult

further with stakeholders to reach consensus on future sales proposals.

Our second challenge was to develop an OCS 5-Year Oil and Gas

Program for 1997 through 2002. They was both consensus based

and met the requirements of the OCS Lands Act. During the 2-year

process of developing that program, we consulted with and listened

closely to our stakeholders. As a result of that process, we decided

on the following.

In the Pacific Region, we ultimately decided not to schedule an

OCS sale. After extensive discussions, we believed that such a sale

was premature. Especially in light of the challenges posed by the

existing, but undeveloped leases. I believe that this decision was

the correct one; it has enabled us to work with our stakeholders on

important development issues. As a result, production from existing developed leases has increased significantly to about 150,000

barrels a day.

In the Atlantic Region, we decided not to propose a lease sale for

the area, given the ongoing litigation and controversy. Instead, we

are using this time to talk to and work with constituents. For example, we have been working closely with the State of North Carolina concerning possible development of the ‘‘Manteo Unit’’ by

Chevron. We recently held a workshop on environmental issues associated with possible exploration. There is still much work to be

done but discussions to date has been fruitful.

In the Alaska Region we established the Alaska Regional Stakeholders Task Force to facilitate stakeholder participation in developing the current OCS 5-year program. Based on their recommendations, the new program proposes consideration of leasing

in some of the areas that had previously been deferred, as well as

Cook Inlet and the Beaufort Sea.

We’re also continuing to consult closely with the State, native organizations and others concerning several Beaufort Sea development projects. Those projects, and the plan lease sales, point to a

vibrant future for the program in that area.

In the Gulf of Mexico Region, we focused our efforts on the Eastern Gulf of Mexico, an area that had been under leasing moratoria

for 8 years. Because of our efforts, we were able to identify a part

of the planning area that lies more than 100 miles offshore Florida,

and more than 15 miles offshore Alabama for possible lease in

2001. This solution for the Eastern Gulf of Mexico perhaps best exemplifies our approach to the OCS program. The area to be considered for possible lease is an area that was carved out based on consensus and science, and promises to make natural gas resources

available to the Nation. Thus, the current OCS 5-Year program is

a program that helps return predictability back to the OCS program, while ensuring that stakeholder concerns are addressed.
36

It’s also important to know that Congress has agreed with this

approach. After the secretary approves the current 5-year program,

the administration sought, and Congress accepted, annual moratoria provisions that reflected the consensus achieved. Therefore,

the current program and annual moratoria provisions included in

the Department’s fiscal year 1998 Appropriations Act are now in

harmony with our fiscal year 1999. The Department has again proposed to carry forward that language from fiscal year 1998. We believe this rollover will be useful to us as we continue to work with

our stakeholders and attempt to resolve issues of concern.

As we look to the future of the OCS program, it is possible that

advancing technology, coupled with our acquisition of sound scientific information, our continued diligent administration of effective environmental and safety practices, and our willingness to

work with our stakeholders can go a long way toward challenging

existing perceptions and attitudes; and help us forge more widespread consensus concerning the OCS program.

However, we must have all of those ingredients if we are to

progress further. If we do not, we are likely to repeat the mistakes

of the past.

This concludes my opening remarks. I’d be happy to answer any

questions the Subcommittee might have.

[The prepared statement of Ms. Quarterman may be found at

end of hearing.]

Mrs. CUBIN. Thank you for your testimony.

Are there any questions on the Committee? If not, this is the

easiest day you’ve ever had here, isn’t it?

[Laughter.]

Ms. QUARTERMAN. I appreciate that.

Mrs. CUBIN. And we’ll see you back here in one week. Thank you.

I saw Congressman Taylor come in, and I understand he’d like

to testify for the Committee.

STATEMENT OF HON. GENE TAYLOR, A REPRESENTATIVE

FROM THE STATE OF MISSISSIPPI

Ms. TAYLOR. Thank you.

Mrs. CUBIN. Welcome, Congressman Taylor.

Mr. TAYLOR. Thank you very much. As a former member of the

House Merchant Marine Committee, it’s great to be back in here.

Chairwoman, I’m going to submit some remarks for the record and

try to be as brief as possible.

I was a member of this Committee when we did two significant

things. No. 1, and I think of the most importance as far as this is

concerned, was the passage of the Oil Pollution Act of 1990. The

Oil Pollution Act of 1990 raised the cost of making a mistake for

those people who transport oil and explore for oil so high, that I

think they have seen to it that they don’t make a mistake. And

therefore, it was a good thing. It called for double hulls on vessels

that transport oil and chemicals. It has already been implemented

as far as barges; it will be implemented as far as offshore ships by

the year 2015. I think it was an excellent piece of legislation and

it has had excellent results.

I was also part of this Committee when we voted, I believe,

unanimously to allow the Floridians to ban drilling within 50 miles
37

of their shore. I wish I had that vote back, because I know I cast—

I made a mistake that day. I think the States ought to have absolute sovereignty in what they do within their State territory waters, but in Federal waters, I think Federal law should apply.

I happen to believe that offshore exploration can take place and

protect the environment. I think we have seen to it with the Oil

Pollution Act of 1990 that the penalty for making a mistake is so

high that they just won’t let that happen, and haven’t let that happen.

I would encourage those of you who are concerned about this

issue, not only from an environmental standpoint, but from a national security perspective, to read an excellent book by Stephen

Ambrose, the author of Undaunted Courage and Eisenhower. But

before those two books became famous, he wrote book called ‘‘A

Rise to Globalism’’ which he compares America in 1988 to America

in 1939. In 1939, we produced all of our own oil; we produced all

of our own automobiles, all of our own electronics. We had a minuscule-standing army, and yet when we were called to the task in

World War II, the fact that we had this incredible industrial base

enabled us to rise to the occasion to defeat Nazi Germany and Imperial Japan. Compare that to 1988 when we had the undisputed

greatest military force on earth, but half of the fuel that military

uses comes from some place else.

Electronics that make our electric gadgetry in smart bombs in

our planes work so well come from some place else. It creates in

turn an incredible military vulnerability for our Nation.

Any step that we take to deprive this Nation of the ability to

have energy independence is a mistake. We have seen to it that the

oil companies, and those people who explore for oil are not going

to pollute. It is ludicrous to take the additional step of depriving

them of the opportunity of even searching for oil. Therefore, I

would rise in opposition to any postponement on the further leasing

of the offshore continental shelf. I think it would be counterproductive militarily; counterproductive economically; and I think

it would be counterproductive ecologically because I can tell you as

someone from a Gulf Coast State, the most sought after fishing

spots off the Gulf Coast States are indeed the oil platforms and the

associated structures that are placed out there by the oil companies. Additionally, several of the companies have an excellent program that when a rig outlives its useful life, it has been donated

to create habitat for fish in the Gulf of Mexico.

