```

[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]

EFFECT OF PRESIDENT'S FY 2012 BUDGET AND LEGISLATIVE PROPOSALS FOR THE 
  BUREAU OF LAND MANAGEMENT AND THE U.S. FOREST SERVICE'S ENERGY AND 
MINERALS PROGRAMS ON PRIVATE SECTOR JOB CREATION, DOMESTIC ENERGY AND 
            MINERALS PRODUCTION, AND   DEFICIT   REDUCTION

=======================================================================

                           OVERSIGHT HEARING

                               before the

                       SUBCOMMITTEE ON ENERGY AND
                           MINERAL RESOURCES

                                 of the

                     COMMITTEE ON NATURAL RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                         Tuesday, April 5, 2011

                               __________

                           Serial No. 112-17

                               __________

       Printed for the use of the Committee on Natural Resources

         Available via the World Wide Web: http://www.fdsys.gov
                                   or
          Committee address: http://naturalresources.house.gov

                  U.S. GOVERNMENT PRINTING OFFICE
65-597 PDF                WASHINGTON : 2011
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                     COMMITTEE ON NATURAL RESOURCES

                       DOC HASTINGS, WA, Chairman
             EDWARD J. MARKEY, MA, Ranking Democrat Member

Don Young, AK                        Dale E. Kildee, MI
John J. Duncan, Jr., TN              Peter A. DeFazio, OR
Louie Gohmert, TX                    Eni F.H. Faleomavaega, AS
Rob Bishop, UT                       Frank Pallone, Jr., NJ
Doug Lamborn, CO                     Grace F. Napolitano, CA
Robert J. Wittman, VA                Rush D. Holt, NJ
Paul C. Broun, GA                    Raul M. Grijalva, AZ
John Fleming, LA                     Madeleine Z. Bordallo, GU
Mike Coffman, CO                     Jim Costa, CA
Tom McClintock, CA                   Dan Boren, OK
Glenn Thompson, PA                   Gregorio Kilili Camacho Sablan, 
Jeff Denham, CA                          CNMI
Dan Benishek, MI                     Martin Heinrich, NM
David Rivera, FL                     Ben Ray Lujan, NM
Jeff Duncan, SC                      John P. Sarbanes, MD
Scott R. Tipton, CO                  Betty Sutton, OH
Paul A. Gosar, AZ                    Niki Tsongas, MA
Raul R. Labrador, ID                 Pedro R. Pierluisi, PR
Kristi L. Noem, SD                   John Garamendi, CA
Steve Southerland II, FL             Colleen W. Hanabusa, HI
Bill Flores, TX                      Vacancy
Andy Harris, MD
Jeffrey M. Landry, LA
Charles J. ``Chuck'' Fleischmann, 
    TN
Jon Runyan, NJ
Bill Johnson, OH

                       Todd Young, Chief of Staff
                      Lisa Pittman, Chief Counsel
                Jeffrey Duncan, Democrat Staff Director
                 David Watkins, Democrat Chief Counsel
                                 ------                                

              SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES

                       DOUG LAMBORN, CO, Chairman
               RUSH D. HOLT, NJ, Ranking Democrat Member

Louie Gohmert, TX                    Peter A. DeFazio, OR
Paul C. Broun, GA                    Madeleine Z. Bordallo, GU
John Fleming, LA                     Jim Costa, CA
Mike Coffman, CO                     Dan Boren, OK
Glenn Thompson, PA                   Gregorio Kilili Camacho Sablan, 
Dan Benishek, MI                         CNMI
David Rivera, FL                     Martin Heinrich, NM
Jeff Duncan, SC                      John P. Sarbanes, MD
Paul A. Gosar, AZ                    Betty Sutton, OH
Bill Flores, TX                      Niki Tsongas, MA
Jeffrey M. Landry, LA                Vacancy
Charles J. ``Chuck'' Fleischmann,    Edward J. Markey, MA, ex officio
    TN
Bill Johnson, OH
Doc Hastings, WA, ex officio
                                 ------                                

                                CONTENTS

                              ----------                              
                                                                   Page

Hearing held on Tuesday, April 5, 2011...........................     1

Statement of Members:
    Holt, Hon. Rush D., a Representative in Congress from the 
      State of New Jersey........................................     4
        Prepared statement of....................................     5
    Lamborn, Hon. Doug, a Representative in Congress from the 
      State of Colorado..........................................     1
        Prepared statement of....................................     3

Statement of Witnesses:
    Abbey, Hon. Robert V., Director, Bureau of Land Management, 
      U.S. Department of the Interior............................     6
        Prepared statement of....................................     8
    Bolton, Shawn, Commissioner, Rio Blanco County, Colorado.....    44
        Prepared statement of....................................    45
    Ferguson, Hon. Tony, Director, Minerals and Geology 
      Management, U.S. Forest Service, U.S. Department of 
      Agriculture................................................    11
        Prepared statement of....................................    13
    Fosburgh, Whit, President and CEO, Theodore Roosevelt 
      Conservation Partnership...................................    60
        Prepared statement of....................................    62
        ``FACTS for Fish and Wildlife--Revisited: Balanced 
          Management for Energy and Fish and Wildlife Can Be 
          Accomplished with the FACTS'' submitted for the record.    68
    Schroeder, James, President and CEO, Mesa Energy Partners, 
      LLC, and President, Western Energy Alliance................    46
        Prepared statement of....................................    48
    Skaer, Laura, Executive Director, Northwest Mining 
      Association................................................    50
        Prepared statement of....................................    52
        Table 1 submitted for the record.........................    59

Additional materials supplied:
    ``Leasing of Onshore Federal Oil and Gas Resources'' from BLM 
      website....................................................    43

 
OVERSIGHT HEARING ON THE ``EFFECT OF THE PRESIDENT'S FY 2012 BUDGET AND 
 LEGISLATIVE PROPOSALS FOR THE BUREAU OF LAND MANAGEMENT AND THE U.S. 
