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AMERICA’S ENERGY FUTURE, PART I: A REVIEW 

OF UNNECESSARY AND BURDENSOME REGULATIONS 

HEARING 

BEFORE THE

COMMITTEE ON OVERSIGHT 

AND GOVERNMENT REFORM 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

JULY 13, 2012 

Serial No. 112–163 

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

( 

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

http://www.house.gov/reform 

(II) 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM 

DARRELL E. ISSA, California, Chairman 

DAN BURTON, Indiana 

JOHN L. MICA, Florida 

TODD RUSSELL PLATTS, Pennsylvania 

MICHAEL R. TURNER, Ohio 

PATRICK T. MCHENRY, North Carolina 

JIM JORDAN, Ohio 

JASON CHAFFETZ, Utah 

CONNIE MACK, Florida 

TIM WALBERG, Michigan 

JAMES LANKFORD, Oklahoma 

JUSTIN AMASH, Michigan 

ANN MARIE BUERKLE, New York 

PAUL A. GOSAR, Arizona 

RAU ́ L R. LABRADOR, Idaho 

PATRICK MEEHAN, Pennsylvania 

SCOTT DESJARLAIS, Tennessee 

JOE WALSH, Illinois 

TREY GOWDY, South Carolina 

DENNIS A. ROSS, Florida 

FRANK C. GUINTA, New Hampshire 

BLAKE FARENTHOLD, Texas 

MIKE KELLY, Pennsylvania 

ELIJAH E. CUMMINGS, Maryland, Ranking 

Minority Member 

EDOLPHUS TOWNS, New York 

CAROLYN B. MALONEY, New York 

ELEANOR HOLMES NORTON, District of 

Columbia 

DENNIS J. KUCINICH, Ohio 

JOHN F. TIERNEY, Massachusetts 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

JIM COOPER, Tennessee 

GERALD E. CONNOLLY, Virginia 

MIKE QUIGLEY, Illinois 

DANNY K. DAVIS, Illinois 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

JOHN A. YARMUTH, Kentucky 

CHRISTOPHER S. MURPHY, Connecticut 

JACKIE SPEIER, California 

LAWRENCE J. BRADY, Staff Director 

JOHN D. CUADERES, Deputy Staff Director 

ROBERT BORDEN, General Counsel 

LINDA A. GOOD, Chief Clerk 

DAVID RAPALLO, Minority Staff Director 

(III) 

C O N T E N T S 

Page 

Hearing held on July 13, 2012 ............................................................................... 1 

WITNESSES 

Mr. C. Michael Ming, Secretary of Energy, State of Oklahoma 

Oral Statement ................................................................................................. 6 

Written Statement ............................................................................................ 10 

Ms. Patrice Douglas, Commissioner, Oklahoma Corporation Commission 

Oral Statement ................................................................................................. 14 

Written Statement ............................................................................................ 16 

Mr. Mike McDonald, President, Triad Energy, Inc. 

Oral Statement ................................................................................................. 26 

Written Statement ............................................................................................ 28 

Ms. Patricia D. Horn, Vice President for Governance and Environmental 

Health and Safety, OGE Energy Corp. 

Oral Statement ................................................................................................. 36 

Written Statement ............................................................................................ 39 

Mr. Brian Woodard, Vice President of Regulatory Affairs, Oklahoma Independent Petroleum Association 

Oral Statement ................................................................................................. 58 

Written Statement ............................................................................................ 61 

Mr. Joseph Leonard, Environmental Health and Safety Engineer, Devon Energy Corporation 

Oral Statement ................................................................................................. 64 

Written Statement ............................................................................................ 66 

(1) 

AMERICA’S ENERGY FUTURE, PART I: A REVIEW OF UNNECESSARY AND BURDENSOME 

REGULATIONS 

Friday, July 13, 2012 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, 

Washington, D.C. 

The committee met, pursuant to call, at Constitution Hall, University of Central Oklahoma, Edmond, Oklahoma, Hon. Darrell E. 

Issa [chairman of the committee] presiding. 

Present: Representatives Issa, Lankford and Farenthold. 

Staff Present: John Cuaderes, Majority Deputy Staff Director; 

Linda Good, Majority Chief Clerk; Kristina M. Moore, Majority 

Senior Counsel; Cheyenne Steel, Majority Deputy Press Secretary; 

and Donald Sherman, Minority Counsel. 

Chairman ISSA. The Committee will come to order. 

Welcome, to all of our guests. Today we come to Oklahoma City 

at the request of Chairman Lankford. As members of the committee that oversees all of Government, the most important part of 

Government is our relationship with the private sectors, job creators. So our field hearings, around the country, including here in 

Oklahoma City today, are about finding out how jobs are created 

and what the impediments to job creation are, red tape, stumbling 

blocks of all sorts, sometimes simply Government not getting out 

of the way, are what we usually hear about. 

Today, obviously, the subject will be energy and energy independence at a time when America imports as much oil as it produces and, yet, we find in oil and natural gas, in coal and other 

minerals, we could be self-sufficient. 

Our Committee is here today to find out why we are not. When 

asked to come to Oklahoma City by Chairman Lankford, I not only 

said yes, but I said when would be the best time to do it? And he 

said it’s beautiful in Oklahoma City all year. Not believing that, I 

consulted with the weatherman, and they said, you know, you can 

come anytime to Oklahoma City and you will get weather. 

So, James, I want to thank you for providing the kind of weather 

we hoped for today. 

Additionally, Mr. Farenthold has come from Texas. He will make 

an opening statement. He will insult Oklahoma appropriately by 

calling it some portion of northern Austin. Be prepared for it. 

I will close what is an informal opening statement by making it 

clear that I do have a connection to Oklahoma. Now, my connection 

is tenuous, but I want you to understand that we can stretch to it, 

2 

because Blake may stretch to it. Boone Pickens’ wife is my constituent. So I know Boone comes to Oklahoma from time to time 

to give a few bucks to universities, a few, but not necessarily here. 

I didn’t see the stadium at this particular location. 

But you do have three members of Congress who each have 

something in common. We all claim Boone Pickens, which means 

we all understand that America is the Saudi Arabia of natural gas. 

And, in fact, we could have a—we do have an abundance of a very 

clean fuel, one that, if we use, should please both the left, who 

want us to reduce our carbon footprint, and the right, myself included, who want to know that America can feed itself the energy 

that changed the Stone Age because, as a friend of mine once said, 

the Stone Age didn’t end because it ran out of stone; it ended because we learned how to harness energy. 

And with that, I recognize—actually, I’m going to save you for 

last, Mr. Farenthold, for his opening statement. And then, Chairman, if you would introduce the Panel in your Opening Statement, 

I’d appreciate it. 

Thank you. 

Mr. FARENTHOLD. Thank you, Chairman Issa, Chairman 

Lankford, I’m happy to be up here north of the Red River. As I was 

so appropriately informed by Representative Lankford earlier this 

morning, I am not really from Texas. I’m from Baja, Oklahoma. 

I always thought Oklahoma was far north Dallas. 

I’ll accept being from Baja. I’ll accept being from Baja, Oklahoma, today. 

And, you know, energy is critical to our country. And the energy 

production and low energy prices we have right now overcome a lot 

of problems with American competitives. We have a higher labor 

rate, higher cost of doing business here in America and a higher 

regulatory cost. But our low energy prices make America a real 

good option for a revitalization of manufacturing jobs. If we cannot 

overcome paying our people well here, but we can overcome paying 

our people well here and an intrusive amount of Government regulations. 

So I think one of the things I would like to get out of the hearing 

today is impact and feedback from the Panel about how 

overegulation from Washington is affecting, not only the oil and 

gas industry, but overall, the economic development in Oklahoma 

and the remainder of the country. 

I think you will find that you’ve got a group of people up here 

from Congress, Chairman Lankford, Chairman Issa and myself. 

Chairman Issa is from California. Obviously, Mr. Lankford is from 

Oklahoma. I’m from Texas. That’s three of the top five crude oil 

producing states in the country, and I’m proud to be in the top five 

with you guys. 

So I’m looking forward to listening to what our panelists have to 

say and then ask our questions in developing a record so we can 

take the Oklahoma experience back to Washington, D.C., and learn 

how it’s being done in states like Oklahoma and Texas where it’s 

working. 

Thank you. 

3 

Chairman ISSA. Mr. Lankford, I want to thank you for bringing 

us here. And the hearing is yours, at least through the introduction 

of this incredibly good panel. 

Mr. LANKFORD. Thank you. And I do want to say thank you, as 

well, Chairman. Thank you for bringing us here. It is an unusual 

thing to bring Washington to Oklahoma. We try to take Oklahoma 

to Washington. Now we’re trying to turn that thing around, get 

some wisdom into it. So I really appreciate you being here. And for 

the staff that’s here and for Blake, for being here, as well and 

being a part of it. 

I want to thank the University of Central Oklahoma, as well, for 

hosting this event and for allowing us to come to this great facility, 

this great room. 

And then, also, our witnesses, which I will introduce in just a 

moment, I have a formal opening statement, I will get a chance to 

read through it, to set the tone for what we’re trying to accomplish 

today, to be able to set some of those questions there. 

Since the 1970s and all the energy crisis and all the spikes in 

fuel costs, our nation has talked about an energy policy that would 

make our nation energy independent. We’re all used to the comments of why aren’t we energy independent. We focus on exploration, on supply lines, on diversification of fuels, renewable fuels, 

natural resources, the environment and more. 

We’ve asked ourselves, do we consume too much? Do we produce 

too little? Or are our resources, are they just in short supply? 

In the middle of this four-year journey, we invested in oil, coal, 

natural gas, hydroelectrics, solar, nuclear, geothermal, biofuels, hydrogen and multiple other experimental fuels. But we’re not energy 

independent yet. Not even North America is energy independent 

yet. 

What I want to know is why? What’s preventing us from obtaining energy independence. 

Our economy runs on inexpensive and reliable energy, millions 

of jobs are created by energy. 

If we can move from talking about it to actually doing it, our energy independence could make the difference in the American economy. 

Around 300 billion dollars a year is spent on purchasing crude 

oil from foreign sources, which is a tremendous drain on our economy. 

We have to deal with the national security and the implications 

of that, as well, depending on foreign sources. 

Our Navy just sent out the green fleet for a test run on biofuels 

that cost $27 a gallon. The goal is to find a way to function our 

military on fuels that we can grow and produce so we’re not at risk 

for a fuel shortage in the time of war. 

That’s a noble cause, but, again, it begs the question, why can’t 

we produce our own energy at a reasonably rate and ample supply. 

I want to know today, is it our lack of supply? The President 

loves to imply that we’re running out of oil, and we have to switch 

to other fuels. He repeats often, two percent of the world’s crude 

in reserves, but we use 20 percent of the world’s oil. Are we running out? 