So for a number of reasons, I think it would be a mistake for our

country to put a moratorium on the leasing of the Outer Continental Shelf.

[The prepared statement of Mr. Taylor follows:]

STATEMENT OF HON. GENE TAYLOR, A REPRESENTATIVE IN CONGRESS FROM THE

STATE OF MISSISSIPPI

Mr. Chairman, thank you for allowing me the opportunity to testify before your

Subcommittee today regarding the issue of oil and gas operations under the waters

of the Outer Continental Shelf (OCS). Our nation has a growing need for oil and

natural gas. That is why I must oppose restrictions on the development of domestic

resources of the OCS. Restrictions on OCS oil and gas operations threaten the jobs

of many of my constituents in Mississippi jobs and the jobs of working people across

our nation. Equally important, OCS restrictions endanger the nation’s energy security.
38

When jobs are created offshore, other jobs are created onshore. The OCS Policy

Committee, part of the OCS Advisory Board that was established some years ago

by the Department of Interior to advise the secretary, estimated that in addition

to the jobs created offshore, ‘‘OCS activities indirectly provide about 2.5 jobs for

every person directly employed by industry.’’ Those jobs are created in Mississippi

and across our nation. In 1996, exploration and production companies active in the

Gulf of Mexico spent almost $6 billion with vendors in 49 of our 50 states. Over

$33 million in sales were generated for Mississippi alone. Mr. Chairman, I believe

Congress should enact legislation that helps the private sector create jobs. Restrictions on the exploration and production of oil and natural gas on the OCS destroys

jobs. Offshore operations on the OCS means paychecks and benefits for people from

Mississippi to California.

Mr. Chairman, restrictions on OCS operations also endanger our energy security.

As a member of the House National Security Committee, I realize that energy security is a critical component of national security. I am concerned that our nation imports over half of the petroleum products we consume. Restrictions on OCS operations turn us away from domestic energy sources in favor of foreign sources. That

increases our dependence on and vulnerability to those suppliers. It gives them powers and the opportunity to interrupt our supplies and affect our economy.

OCS leasing is an important source of revenue for our nation. Annually, the Minerals Management Service (MMS) collects in excess of $4 billion in OCS lease payments from the offshore industry. According to the MMS, OCS leasing is the greatest source of non-tax or tariff revenue for our nation. In these tight fiscal times, the

importance of the OCS generated revenue to our nation’s treasury cannot be overstated.

Finally, Mr. Chairman, because Mississippi is on the Gulf Coast, I want to say

a word about protecting the environment. I know that exploration and production

activities offshore, as onshore, are managed with the highest regard for the air, the

land and the water. Offshore operations are one of the most tightly regulated environmental activities in our nation. There are laws, rules and regulations to protect

the waters, to protect marine life and to protect our shores. The Minerals Management Service says that since 1975, the offshore industry has an environmental

record that is 99.999 percent safe. That is a record that has earned the right to new

opportunities, not more restrictions.

Those of us who live in the Gulf states want to protect the quality of our water

and marine resources. As a Member of Congress who voted for the Oil Pollution Act

of 1990 and the Air Act Amendments of 1990, I am proud of my record in support

of strong environmental laws. The offshore industry has made environmental protection a fundamental part of its business plan. Even during Hurricane Andrew, the

offshore industry’s safety devices worked, shutting down production. Major spills

were avoided, contrary to predictions of catastrophic spills from Gulf hurricanes.

The offshore industry also is a key participant in the Rigs to Reefs Program. This

program converts non-producing oil and gas platforms to reefs which provide critical

habitat for finfish and other marine organisms. Since 1991, 112 rigs in Alabama,

Florida, Louisiana and Texas have been converted to reefs as part of this program.

Off the coast of Mississippi, there are currently seven OCS structures. These rigs,

although in service, attract plenty of fish and are accessed by both recreational and

charter boat fisherman.

In summary, Mr. Chairman, restrictions on the OCS are not needed. They will

not significantly improve the environment. Instead, they restrict government revenues and economic opportunity. Additionally, it would increase America’s dependence upon foreign oil and gas and endanger our nation’s energy security.

Mrs. CUBIN. We certainly appreciate your testimony, and I know

the people that are left in the audience appreciate that you gave

the last word.

Are there any questions from the panel? Thank you very much

for being here; we appreciate it.

[The prepared statement of Mr. Riggs follows:]

STATEMENT OF HON. FRANK D. RIGGS, A REPRESENTATIVE IN CONGRESS FROM THE

STATE OF CALIFORNIA

Madam Chair, members of the Subcommittee, thank you for the opportunity to

testify today.
39

I appear before you to speak on behalf of the constituents of my congressional district and the many other Californians who are concerned about the expansion of oil

and gas development on the Outer Continental Shelf (OCS).

Since 1982, Congress has recognized the importance of our shores and beaches,

and placed a nationwide ban on oil and gas drilling on the OCS. Additionally, in

1990, President Bush issued an Executive Statement calling for a moratorium on

oil and gas leases off the coasts of California and Florida until the year 2000.

OCS moratorium language has been added annually to the Interior Appropriations Act. However, a permanent moratorium on OCS leasing activities has never

been enacted. In fact, moratorium legislation has never gotten past the hearing

stage. Without a permanent, comprehensive moratorium, the coastal communities

from California to Washington, and from Florida to Maine, that rely upon the fishing and tourism industries will never be safe from an attempt to lift the ban.

In order to ensure that these resources are protected, I have introduced two bills,

H.R. 3073 and H.R. 3074, that will effectively and permanently resolve this issue.

H.R. 3073 will codify President Bush’s 1990 Executive Statement, permanently

protecting the two continental states with the longest coastlines—California and

Florida. As a complement to H.R. 3073, H.R. 3074 would institute a nationwide ban

on future oil and gas leasing programs on the entire outer continental shelf, permanently authorizing the current moratorium found in the Appropriations Act.

As the representative of 300 miles of the North Coast of California, I am keenly

aware of the importance of an OCS moratorium to coastal communities. The fishing

and tourism industries in my district are dependent upon a healthy and vibrant seashore. With unemployment along much of the north coast in the double digits, the

OCS moratorium helps to ensure the protection of a natural resource that provides

a steady stream of jobs.