  FOREST SERVICE'S ENERGY AND MINERALS PROGRAMS ON PRIVATE SECTOR JOB 
    CREATION, DOMESTIC ENERGY AND MINERALS PRODUCTION, AND DEFICIT 
                              REDUCTION.''

                              ----------                              

                         Tuesday, April 5, 2011

                     U.S. House of Representatives

              Subcommittee on Energy and Mineral Resources

                     Committee on Natural Resources

                            Washington, D.C.

                              ----------                              

    The Subcommittee met, pursuant to call, at 10:06 a.m. in 
Room 1324, Rayburn House Office Building, Hon. Doug Lamborn 
[Chairman of the Subcommittee] presiding.
    Present: Representatives Lamborn, Coffman, Thompson, Gosar, 
Fleischmann, Holt, DeFazio, Bordallo, Costa, Sablan, and 
Sarbanes.
    Mr. Lamborn. The Subcommittee will come to order. The 
Chairman notes the presence of a quorum which, under Committee 
Rule 3[e], is two Members.
    The Subcommittee on Energy and Mineral Resources is meeting 
today to hear testimony on the Effect of the President's Fiscal 
Year 2012 Budget and Legislative Proposals for the Bureau of 
Land Management and the U.S. Forest Service's Energy and 
Minerals Programs.
    Under Committee Rule 4[f], opening statements are limited 
to the Chairman and Ranking Member of the Subcommittee, so that 
we can hear from our witnesses more quickly. However, I ask 
unanimous consent to include any other Members' opening 
statements in the hearing record if submitted to the Clerk by 
close of business today.
    [No response.]
    Mr. Lamborn. Hearing no objection, so ordered. I now 
recognize myself for an opening statement.

    STATEMENT OF THE HON. DOUG LAMBORN, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF COLORADO

    Mr. Lamborn. During today's hearing we will hear from the 
Administration their justification for the budget and 
legislative proposals they have submitted for the Federal 
Onshore Energy Minerals programs.
    Traditionally, the Energy and Mineral programs, under the 
jurisdiction of this Subcommittee, bring in the most revenue to 
the Federal Treasury, behind the Internal Revenue Service. 
According to the Department of the Interior's own economic 
analysis, Federal lands contribute $370 billion in economic 
activity annually, most of it from energy development. If the 
Department had included locatable mineral activity, the number 
would be even higher.
    In addition, Federal lands are a key contributor to job 
creation. The Administration's own jobs report said that more 
than half the jobs created by the Department's activities are 
related to energy and mineral production, more than 726,000.
    When we talk about potential new job creation, the 
opportunities are endless, whether from a new copper mine in 
Arizona, a new solar field in Nevada, or a new oil and natural 
gas resource in Utah.
    Unfortunately, since the Administration took office, the 
Department of the Interior has taken steps to reduce access to 
domestic energy and mineral resources on Federal lands, 
including renewable resources like wind and solar. The recently 
announced so-called Wildlands program will further reduce 
energy and mineral development on Federal lands, and exacerbate 
the flight of investment capital from the public-land States to 
those States with resources located on State and private lands; 
or even overseas, to foreign nations.
    This is devastating to the Federal land counties in the 
West that still need to provide goods and services for the 
residents of their counties, and the many visitors to the 
public lands that come to use the national parks, wildlife 
refuges, national monuments, or just come to camp or hunt, 
fish, or hike on Forest Service and BLM lands.
    It is important to recognize the extraction of energy and 
mineral resources represents the introduction of brand-new 
money into the nation's economic system, as well as providing 
the commodities needed by people for the things they use every 
day in their lives, the raw materials. This is an important 
aspect of who we are as a nation.
    Just last week there was an article highlighting that there 
are more people working for government than working in 
manufacturing. I am sure that in nearly all our States, the 
same dynamic holds true for resource development. It is hard to 
envision that a nation can become wealthy by simply selling 
things made and produced elsewhere. At some point, that 
financial engine will run out.
    It is imperative to the economic security of our nation 
that we develop our own domestic resources that we are 
fortunate enough to have within our borders.
    A recent CRS report that analyzed USGS energy resource 
assessments determined that the U.S. has the largest barrel-of-
oil equivalent in the world: 1.3 trillion BOE. We don't have 
the same kind of comprehensive assessments for locatable 
minerals like copper, gold, or rare-earth minerals; however, 
these mineral commodities the U.S. has in abundance, also.
    Ensuring that we have robust energy and mineral programs 
within the BLM and Forest Service will create jobs, increase 
our domestic supply of energy and critical and strategic 
mineral resources, and increase money coming to Federal, State, 
and local Treasuries, is what I think our goal should be.
    I am concerned, however, that the current Administration is 
not moving in the direction to achieve private sector job 
growth in these important sectors of our economy, and is too 
willing to depend on OPEC to make up the nation's shortfall in 
oil production. The Administration's policies instead have and 
will contribute to job loss, further dependence on foreign 
sources for the energy and mineral needs of the country, and 
severely limit the revenue stream from the development of 
Federal mineral resources.
    I look forward to hearing from our other witnesses affected 
by the policies that have been implemented since the 
Administration took office, and their perspectives on the 
proposed 2012 budget and legislative proposals.
    I now recognize the Ranking Member for five minutes for any 
statement that he might have. Representative Holt.