4 

In the 1970s, President Jimmy Carter’s administration focused— 

forced the electricity generation towards coal, because he believed 

that we were running out of natural gas, and we need to use an 

abundance fuel for electricity generation. 

Now that Oklahoma is demonstrating an incredible abundance in 

natural gas in America, this administration has turned it’s attention to attacking natural gas for exploration and usage. 

I want to know, is it our regulatory environment? The Federal 

Regulations and guidance appear to be in front of science at times. 

The BLM and EPA have already made major moves against hydraulic fracking. But in 2010, a Congressionally mandated study of 

fracking has not even released its draft findings for it’s first year 

of the study. For the past two years, in fact, the EPA has studied 

the nations five worst environmental sites around fracked wells to 

look for any environmental consequences. 

And though the studies have not been released, it’s my understanding, that the initial findings were actually very positive. The 

first year of the study, without any conclusive findings, will be released late this year and, by the way, right after the election. And 

the final data will be released in 2014. The control wells in the frac 

state have not even begun the field research yet. 

But the lack of evidence hasn’t slowed the frequent guidance of 

regulation concerning fracking for the Federal Government. 

The same is true for air quality around the sites. The EPA has 

manipulated gas release data from flowback from a few well sites 

and extrapolated that data onto all producers, when, in reality, 

even the initial data study, the three company’s flowback was seriously flawed, and it’s been demonstrated the EPA is flawed. But 

that doesn’t seem to slow down the EPA assault on admissions 

around well sites. And, in fact, it’s estimated that the EPA overestimated the release by 1,400 percent. That’s a slight error. 

What’s ironic is the Regional Haze rule policy that came about 

because environmental groups sued the EPA, and the EPA quickly 

settled with them in what we call ‘‘sue and settle.’’ 

We can go on and on about the issues. It’s just connecting science 

with the actual practice of energy. I want to know, is our regulatory environment slowing down our production? 

Permits for oil and gas and mining have dropped dramatically on 

Federal lands. The length of time it takes to acquire Federal permits to drill is ten times longer on Federal land than it is on private land. 

And when a project finally does move forward, brace yourselves 

for this, we have to still deal with the Department of Interior and 

Fish and Wildlife. 

Let me give you two Oklahoma examples you may or may not 

have heard of. In Western Oklahoma, we have a wild chicken 

called the Lesser Prairie-Chicken. This chicken, apparently, is a 

chicken, and it will not breed around anything tall and noisy. So 

Fish and Wildlife have stated it wants control over Western Oklahoma, and it wants to keep at least 64 percent of all of Western 

Oklahoma uncultivated to benefit the Lesser Prairie-Chicken. 

The Fish and Wildlife wants control over how many cows can 

graze in the field, how many fields or farms are for crops, when we 

5 

put in roads, energy production, including wind energy, and much 

more. 

You may not know about that chicken right now, but once we 

begin more and more exploration of oil and gas in Western Oklahoma, you’ll know more about it. 

In Southern Oklahoma, we have a multi-million dollar pipeline 

project on hold because a doctoral student in Kansas gave his work 

about burrowing beetles to Fish and Wildlife. Now, the Keystone 

Pipeline and other pipelines are on hold until they can prove they 

won’t affect the beetle. 

Do you remember the President standing in front of a big stack 

of empty oil pipes, talking about how we’re going to expedite all the 

permits for the Keystone Pipeline in the southern leg? 

Guess what. They’ve all stopped because Fish and Wildlife has 

shut it down, because of the burrowing beetle. It’s common across 

Southern Oklahoma. 

I want you to know, I want to know, if we don’t have energy 

independence because the Federal Government cares more about 

chickens and beetles than people and national security, I think we 

need to find that out. 

I want to know if the Federal Government is intentionally slowing down production by taking over the states primary to permit 

electricity generation and exploration. 

And I want to know if we’re really running out of supply, so we 

have to move today a different fuel for our national survival. Today 

is the day for Oklahoma common sense. 

In the hearing the testimony of people who have to live with the 

Federal regulations and still provide energy that our nation requires to thrive. 

I really am looking forward to the testimony, and to the insight. 

Several of these folks, I have met before; several of them I have 

not. But I’m looking forward to your expertise. 

Let me introduce the people that are here. 

Michael Ming is the Oklahoma Secretary of Energy, incredibly 

knowledgeable and incredibly passionate about the future of our 

nation’s energy independence. 

Patrice Douglas is our newest Commissioner of the Oklahoma 

Corporation Commission. The Oklahoma Corporation Commissioner is very well known in this room and in Edmond as the 

former Mayor of Edmond. 

Mr. Mike McDonald is the President of Triad Energy, Inc., and 

President of Domestic Energy Producers Alliance. He comes with a 

lot of experience and background on independent production. 

Patricia Horn—I think it’s just Trisha Horn, isn’t it—is the Vice 

President for Governance and Environmental Health & Safety of 

OG&E and has a great deal of knowledge about wind and about 

coal and about the background of how we use that for electricity 

generation. 

Mr. Brian Woodard is the Vice President of Regulatory Affairs of 

the Oklahoma Independent Petroleum Association and comes with 

tremendous background and experience in the regulatory environment. 

Mr. Joseph Leonard is the Environmental Health and Safety Engineer at Devon Energy Corporation and knows extremely well the 

6 

issues that we face in the regulatory environments and in the environment in drilling and producing on Federal lands. 

So I’m honored theses guests are here. 

Mr. Chairman. 

Chairman ISSA. Thank you, Mr. Lankford. 

Chairman ISSA. The Oversight Committee exists to secure two 

fundamental principles. First, Americans have a right to know the 

money Washington takes from them is well spent. 

And, second, Americans deserve an efficient and effective government that works for them. Our duty in the Oversight and Government Reform Committee is to protect these rights. Our solemn responsibility is to hold Government accountable to taxpayers, because taxpayers have a right to know what they get from their 

Government. 

We have an obligation to work tirelessly in partnerships with citizen watchdogs to deliver the facts to the American people and 

bring genuine reform to the Federal bureaucracy. That is why 

we’re here today. 

Pursuant to our Committee rules, I would ask that all the Witnesses please rise and take the oath. Raise your right hand. 

Do you solemnly swear or affirm that the testimony you are 

about to give will be the truth, the whole truth and nothing but 

the truth? 

Let the record indicate all answered in the affirmative. Please 

take your seat. 

As promised before we began, I will reduce how we do business 

on the Committee to a simple stoplighting that we all deal with. 

In front of you there is a timer that has a green, a yellow and a 

red light. Green means go; the yellow means go fast to get underneath the light before it turns red. And red means get to the intersection and stop, if you’re not in an intersection. If you have not 

reached the intersection, find a way to stop it anyway. 

So with that, Mr. Ming, if you would present your testimony, recognizing that, for all of you, your full testimony will be placed in 

the record. So you may go off script as you see fit to help make the 

record more complete. 

WITNESS STATEMENTS 

STATEMENT OF C. MICHAEL MING 

Mr. MING. Good morning, Chairman Issa, and Members of the 

Committee. My name is Michael Ming. I currently serve as the 

Oklahoma Secretary of Energy under Governor Mary Fallin. I previously served five years as the President of the Research Partnership to Secure Energy for America, a nonprofit public-private partnership, which I helped found, that manages the nation’s unconventional natural gas and ultra-deep water research programs with 

oversight from the U.S. Department of Energy. 

Prior to that, I spent 25 years as an independent oil and natural 

gas producer drilling and operating wells as a hands-on operational 

petroleum engineer. So I have been at this business for over thirty 

years. 

I appreciate the opportunity to be here today before you to discuss the important topic of unnecessary and burdensome regulaVerDate Aug 31 2005 14:48 Aug 22, 2012 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 C:\DOCS\75466.TXT APRIL
7 

tions, one that could not be more important at this critical time to 

our nation’s security and economic well being. 

My comments today are of a general, but pointed, nature. I will 

discuss the roles of both Federal and State Governments in developing and enforcing regulations that should seek to balance the 

needs of producing reliable, secure, affordable, and environmentally 

acceptable energy supplies for America. 

While others may speak to specific examples of overreaching and 

onerous regulations, I will direct my comments to the diseased Federal regulatory culture. 

I will focus on three areas: (1) what appears to be a concerted 

agenda to push for Federal regulation over State regulation, especially around hydraulic fracturing; (2) the overtly compromised 

practices of Federal agencies, struggling to justify their existence in 

a world of reduced government budgets; and (3) a concerning increase in the influence and direct involvement of activist environmental groups in Federal research and regulation. 

To appreciate the rapid acceleration of this unprecedented regulatory effort, it is critical to first understand what has transpired 

in the last seven years in America. A literal tsunami of new but 

traditional energy supplies has totally disrupted our nation’s energy future, starting first with unconventional natural gas from 

shale formations, progressing to unconventional oil from shales and 

now unlocking formerly marginal supplies of oil. 

While a few years back these newfound supplies of natural gas 

were viewed as just a clean bridge fuel to the future, they are now 

also unquestionably a part of our energy future for decades to 

come. 

2011 marked the highest annual U.S. natural gas production on 

record, eclipsing records from the early 1970’s, and January, 2012, 

was the highest monthly natural gas production on record. And the 

United States is now the largest natural gas producer in the world. 

If the value of U.S. natural gas production was calculated based on 

its energy content relative to an oil-equivalent price, as it is generally elsewhere around the globe, it would imply an economic 

stimulus of approximately $300 billion per year to the U.S. economy. It is also likely that, in the next four or five years, the U.S. 

will erase 20 years of oil decline, and depending on the forecaster, 

it is possible that North America could be energy independent in 

the next 10 years. Excessive regulation and the climate of uncertainty created thereby, places these opportunities and America’s 

chance at energy independence at risk. 

Hydraulic fracturing has become the point of attack. It is both 

the key to accessing these new supplies, and it is the epicenter of 

the disruptive wave that ideologues are attempting to stop. 

These impressive developments have significantly changed the 

tactics of those who want to see traditional fuel use eliminated. 

Rather than attempting to make our energy system better, they 

would prefer to ideologically replace traditional energy at any cost. 

Yet, this view of the world ignores three critical aspects of energy 

policy: Balance; system optimization; and scale. 

First, all forms of energy have consequences, whether traditional 

or renewable. It is critical, therefore, to balance the tradeoff between human needs and environmental sustainability. 

8 

Second, in order to optimize our existing energy resources, we 

must look at energy as a system instead of indiscrete fuel silos. 

This means looking for synergistic opportunities to leverage our energy resources, instead of simply using them the same way we always have. 

Finally, the issue of scale has to be acknowledged. It seems that 

some in Washington either don’t understand this concept, or they 

don’t want to understand it. 