California’s tourism and recreation industry is the state’s largest employer. Coastal tourism generates over $27 billion annually and accounts for thousands of jobs.

Additionally, the fishing industry is the primary employer for many small communities up and down the state. The commercial value of the fisheries of Alaska,

Washington, Oregon and California is too great to put at risk for the small amount

of estimated recoverable oil in the protected areas.

The effects of oil spills and the crippling damage to the delicate balance of wildlife

are of great concern to all Californians and me. Furthermore, the ecosystem degradation caused by additional oil and gas development could impact protected marine areas in both state and Federal waters, including sanctuaries, seashores, reserves, preserves, refuges, underwater parks, and areas of special biological significance.

The current leasing restrictions have been in place without any perceptible impact

on national energy security. Existing leasing restrictions leave more than threequarters of the nation’s undiscovered, economically recoverable offshore reserves

open to exploration and development. These restrictions affect less than one-half of

one percent of total world oil reserves. In fact, proven reserves in the California

moratorium areas would only last the nation about 41 days at current rates of consumption.

I believe it is time to permanently institute Federal policy protecting environmentally sensitive coastal areas from the impacts of increased offshore oil development. My bills are a bipartisan effort to preserve one of the most economically viable and pristine natural resources the United States has to offer.

Thank you.

Mrs. CUBIN. The Subcommittee on Minerals and Energy—leave

the record open for 2 weeks for any additional comments, and we

are now adjourned.

[Whereupon, at 3:41 p.m., the Subcommittee adjourned subject to

the call of the Chair.]

[Additional material submitted for the record follows.]
40

STATEMENT OF WILLIAM HOLMAN, ASSISTANT SECRETARY FOR ENVIRONMENTAL PRO- TECTION, NORTH CAROLINA DEPARTMENT OF ENVIRONMENT AND NATURAL RE- SOURCES

Good Morning Chairman Cubin and Members of the Subcommittee. I am Bill Holman, Assistant Secretary for Environmental Protection of the North Carolina Department of Environment and Natural Resources.

On behalf of the State of North Carolina I want to thank you and Congressman

Walter Jones for the opportunity to participate in this hearing and to comment on

some of the Outer Continental Shelf issues which you are considering here today.

I am here to deliver two basic messages: First, it is critically important that states

have a strong and clearly defined role in the management and stewardship of our

offshore resources. Second, it is both essential and possible for the energy and mineral resources of the OCS be managed in a coordinated and progressive manner that

maximizes benefits to both the nation’s economy and the marine and coastal environment.

Mr. Jones asked that the State of North Carolina participate here today to convey

our views on his legislation, the Outer Banks Protection Act, which would require

the concurrence of the Governor of North Carolina as a condition for exploratory

drilling off the Outer Banks. We appreciate the recognition that this bill embodies

of the responsibility that states must have for safeguarding their marine and coastal

environment. We are in fact gratified that by its very title as well as content, the

bill makes a strong statement that the Governor’s role is central in making decisions aimed at protecting the many resources represented by our Outer Banks.

As members of the Subcommittee know, the current process for state review of

offshore energy exploration proposals is based on the states’ coastal protection planning responsibilities under the Coastal Zone Management Act. Through a consistency review and determination by the state, the exploration plans are examined by

the state for consistency with its approved coastal zone management plan. If the

state finds the plan inconsistent, no permits can be issued unless the Secretary of

Commerce overrides the state’s determination that the project is inconsistent with

its approved coastal zone plan.

We appreciate Mr. Jones’ concern that this may not provide a sufficiently strong

voice for states in reviewing drilling proposals. We are currently awaiting detailed

proposals regarding proposed exploratory drilling on the OCS off the Outer Banks,

in an area known as ‘‘The Point’’ for its geologic structure.

The Committee may be aware that The Point is also currently under consideration for designation as a ‘‘Habitat Area of Particular Concern’’ under the Essential

Fish Habitat provisions of the Magnuson Stevens Fisheries Management Act. This

area has become recognized as a unique mixing zone. Larvae of some 300 fish that

are native to coastal waters, the Labrador Current and the Gulf Stream are found

at The Point—all in one place.

I am told that this is far higher than might be found in a typical OCS area, and

it again reinforces the importance of assuring that both economic and environmental

values are fully evaluated in assessing any drilling proposal. This is new information that must be considered by both the state and the nation in making appropriate

decisions on whether and how to proceed with the pursuit of energy resources in

this part of the OCS.

It is part of the duty and responsibility of the State of North Carolina to assure

that if such drilling is to occur that it will be done in a manner that is sensitive

to and protective of this unique marine environment and our coast. We do not yet

have firm word from MMS that they will in fact grant us the consistency review

that we strongly feel is our right.

The reason is that in 1982, when much less was known about the environmental

characteristics and significance of this area, the state made a determination that

a previous, different exploration proposal was consistent with our coastal management plan. But that exploration proposal was never carried out. Unless MMS finds

that the potential environmental impact of the new exploration plan is significantly

greater than the prior proposal, and that new permits are required, then under

MMS rules the state will not be granted a new consistency review.

The legislation proposed by Mr. Jones assures a state voice in a project proposal

that is 16 years old, in the context of substantial new uses of the resources in the

area by the state and its citizens.

We are working cooperatively with MMS, and I want to say to you and to them

here today that we appreciate the collegial approach that they have taken up to this

point in our discussions. However, we do feel that a firm commitment is needed to

the concept of a strong state role in this decision process. We see Mr. Jones’ bill

as a constructive part of this ongoing dialogue.
41

Let me conclude by stating for the record that the State of North Carolina has

in no way reached any predetermined decision on the proposed exploratory well off

the Outer Banks. We are eager to have as much information as possible to reach

a conclusion that will reflect and balance the many issues that are presented by the

preliminary proposal we have seen with regard to such drilling.

We need a full proposal. We need as much information as can be gained on the

particulars of the plan and the emerging importance of The Point as fisheries habitat. We need to carefully and vigilantly assess potential impacts on our famous

Outer Banks and our coastal communities. We also need a continued recognition

and commitment to the role of the state in this decision process.

Thank you again for having us here today. I will be pleased to respond to any

questions you may have.