    [The prepared statement of Chairman Lamborn follows:]

          Statement of The Honorable Doug Lamborn, Chairman, 
              Subcommittee on Energy and Mineral Resources

    During today's hearing we will hear from the Administration 
justification for their budget and legislative proposals for the 
federal onshore energy minerals programs. Traditionally the energy and 
mineral programs under the jurisdiction of this subcommittee bring in 
the most revenue to the federal treasury behind the IRS. According to 
the Department of the Interior's own economic analysis, federal lands 
contribute $370 billion in economic activity annually, most of it from 
energy development. If the department had included locatable mineral 
activity the number would be even higher.
    In addition, federal lands are a key contributor to job creation. 
The Administration's own jobs report said that more than half the jobs 
created by the Department's activities are related to energy and 
mineral production--more than 726, 000. When we talk about potential 
new job creation the opportunities are endless, whether from a new 
copper mine in Arizona, a new solar field in Nevada or a new oil and 
natural gas resource in Utah.
    Unfortunately, since the Administration took office the Department 
of the Interior has taken steps to reduce access to domestic energy and 
mineral resources on federal lands including renewable resources like 
wind and solar. The recently announced ``wild lands'' program will 
further reduce energy and mineral development on federal lands and 
exacerbate the flight of investment capital from the public land states 
to those states with resources located on state and private lands or 
overseas to foreign nations. This is devastating to the federal land 
counties in the West that still need to provide goods and services for 
the residents of the county and the many visitors to the public lands 
that come to use the National Parks, Wildlife Refuges, National 
Monuments or just come to camp or hunt and fish on Forest Service and 
BLM lands.
    It's important to recognize the extraction of energy and mineral 
resources represents the introduction of brand new money into the 
nation's economic system as well as providing the raw materials needed 
by people for the things they use every day in their lives. This is an 
important aspect of who we are as a nation. Just last week there was an 
article highlighting that there are more people working for government 
than working in manufacturing. I am sure that in nearly all our states 
that same dynamic holds true for resource development. It is hard to 
envision that a nation can become wealthy by simply selling things made 
and produced elsewhere. At some point that financial train will run 
out. It is imperative to the economic security of our nation that we 
develop our own domestic resources that we are lucky enough to have 
within our borders.
    A recent CRS report that analyzed USGS energy resource assessments 
determined that the U.S. has the largest barrel of oil equivalent in 
the world--1.3 trillion BOE. We don't have the same kind of 
comprehensive assessments for locatable minerals like copper, gold, or 
rare earth minerals--however these are mineral commodities the U.S. has 
in abundance.
    Ensuring that we have robust energy and mineral programs within the 
BLM and Forest Service will create jobs, increase our domestic supply 
of energy and critical and strategic mineral resources, and increase 
revenue coming into federal, state and local treasuries.
    I'm concerned, however, that the current Administration is not 
moving in the direction to achieve private sector job growth in these 
important sectors of the economy, and is too willing to depend on OPEC 
to make up the nation's shortfall in oil production. The 
Administration's policies instead have and will contribute to job loss, 
further dependence on foreign sources for the energy and mineral needs 
of the country and severely limit the revenue stream from the 
development of federal mineral resources.
    I look forward to hearing from our other witnesses affected by the 
policies that have been implemented since the Administration took 
office and their perspectives on the proposed 2012 budget and 
legislative proposals.
                                 ______
                                 

 STATEMENT OF THE HON. RUSH HOLT, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF NEW JERSEY

    Mr. Holt. Thank you, Mr. Chairman. I appreciate your 
holding the hearing today, and I thank the witnesses for 
coming.
    The BLM oversees all mineral and energy resource extraction 
activities on Federal lands, including units of the Forest 
Service. I would like to make the point that far from locking 
up our energy resources, as some have alleged, the BLM has 
actively promoted managing those resources, including 
development of all forms of energy. And we will hear about that 
in the testimony today.
    The Obama Administration has continued to increase emphasis 
on domestic oil and gas production on Federal lands. In 2010, 
domestic natural gas production reached an all-time high. 
Domestic oil production reached its highest level in nearly a 
decade. Oil production increased more in the United States last 
year than in any other country in the world.
    This occurred, despite the fact that oil companies are 
often letting leases that are issued to them languish. And the 
drilling permits that are approved they allow to go unused.
    In 2009, BLM approved 4,487 new permits onshore. The 
industry started about three quarters of that number in new 
wells. Last year, oil companies held back even more. BLM 
approved 4,090 applications for permit to drill, the APDs; 
however, the industry started 1,080, compared to 4,090, new 
wells.
    Meanwhile, according to a recent report released by the 
Department of the Interior, oil companies are sitting on tens 
of millions of acres of public land on which they are not doing 
any exploration or production, whatsoever. So according to that 
report, the oil companies are not conducting exploration or 
production activities on 57 percent of the onshore acres under 
lease.
    And this current level of development is not an aberration. 
The report concluded that over the last decade, oil companies 
have produced oil on an average of only 30 percent of the 
public land that they held under lease.
    And yet the extraction companies and those advocating for 
them in Congress say we have to help them--including oil 
companies already making $20 billion, $30 billion, $40 billion 
a year in profit.
    Ranking Member Markey and I have introduced H.R. 927, the 
Use It Act, to establish an escalating fee on oil and gas 
leases over time, providing a strong incentive for oil 
companies to either start drilling, or relinquish this land so 
that another company could develop it. Our legislation also 
would help us reduce the Federal deficit by increasing the 
revenue to our Federal government. A similar proposal is 
included in the Administration's budget request.
    In addition, the Obama Administration is promoting the 
development of renewable energy on public lands, which had been 
almost completely ignored under the previous Administration. 