Traditional fuels provide unmatched energy on demand at scale, 

today, and are, therefore, indispensable to our energy portfolio. It 

is also important to recognize that there is no better way to protect 

the environment than to have a strong economy. Environmental 

protection is clearly correlated to economic health. One only has to 

look at the developing world to understand this tragedy. Whether 

looking at the denuded hillsides in Haiti or Africa, experiencing 

virtually unbreathable air in Chinese cities, or witnessing unregulated toxic discharges in third-world countries, economic health is 

the gateway to environmental protection. 

In this light, it seems we are on a well- orchestrated and micromanaged path that sacrifices economic development in an ideological quest to eliminate all fossil fuels. It is disguised in the name 

of environmentalism and carried out under the auspices of regulation. 

I confess that I am both a capitalist and an environmentalist. 

One can be both. I lecture frequently on how traditional fuels in 

partnership with renewable energy and energy efficiency actually 

possess almost unlimited potential. 

Leveraged together and treated as a system, the combination can 

affordably power our nation’s factories, homes, and economic future, while reducing emissions, improving system reliability, enhancing fuel diversity, and hedging price volatility. 

Just as importantly, it offers the first real opportunity in decades 

to essentially become energy independent. We can’t let ideological 

regulation stymie the important role that capital markets can play 

in this evolution. 

There are those, however, who are not pleased with this grand 

disruption, and the unprecedented emergence of unconventional resources in time and scale based on private sector technology and 

innovation. This new supply of affordable energy has imparted a 

newfound sense of urgency to opponents of traditional energy. I believe these opponents play a key role in this new era of exceptional 

regulation. One only has to look at the recently announced Sierra 

Club’s Beyond Gas campaign, which I believe actually sacrifices environmental benefits in the name of environmentalism. 

This Committee’s recent hearing on sue and settle, or, as others 

have called it, a wink and a nod, only reinforces the perception of 

something that cannot pass the sniff test. Recent specific events 

that have highlighted the close connection of environmental activists to bureaucrats should be of great concern. 

Furthermore, there appears to be a huge conflict of interest between government research and regulation. In a recent hearing before the House Committee on Energy and Commerce Subcommittee 

on Energy and Power, Congressman Joe Barton revealed that a 

disturbing number of EPA’s supposedly ‘‘independent’’ Clean Air 

9 

Scientific Advisory Committee were also recipients of Federal research funding. Such practices undermine scientific credibility, and 

lead to the most insidious form of science, where the experiments 

might be designed to produce the desired results. 

Furthermore, widely referred studies used to justify policy objectives simply because the conclusions fit the desired outcome even 

if the conclusions are flawed. 

Chairman ISSA. If you could summarize. 

Mr. MING. Excuse me? 

Chairman ISSA. If you could summarize. 

Mr. MING. Okay. 

Chairman ISSA. I’m looking at the number of pages there. 

Mr. MING. I’ve just got half a page, but I’ll go to the summary. 

Chairman ISSA. Thank you. 

Mr. MING. I greatly appreciate the opportunity to speak to you 

today and encourage you to take a pragmatic and balanced approach to energy. While digging into specific overreaching regulations is one approach, it only addresses the symptoms. I urge you 

to look at the root of the problem, which is the diseased culture 

itself, and I have described three of the viruses: A perceived agenda 

to pre-empt State regulatory authority; unchecked growth in the 

bureaucracy; and the relationship of third-party activists in creating regulations. 

I also urge you, if you are so inclined, to consider reading Governor Fallin’s Oklahoma First Energy Plan. It is a pragmatic and 

balanced plan, one that other states, and the Federal Government, 

can use as a template to optimize their own resources. 

Thank you for your invitation and your attention. 

Chairman ISSA. Thank you. And thank you for the years in 

which Mary was a member of Congress. She gave us quite a few 

of those ideas during that time, too. 

[Prepared statement of Mr. Ming follows:] 

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Chairman ISSA. Ms. Douglas. 

STATEMENT OF PATRICE DOUGLAS 

Ms. DOUGLAS. Thank you for coming to Oklahoma and thank you 

for letting me be a part of this proceeding today. 

I would be remiss if I didn’t welcome you to Oklahoma, but I 

would be extremely remiss if I didn’t welcome you to Edmond as 

its former Mayor. 

So I am so glad you’re here. 

Edmond is glad you’re here, and we’re proud to have this proceeding taking place here. 

I’m going to go off script. I’m going to talk a little bit about my 

perspective as a State Regulator. And I have to disclose to you 

that, in my former life, I was a banker. So I have a healthy skepticism of Federal Regulations. I have seen what Federal Regulation 

can do to an economy and to an industry. And so when I was asked 

to be on Oklahoma’s Chief Regulating Board for so many industries, I brought the skepticism with me. 

I want to talk about three different things today. I want to talk, 

first, about the difference in a State Regulator and a Federal Regulator. I want to talk, also, about how Oklahoma has managed some 

of the national topics, like disclosure of chemicals in fracked fluids. 

I also want to talk to you a little bit about how I see this overlap 

into the utility industry and what I see coming for Oklahoma, 

based on some of the regulations that are being forced down on 

Oklahomans. 

First, I’m disheartened by the fact that we even have to talk 

about whether a State regulatory body should be in charge of the 

oil and gas industry, in charge of the utility industry, in charge of 

so many of the industries that we regulate. 

The State Regulators have vast amounts of experience. We, just 

this year, the Oklahoma Corporation Commission held over 30,000 

hearings. We issued over 10,000 orders, and more than 6,500 of 

those orders involve the oil and gas industry. 

So in one year, we had 6,500 cases worth of experience in regulating the oil and gas industry. 

And then you multiply that times the fact that we have a regulator on our Commission who’s been there for 24 years. And you 

can see the vast experience that we bring. 

The other thing that Oklahoma Regulators know and understand 

is that we’ve been fracking wells since 1948. And I think you can 

drink our water and you can breathe our air. We’ve been regulating 

this industry since the early 1900s, and we have, right now, over 

190,000 active wells in Oklahoma. 

So the Corporation Commission has vast experience in regulating 

the oil and gas industry. We have a lot of expertise. And I believe, 

also, we’re able to recognize that every individual is different, every 

State is different, as is every geological formation. So what fits in 

Pennsylvania doesn’t fit in Oklahoma. One size does not fit all 

when it comes to regulation of this kind of an industry. And, as a 

State Regulator, I get to take into consideration what my industry 

in Oklahoma needs. 

Secondly, I want to talk to you a little bit about how we did a 

different approach with regard to the disclosure of hydraulic 

15 

fracking chemicals. There was a big push—I’m sure you’ve seen it 

in the news, about how bad hydraulic fracking is and how concerned people were about the chemicals that were in hydraulic 

fracturing, the process. 

So we, in Oklahoma, decided to be a leader in this area. Our industry came together, and almost 100 percent of the industry 

agreed that we should disclose, even if the industry didn’t believe 

it was going to make people safer, they felt like it was going to give 

the perception of making people feel safer. So they were willing to 

come to the table and talk to us. 

As we worked on a rule for how we were going to disclose these 

chemicals, we found out that small companies and large companies 

had different needs. But we all wanted to reach the same goal, 

making sure that Oklahoma was protected. 

So instead of having a one-size-fits-all kind of rule, what we did 

was we enacted a rule that allowed this disclosure through two different methods, and recognizing that a small business guy can’t afford the additional time and research and training that it takes to 

maybe input all this data into a database with regard to the chemicals used, we, as a commission, took that responsibility on ourselves. 

So we gave two different avenues by which you can report these 

chemicals, and we allowed companies to choose. 

So we show in that rule that one size does not fit all, that Oklahoma needed a rule that would work for Oklahoma. 

Lastly, I want to say something really quickly about the utility 

industry. I see the EPA pushing a rule that, as a regulator, is going 

to force me to enact $2.1 billion dollars of increases on utility customers in Oklahoma. Are they going to get safer electricity? No. 

Are they going to get more electricity? No. Is it going to be more 

reliable? No. 

What it does is it forces utilities to make decisions about assets 

before the time is ready to make decisions about assets. So I believe, if Oklahoma was given the choice of formulating a rule, we 

would formulate a rule that encourage what our natural resources 

are, that encourage the use of those natural resources, and that 

helps Oklahoma consumers. 

Thank you for letting be here today. 

Chairman ISSA. Thank you so much. 

[Prepared statement of Ms. Douglas follows:] 

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Chairman ISSA. Mr. McDonald. 

STATEMENT OF MIKE MCDONALD 

Mr. MCDONALD. Chairman Issa, Congressman Lankford, Congressman Farenthold, I appreciate the opportunity to testify today. 

I thank the Committee for it’s oversight of the Executive Branch 

Agencies and for investigating regulations that hamper the production of domestic crude oil and natural gas. These fossil fuels are 

critical to Oklahoma and the nation. 

I am the co-owner of Triad Energy, Inc., a 31-year-old independent producer of crude oil and natural gas. I have 11 employees. I am the current President of the Domestic Energy Producers 

Alliance and immediate past Chairman of the Oklahoma Independent Petroleum Association. 

This year, our company will drill 10 wells. 

I have submitted my written testimony for the record and will 

take only a few moments to address key points. 

First, we must understand that fossil fuel opponents follow a 

proven strategy to curb production of oil and natural gas, a strategy to wrap small businesses like mine with enough red tape to affect our mission to provide affordable U.S. energy. 

These professional fossil fuel opponents did not rely on facts or 

science to justify their effort. So they resort to fear mongering. This 

strategy has been on grand display lately, especially on hydraulic 

fracture. The EPA’s wrongful actions in Texas, Wyoming and Pennsylvania and the resignation of an EPA Regional Administrator, 

when he has, I quote, ‘‘crucified them,’’ enforcement plan was exposed, showed the limits of Federal credibility when it comes to 

regulating oil and gas operations.’’ 

Regulators now admit that hydraulic fracturing is a safe and 

proven technology governed by effective State controls. But the Bureau of Land Management will press forward with costly, time-consuming and additional rules to regulate hydraulic fracturing on 

Federal and Tribal lands. 

Flaws in a 40-year old Endangered Species Act allow fossil fuel 

opponents to slow energy development with species listings that 

make no sense and for which there is no recovery plan. 

The EPA’s new greenhouse gas reporting regime will cost our industry hundreds of millions of dollars annually. Every dollar that 

I must spend on compliance and paperwork is a dollar I cannot 

spend exploring for oil and gas. 

In effect, these regulations are hidden taxes on my company. 

Compliance costs cannot be recovered because I do not have the 

ability to increase the price of my product. We are price takers, not 

price makers. 

But the Agency merely reflects the President’s anti-fossil fuel 

bias. Each of President Obama’s four budgets has specifically targeted small producers like me. The President has proposed raising 

my taxes by repealing a tax provision, which has been the law of 

the land since 1913, that allows me to expense normal business 

costs, such as labor, fuel and supplies. And by preventing me and 

millions of royalty owners from coast to coast from depleting well 

assets as they decline, which has been on the books since 1926. 