STATEMENT OF ESTUS WHITFIELD, ENVIRONMENTAL ADVISOR TO GOVERNOR LAWTON

CHILES OF FLORIDA

Thank you for the opportunity to present testimony on behalf of Governor Chiles

and the citizens of the State of Florida regarding outer continental shelf (OCS) oil

and gas leasing and development. Our concerns about negative effects of offshore

oil and gas development cannot be overstated. These concerns are expressed by a

range of people—from our elected officials to scientists to citizens enjoying the white

sands and clean waters of Florida’s beaches. While there is no immediate threat of

oil and gas activities in the South Atlantic and Straits of Florida Planning Areas

off the east, south and southwest Florida coasts, the potential for damage to our

coastal and marine resources from these activities in the Eastern Gulf of Mexico off

the northwest Florida Panhandle remains high. Should future activities be proposed

for the other areas off of Florida, the concerns addressed below would also apply.

With the support of Governor Chiles and the Florida Cabinet, our Congressional

Delegation has been successful over the last several years in securing protection by

implementing moratoria on additional leasing off the west Florida coast. The Department of the Interior, in its Outer Continental Shelf Oil and Gas Leasing Program: 1997-2002, continued the ‘‘leasing moratorium’’ by not proposing any new

leasing within 100 miles of Florida in the Gulf of Mexico, or in the South Atlantic

and Straits of Florida. However, approximately 150 active leases or 864,000 acres

(1,350 square miles) remain in the eastern Gulf of Mexico and development and production has recently been proposed just 25 miles off the coast.

Florida’s west coast provides an array of marine and coastal habitats from the offshore fishing grounds and bountiful estuaries, to the sandy white beaches and barrier islands, including the Gulf Islands National Seashore. The seagrasses, marshes

and other coastal areas provide habitat for a variety of wildlife, including many

threatened and endangered species. Offshore marine habitats are critical to many

life stages of marine flora and fauna. Nearly 90 percent of the reef fish resources

(primarily groupers and snappers) of the Gulf of Mexico are caught on the West

Florida Shelf and contribute directly to Florida’s economy. The environmental and

economic importance of the area is reflected in the vast number of state and Federal

holdings in designated environmental preservation, conservation, and recreation

areas including over 50 such areas along a coastal area of about 175 miles in the

Florida panhandle.

The economy of Florida’s northwest coast, like the remainder of the state, is directly tied to our warm climate, clean waters and unspoiled natural resources.

Recreation, tourism, retirement and commercial and recreational fishing are major

economic activities of the area bringing in billions of dollars annually to state and

local economies. Florida ranks second only to California in tourism expenditures.

Visitors rank parks, preserves and natural areas as the second major attraction

bringing them to Florida. The five western counties of the Florida panhandle

brought in over $8 million from tourist development tax (bed tax) in 1996. Three

cities in this area, Panama City, Pensacola and Fort Walton Beach, recorded over

$1.5 billion in tourism and recreation taxable sales during the same period.

With a majority of the state’s population living in and deriving income from jobs

related to our rich and diverse marine and coastal resources, we remain very concerned about the vulnerability of our state to the potential impacts and changes that

offshore oil and gas activities can bring. These coastal and marine resources are the

foundation of Florida’s economy and quality of life. In a healthy condition, these

self-sustaining resources will continue to provide benefits to people who live in and

visit Florida. Otherwise, the ecology and economy of the state is doomed.

With the potential for damage to Florida’s resources and economy, we remain concerned about having oil and gas developed off our coasts. Oil spills remain the most
42

visible of these concerns, however, there are other detrimental environmental effects

that these activities could have on the shallow, clean water marine communities

found on the Florida outer continental shelf. Physical disturbances caused by anchoring, pipeline placement and rig construction, the resuspension of bottom sediments, and the chronic pollution from discharges of drilling effluents, production

effluents, and possible accidental releases of oil or other toxic material can be very

destructive, especially when considering long-term and cumulative effects. Notwithstanding the potential impacts of a catastrophic event, many scientists believe that

the marine communities off west Florida are not well adapted to withstand the expected adverse impacts associated with large scale development and production.

Environmental studies and analyses, including comprehensive studies on the longterm and cumulative effects of these activities, are not yet complete. The Minerals

Management Service’s Northeastern Gulf of Mexico Physical Oceanographic Program and the Coastal and Marine Ecosystem Program are still ongoing. Some of the

studies planned for these two programs are not likely to be completed before 2002.

For example, the study entitled ‘‘Ecosystem Monitoring, Northeastern Gulf of Mexico OCS’’ is not scheduled to begin until fiscal year 1999 with completion in 2002.

Objectives of this study include providing descriptive and process data which will

be used to estimate the level of potential impacts of oil and gas activities. Results

will serve as a basis for leasing decisions on the Florida panhandle OCS and as

noted in the MMS studies plan, information from this study will be useful as soon

as available to review planned and ongoing activities. In addition, the MMS is currently planning a joint ecological and physical oceanographic workshop for August

1998, which will help in identifying and designing additional environmental studies

necessary for (1) contingency planning, (2) risk assessment, (3) the preparation of

NEPA documents, and (4) review of development and production activities. Without

completion of these studies, Florida has no assurances that OCS oil and gas activities can take place without causing irreparable harm to our ecological and economic

resources. It is critical for Florida, as well as other coastal states, to have adequate

information for and a pivotal role in decisions regarding oil and gas activities off

their coasts.

Congressman Goss has introduced H.R. 180 to prohibit any additional leasing, exploration or development until adequate environmental studies and analyses can be

identified and completed. While the Department of the Interior, Minerals Management Service has been working to rectify deficiencies in the Environmental Studies

Program identified by the National Academy of Sciences and scientists from state

and Federal agencies and academia, much remains to be done. Primarily because

the environmental studies program funding remains low, progress has not been

rapid. Therefore, it is premature to consider additional oil and gas activities, especially precedent setting development and production in previously undeveloped

areas such as offshore the Florida panhandle, until adequate environmental studies

can be completed. This legislation would allow the MMS to complete studies necessary to better understand the environmental risks associated with OCS decisions.

In addition, a delay in proceeding with any oil and gas activity off Florida would

allow time to address an issue critical not only to Florida, but to the Nation as well.

Currently a state’s review of development and production plans pursuant to the

Federal Coastal Zone Management Act (CZMA) must be completed prior to the reviewing state having all information necessary to adequately assess environmental

impacts and determine consistency of the activity with the state’s coastal management program. Specifically, a state’s coastal zone management consistency review

precedes review of environmental impact statements (EIS) which are developed to

analyze primary, secondary and cumulative effects of proposed OCS development

and production projects. States are not allowed to delay, beyond the predetermined

timetable, a coastal zone management consistency decision. The two review processes are backwards.