The Department of the Interior has set a goal of permitting 
10,000 million watts, so 10 gigawatts, of renewables on public 
lands by the end of next year, 2012; and has already approved 
5,683 megawatts of wind, solar, and geothermal, on its way to 
that goal.
    This stands in stark contrast to the de facto moratorium on 
public lands for renewable energy that was in place during the 
previous Administration. Indeed, the previous Administration 
approved only four--that is a single digit--four wind projects 
on public lands, and no--that is a goose egg--solar projects 
over eight years.
    The Obama Administration is restoring a balance to our 
energy development on public lands that was sorely needed. And 
I hope we just don't hear that repeated, sorry story that 
failure to extract oil from public lands and offshore in the 
United States is responsible for high prices at the gas pump.
    We had a hearing last week where it was clearly established 
that it is speculation, manipulation, profit-taking, call it 
gouging, whatever; it is not failure to release permits.
    Thank you.
    [The prepared statement of Mr. Holt follows:]

       Statement of The Honorable Rush D. Holt, Ranking Member, 
              Subcommittee on Energy and Mineral Resources

    Thank you.
    The Bureau of Land Management (BLM) oversees all mineral and energy 
resource extraction activities on all Federal onshore lands, including 
units of the National Forest System. Far from locking up our energy 
resources, as some in the majority have alleged, the BLM is actively 
promoting the development of all forms of energy.
    The Obama Administration has continued to increase domestic oil and 
gas production on federal land. In 2010, domestic natural gas 
production reached an all-time high, and domestic oil production 
reached its highest levels in nearly a decade. Oil production increased 
more in the United States last year than in any other country in the 
world.
    This occurred despite the fact that oil companies are often letting 
the leases they are issued languish and the drilling permits that are 
approved go unused. In 2009, BLM approved 4,487 new permits onshore but 
industry only started 3,267 new wells. Last year, oil companies held 
back even more--BLM approved 4,090 Applications for Permit to Drill 
(APDs), however, industry only started 1,480 new wells.
    Meanwhile, according to a recent report released by the Department 
of the Interior, oil companies are sitting on tens of millions of acres 
of public lands on which they are not doing ANY exploration or 
production whatsoever. According to that report, oil companies are not 
conducting exploration or production activities on 57 percent of the 
onshore acres under lease. And this current level of development is not 
an aberration; the report concluded that over the last decade, oil 
companies have produced oil on an average of only 30 percent of the 
public land they held under lease.
    Ranking Member Markey and I have introduced H.R. 927, the USE IT 
Act to establish an escalating fee on oil and gas leases over time, 
providing a strong incentive for oil companies to either start drilling 
or relinquish this land so that another company can develop it. Our 
legislation also would help us reduce the federal deficit by increasing 
the revenue to the federal government. A similar proposal is included 
in the Administration's budget request.
    In addition, the Obama Administration is promoting the development 
of renewable energy on public lands, which had been almost completely 
ignored under the previous administration. The Department of the 
Interior has set a goal of permitting 10,000 MW of renewables on public 
lands by the end of 2012 and has already approved 5,683 MW of wind, 
solar and geothermal on the way to that goal. This stands in stark 
contrast to the ``De Facto Renewable Energy Moratorium'' on public 
lands that was in place during the Bush Administration. Indeed the 
previous Administration only approved 4 wind projects on public lands 
and NO solar projects over 8 years.
    The Obama Administration is restoring a balance to our energy 
development on public lands that was sorely needed. I look forward to 
the testimony of our witnesses.
                                 ______
                                 
    Mr. Lamborn. I thank the Ranking Member. And we will now 
hear from our witnesses. We have invited, and I appreciate the 
attendance today of, the Hon. Bob Abbey, the Director of the 
Bureau of Land Management, and the Hon. Tony Ferguson, Director 
of Minerals and Geology Management of the USDA Forest Service. 
Appreciate you both being here.
    Like all of our witnesses, your written testimony will 
appear in full in the hearing record, so I ask that you keep 
your oral statements to five minutes, as outlined in our 
invitation letter to you, and under Committee Rule 4[a].
    Our microphones are not on automatic; you will have to 
switch them on. And the timing lights, as you begin to speak, 
the Clerk will start the timer, a green light will come on; and 
after four minutes, a yellow light will come on; and after five 
minutes, a red light.
    Thank you for being here. And Mr. Abbey, you may begin.

    STATEMENT OF ROBERT V. ABBEY, DIRECTOR, BUREAU OF LAND 
                  MANAGEMENT, WASHINGTON, D.C.

    Mr. Abbey. Thank you, Mr. Chairman and members of the 
Subcommittee. We appreciate the opportunity to discuss the 
President's Fiscal Year 2012 energy and minerals budget request 
for the Bureau of Land Management.
    The BLM administers more than 245 million acres, and 
approximately 700 million acres of subsurface mineral estate 
nationwide. America's public lands provide resources that are 
critical to the nation's energy security. These resources have, 
and will continue to play, a critical role in domestic energy 
production for decades to come.
    The BLM is a sound investment for America. Our management 
of public lands contributes more than $100 billion annually to 
the national economy, and supports more than 500,000 American 
jobs.
    Revenues generated from public lands make the BLM one of 
the top revenue-generating Federal agencies, positively 
affecting the U.S. Treasury, and directly benefitting the U.S. 
taxpayers.
    On March 30 the President announced his blueprint for a 
secure energy future. The Bureau of Land Management is well-
positioned to contribute to this strategy. More than 114 
million barrels of oil was produced from BLM-managed mineral 
estate in Fiscal Year 2010, the most since Fiscal Year 1997. 