27 

The impact of such tax proposals would be devastating for American energy independence. Without my ability to expense normal 

business costs, I will be forced to cut my drilling budget by at least 

30 percent. That’s less steel manufactured in Pennsylvania, fewer 

jobs to help our nation’s economic recovery, less money in the pockets of my royalty owners and less revenue to Oklahoma and the 

U.S. Treasury. 

And this is not a small impact. There are 18,000 independent 

producers like me operating in 32 states, who would also have to 

reduce their budget. We are not big oil. But, together, we independent producers drill 95 percent of all wells drilled in the U.S. 

and produce, roughly, 82 percent of U.S. natural gas production, 

and more than 54 percent of U.S. oil production. 

And we pay a lot of taxes, royalties, in rent to Federal, State and 

Local Governments. In 2010, we generated $131 billion for Federal 

and State coffers. 

In Oklahoma, our industry is responsible for one out of every 

three dollars in gross state product. One out of every five dollars 

in personal income, and represents one out of every six jobs in our 

State. Since 2009, our industry has added nearly 12,000 jobs, with 

the average compensation of more than $113,000 per job. 

We are helping the U.S. economy recover, but we cannot create 

more jobs nor make America energy independent if our hands are 

tied by Federal red tape. 

Thank you very much for allowing me to appear today. I look forward to any questions you may have. 

[Prepared statement of Mr. McDonald follows:] 

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Chairman ISSA. Ms. Horn? 

STATEMENT OF PATRICIA D. HORN 

Ms. HORN. Good morning, Chairman Issa, good morning Representative Lankford and Farenthold. It’s so nice of you to be here 

in Oklahoma, and we so appreciate all the work that you do for us 

in Washington. 

I’m here to speak on behalf of Oklahoma Gas and Electric, an 

electric utility headquartered in Oklahoma City. OG&E is the largest utility operating in Oklahoma with, approximately, 790,000 

customers in 268 communities in Oklahoma and Western Arkansas. 

If I could just brag for just a moment. In 2011, OG&E was 

named best in class for customer service by J.D. Powers and Associate. Later in 2011, OG&E and its members were named 2011 

Utility of the Year in North America by Electric Light & Power 

Magazine. We’re proud of those accomplishments. 

My company and I appreciate the opportunity to come before you 

today and speak about the unnecessary and burdensome Federal 

Regulations that are affecting our industry. Our electric industry 

is the most capital intensive industry in the U.S. economy, a reality 

which necessitates that we have a multi-decade plan on the horizon. 

But the recent suite of EPA rules affecting issues such as Regional Haze, visibility, maximum achievable controlled technology, 

best technology available for cooling water intake structures and 

disposal and handling of coal combustion residuals make cost effective, capital investment planning by utilities, such as ours, very difficult, extremely costly. 

The required compliance that began with EPA’s new rules effectively compels OG&E to make a premature and illogical choice 

about expensive capital investments that determine, long term, 

how we will generate electricity. 

We are not faced with the situation where one alternative is costly and another is not. Rather, all of the compelled choices required 

by EPA’s rules are expensive and are made more difficult due to 

their technical complexity and uncertainty. 

To put the Regional Haze cost quandary that you heard something about this morning in perspective, the estimated capital cost 

of installing scrubbers on four of OG&E’s five coal units, as ordered 

by the EPA in its Federal Implementation Plan, is over one billion 

dollars. 

Chairman ISSA. Say that again. 

Ms. HORN. It is over one billion dollars for our company alone. 

And that doesn’t even include the O&N on the—that would be annual between $70 and $150 million. 

On the other hand, the other choice faced by OG&E is if we replace its coal units with natural gas generation, we would face a 

capital cost of replacing, retiring and converting coal units baseload 

capacity and the related natural gas fuel costs. We estimate that 

that switch to natural gas would even be more expensive than installing scrubbers and also leave our generation fleet with no fuel 

diversity, something we talked about this morning that we feel is 

very important. 

37 

Both of these options involve unprecedented rate implications for 

our customers, and would commence, what we believe, an adverse 

ripple effect on our Oklahoma economy and the ability of our State 

to create jobs. 

Aside from the cost implication, we are troubled by the justifications and the analysis that EPA provides for implementing these 

regulations, whether old regulations or new. EPA overrode a State 

implementation Plan for Regional Haze that was a product of intensive good faith negotiations with the entire range of Oklahoma 

interest. That said, achieved the visibility objectives at a fraction 

of the cost of the Federal Implementation Plan. 

Similarly, EPA has also determined that Oklahoma should be included in the Cross-State Air Pollution rule, a rule that came out 

in late 2011 and included Oklahoma almost as an afterthought. 

Based on what? Based on our air emissions affecting a county in 

Michigan that was in attainment status. 

We are encouraged that the Federal Courts have issued stays in 

both the Regional Haze case and across state matters pending the 

considerations of those merits of our appeals. Until those legal 

processes reach an end, OG&E must face the possibility of eventually complying with these very extensive rules which threaten our 

ability to invest, create jobs and provide Oklahomans a cost- effective power for both their homes and their businesses. 

But those are not our only regulatory threats. EPA is considering 

a proposed Clean Water Act rule that, in the name of protecting 

fish, bait fish and minnows, from impingement in attainment, 

would require us to incur millions of dollars in additional capital 

and operating costs to retrofit the water intake structures in our 

cooling water lakes at three of our facilities. 

We have pointed out to the EPA that the Oklahoma Department 

of Wildlife Conservation ranks these lakes currently among the top 

fishing venues. And they have found no material adverse impact on 

the fishery resources of those lakes. 

Why would anyone order us to spend tens of millions of dollars 

to reconfigure when there’s no demonstrated harm to the fish in 

those lakes? 

I could go on about the coal combustion residuals, as well. It offers the same story and concerns. 

Finally, I’d like to note that, aside from the EPA’s regulatory excesses, the energy sector is very concerned about the possible listing of the Lesser Prairie-Chicken, which you’ve heard today. 

It would affect our wind farm developments, our electric transmission projects, our natural gas gathering and transportation 

pipelines. Those could be blocked or seriously delayed, which 

means that energy resources, jobs and beneficial economic activity 

associated with those projects would be in jeopardy. 

Our written testimony describes the alternative ways of protecting the Lesser Prairie-Chicken that we are looking at, and we 

are working with numerous other Oklahoma agencies and companies to actively engage our state wildlife experts to do just that. 

In all these matters, the EPA and the Federal agencies would be 

well served by an understanding of the implications and the affected interests prior to taking action. And to take a rational and 

harmonized course of action designed to minimize the impact to enVerDate Aug 31 2005 14:48 Aug 22, 2012 Jkt 000000 PO 00000 Frm 00041 Fmt 6633 Sfmt 6633 C:\DOCS\75466.TXT APRIL
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ergy development, which is a critical economic engine for our State 

and for the nation. 

Thank you for allowing me to be here to present my views. 

Chairman ISSA. Thank you. 

[Prepared statement of Ms. Horn follows:] 

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Chairman ISSA. Mr. Woodard. 

STATEMENT OF BRIAN WOODARD 

Mr. WOODARD. Chairman Issa, Chairman Lankford, Congressman Farenthold, my name is Brian Woodard, and I am the Vice 

President of Regulatory Affairs with the Oklahoma Independent 

Petroleum Association. 

I appreciate the opportunity to testify in my hometown today 

concerning unnecessary and burdensome regulations which unduly 

threaten America’s energy future. 

The OIPA was founded in 1955 and represents, approximately, 

2,300 small to large independent operators who are primarily involved with the exploration and production of crude oil and natural 

gas in the State. 

In recent years, assisted by technological advances in horizontal 

drilling and hydraulic fracturing, Oklahoma oil and gas operators 

have actively developed sources of natural gas like the Woodford 

Shale, as well as sources of natural gas liquids and crude oil in the 

Cleveland, Tonkawa, Granite Wash and Mississippi Lime plays. 

Since 2009, Oklahoma’s oil and natural gas industry has added 

nearly 12,000 jobs. 

As I hope my testimony reveals, this industry, along with the associated jobs and energy from the fossil fuel it produces, is critical, 

not just to Oklahoma, but to the nation. 

However, as I sit before you today and tout America’s current oil 

and gas renaissance, and as the blueprint has been laid for a true 

era of U.S. energy independence, the current administration has 

countered with an equivalent flood of regulatory policies which 

threaten to undermine this bright energy future. 

To elaborate on this, I will briefly discuss two recent Federal air 

regulations in addition to challenges we, as Oklahomans, face due 

to recent and unprecedented actions under the Endangered Species 

Act. 

In 2008, Congress directed the EPA to conduct an inventory of 

greenhouse gas emissions throughout all sectors of the economy. 

Subpart W is the section of the resultant EPA rule dealing with the 

onshore oil and natural gas industry. 

Although Congress directed the EPA to conduct ‘‘an inventory,’’ 

EPA’s rule requires annual reporting on behalf of operators. 

According to analyses of past GHG inventories, oil and natural 

gas production activities were believed to collectively account for 

two percent of national GHG emissions, with the largest portion of 

that two percent being vented natural gas itself, or methane. 

To place this level of methane emissions into context, EPA’s own 

inventories note that enteric fermentation, or cattle flatulence, contribute substantially higher quantities of methane. However, rather 

than using simple estimation techniques, EPA created an extremely complex and burdensome regulation that consumed 44 

pages in the Federal Register and has led to excessive financial impacts on the order of hundreds of thousands, if not millions, of dollars for some of our larger independent producers. 

In a similar fashion to this administration’s recent proposal to 

regulate the practice of hydraulic fracturing prior to the completion 

of the Hydraulic Fracturing Study, EPA has continued their ‘‘reguVerDate Aug 31 2005 14:48 Aug 22, 2012 Jkt 000000 PO 00000 Frm 00062 Fmt 6633 Sfmt 6633 C:\DOCS\75466.TXT APRIL
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late then validate’’ trend by crafting an additional air rule which 

regulates the very emissions for which Subpart W was designed to 

inventory. While the EPA has commented on the record that this 

New Source Performance Standard Subpart 0000 rule will be costeffective for the industry, this statement is not only misleading, but 

is insulting. 

Under this rule, EPA has used methane as a surrogate for volatile organic compounds to justify the economic basis of the rule. In 

order to be cost effective, the rule should only apply to production 

streams which contain a meaningful VOC concentration. For 

sources with significantly low to zero VOC content, such as dry gas 

shales like the Haynesville and Barnett and others, the cost per 

ton of emission reductions drastically exceeds historically acceptable levels. 

Unfortunately, excessive regulation under the Clean Air Act is 

only one of many regulatory hurdles, which Oklahoma oil and gas 

producers face. 

Switching to the topic of the Endangered Species Act, in September, 2011, the U.S. Fish and Wildlife Service reached an unprecedented settlement agreement with the two conservation 

groups. 