Further, states are not allowed to review, for coastal zone management consistency, other significant activities associated with OCS development and production

such as detailed information included in pipeline installation applications. This type

of information is vital for states to adequately assess potential impacts. Delaying

final consistency decisions until all analyses in an EIS and associated information

are completed and reviewed would enable states to make more informed decisions.

Florida continues to work with our Congressional delegation on legislation which

would allow states the same opportunity for a full review of all relevant information,

as the Minerals Management Service and other Federal agencies are allowed under

current Federal regulations.

Chairman Cubin, thank you for the opportunity to provide comments during this

oversight hearing on the outer continental shelf (OCS) oil and gas leasing and development issues.
43

STATEMENT OF HON. PORTER J. GOSS, A REPRESENTATIVE IN CONGRESS FROM THE

STATE OF FLORIDA

Madame Chairman, I appreciate the opportunity to appear before you this afternoon. I commend the panel for taking up the issue of outer continental shelf oil and

gas exploration moratoria—it is a vital one for Florida and many other coastal

states. I would like to discuss this issue from Florida’s perspective, and make the

case for H.R. 180, a bill that I have again introduced as a proposed solution to the

existing Florida OCS stalemate. I am particularly pleased that the Committee has

invited Mr. Estus Whitfield, Environmental Advisor to the Governor of Florida, to

testify about this proposal. I look forward to his testimony.

As you know, each year Congress enacts restrictions on oil and gas activities in

the eastern Gulf of Mexico as part of the Interior Appropriations bill. Florida’s OCS

moratorium was instituted in 1983, by our colleague, Rep. Bill Young, and it accomplished its goal as a short-term fix to protect the Florida coastline from a possible

expansion of oil and gas exploration. I would note that this moratorium has enjoyed

unanimous support from Florida’s Congressional delegation. However, it was never

intended to be a long term solution and I believe it fails to satisfy the interests of

both parties to this debate: Florida is only protected against new oil and gas leases,

while the oil industry is left holding several existing leases but without the ability

to make any long-term exploration and development plans in the Eastern Gulf. I

think that, fifteen years later, everyone realizes we need to find a better way to do

business.

Floridians oppose offshore oil drilling because of the threat it presents to the

state’s greatest natural and economic resources: our coastal environment. Florida’s

beaches, fisheries, and wildlife draw millions of tourists each year from all over the

globe, supporting our state’s largest industry. Tourism supports, directly or indirectly, millions of jobs all across Florida, and the industry generates billions of dollars every year. A 1990 study by Lee County estimates that a major blowout/oil spill

could cost the economy of Lee County alone some $590 million in lost revenue. This

translates into a loss of 12,300 jobs. Also, the on-shore facilities required to process

the oil would likely change the character of the Florida coast, possibly contribute

to the pollution of the environment, and pose serious problems for Florida’s tourism

and real estate industries.

Concern about this issue is not limited to our business community—there are several grass-roots groups who are dedicated to preserving and protecting our coastline.

There is a petition and letter writing campaign in my district run by Marge and

David Ward of the Citizens Association of Bonita Beach. The Wards’ tireless efforts

have yielded over 28,479 signatures opposed to drilling off Florida’s coast, and they

have generated letters of support from local chambers of commerce, government,

and elected officials.

The Florida coastline boasts some of the richest estuarine areas in the world.

These bracken waters, with their mangrove forests and seagrass beds provide an irreplaceable link in the life of many species, both marine and terrestrial. Florida’s

commercial fishing industry relies on these estuaries because they support the nurseries for most commercially harvested fish. Perhaps the most environmentally delicate regions in the Gulf, estuaries could be damaged beyond repair by a relatively

small oil spill.

H.R. 180 was developed after extensive consultation with the state of Florida and

enjoys the Governor’s support, as well as a wide range of support among both the

public and private sector in the state. I am particularly pleased to report that every

member of the Florida Congressional delegation has cosponsored H.R. 180.

This legislation was introduced to provide for a ‘‘time out’’ period during which

no new leasing or drilling could take place in Federal waters off Florida’s coast.

During this period, a joint Federal-state task force would review the available scientific and environmental studies and (if necessary) recommend further ones. Once

the joint task force determines that an adequate base of data exists, it would recommend what areas (if any) off Florida could safely sustain oil and gas exploration

and production.

The benefits of this approach include:

• the opportunity to develop a more precise policy than afforded under the current moratorium, which must be renewed by Congress each year. This should

provide the oil industry with greater certainty and an ability to plan in the context of a long-term strategy; and

• a central role for the State of Florida in a decision with great impact on our

state—even though that decision would apply to waters under the jurisdiction

of the Federal Government; and

• a decision that accurately reflects scientific rather than political pressures.
44

I recognize that some concerns have been raised about this proposal and I would

like to take a moment to discuss some of those issues. First, the question I hear

most often is why do we need to pass this legislation, when it is very likely Congress

will continue to enact the annual moratorium, as it has for fifteen years. As I mentioned earlier, I believe the moratorium provides a short-term way to deal with this

issue, but, in the long-run, it shortchanges both the State of Florida and the oil industry. I believe both parties would benefit from a scientifically crafted long-term

approach to management of the Eastern Gulf. In addition, from a process perspective, I would prefer not to address substantive legislative issues through ‘‘riders’’ to

an appropriations bill.

In addition, I have also heard concerns about the effect of H.R. 180 on revenues

for the Land and Water Conservation Fund (LWCF), the principal source of Federal

funds for land acquisitions by the National Park Service, the Bureau of Land Management, the U.S. Fish and Wildlife Service and the U.S. Forest Service. The LWCF

is funded by revenues from Federal outdoor recreation user fees, the Federal motorboat fuel tax, property sales and from oil and gases leases on the Outer Continental

Shelf. As the Subcommittee is well aware, OCS revenues have accounted for more

than 90 percent of the deposits in the LWCF, and, in some years, almost all deposits

to this fund. I agree that the effect of H.R. 180 on revenues for LWCF is a critically

important question, particularly given Federal land acquisition in Florida. Since the

current moratorium prohibits any new leases, it effectively forecloses the possibility

of future contributions to the fund from OCS activities in the Eastern Gulf of Mexico. If we continue our current approach—adopting the moratorium each year—that

won’t change. The joint-task force created by H.R. 180 would be charged with making a scientific decision on OCS activities in the Eastern Gulf and their recommendations would effectively address the LWCF issue.

Finally, I have heard concerns about the make-up of the joint task force provided

for in H.R. 180. As drafted, the bill would create a task force consisting of one representative each from the Environmental Protection Agency, the Minerals Management Service, the National Oceanic and Atmospheric Administration, and the U.S.