And the almost 3 trillion cubic feet of natural gas produced 
made 2010 the second most productive year of natural gas 
production on record.
    The coal produced from nearly a half-million acres of 
Federal leases powers more than one fifth of all electricity 
generated in the United States.
    The BLM is also leading the Nation toward the new energy 
frontier, with active solar, wind, and geothermal energy 
programs. In 2010, the BLM approved nine large-scale solar 
energy projects. These projects total more than 3600 megawatts 
of electricity, enough to power more than a million homes; and 
could create thousands of construction and operation jobs.
    The Bureau of Land Management manages 20 million acres of 
public lands, with wind potential. And there is currently 437 
megawatts of installed wind power capacity on public lands. 
Geothermal energy development on these public lands, with an 
installed capacity of 1275 megawatts, accounts for nearly half 
of the U.S. geothermal energy capacity.
    The BLM's total Fiscal Year 2012 budget request is $1.1 
billion, a decrease of $12 million from the 2010 enacted level. 
The budget proposal reflects the Administration's efforts to 
maximize public benefits, while recognizing the realities of 
the current fiscal situation.
    The proposed budget for the Bureau of Land Management makes 
a strategic investment of $152.8 million in support of the new 
energy frontier, an important Administration and Secretarial 
initiative. This new initiative recognizes the value of 
environmentally sound, scientifically grounded development of 
both renewable and conventional energy resources on public 
lands. Investment in this program today will reap benefits for 
years to come.
    President Obama and Secretary Ken Salazar have stressed the 
critical importance of renewable energy to the future of the 
United States. Developing renewable energy will create jobs and 
promote innovation in our country, while reducing reliance on 
fossil fuels.
    In the conventional energy arena, the BLM expects its 
onshore minerals leasing activities to contribute $4.3 billion 
to the Treasury in Fiscal Year 2012. We will focus on 
implementing oil and gas leasing reforms that place a continued 
emphasis on oil and gas inspections, environmental enforcement, 
and production monitoring. These reforms help ensure that 
conventional energy development on public lands takes place in 
a way that minimizes harm to the environment, as well as to the 
public health and safety.
    The budget proposes to shift a share of the cost of oil and 
gas inspection activities from discretionary appropriations to 
industry fees, for a savings of $38 million; a fee for non-
producing leases, and an increase in the onshore oil and gas 
realty rate are also included in our budget proposal.
    Finally, the BLM's budget for Fiscal Year 2012 assumes 
legislative proposals to reform hard-rock mining on both public 
and private lands.
    Our budget request provides funding for the Agency's 
highest-priority energy and minerals initiatives, and maximizes 
public benefits.
    Mr. Chairman, again, we appreciate the opportunity to 
appear before your Subcommittee.
    [The prepared statement of Mr. Abbey follows:]

  Statement of Robert V. Abbey, Director, Bureau of Land Management, 
                    U.S. Department of the Interior

    Mr. Chairman and Members of the Subcommittee, thank you for the 
opportunity to appear here today to discuss the President's Fiscal Year 
(FY) 2012 energy and minerals budget request for the Bureau of Land 
Management (BLM).
    The BLM, an agency of the U.S. Department of the Interior (DOI), is 
responsible for protecting the resources and managing the uses of our 
nation's public lands, which are located primarily in 12 western 
States, including Alaska. The BLM administers more land--over 245 
million surface acres--than any other Federal agency. The BLM also 
manages approximately 700 million acres of onshore subsurface mineral 
estate throughout the Nation.
Meeting Our Nation's Needs
    The BLM is a sound investment for America. Management of public 
land resources and protection of public land values results in 
extraordinary economic benefits to local communities and to the Nation. 
The BLM's management of public lands contributes more than $100 billion 
annually to the national economy and supports more than 500,000 
American jobs. Energy and mineral resources generate the highest 
revenue values of any uses of the public lands from royalties, rents, 
bonuses, sales and fees. Revenues generated from the public lands make 
the BLM one of the top revenue-generating Federal agencies, positively 
affecting the U.S. Treasury, and directly benefiting the U.S. taxpayer.
    A key component of these economic benefits is the BLM's 
contribution to America's energy portfolio. The BLM expects its onshore 
mineral leasing activities to contribute $4.3 billion to the U.S. 
Treasury in Fiscal Year 2012. The BLM currently manages more than 38 
million acres of oil and gas leases, although only 43 percent of that 
acreage is currently in production. More than 114 million barrels of 
oil were produced from BLM-managed mineral estate in Fiscal Year 2010 
(the most since Fiscal Year 1997), and the almost 3 billion MCF 
(thousand cubic feet) of natural gas produced made 2010 the second-most 
productive year of natural gas production on record.
    The coal produced from nearly a half million acres of federal 
leases powers more than one-fifth of all electricity generated in the 
United States. To underscore the Administration's commitment to the 
goals of energy security and job creation, the BLM on March 22 
announced four lease sales and four future records of decision for coal 
tracts in Wyoming's Powder River Basin. The estimated total tonnage for 
the eight coal tracts is 2.3 billion tons of coal, which is estimated 
to generate $13.4 billion to $21.3 billion in revenue over the life of 
the leases.
    The BLM is also leading the nation toward the new energy frontier 
with active solar, wind, and geothermal energy programs. The BLM has 
proposed 24 Solar Energy Zones within 22 million acres of public lands 
identified for solar development, and in 2010 approved nine large-scale 
solar energy projects. These projects total more than 3,600 megawatts 
of electricity, enough to power close to 1 million homes, and could 
create thousands of construction and operations jobs. Development of 
wind power is also a key part of our nation's energy strategy for the 
future. The BLM manages 20 million acres of public lands with wind 
potential and there is currently 437 MW of installed wind power 
capacity on the public lands. Geothermal energy development on the 
public lands, with an installed capacity of 1,275 MW, accounts for 
nearly half of U.S. geothermal energy capacity.