As a result of the settlement, the Fish and Wildlife Service is required to establish annual work plans that gradually reduce a 

backlog of greater than 600 candidate species over a six-year period. Of particular concern to Oklahoma, as previously noted, oil 

and gas operators is a listing and critical habitat designation for 

the Lesser Prairie-Chicken. 

As previously mentioned, Oklahoma has been blessed with rich 

energy resources including four of this nation’s leading tight oil and 

gas plays; however, the listing of the Lesser Prairie-Chicken threatens to jeopardize the development and production of this economic 

boon, as the chicken’s habitat range directly overlies the core acreage of these plays. It is our hope that the Fish and Wildlife Service, 

working with State and local stakeholders, will recognize and support the extensive voluntary conservation efforts that are currently 

underway, rather than impeding economic development with a 

chilling, threatened or endangered listing under the antiquated Endangered Species Act. 

And last but not least, I would like to mention a recent ESA development affecting oil and gas producers, among others, throughout the eastern portion of our State. The American Burrowing Beetle was listed as endangered in 1989. At the time, the beetle’s 

known habitat consisted of two colonies encompassing two counties 

across the U.S., one of which was Oklahoma’s own Latimer County. 

The listing was made without the designation of any critical habitat, and the recovery plan hasn’t been updated in over two decades. 

However, the beetle has since been recognized to exist by the 

thousands across many of the southern plains states. With the unveiling of a shocking new Guidance Document in April, overnight, 

and, again, I’ll say overnight, Guidance Document, the Service had 

revised the beetle’s habitat range based on new modeling standards 

and eliminated industry’s only protocol allowing for continued, sustained development within the habitat range. 

60 

A revised guidance supporting interim relief measures and protocols for continued development without guidance, construction of oil 

and gas pad sites, pipelines and roads will continue to be stalled 

throughout the beetle’s habitat range. 

In conclusion, we must reduce the insurmountable Federal regulatory hurdles which plague domestic operators and impede our 

ability to achieve energy independence and freedom from foreign 

fuels. 

This concludes my testimony. 

Thank you. 

Chairman ISSA. Thank you. 

[Prepared statement of Mr. Woodard follows:] 

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Chairman ISSA. Mr. Leonard. 

STATEMENT OF JOSEPH LEONARD 

Mr. LEONARD. Good morning and thank you for providing the opportunity to testify on such an important issue. 

My name is Joe Leonard, and I am the Environmental, Health 

and Safety Engineer for Devon Energy with a particular technical 

expertise in air quality. 

EPA’s unreasonable and inappropriate misuse of industry data 

and bad science leads to unnecessary and burdensome air quality 

regulations on the oil and gas industry. I would like to focus on two 

examples of this today. 

First, I would like to address EPA’s development of an emission 

factor for well completions by improperly using Natural Gas STAR 

data. In short, the EPA assumes that gas recovered would have 

otherwise been flared or vented. However, industry data shows 

that reduced emission completions account for significantly more 

gas produced and sold than would be flared or vented during older 

and less common completion processes. 

The figure in my written testimony depicts the comparison between what EPA perceives and what industry data actually shows. 

Second, EPA Region 6 recently designated Wise County in the 

State of Texas, a significant production and transmission area to 

be in ‘‘nonattainment’’ for ozone. Region 6’s argument can best be 

described as arbitrary and capricious. 

Their stance rests only on two data points and their attempt to 

link The Barnett Shale gas production development. Their science 

behind the designation is lackluster and relies on methods rejected 

by other EPA regions. 

In regards to flawed completion emissions, EPA continues to 

state that reduced emission completion estimates are reasonable 

estimates for gas that would have otherwise been flared or vented 

- despite a wealth of data showing that those estimates are dramatically overstated. This overstatement is consistent with the latest industry study from API/ANGA of more than 90,000 wells that 

demonstrated estimates were at least 100% too high across upstream processes. This work follows similar industry work that 

shows even greater errors. 

This is outrageous because EPA, using incorrect assumptions, 

applying inappropriate data, and then analyzing it improperly, has 

not only changed its emission estimates for completion operations 

on a forward-looking basis, but revised all oil and gas completion 

estimates back to 1990 - a period before the combined use of horizontal drilling and hydraulic fracturing. 

Since revising its estimates, EPA submitted those estimates as 

part of the US input to the UN Intergovernmental Panel on Climate Change, giving it a worldwide audience. 

The effect of the revision has allowed for the mischaracterization 

of natural gas. Non-governmental organizations and university 

studies have claimed that (on a life-cycle basis) gas-fired electricity 

generation is no cleaner than coal-fired, and that natural gas-powered vehicles are no cleaner than those running on gasoline. 

The ripple effects like these will continue until EPA acknowledges and corrects this inaccurate data. Severe damage has been 

65 

inflicted on the many benefits of using natural gas as a clean fuel 

that will last for years to come. EPA must exercise more scrutiny 

in their methods for calculating such factors if the oil and gas industry is to be represented fairly. This issue proves that casual efforts on the part of the EPA can have such a strong and negative 

impact to our industry. 

As I mentioned earlier, EPA has recently designated Wise County, Texas, as an ozone non-attainment area contributor. An area is 

considered ‘‘nonattainment’’ when it exceeds a national air standard, in this case, ozone. The area must then take steps to come to 

‘‘attain’’ the standard, or come into ‘‘attainment’’. 

That action, in Region 6, was initiated under a since-resigned regional administrator who once likened enforcement action approaches to the oil and gas industry to what might be described as 

examples by crucifixion. 

There are several other concerns when analyzing their justification for nonattainment. 

Concern 1: The model used by Region 6 is inadequate for modeling ozone formation and transport. Other regions, specifically, refused to use this method because of its unreliability. 

Concern 2: The model only traced two events over four years 

passing through Wise County, one of which originated in the notoriously nonattainment Tarrant County, which is coincidentally the 

same county of the only monitor that EPA provided results for. 

Data shows that winds blow from Wise County into Tarrant County less than three percent of the time. Other EPA regions denied 

nonattainment considerations based solely on wind occurrences of 

less than 20% of the time. 

Concern 3: We do not know the results from other monitors 

downstream of the prevailing wind from Wise County. If the EPA 

Region 6 wanted to justify Wise County as a contributor of ozone, 

why did they not provide results from more representative monitors? As the Texas Commission of Environmental Quality described, the presented data seems to be ‘‘cherry-picked’’. 

The second figure in the written testimony shows a composite of 

all modeling results done by EPA Region 6, with the two Wise 

County events highlighted in red. 

If Wise County is, in fact, nonattainment, then Devon will diligently comply with the regulations, but we do not believe the EPA’s 

argument, or the data supporting their decision. 

In conclusion, it is difficult to adequately capture all of the unnecessary and burdensome air regulations imposed on our industry. 

I hope that the examples of completion emission estimates and 

Wise County Nonattainment provide at least some insight into this 

issue. 

This concludes my testimony. Thank you. 

Chairman ISSA. Thank you. 

[Prepared statement of Mr. Leonard follows:] 

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Chairman ISSA. I want to thank all of you for your testimony. 

We’ve got more questions than we possibly have time to have answered. So I would ask each of you, the questions we don’t get to 

in this session, will you agree to make your best effort to answer 

them in writing? Without objection your answers in writing will be 

also be included, as well in the oral testimony today. 

Mr. Leonard, Winston Churchill once said, an appeaser is somebody who feeds crocodiles hoping they will eat him last. Has Congress been effectively, as many of us think, including Mr. Woodard, 

appeasers by, instead of fighting the, if you will, the cooked books, 

the flawed science and so on, simply trying to reach a compromise, 

do a piece of it? Is one of our challenges the fact that we haven’t 

confronted agencies that no matter how clean the air and water is, 

and no matter how much it would cost to incrementally clean it a 

little more, we, essentially, try to compromise rather than saying, 

at what point do we weigh the cost benefits in a different way 

when the cost to augment is higher. Ms. Horn certainly brought 

that up with a billion dollar example. 

Do you think, in fact, it’s time for Congress to stop, as Senator 

Inhofe might say, appeasing? 

Mr. LEONARD. We’ve actually met with some members of the 

Government. In regards to completion emission issues, we, quite 

frankly, feel that we’ve been stonewalled. We presented both written comments and met with them personally and have not received 

the feedback that we would deem as adequate. 

However, organizations like this seem to be open to communicate, and we sincerely appreciate that. 

Thank you. 

Chairman ISSA. Ms. Horn, when energy production facilities are 

put online on behalf of, if you will, the downstream constituency, 

does EPA, OSHA, everybody else weigh in to every little nuance of 

detail of how much you’re going to put out in order to produce that 

electricity? 

Ms. HORN. No. We don’t have everyone weighing in. (Inaudible). 

Chairman ISSA. Right. So in order to get a license, your scrubbers and your stacks, your processes, all are evaluated and approved when you get your permit, both Federal and State; isn’t 

that true? 

Ms. HORN. Yes, that’s true. 

Chairman ISSA. So in a sense, when Government comes in during 

a licensed period, let’s say a 30-year period, which is, I think, typical for plants and then relicensing, when they come into the middle of a period, aren’t they breaking an implied contract, one in 

which you know you were online safe, there was an actuarial calculation over the life of that production using coal, what would 

come out in the way of emissions, isn’t the Government, in fact, 

breaking a promise, a promise that, during that licensed period, 

you would be able to do certain things? 

Ms. HORN. Yes, I agree, they are. It’s an implied contract that, 

based upon how we looked at it at the time, that we’re going to 

conduct it that way. 

Chairman ISSA. And with an anticipation of re-licensing your facilities, and your facilities go through re-licensing, you do normally 

70 

anticipate that there will be updates, modernization and costs, correct? 

Ms. HORN. Yes. 

Chairman ISSA. So as members of Congress, trying to figure out 

where the fair balance is, shouldn’t we give you that quiet period 

of enjoyment unless there is irreparable harm, not anticipated in 

the permit, so that the taxpayers, in this case, the rate payers, 

could know that, over that period of time, they could expect—and 

this is assuming you get the same quality of coal, the same everything else. Isn’t that, essentially, the broken promise that you deal 

with in your industry and boiler MACT and these other new regulations coming in and wanting to grab you for billions of dollars 

mid-stream. 

Ms. HORN. Absolutely. Certainty is something we must have to 

run our utility business. 

Chairman ISSA. Ms. McDonald, you were very convincing of 

something I’m glad you put it in the record, and that is that the 

tax treatment that you enjoy is, in fact, tax treatment that every 

manufacturer, every production, everybody enjoys and the ability to 

expense labor. But more importantly, the dates you put in. And I 

want to thank you for that. 