Fish and Wildlife Service; four representatives from the State of Florida appointed

by the Governor; and three members appointed by the Secretary of Commerce based

on nominations from the National Academy of Sciences who are professional scientists in the field of physical oceanography, marine ecology, and social science.

Clearly, the intent is to provide a scientific panel while allowing input from the

State of Florida. If the Subcommittee wants to reconsider this makeup, I would be

happy to discuss that issue further.

Finally, let me thank the Subcommittee for its indulgence in holding this hearing.

I look forward to working with you on moving this proposal forward.

Thank you again.

STATEMENT OF CYNTHIA L. QUARTERMAN, DIRECTOR, MINERALS MANAGEMENT

SERVICE, DEPARTMENT OF THE INTERIOR

Madam Chairwoman and Members of the Subcommittee, thank you for the opportunity to testify on the Department of the Interior’s Outer Continental Shelf (OCS)

oil and gas program and the issue of moratoria. As you may recall, I appeared before your Subcommittee almost two years ago and presented testimony on the same

issue. My testimony at that time briefly cited the economic and environmental benefits of the OCS program; described in some detail the history of Federal offshore oil

and gas activity and the associated conflicts and controversies that led to moratoria;

and outlined the Department’s approach to managing the program and resolving

some of the problems we inherited. I also related to the Subcommittee a number

of difficult issues we were confronting and gave several examples that demonstrated

varying degrees of success for our efforts.

Today, I would like to take the opportunity to describe further the Department’s

approach to moving the OCS program from conflict to consensus—including the role

of OCS moratoria in that approach—and to update you on the progress of some of

our efforts. However, as a preface to those remarks, I would first like to briefly note

the significant benefits associated with the OCS program.

First, the OCS program is a major source of energy for the Nation, currently providing about 18 percent of our total domestic production of oil and 27 percent of our

production of natural gas. Hand in hand with this much needed energy production,

the program generates substantial national and regional economic benefits. Those

benefits come in the form of bonus, rent, and royalty payments to the Federal Treasury (almost $5 billion in 1997 and over $120 billion to date)—a portion of which is

distributed to coastal States under section 8(g) of the OCS Lands Act—as well as
45

income and taxes generated by petroleum companies and a host of manufacturers

and other firms located throughout the country. Furthermore, OCS revenues are the

major funding source for both the Land and Water Conservation Fund (LWCF) and

the Historic Presentation Fund (HPF)—programs that benefit all Americans. To

date, over $18.8 billion and $2.6 billion have gone into the LWCF and HPF, respectively. Finally, the OCS program has an excellent safety and environmental record.

These benefits notwithstanding, the OCS program and the way it was managed

in the past led to conflict, controversy, and—ultimately—moratoria that have been

in effect for many years for certain areas of our Nation’s OCS. I do not plan to detail

the history of moratoria as I did in my previous testimony. That history is well documented in two reports produced by Committees of the Minerals Management Advisory Board—Moving Beyond Conflict to Consensus (OCS Policy Committee—April

1993) and Environmental Studies in OCS Areas Under Moratoria: Findings and

Recommendations (OCS Scientific Committee—May 1997). The former had a significant influence on the Department’s development of its management approach, and

the latter was a project I mentioned in my previous testimony that had not yet been

completed. The OCS Scientific Committee has now completed its report, and I would

like to submit it for the Subcommittee’s consideration.

THE DEPARTMENT OF INTERIOR’S APPROACH TO THE OCS PROGRAM

When this Administration assumed management of the OCS program in 1993,

there were substantial problems facing the program—congressional moratoria were

in effect for both the Atlantic and Pacific coasts, the Eastern Gulf of Mexico, and

the North Aleutian Basin off Alaska; there were lease sales scheduled in the Atlantic and Eastern Gulf of Mexico areas under leasing moratoria; there were drilling

restrictions on previously issued leases in the southeastern part of the Eastern Gulf

of Mexico, in the North Aleutian Basin, and off North Carolina; and there was

breach-of-contract/takings litigation that had been filed by the companies holding

those leases. In addition, there were existing leases in the areas subject to leasing

moratoria off the Florida Panhandle and off California that demanded our attention,

and there were proposed lease sales off Alaska that were generating controversy.

For this hearing, I would like to explain the Department’s general approach to managing the OCS program and dealing with these issues. In doing so, I will cite some

specific examples of where we have been able to resolve or reduce conflicts and controversies.

Resolving Existing Controversies to Set the Stage for Consensus Building

First, the Department recognized that conflict resolution would have to be a high

priority and that the best way to proceed would be to consult with, and listen very

carefully to, the OCS program’s stakeholders. We endorsed the existing annual congressional moratoria as a way to assure stakeholders that the status quo would be

maintained while discussions ensued. We felt that it was extremely important to ensure that no new leasing occur in areas where we were attempting to resolve intense disputes concerning already existing leases as well as some controversial

areas where leasing was contemplated. The annual moratoria that were in effect

proved to be a very useful tool that we believe helped us:

• settle litigation concerning the leases in the North Aleutian Basin and in the

southeastern part of the Eastern Gulf of Mexico, which resulted in their relinquishment;

• settle litigation on the majority of leases off North Carolina, resulting in their

expiration or relinquishment, while preserving the promising ‘‘Manteo Unit’’ for

possible exploration;

• cancel proposed lease sales in the Atlantic and in the Eastern Gulf off Florida

that were precluded by moratoria, thereby allowing us and the stakeholders to

concentrate on resolving issues related to potential exploration and development

of remaining leases; and

• focus efforts off California on discussing the possible development of some 40

existing leases without the distractions that proposals for new leasing would engender.

In short, annual moratoria and the actions we were able to take with them in

place, helped us to begin building trust with our stakeholders and make strides in

putting the OCS program on firmer footing in those controversial areas. At the same

time, we took under careful consideration the sales off Alaska that had been proposed in the OCS 5-Year Oil and Gas Program for 1992-1997 that had been approved by the previous Administration. After consulting with stakeholders, we made

the decision to:

• cancel sales in the Chukchi Sea, Hope Basin, Gulf of Alaska, and St. George

Basin Planning Areas based on a combination of low industry interest and some
46

concerns for other resources that were expressed by Native groups and others;

and

• proceed carefully and deliberately in the presale processes for Beaufort Sea

Sale 144 and Cook Inlet Sale 149, which resulted in successfully conducting

those two sales after a 5 year hiatus in Alaska OCS leasing.