FY 2012 Budget Overview
    The BLM's FY 2012 energy and minerals budget proposal reflects the 
Administration's effort to maximize public benefits while recognizing 
the reality of funding constraints and the need to reduce the Nation's 
budget deficit. The proposed budget for the BLM makes a strategic 
investment in support of the New Energy Frontier, an important 
Administration and Secretarial Initiative. Investment in this program 
today will reap benefits for years to come.
    The BLM's total FY 2012 budget request is $1.13 billion in current 
authority, one percent and $12.0 million below the 2010 enacted/2011 
continuing resolution level. The budget proposes $933.8 million for the 
Management of Lands and Resources Appropriation and $112.0 million for 
Oregon and California Grant Lands Appropriation, the BLM's two main 
operating accounts. This represents a net decrease of $25.3 million for 
these two accounts from the FY 2010 enacted/2011 CR level. While making 
strategic program increases of $93.3 million for high-priority 
initiatives, the budget offsets funding increases for these priorities 
with $25.5 million in administrative and management savings, shifting 
$42.4 million in energy and minerals inspection costs to industry, and 
reducing funding for lower priority programs. The budget also includes 
several important legislative proposals, including proposals to change 
the management of hardrock mining, collect fees to be used to remediate 
abandoned mines, charge a fee on new nonproducing oil and gas leases to 
encourage diligent development, and extend the Federal Land Transaction 
Facilitation Act and Service First authorities. This testimony focuses 
on the BLM's energy and mineral resources program.
New Energy Frontier
    The 2012 budget continues the Department's New Energy Frontier 
initiative to create jobs, reduce the Nation's dependence on fossil 
fuels and oil imports, and reduce carbon impacts. The New Energy 
Frontier initiative recognizes the value of environmentally-sound, 
scientifically-grounded development of both renewable and conventional 
energy resources on the Nation's public lands. Facilitating renewable 
energy development is a major component of this strategy along with 
effective management of conventional energy programs. The proposed FY 
2012 budget for the BLM follows this approach and includes priority 
funding for both renewable and conventional energy development on the 
public lands.
    Renewable Energy--President Obama, Secretary Salazar, and the 
Congress have stressed the critical importance of renewable energy to 
the future of the United States. Developing renewable energy resources 
is central to the Nation's efforts to reduce greenhouse gas emissions, 
mitigate climate change, and protect the global environment. Renewable 
energy is also vital to our economic development and energy security. 
Developing renewable energy will create jobs and promote innovation in 
the United States while reducing the country's reliance on fossil 
fuels.
    The BLM made significant strides in promoting responsible renewable 
energy development on the public lands in 2010. The BLM has approved 
projects that, when built, will generate approximately 4,000 megawatts 
of energy, including the approval of nine large-scale solar energy 
projects, and release of a draft Solar Programmatic EIS to provide for 
landscape-scale siting of solar energy projects on the public lands. 
BLM-managed lands also serve as important corridors for the 
transmission infrastructure needed to deliver renewable energy to the 
American people.
    The BLM continues work on developing a balanced portfolio of 
renewable energy projects on public lands in 2011. We recently 
announced our 2011 priority projects list, which includes 19 renewable 
energy projects (nine solar, five wind, and five geothermal). The 
projects are part of the Administration's efforts to diversify the 
Nation's energy portfolio in an environmentally responsible manner. The 
nine solar projects' potential output is about 2,600 megawatts, the 
five wind projects total about 1,000 megawatts of potential output, and 
the five geothermal projects total about 490 megawatts of potential 
output. The BLM has already made progress on these projects, approving 
a geothermal project in Nevada in early March.
    To encourage and facilitate renewable energy development, the 
President's FY 2012 budget for the BLM proposes $19.7 million, a $3.0 
million increase over the FY 2010 enacted/2011 CR level. The increase 
will be used to conduct site specific studies of potential solar energy 
sites in Nevada, and regional studies of potential wind energy zones in 
Nevada and Oregon. Additionally, the FY 2012 budget proposes 
transferring $16.7 million from the Realty and Ownership Management 
Activity to a new Renewable Energy Management subactivity in the Energy 
and Minerals Management activity. This will allow the BLM to more 
effectively track and monitor spending for these high-profile 
activities, and also emphasize the importance of these efforts.
    Conventional Energy--While we work to develop renewable energy 
sources, domestic oil and gas production remain critical to our 
nation's energy supply and to reducing our dependence on foreign oil. 
Secretary Salazar has emphasized that conventional energy resources on 
BLM-managed lands play a critical role in meeting the Nation's energy 
needs. In 2010, conventional energy development from public lands 
produced 43 percent of the Nation's coal, 14.1 percent of the natural 
gas, and 5.7 percent of the domestically produced oil. The Department's 
balanced approach to responsible conventional energy development 
combines onshore oil and gas policy reforms with effective budgeting to 
provide appropriate planning and support for conventional energy 
development, which has been the target of increased appeals and 
protests.
    The BLM is committed to ensuring oil and gas production is carried 
out in a responsible manner. To accomplish this, the BLM performs 
various types of inspections, to ensure that lessees meet 
environmental, safety, and production reporting requirements. The BLM 
has begun a pilot program using a risk-based inspection protocol for 
production inspections, inspecting first those leases with high levels 
of oil or gas production. The BLM plans to expand this risk-based 
strategy to the other types of inspections it performs. The risk-based 
strategy will help the BLM maximize the efficient use of inspection 
staff to better meet the inspection goals and requirements in the 
future.