Often, in Washington, we lose track of the fact that these aren’t 

some sort of special deal that was struck in under some evil administration, like Ronald Reagan’s. In fact, these are ones that FDR 

didn’t see a problem with, and neither did anybody else until, suddenly, they just wanted to find a little more revenue for the Federal coffers and you were as good a villain as anyone. 

Mr. MING. Yes, sir. You’ll notice in the media and even our opponents in Congress call these things ‘‘subsidies.’’ They’re not subsidies. The Government does not send us a check I assure you. If 

they do, I missed out on it, and I’d like to sign up. 

Like you said, any manufacturer gets his ordinary and necessary 

business deductions, and we are—everybody has testified today, 

we’re making great strides in America and North America in energy independence, and that’s because of our increased rate in drilling. They do away with these tax provisions, our rig count is going 

to drop 30 percent. There’s no way around it. 

Chairman ISSA. It is sort of amazing that a country that prints 

money wants yours faster than you actually make it. 

Mr. MING. That’s a good point. 

Chairman ISSA. Ms. Douglas, you regulate, among other things, 

what happens to the water, what’s in the water, it goes in for 

fracking, and what happens to it after it comes out; isn’t that correct? 

Ms. DOUGLAS. For the most part. 

Chairman ISSA. So under your State control, you’ve, in fact, you 

and other State agencies, are concerned to make sure that, if, let’s 

just say, a chemical is in the water, you know, in the mixture, if 

you will, for fracking, when it comes out, you make sure that it 

doesn’t end up in the water supply, in the neighborhoods and the 

surrounding areas; isn’t that correct? 

Ms. DOUGLAS. Absolutely. We live here. We drink the water. 

Chairman ISSA. And what’s the typical well depth in Oklahoma? 

71 

Ms. DOUGLAS. It depends. It’s gotten a lot deeper with the new 

technology. You can have wells going two or three miles down and 

a mile out. So sometimes they go two miles out. 

Chairman ISSA. But are there any aquifers below a few thousand 

feet in Oklahoma? 

Ms. DOUGLAS. No. We, at the Commission, make sure that the 

water supply is protected. And most of the aquifers are much more 

shallow than where the wells are drilled. So the drilling goes much 

farther down and farther out. And we make sure that the casing, 

that everything that is put into the well is protected, protects our 

water supply. 

If we find out that something has happened, if we find a well 

that was drilled in 1907 or 1910 where there is a problem, we have 

a procedure, at the State level, to do an immediate plugging so we 

can protect our water supply. 

Chairman ISSA. And I do realize that Oklahoma is often known 

as a pincushion of the past. You’ve been drilling here a little longer 

than other places. 

I will note that, having had our first of this series of hearings 

in Bakersfield, we’ve got some old wells in California, including one 

that is under Beverly Hills High. And it’s still producing. 

I often remind my Congressman Waxman, he has oil production 

in his district. He hasn’t yet been able to shut down. 

Mr. Ming, I’ve run out of time. But I briefly wanted to sort of 

recognize a question by asking, and you control energy so you deal 

with your portfolio of oil and natural gas, and, of course, coal; isn’t 

that right? 

Mr. MING. (Nods). 

Chairman ISSA. And when we look at hydraulic fracking, you’re 

not extracting huge amounts of soil or other activities. So, just 

briefly, for the record, when we look at the history of taking copper, 

gold, silver, or, for that matter, coal out of the ground, contrast 

what the effect of fracking is on the actual disturbance thousands 

of feet down versus almost any other kind of mineral extraction, 

just so we can have that in the record. 

Mr. MING. Well, to start with, just for the water implications, the 

water requirements, from start to finish, for the life cycle for natural gas are virtually the lowest of any form of traditional energy. 

So in that regard, the impact is minimal. As you say, there’s no 

large extractive component to it. 

The other side of that, the benefits from natural gas are extraordinary in terms of what they do for the environment in terms of 

reduced criteria pollutants, reduced carbon emissions, energy efficiency opportunities from natural gas. 

The all-in potential of natural gas is what makes this so illogical 

to me an engineer. We are, essentially, trying to kill the form of 

energy that holds the most promise for our nation. 

Chairman ISSA. Thank you. 

Mr. Lankford. 

Mr. LANKFORD. Thank you, Mr. Chairman. 

I didn’t hear from anyone that our problem is supply. I asked, 

initially, is the problem regulatory or is it supply issues, or is it our 

efficiency, or is it a combination of all of that. I didn’t hear from 

anyone that we’re running out of resources. Is there a perception 

72 

here that we’re short of supply, that we don’t have the resources 

to meet the needs of our nation? 

(Several Witnesses answered no) 

Would you have said that 25 years ago? 25 years ago, looking 

back in time, we didn’t have the same technology that we have 

now, would you have said 25 years ago we don’t have the supply; 

we can’t meet it? 

(Several Witnesses said ‘‘no’’) 

Okay, then, I’m hearing them pretty loud and clear that this is 

not supply issues; this is something else. Is it State policy that’s 

the problem? And you can go ahead and speak freely. Patrice is 

right there. 

Mr. LEONARD. No. 

Mr. LANKFORD. Okay. Then is it Federal policy that’s taking this 

on, because I heard a lot of Federal regulations coming out, one 

after another. 

Mr. MING. Yes. 

Mr. LEONARD. Yes. 

Mr. LANKFORD. Okay. Let me just ask you a couple of these, 

then. 

First, let me ask about this: The Regional Haze, as you mentioned, over a two billion dollar increase on rate payers is coming 

down now, a billion in just the Regional Haze bill, why can’t the 

State take primacy in that one and the State make the decision? 

Ms. DOUGLAS. The EPA won’t let us. 

Mr. LANKFORD. Five years ago, was the State making the decision dealing with Regional Haze? 

Ms. DOUGLAS. Five years ago, I’m not sure that people were talking about it in the way that they’re talking about it now. It’s being 

construed in the way now, it looks to me, it’s being construed in 

a way to meeting an objective that’s coming from the top office in 

the nation. 

I think that, if we were permitted to make the regulation in 

Oklahoma, we could make the regulation in Oklahoma. We can 

make it with all of the stakeholders at the table. We would remember Oklahomans who live here, we would remember Oklahomans 

who are going to be paying these utility bills. We would be looking 

at the natural resources we have, as well as the economic resources. 

The Commission is in a unique position. And I what to point this 

out to you. The Oklahoma Corporation Commission has constitutional authority to regulate these industries. But we also have a 

statutory mandate to balance and protect both natural resources 

and economic resources. 

So unlike many of these Federal agencies that are only looking 

at one thing, we have to look at the whole picture. So we have to 

bring everyone to the table, and we have to talk about how we can 

best balance natural resources and economic resources. 

So a State level regulation better fits the topics we’re discussing. 

Mr. LANKFORD. This morning, we talked about Regional Haze. 

That sounds like something you’d never want to breathe and never 

want to take in. Is this a health issue, Regional Haze? 

Mr. MCDONALD. Regional Haze is a visibility standard. 

73 

Mr. LANKFORD. It’s visibility. So this only affects the visibility? 

There’s nothing in the Regional Haze standards that deals with the 

quality of the air that you actually breathe? 

Mr. MCDONALD. No. It’s only about visibility and—— 

Mr. LANKFORD. Would you turn up your microphone, please? Yes, 

your microphone button right there in front of you. 

Mr. MCDONALD. I apologize. 

And it’s only in Federal parks. It’s protected visibility in Federal 

parks. That’s the whole purpose of the statute. 

Mr. LANKFORD. Okay. So is there a Federal park, in particular, 

that’s been identified in Oklahoma? 

Mr. MCDONALD. We have two areas in Oklahoma that we look 

at. The Lawton wilderness area, as well as one in Arkansas, as protected areas. But we don’t have the same type of parks that some 

of the other states have. 

Mr. LANKFORD. Okay. So, in Oklahoma, our Regional Haze 

standards are not about health; they aren’t anywhere in the nation. 

And it’s about trying to provide better visibility in one State park 

in Oklahoma. And it will be a billion dollars. 

Do you know the difference in that visibility rating that they’re 

talking about? Is it something that I can see with the naked eye, 

that I can tell if I looked at the park, and what they’re recommending, and what we actually have now, could I tell by looking 

at it, the difference? 

Mr. MCDONALD. We don’t believe you really can tell visibly. We— 

especially, we—in talking with the Commissioner about what the 

State could do, the State implementation plan is exactly how the 

State could take control of this through the Regional Haze. And if 

EPA would have allowed us to look at our State implementation 

plan, we could have done this as a State. And in doing that, the 

plan we came up with would do the same visibility improvement 

that the Feds would do at a much less, lower cost. 

Mr. LANKFORD. The rules that are going down deal with hydraulic fracking, specifically, whether it be air quality coming out of 

that or whether it would be the water affects on it. Are those 

science-based at this point? Is there a scientific study completed by 

EPA or by any agency that says we have to make these decisions 

because we’ve done the study, completed it, and so this is the product? 

Mr. WOODARD. I’ll answer that, Congressman. No. The answer is 

no. In fact, they’ve come out and stated that there were issues with 

hydraulic fracturing now on multiple occasions without the necessary data quality and without the proper testing standards, if 

you will. 

And they recently backtracked on three of those—— 

Mr. LANKFORD. Yes, Mr. McDonald mentioned three cases where 

the EPA made an accusation and later came back and said oops, 

that it really wasn’t what it was. 

So right now, that you know, there is no study from the Federal 

Government showing any issues with hydraulic fracking or air or 

water quality. So these decisions are based on something besides 

science? 

Mr. WOODARD. That’s correct. 

74 

Mr. LANKFORD. Just as a point of reference, the last time we had 

an administrator from EPA in front of our Committee, trace, we 

asked, pointblank, do you know of a single source of water in the 

country that is contaminated because of hydraulic fracking? And 

their response to us was, no, we don’t know of one, not one source 

of water that’s been contaminated by hydraulic fracking. So that’s 

an interesting interaction on that. 

Chairman ISSA. Do you remember how many wells have been 

drilled in Oklahoma that are fracked? We had that figure at one 

time. Isn’t it in the tens of thousands? 

Mr. LANKFORD. It’s well in excess of tens of thousands. We have 

190,000 wells in Oklahoma right now. And we’ve been fracking 

since 1948. So it’s a few. 

Chairman ISSA. It’s a few. It’s sort of amazing that you’d almost 

think that anything else we do, you would have at least a few accidents. So it’s sort of one of those things it’s so good they’ve got to 

stop us from doing it. 

Mr. Farenthold. 

Mr. FARENTHOLD. Thank you, Mr. Chairman. 

I guess I’ll start with Mr. Ming. Texas and Oklahoma have a lot 

in common as oil and gas states and such. And I was at an event 

with our Attorney General a couple of months ago. And somebody 

asked him, well, what’s your job? And he goes, well, I get up in the 

morning. I go to the office. I sue the Federal Government. I go 

home and come back the next day and sue the Federal Government 

again, trying to get oppressive Federal regulations dealt with or infringements on the various rights that the Attorney General and 

myself believe that are reserved for the States. 