Our decisions to cancel three proposed Alaska sales—as well as cancellation of the

Atlantic and Eastern Gulf of Mexico sales—were made with the view that this Administration would soon have the opportunity to formulate its own OCS 5-year program and could consult further with stakeholders to reach consensus on any future

sale proposals for those areas and others.

Developing the OCS 5-Year Oil and Gas Program for 1997-2002 by Consensus

The Department developed the current OCS 5-Year Oil and Gas Program (1997-

2002) based on the substantive and procedural requirements of section 18 of the

OCS Lands Act and three general guiding principles endorsed by the Secretary: (1)

consensus-based decisionmaking; (2) science-based decisionmaking; and (3) the use

of natural gas as an environmentally preferred fuel. We consulted with and listened

to our stakeholders from start to finish of the 2-year preparation process. At this

time, I would like to highlight some of our experiences in that process and give you

a summary of the program we produced, as well as accounts of other related issues

in each region.

Pacific OCS Region

Our attention in this region focused on the Santa Barbara Channel and Santa

Maria Basin, where there were both existing producing leases and existing undeveloped leases. We consulted closely with the three counties located adjacent to those

areas (through a body known as the Tri-County Forum) as we considered proposing

a small, focused lease sale after 2000. Although it appeared initially that two of the

counties did not oppose such a sale, we consulted further with them and other

stakeholders, including the State of California. We concluded from those consultations that scheduling a Pacific sale in the 1997-2002 timeframe was unwarranted.

In retrospect, I believe the absence of a scheduled lease sale in this area has enabled us to work undistracted with stakeholders to resolve issues concerning existing producing leases. As a result, production from those leases has been increased

significantly—to about 150,000 barrels per day.

We are continuing to work closely with the Tri-County Forum and other stakeholders in the ‘‘California Offshore Oil and Gas Energy Resource Study.’’ The study

is intended to frame better the issues and potential impacts associated with additional development, thus contributing a good scientific foundation to continuing discussions with our stakeholders.

Atlantic Region

In this region, we looked at the vicinity of the ‘‘Manteo Unit’’ off North Carolina

and the Hudson Canyon area off New Jersey as possible candidates for lease sales.

We decided not to propose a sale off North Carolina due to ongoing litigation and

controversy concerning the existing leases there. We also decided, after consulting

with state and local officials and other stakeholders, that scheduling a sale in the

Hudson Canyon area would be premature and that we would need more time for

outreach and conflict resolution. Again, I believe that our decision not to schedule

a lease sale off North Carolina enabled us to focus on working toward an appropriate and acceptable resolution concerning existing leases. We have been consulting

with state officials, and our Gulf of Mexico Regional Office held a North Carolina

Offshore Workshop in Raleigh in February 1998 to discuss environmental issues associated with possible exploration of the ‘‘Manteo Unit.’’ There is still much work

to be done, but discussions so far have been fruitful.

Technological advances, especially those associated with deepwater operations in

the Gulf of Mexico, may be applicable to the Atlantic, where most of the more promising hydrocarbon prospects are farther from shore and in the deeper waters. We

also have been monitoring closely developments affecting the Canadian waters of

the Atlantic. Canada is poised to reconsider its Georges Bank moratorium which is

due to expire on January 1, 2000. Based on the success of existing Canadian OCS

production projects off Nova Scotia and Newfoundland and their demonstrated compatibility with fishing and other uses of the sea, Canada may not renew the ban

and may allow oil and has leasing/development to proceed in its waters. If so, the

Department will consider carefully any ramifications such a decision may have with

respect to managing the resources on our side of Georges Bank. In addition, MMS

has received an application for a pipeline right-of-way and related permits for a segment of a pipeline that is planned to transport natural gas from reserves off the

coast of Newfoundland to a landfall on the coast of New Hampshire.
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Alaska OCS Region

As I mentioned before, the Administration canceled Alaska sales in four areas

that were on the schedule for 1992-1997 with an eye toward revisiting the areas

when we developed our own OCS 5-year program. In order to facilitate stakeholder

participation in the consideration of those and other Alaska planning areas, we established the Alaska Regional Stakeholders Task Force, as recommended by the

OCS Policy Committee. Based on the findings and recommendations of that task

force, the new program proposes consideration of leasing in three of the areas that

had been deferred previously—Gulf of Alaska, Chukchi Sea, and Hope Basin—as

well as in Cook Inlet and the Beaufort Sea.

We have continued to consult with the Alaska OCS Region Offshore Advisory

Committee, which was established as a successor to the Stakeholders Task Force,

on individual Alaska sales included in the current OCS 5-Year Oil and Gas Program. Presently, we are proceeding toward consideration of an August 1998 sale

date for Beaufort Sea Sale 170. We also are continuing our consultations with Alaska Native organizations, the State of Alaska, and other stakeholders concerning several Beaufort Sea development projects. Those projects and the planned lease sales

point to a vibrant future for the OCS program in that area.

Gulf of Mexico OCS Region

Based on the strong consensus of stakeholders supporting the OCS program in the

Central and Western Gulf of Mexico planning areas, we decided to continue the

practice of holding annual areawide lease sales in those areas during the 1997-2002

period. We are continuing to consult with the States and other stakeholders in those

areas, and the program is thriving, as evidenced by the most recent lease sale results and numerous recent discoveries.

After consulting with the Governors of Florida and Alabama, our focus in the

Eastern Gulf of Mexico turned to that part of the planning area located off Alabama

and more than 100 miles off Florida, which both governors indicated would be acceptable for an OCS lease sale in 2001. As consultation with stakeholders continued,

we learned that industry wanted access to more deepwater blocks in that area and

that coastal residents of Alabama had concerns about possible negative visual impacts of nearshore oil and gas development. The final configuration of the lease sale

area that we established accommodated both industry and State concerns—384

blocks in deep water were added, and 22 blocks within 15 miles of the Alabama

coast were excluded. I think this solution exemplifies our approach to the OCS program, since it is based on consensus and science and promises to make environmentally preferable natural gas resources available to the Nation. I am extremely

proud that we were able to come up with a reasonable and acceptable proposal for

leasing in an area of the OCS that had been subject to congressional leasing moratoria since 1990. I firmly believe that we could not have consulted meaningfully and

gained the acceptance of a consensus of the stakeholders if we had decided to pursue additional nearshore leasing off the Florida Panhandle or if the annual leasing

moratorium in that area had been lifted during the process.