    The Fiscal Year 2012 budget request essentially maintains the BLM 
oil and gas program capacity at the FY 2010 enacted/2011 CR level. An 
increase of $13.0 million is proposed to offset a projected decline in 
the fees for processing applications for permits to drill (APD) oil and 
gas on the public lands; and a reduction of $3.0 million is proposed to 
reflect the completion of an energy study required by the Energy Policy 
Conservation Act of 2000 (EPCA). The budget also includes an increase 
of $2.0 million to improve air quality monitoring associated with 
intensive oil and gas development. This funding will help the BLM 
ensure that the energy development complies with NEPA and Clean Air Act 
requirements and aids the BLM in minimizing or addressing potential 
litigation issues.
    The Administration believes that American taxpayers should get a 
fair return on the development of energy resources on their public 
lands. A 2008 Government Accountability Office (GAO) report suggests 
that taxpayers could be getting a better return from Federal oil and 
gas resources in some areas. Subsequent GAO reports have reiterated 
this conclusion. The BLM and the Bureau of Ocean Energy Management, 
Regulation, and Enforcement are cooperating to conduct an international 
study of oil and gas revenues under different management regimes. The 
study should be completed and published later this year. To this end, 
the Administration proposes to implement the following reforms:
          In 2012 the BLM will begin to charge a fee to recover 
        inspection costs for the oil and gas program, allowing a 
        savings of $38 million in requested funding. The fee would 
        defray Federal costs and ensure continued diligent oversight of 
        oil and gas production on Federal lands. Fee levels would be 
        based on the number of oil and gas wells per lease so that 
        costs are shared equitably across the industry.
          To encourage diligent development of new oil and gas 
        leases, the Administration is proposing a per-acre fee on each 
        nonproducing lease issued after enactment of the proposal. The 
        $4 per acre fee on new non-producing Federal leases would 
        provide a financial incentive for oil and gas companies to 
        either put their leases into production or relinquish them so 
        that tracts can be re-leased and developed by new parties.
          The BLM will propose a rulemaking in 2011 to increase 
        the onshore oil and gas royalty rate from its current 12.5 
        percent level. The BLM expects that the royalty rate increase 
        will increase oil and gas revenues by more than $900 million 
        over 10 years.
Abandoned Mines & Hardrock Mining Reform Proposals
    The budget proposes legislation to address abandoned mine land 
(AML) hazards on Federal, State, Tribal, and private lands and to 
provide a fair return to the taxpayer from hardrock production on 
Federal lands. The first component of this proposal addresses abandoned 
hardrock mines across the country through a new AML fee on hardrock 
production. Just as the coal industry is held responsible for abandoned 
coal sites, the Administration proposes to hold the hardrock mining 
industry responsible for abandoned hardrock mines. The proposal will 
levy an AML fee on all uranium and metallic mines on both public and 
private lands that will be charged on the volume of material displaced 
after January 1, 2012. The fee will be collected by the Office of 
Surface Mining, while the receipts will be distributed by BLM. Using an 
advisory council comprised of representatives of Federal agencies, 
States, Tribes, and non-government organizations, the BLM will create a 
competitive grant program to restore the Nation's most hazardous 
hardrock AML sites each year. The advisory council will recommend 
objective criteria to rank AML projects to allocate funds for 
remediation to the sites with the most urgent environmental and safety 
hazards. The proposed hardrock AML fee and reclamation program would 
operate in parallel to the coal AML reclamation program, as two parts 
of a larger proposal to ensure that the Nation's most dangerous coal 
and hardrock AML sites are addressed by the industries that created the 
problems. The 2012 BLM budget request also includes an increase of $4.0 
million in regular discretionary appropriations to address high 
priority AML sites, such as the Red Devil mine in Alaska.
    The second piece of the legislative proposal would institute a 
leasing process under the Mineral Leasing Act of 1920 for certain 
minerals (gold, silver, lead, zinc, copper, uranium, and molybdenum) 
currently covered by the General Mining Law of 1872. After enactment, 
new claims for mining these metals on Federal lands would be governed 
by a leasing process and subject to annual rental payments and a 
royalty of not less than five percent of gross proceeds. Half of the 
receipts would be distributed to the States in which the leases are 
located and the remaining half would be deposited in the U.S. Treasury. 
Pre-existing mining claims would be exempt from the change to a leasing 
system, but would be subject to increases in the annual maintenance 
fees under the General Mining Law of 1872. However, holders of existing 
mining claims for these minerals could voluntarily convert their claims 
to leases. The Office of Natural Resources Revenue in the Department of 
the Interior will collect, account for, and disburse the hardrock 
royalty receipts.
Reductions & Efficiencies
    The BLM's Fiscal Year 2012 budget proposal reflects many difficult 
choices to produce a cost-conscious budget, while supporting priority 
initiatives and maximizing public benefits. The budget request also 
includes reductions that reflect the Accountable Government Initiative 
to curb non-essential administrative spending in support of the 
President's commitment to fiscal discipline and spending restraint.
Conclusion
    The BLM's Fiscal Year 2012 budget request for energy and minerals 
programs provides funding for the agency's highest priority energy and 
minerals initiatives, while making difficult but responsible choices 
for reductions to offset some of these funding priorities. This budget 
request reflects the Administration's commitment to encourage 
responsible energy development on the public lands, as well as ensure 
the American people receive a fair return for the public's resources. 
Mr. Chairman, thank you for the opportunity to testify on the BLM 
budget request for Fiscal Year 2012. I will be pleased to answer any 
questions you may have.
                                 ______
                                 
    Mr. Lamborn. Thank you for your testimony. And Mr. 
Ferguson, you may begin.