What is Oklahoma doing with respect to defending itself from 

these regulations? 

Mr. MING. Well, right now, if we just look at the hydraulic fracturing, we are closely monitoring what we feel is a clear move by 

the EPA for regulation to assert primacy over the activities that 

Commissioner Douglas described. 

And I’ll quote from an inside EPA wire service. This is an individual, Fred Hauchman, Director of EPA’s Office of Science Policy, 

they are currently, ‘‘we’re doing a pretty comprehensive look at all 

the statutes where there are some holes to allow additional regulation.’’ 

And while officials from EPA say they have no intention to regulate the States, they don’t have the capability to regulate the 

States, we’re clearly seeing actions don’t meet words. And so—— 

Mr. FARENTHOLD. Is that being—do you have a thought as to 

how that’s being driven? I know we had the three points, activism, 

activists involved in the EPA, bureaucrats trying to protect their 

job. What was the third one? There was a third one. 

Mr. MING. So you have the growth of the Federal bureaucracy; 

you have activists; and then you have this agenda for Federal preemption of State primacy. 

Mr. FARENTHOLD. All right. Let me go to Mr. McDonald for a second. As an oil and gas man, do you drill on Federal lands? 

Mr. MCDONALD. I do not. 

Mr. FARENTHOLD. Is there a reason you don’t? 

Mr. MCDONALD. Yes, sir. 

75 

Mr. FARENTHOLD. Would like to share that with us? 

Mr. MCDONALD. Well, the—you know, the BLM is, I think— 

maybe Congressman Lankford, one of you all, in your all’s introductory remarks, talked about how long it takes to get a permit, 

and all of the things that you have to do to do that. And I’ve got 

a few Indian leases where I’ve had to deal with that. And I have 

intentionally, in the last 15 years, not bid on another Indian lease, 

because I have to interact with the Federal Government. 

They tell me now—and I want you to believe this. This is the 

God’s honest truth. 

They tell me what I should pay every month. In other words, I’m 

trying to get the best price I can for natural gas. And they’ve got 

a formula, and they come in and tell me, well, you didn’t get 

enough. So you have to pay us $20, $30—— 

Mr. FARENTHOLD. Regardless of the fact—— 

Mr. MCDONALD. Yes. 

Mr. FARENTHOLD. Regardless of the fact that gas is now down to what, $2.70? 

Mr. MCDONALD. Exactly. It’s unbelievable that I wouldn’t try to 

get as much money as I could for my product. But, yet, they impose 

that on us. 

So when those wells are gone, I won’t be involved in Federal or 

Indian land anymore. 

Mr. FARENTHOLD. I appreciate that. 

I want to go to Ms. Horn for a second. You were talking about 

the cost of regulation on your company. When the cost of regulation 

and the cost of doing business goes up, that doesn’t come out of 

your profit. That comes out of what you charge to the people buying electricity; is that not correct? 

Ms. HORN. That is how we work as a utility—— 

Mr. FARENTHOLD. So would it be a fair statement to say that increased regulatory costs, for all practical purposes, are a tax on the 

low income and middle class Americans? 

Ms. HORN. It operates to be a tax, yes. 

Mr. FARENTHOLD. I have a lot more questions. But I realize I’m 

already out of time. 

Chairman ISSA. We’re going to do a quick second round. 

Mr. Leonard, if you were to present to the Federal Government, 

using known bad results, known flawed science, anecdotal information that you extrapolated to get a result you wanted to get, and 

then you submitted it into a Government submission for a permit, 

what would happen to you? 

Mr. LEONARD. I would receive a weak response to my comments, 

thank you for your efforts, a pat on the back, and a thank you very 

much. 

Chairman ISSA. And that’s if you didn’t get prosecuted for lying 

to the Government, right? 

Mr. LEONARD. That’s correct. 

Chairman ISSA. So fraud on the Government would be one of the 

things that could happen if you knowingly delivered false information, extrapolations that weren’t true and used that to achieve an 

agenda to get a permit when, in fact, you shouldn’t get one, right? 

Mr. LEONARD. Yes, sir. And not only would the Government reprimand me, but so would the press. 

76 

Chairman ISSA. So one of my questions to you is, since we’re 

from the Government and we’re here to help you, what should we 

do and how should we change our Washington bureaucrats who 

knowingly produce and extrapolate and create false documents 

when we discover that, in fact, they did it with a reason, with malice and forethought in order to get a rule or some agenda that, in 

fact, was inconsistent with the true science that they knew or could 

have known? 

Mr. LEONARD. Well, I understand it’s challenging for the EPA to 

exercise proper scrutiny on all the calculations and regulations 

they must make. But they must be open to communication when 

such concerns are brought to them. And—that’s what I think. 

Chairman ISSA. Is there a real likelihood that you would simply 

stop worrying about clean air and clean water if the government 

went back to it’s historical levels of allowing you to regulate? 

Ms. DOUGLAS. No. We live here. And I have a constitutional 

duty. I take office, and I take an oath, and I have a constitutional 

duty to protect Oklahoma, to protect our natural resources, to protect our economic resources. 

So much like you’re talking about being prosecuted for information down there, I can get in big trouble, and I, frankly, don’t want 

to be in big trouble. I respect Oklahoma and Oklahomans. 

Chairman ISSA. Well, I’m just going to have to ask one closing 

question. I’ll probably just get nods, because it’s more of a comment 

than a question. 

If we were able to not send $300 billion outside the U.S., if we 

were, in fact, driving down the cost of all our energy, similar to the 

way natural gas has gotten, wouldn’t we, in fact, have tens of hundreds of billions or even trillions of dollars more to put into environmental research, into cleaning up the air, into finding science 

that would advance all kinds of benefits to mankind? And, in fact, 

for that matter, helping to educate or people? 

Mr. WOODARD. Yes. 

(Other Witnesses nod) 

Chairman ISSA. So just one closing question to all of you who 

deal in energy: Shouldn’t the greatest obligation of Government be 

to, in fact, allow and then promote energy, driving the advancement so that the spin-off advancement of a profitable and prosperous country, in fact, is the ability to do all these other things 

that our taxpayers our American citizens want us to do? 

Mr. WOODARD. Definitely. 

(All Witnesses nod) 

Chairman ISSA. So, lastly, as my red light is on, I’m going to respect the red light. 

Is the Government on exactly the wrong track by not considering 

the cost of benefit in weighing that, as we lower cost of energy, we 

increase productivity, we create American jobs, and that fuels all 

of the ability to do the other things that the American people want 

us to do? 

Mr. WOODARD. Yes, sir. 

(All Witnesses nod) 

Chairman ISSA. I’ll take that back with me. 

Mr. Lankford. 

77 

Mr. LANKFORD. Ms. Douglas, when there’s a problem with a well 

and with any kind of operation, there’s a spill that does occasionally happen. 

This is not a perfect entity at all. Do you find, typically, that they 

have violated an existing regulation or that there’s some other new 

problem that has occurred when there’s a problem with a well site. 

Ms. DOUGLAS. No. It’s, typically, an existing regulation that we 

have already got a solution for and got a regulation at the State 

level. 

Mr. LANKFORD. They’re just slapped on the wrist, or they’re 

fined, or they’re punished, or reprimanded? What happens? 

Ms. DOUGLAS. All of those things. All those things. It depends on 

the severity of the accident. 

Mr. LANKFORD. When something new occurs, hadn’t thought 

about it, hadn’t seen, brand new on it, how do States share that 

or how do States share this, this occurred in our State, and so 

state-to- state, is there some process already in place to pass this 

on to the State Regulators? 

Ms. DOUGLAS. Absolutely. We pass on all the information we get 

to other State regulatory bodies. We have a national body called 

Naylor that’s the regulatory commission where we can share information like that. 

We also have formulated specific groups to deal with specific 

problems, like the group called Stronger, which was really addressing oil and gas issues across State lines. 

Mr. LANKFORD. And how long does it take to get a new rule in 

place with them? 

Ms. DOUGLAS. On a State level? 

Mr. LANKFORD. Right, State level. 

Ms. DOUGLAS. At the State level, we started rule making processes in December and had them wrapped up in March, and that 

was after we took all the input from the stakeholders, and we had 

technical conferences, as well. 

Mr. LANKFORD. It’s a little longer than that, in the Federal Government, isn’t it? 

Ms. DOUGLAS. Yes, sir. 

Mr. LANKFORD. That seems a little more agile. 

Ms. DOUGLAS. Yes, sir. 

Mr. LANKFORD. Mr. Leonard, I want to bring up one of your 

charts that you have listed there. This is a ten-year flowback chart. 

We’ll see if we can bring that up. Because I want you to be able 

to explain that when it comes up, and we’ll see if the magic of technology can bring it. 

There it is. I want you to explain this chart a little bit to me, 

and talk about—you spoke about this in excellent technical language that probably nine people, totally, got. So I want to walk 

through this and try to help understand. 

This deals with air quality and EPA estimates of how they’re trying to determine what the air quality is around sites; is that correct. 

Mr. LEONARD. Yes, sir. 

Mr. LANKFORD. Okay. So talk us through this chart. 

Mr. LEONARD. Okay. 

78 

The chart represents the relationship between time and gas volume for a typical well flowback completion. And when a natural 

gas flow is hydraulically fractured, the first thing that comes out 

of the hole is water and sand. It must flowback out of the well so 

that gas may be produced. 

And at the initial start of flow, the stream is mostly comprised 

of this water and sand, with very little gas being able to fit in the 

pipe. But as more water and sand is recovered, that gas volume increases. 

Now, typically, after—results show that, after three and a half 

days, the gas has recovered much water and sand and is producing 

enough gas to sustain itself. After those three and a half days, the 

well is either turned to production or shut in. 

Now—and you can see after that, after three-and-a-half-day 

point, when the well is making enough gas to sustain itself, there 

is very little water and sand still left downhole, and the gas volume 

greatly increases. 

Now, industry data shows that we’re only emitting the gas volume represented by the blue in that three-and-a-half days. 

But the EPA assumes that industry is creating emissions from 

flowback processes up to 10 days. And, therefore, it accounts for 

both the blue and the red gas volumes as emissions from our industry. 

Mr. LANKFORD. Okay. So here’s my question: You represent 

Devon. If Devon were to release all of that red area that you show 

there just into the air and not capture it and sell it, would that be 

a wise thing to do or an unwise thing to do? 

Mr. LEONARD. Very unwise. 

Mr. LANKFORD. I think they’d probably have somebody’s job if 

they let that much gas just into the air on it. 

But you’re saying EPA assumes, for 10 days, all gas that’s coming out from flowback is not captured, is not sold. It’s just released 

into the air? 

Mr. LEONARD. Correct. 

Mr. LANKFORD. And their data—my point for that is their proof 

of that is what? 