Currently, we are continuing to attempt to resolve conflicts concerning the existing Florida Panhandle leases. Again, as in other areas, the absence of a controversial proposal for additional leasing off the Florida Panhandle has enabled us to concentrate on analysis and consultation related to the development and production

plan filed by Chevron USA for its natural gas discovery in the Destin Dome Block

56 Unit. We have begun the process of preparing an environmental impact statement (EIS) for the project and have held five public scoping meetings. We plan to

issue a draft EIS in November of this year and hold public hearings on it in January

1999. Just recently, the State of Florida officially objected to Chevron’s certification

that the development and production plan is consistent with Florida’s federally approved coastal zone management program, and Chevron has filed a formal appeal

with the Department of Commerce.

Results of Consensus Building—The OCS 5-Year Oil and Gas Program and

Congressional Moratoria Are Now Consistent

After the OCS 5-Year Oil and Gas Program for 1997-2002 was approved by the

Secretary, the Department proposed amendments to the Fiscal Year (FY) 1998

budget that were designed to conform the annual congressional moratoria provisions

to the new leasing program. The amended language proposed to delete drilling restrictions in both the North Aleutian Basin and in the Eastern Gulf of Mexico south

of 26 degrees North Latitude since these restrictions were no longer necessary. More

importantly, the proposed language also reconfigured the existing Eastern Gulf of

Mexico leasing moratorium so that it would not apply to the area proposed for possible lease in 2001 in the current OCS 5-Year Oil and Gas Program. Congress ac-
48

cepted the proposed language. Therefore, the current OCS 5-Year Program and the

annual moratoria provisions are now consistent, i.e.; all areas included in the congressional restrictions are excluded from leasing consideration. Thus, for the first

time since OCS moratoria were enacted in the early 1980’s, we have a OCS 5-year

program that does not propose leasing anywhere that opposition and controversy led

to those restrictions. As part of its FY 1999 budget request, the Department has

again proposed to carry forward the language enacted in FY 1998.

LOOKING TO THE FUTURE

It is possible that changing international conditions or evolving domestic conditions and attitudes eventually could result in future consideration of leasing in

areas currently under moratoria. However, as experience has shown us, any such

consideration should be based firmly on science and consensus or we will likely repeat the mistakes of the past. As I have stated previously, our support of moratoria

and our focus on resolving issues related to existing leases before conducting more

leasing in certain areas has been designed to build public trust and set the stage

for a rational and civil discussion of possible future courses of action.

We also realize that prior to considering leasing in areas under moratoria, as part

of this effort we must first identify scientific information needs, and that is why we

requested a joint subcommittee of the OCS Policy and Scientific Committees to conduct a review of such needs and report to the Secretary. The report was finalized

in May 1997, and its recommendations were unanimously approved by the group

(which represents a wide range of stakeholders). In addition to providing an excellent account of the OCS program’s history that I mentioned earlier, their report presents a great deal of information that is useful for future planning.

One important point that can be gleaned from the Policy/Scientific Committee report is that times—and more importantly, technology—have changed dramatically

since OCS moratoria first were enacted. Tremendous advances have resulted in:

• cleaner and less toxic drilling fluids and associated discharges;

• cleaner and less intrusive offshore structures, including zero discharge rigs;

• safer and more efficient drilling and monitoring systems, including Measure

While Drilling and Logging While Drilling, and faster blowout preventers;

• better seismic data gathering and interpretation techniques that lead to fewer

wells being drilled than in the past,

• better oceanographic and meteorological forecasting and earlier response;

• cleaner and less toxic produced water;

• smaller and fewer platforms;

• better and faster communications equipment;

• better and faster oil spill response and cleanup; and

• safer and more efficient pipelines and pipeline burial techniques.

SUMMARY AND CONCLUSION

In summary, I believe we have made significant strides in building public consensus concerning the OCS program in the past several years. As I have stated previously, we have found moratoria to be a useful tool that enabled us to address and

resolve specific difficult conflicts that we inherited with the OCS program as well

as develop a OCS 5-Year Program that is consensus based. As a result, moratoria

language in the Department’s FY 1998 Appropriations Act and areas considered for

possible lease in the Department’s OCS 5-Year Oil and Gas Program for 1997-2002

are now consistent.

Madam Chairwoman, this concludes my prepared remarks. However, I will be

pleased to answer any questions Members of the Subcommittee may have.

STATEMENT OF HON. OWEN B. PICKETT, A REPRESENTATIVE IN CONGRESS FROM THE

STATE OF VIRGINIA

Thank you for the opportunity to offer remarks before this Committee today regarding the Minerals Management Service (MMS) policy of assessing a tax against

state and local governments for the use of Outer Continental Shelf (OCS) sand and

gravel. During the 103rd Congress, Public Law 103–426 was enacted that removed

procedural obstacles and allowed government agencies to negotiate and obtain OCS

sand and gravel. This law specifically exempted the Federal Government from being

assessed a tax for OCS sand, gravel, and shell resources. In October 1997, MMS formalized its guidelines regarding the tax for OCS sand, gravel, and shell resources

when used in shore protection and beach restoration projects by state and local governments. In this new policy, MMS decided to assess state and local governments
49

a tax for OCS sand and gravel used in shore protection projects, even in those cases

where the projects are authorized by Federal law.

Although the costs involved for OCS sand and gravel may not be significant when

compared to the overall cost of a shore protection or beach restoration project, they

are significant and will make such projects more costly and less attractive when undertaken by state and local governments. Even worse, a local government in my

Congressional District recently paid MMS over $200,000 for 1.1 million cubic yards

of OCS sand for a federally authorized project that had already been planned, approved, and funded. Due to this increase in the project cost for the fee to MMS, the

only option for the local government was to reduce, by 400,000 cubic yards, the

quantity of 1.5 million cubic yards of sand required by the engineers in the original

plans and specifications for this project. This project will now have a shorter useful

life and will require the local government to replace the project earlier than planned

at a much higher cost.

As the Administration seeks to change the nation’s shore for OCS sand and gravel

will continue to rise dramatically unless this ill-advised tax law is changed. Historically, the Federal Government has entered into 65/35 costshare agreements with

local governments for federally authorized shore protection projects. A recent proposal by the Administration, if adopted, will reverse this cost share ratio upon completion of the initial construction with the local sponsor paying almost double the

share of the project maintenance. The typical MMS tax to the local government

sponsor will double for OCS sand and gravel. This excessive and inequitable tax will

become a serious and insurmountable burden for struggling local governments. It

is clearly another unfunded mandate on state and local government, and it should

be eliminated here and now.

I strongly urge the Committee to adopt the amendment, restore equity among

Federal, state, and local governments and eliminate this unfair tax.