Mr. LEONARD. Their proof of that is an industry study, a voluntary industry study, called the National Gas Star Program. And 

the National Gas Star Program captured emission reduction efforts 

from industry. And they captured numbers from green completions. 

Now green completions are very different from the typical completion processes, which is represented by the blue. 

Green completions, gas is captured. And so, during the recompletion process, everything in the red is captured. 

But the EPA assumes that that is all emitted. 

Mr. LANKFORD. Okay. So you’re saying it is actually captured, 

and the EPA says, no, we think you’re actually letting it go instead? 

Mr. LEONARD. Yes, sir. 

Mr. LANKFORD. Just a quick question, because I see my yellow 

light is coming on. 

Chairman ISSA. Would the gentleman yield for a minute? 

Mr. LANKFORD. Absolutely, I would, Mr. Chairman. 

79 

Chairman ISSA. I’m originally from Cleveland. So it gets colder 

there in the winter, kind of like here. But let me just put this in 

terms of, hopefully, I would understand. 

You’re sort of saying that, in the winter when you start your car 

and you don’t want to go, you go back in the house for a minute 

or two while it warms up. And then you drive down the street. 

It’s like saying that your basic fuel economy on your car was one 

mile per gallon for that first street, rather than, because it included 

all the time you idled while it warmed up. And you went back in 

to get coffee. And that first acceleration going down the street. And 

it’s capturing that and saying, over the life of that tank of gas, 

you’re going to get one mile per gallon. 

Mr. LEONARD. Yes, sir, that would be a correct statement. 

Chairman ISSA. But there’s just, literally, it’s cooked books again, 

right? 

Mr. LEONARD. Yes, sir. 

Chairman ISSA. Thank you, sir. 

Mr. LANKFORD. Actually, in Oklahoma, we go start our cars early 

in the summer. 

A couple of quick comments. 

Chairman ISSA. Would the gentleman yield one more time, 

please? 

Mr. LANKFORD. I would. 

Chairman ISSA. I would note that I formerly created remote 

starters, so you push the button, and whether it was hot or cold, 

the car adjusted before you went out there. But that’s a former life. 

Mr. LANKFORD. Secretary Ming, you mentioned we are 10 years 

away from energy independence if we don’t mess this up. Do you 

have a couple of areas that you look at and say these are really 

the critical areas, or is it just a whole series of things? But a statement to say we’re a decade away from energy independence is a 

pretty strong statement. 

Mr. MING. It is a strong statement, but the reality is in the data. 

And I said that in regard to North America. 

Mr. LANKFORD. We’d be in North America. 

So Canada, United States, Mexico, take just energy, so we don’t 

need OPEC oil, we don’t need Venezuelan oil; we don’t need North 

African oil, just for North America, we can reach energy independence in ten years. 

Mr. MING. That’s correct. And it’s a combination. You have new 

energy supplies coming from the oil sands of Canada, extraordinary 

new oil supplies coming from North Dakota and the Bakken shell, 

and formerly marginal supplies of oil in, essentially, counties in 

Western Oklahoma that were out of the money just as soon as ten 

years ago. Everything is back in play now. 

So you take those three combinations of supply, and then you 

take the opportunities around energy efficiency, plus the opportunities of natural gas as a substitution fuel for transportation. All of 

those, collectively combined, it is very possible that we can be energy independent in the next ten years. 

Mr. LANKFORD. Mr. Leonard, I’m going to follow up with additional written questions about Wise County. That is a very serious 

issue, dealing with what’s happened in Wise County, because that 

can affect us here in Oklahoma City, obviously. 

80 

Mr. LEONARD. Yes. 

Mr. LANKFORD. And the days to come on that. 

And one quick statement from Mr. McDonald about not drilling 

on Federal lands. My comment on that is, obviously, if other 

drillers, like you, and I know that has occurred, that the process 

is now so bulky to drill on Federal lands, and a couple of things, 

one that reduces income to taxpayer, because the taxpayer is not 

getting the royalty amount now. 

And then in the western part of the United States, where the 

bulk of the land is BLM lands. In Oklahoma, we have very little 

Federal lands and crop lands and such. But you get into areas like, 

Utah and Nevada, and it’s up to 90 percent of the real estate in 

the State is controlled by the Federal Government, that’s a tremendous hit to jobs in those areas if other drillers continue to do that. 

Mr. MCDONALD. That is true. And, also, the Federal Government 

is taking a lot of that land out of the ability to lease for oil and 

gas. So you’ve taken a huge resource that, even if they were to permit it, you know, in those certain areas, they’ve taken it, and you 

can’t even drill. 

Mr. LANKFORD. It is my understanding we’re headed to North 

Dakota, and it will be one of the questions that I have for some 

of the folks in North Dakota, because they have a mixture of BLM 

lands and private lands there that I want to ask the timing, how 

long it takes to get a permit on private, how long it takes to get 

a permit on Federal lands there. 

Mr. MCDONALD. The Oklahoma Corporation Commission has got 

a special provision if I pay a little more money, I can go down there 

and get a permit in one day if my permit is in proper order. But 

I’ve been told by friends six, nine, twelve months a lot of times, for 

a permit on Federal land. 

Mr. LANKFORD. Well, the good news is they make you pay additional money anyway. 

Chairman ISSA. Mr. Farenthold. 

Mr. FARENTHOLD. Thank you very much. 

Mr. Ming, you talked a little bit about natural gas and the abundance of natural gas moving transportation over to natural gas. Is 

Oklahoma involved in doing anything to promote that or stimulating or working with the private sector to get that to happen 

more quickly? 

Mr. MING. Congressman, I’m really glad you asked that question. 

Yes, we are. Governor Fallin along with Governor Hickenlooper of 

Colorado have led an effort among Governors, no offense to Washington, but we feel the States can push this effort forward to do 

a statewide procurement of natural gas vehicles, which would partner with manufacturers to entice them to build a functional and affordable natural gas vehicle at a price point where consumers can 

buy it. And as of today, 13 Governors, in a very bipartisan fashion, 

have signed onto that. And we anticipate releasing a request for a 

proposal to all the automobile manufacturers here within a couple 

of weeks. 

(Inaudible) 

It will actually be auto and truck, yes. 

Mr. FARENTHOLD. It’s my understanding that part of the problem 

with natural gas vehicle is getting refueling infrastructure in place 

81 

with the gas stations that now sell gasoline, would sell—have some 

sort of facilities to sell the natural gas for the vehicles. 

It’s also my understanding that, in typical American entrepreneurial fashion, even the large auto manufacturers in Detroit are 

realizing that there’s a potential market here. And there was a recent Wall Street Journal article that says they’re doing combination vehicles that have an eight-gallon gasoline tank, as well as a 

natural gas tank. So when you’re in a location where you cannot 

refuel in natural gas, you’re stuck. And that was done despite the 

Government involvement with the automobile industry. It was 

done with a minimal amount of Government help of choosing winners and losers. 

Ms. HORN. I want to go back. You were talking about diversity 

of fuel sources as being a key to the success of the electric energy. 

And it’s my understanding Oklahoma, obviously, has coal and 

wind, natural gas. I’m assuming there’s some nuclear here, as well? 

As far as our company, we’re a natural gas, coal and wind. 

Mr. FARENTHOLD. Okay. 

Ms. HORN. Nuclear is over in Arkansas. 

Mr. FARENTHOLD. Now, your wind farms, the Endangered Species Act is also, the prairie-chickens, are also an issue with your 

wind farms. The green folks seem to think that wind is the end all, 

be all. Can you tell me what the problem is with the prairie-chickens and the wind farms? 

Ms. HORN. That’s an interesting question, because we were asking that same question. What is it about wind farms that either affects or threatens the species? And right now, we have not heard 

anything about the structures themselves, that they documented 

that actually affects the species. So we’re looking at what threatens 

the chickens and making sure that what we do is—— 

Mr. FARENTHOLD. I think it scares them. They think it’s a bird 

of prey coming after them, is what I’ve heard. 

Let me ask you one more question about EPA. 

You indicated the EPA comes in and tells you you’ve got to do 

a lot of stuff. Are they good at helping you with exactly what you’re 

going to do? They come in and say, oh, you know, you’re in noncompliance on this. Obviously, the next question is: What do we 

need to do to get in compliance? Are they helpful in that at all. 

Ms. HORN. I’ll just have to say, most recently, they seem to have 

an agenda. And that agenda seems to be affecting the way we generate—and the fuel we use to generate electricity. So there seems 

to be an agenda. While they are very, you know, (inaudible) EPA, 

overall, it seems to be that they have an agenda in mind or are not 

willing to compromise. 

Mr. FARENTHOLD. All right. Well, I see my yellow light is coming 

on. Again, I could go on for quite a while, but I will (inaudible). 

Chairman ISSA. Thank you. 

If there are no further questions, I had one last thing for Mr. 

McDonald. Now, you did say you’re still operating on Tribal lands? 

Mr. MCDONALD. Yes. 

Chairman ISSA. And paying a royalty? 

Mr. MCDONALD. Yes. 

Chairman ISSA. 17 or 18 percent? 

Mr. MCDONALD. I think it’s more like 20 percent. 

82 

Chairman ISSA. 20 percent. Now that’s on the gross, right? 

Mr. MCDONALD. Yes, sir. 

Chairman ISSA. So Government doesn’t actually take a hit for 

how little you make. If your gross and your net came off—if you, 

in fact, made not a penny, you’d still pay 20 percent of the gross. 

Mr. MCDONALD. That is correct. 

Chairman ISSA. So your partner on Federal land is a partner 

that takes first and doesn’t worry about whether there’s anything 

left at the end. 

Mr. MCDONALD. Yes, sir. 

Chairman ISSA. I just wanted to make sure we understand the 

problem you have with Federal lands. I couldn’t resist. 

It’s our goal to make the Federal Government a better partner, 

one who does protect the American people, and one who, at the 

same time, recognizes that America’s low cost, high quality energy 

is, in fact, part of the most important difference between the caveman and modern man. And countries who don’t understand that do 

so at their peril. 

I travel around. Many of us get to take sometimes what’s called 

junkets, you know, overnight to Afghanistan or Iraq. But I also go 

to China, and I also go to many of those other countries. And they 

all have strategic energy plans in which they’re trying to make 

sure that they control their energy future. 

It’s our commitment on the Committee to take what you’ve told 

us today, plus the additional questions you’ll answer in writing, put 

it not just into the record, but put it into an action plan for the 

next administration. 

And with that, again, I thank you for your testimony. Your ability to revise and extend any additional ideas you came up with will 

also be placed in the record. 

And with that, I want to finally thank our audience. You’ve been 

extremely good. I’ve heard neither interruptions through phone 

ringing nor did I hear any boos. 

So with that, we stand adjourned. 

[Whereupon, the committee was adjourned.] 

Æ