        STATEMENT OF TONY FERGUSON, DIRECTOR, MINERALS 
 AND GEOLOGY MANAGEMENT, USDA FOREST SERVICE, WASHINGTON, D.C.

    Mr. Ferguson. Thank you, Mr. Chairman and members of the 
Subcommittee. I am honored to be here today to talk about the 
Energy and Minerals program at the Forest Service.
    America relies on forest and grasslands for jobs, energy, 
and strategic minerals. This program provides significant 
socioeconomic benefits to the American people, while at the 
same time working to ensure that watersheds are protected and 
threats to human safety are minimized.
    Here are some examples of some activities on the Forest 
Service. The value of mineral production from National Forest 
System lands typically exceeds $5 billion per year. Over 5 
million acres of National Forest System lands are currently 
leased for oil, gas, coal, geothermal, and other minerals.
    Approximately 58 percent of the U.S. coal production comes 
from Federal minerals, and a third of that comes from National 
Forest System lands. Last year, approximately 16.7 million 
barrels of oil and 194 billion cubic feet of natural gas were 
produced from National Forest System lands.
    The Forest Service administers operations on approximately 
90,000 mining claims, with many of those containing strategic 
minerals. We manage approximately 4,000 mineral material 
contracts for sand, gravel, and other industrial minerals, 
amounting to over 10 million tons of materials that are 
critical for road maintenance in rural communities.
    Mineral revenues are managed and distributed by the Office 
of Natural Resource Revenue at the Department of the Interior. 
And between 25 and 50 percent of the revenues are returned to 
the States and the counties where production occurs.
    For Fiscal Year 2012, the priority for the Forest Service 
Minerals program will be placed on processing the energy-
related mineral proposals, with the focus on the oil, gas, and 
geothermal resources that are present on National Forest System 
lands.
    We will continue our inspection and monitoring of ongoing 
mineral operations, we will continue to mitigate threats 
associated with abandoned mine lands. We will identify and 
manage geologic resources and hazards, and also restore sites 
contaminated with hazardous materials.
    At this time I would like to shift a little bit and focus 
more on some renewable energy and some of the things we are 
doing. We feel, the Forest Service feels that renewable energy 
is a key to our future, and the expansion of the energy 
portfolio to include renewable energy is critical. We have a 
couple of examples I would like to share with you.
    One of the areas we see a great amount of potential is 
woody biomass utilization. In terms of renewable energy, it 
represents about 7 percent of the overall U.S. energy 
consumption. But of that 7 percent, more than a quarter of that 
comes from wood, so we have some tremendous opportunities for 
more jobs. It also has some great opportunities for us to meet 
our forest restoration goals. We see opportunities to reduce 
fire risks to communities, and at the same time provide jobs 
and economic opportunities.
    The next area is hydropower. We have a number of 
significant small-scale projects that are available to us, that 
we feel could very easily raise our existing megawatts up to 10 
percent or more above what we are currently doing. There would 
be no impact to fish passage, and at the same time we would be 
helping rural communities. In Alaska alone there are 32 new 
proposals for hydro-entitled projects.
    The next area would be geothermal leasing and operation. 
Working with the Bureau of Land Management, we currently have 
137 leases that are covering 155,000 acres. There are also two 
geothermal plants that are actually operating on National 
Forest System lands, that are providing electricity 
equivalents, the equivalent electricity demands for 60,000 
homes. We also have 29 geothermal lease applications that we 
are processing.
    In the area of wind and solar energy development, at this 
point in time we only have one wind project that is being 
evaluated, and that is in Vermont. We have, we don't have the 
same terrain and territory for some of the solar developments, 
and that is pretty limited for us.
    One thing I wanted to be sure to mention, though, is in 
association with all of this activity regarding renewables, we 
have a very, very active program dealing with transmission 
lines, and making sure that we have adequate transmission for 
existing production, as well as new production that comes on 
line.
    So in conclusion, the Forest Service Minerals and Energy 
programs contribute to a sustainable energy situation, and 
provide jobs for the American public, while promoting healthy 
ecosystems.
    Thanks for the opportunity to be here, and I will be happy 
to answer any questions you may have.
    [The prepared statement of Mr. Ferguson follows:]

 Statement of Tony Ferguson, USDA Forest Service Director of Minerals 
         and Geology Management, U.S. Department of Agriculture

    Mr. Chairman and members of the subcommittee, it is a privilege to 
be here today to discuss the President's Budget request for the Forest 
Service in fiscal year (FY) 2012 and specifically as it relates to the 
energy and minerals programs administered by the Forest Service. I 
appreciate the support this subcommittee has shown the Forest Service 
in the past, and I look forward to working together in the future to 
ensure that stewardship of our Nation's forests and grasslands continue 
to meet the desires and expectations of the American people. I am 
confident that this budget will allow the Forest Service to support 
this goal, while also reflecting our commitment to fiscal restraint and 
efficiency.
    The Forest Service Minerals and Geology Management program is a 
critical program in providing jobs, minerals and energy for the 
American people, while working to ensure that watersheds are protected 
and threats to human safety are minimized. In addition, the program 
will work to restore sites contaminated with hazardous materials on NFS 
lands, in particular, abandoned mine lands. Reliability of the nation's 
electrical grid to sustain the economic growth of America and to 
deliver new sources of renewable energy are prominent issues that our 
country faces. The Forest Service will continue to support both of 
these efforts.
Minerals and Geology Management Program
    The FY 2012 President's Budget requests $78.8 million for the 
Minerals and Geology Management Program, an $8.4 million decrease from 
the annualized FY 2011 continuing resolution as shown in the published 
FY 2012 Budget Justification. Priority will be placed on processing 
energy-related mineral proposals with a focus on increasing 
opportunities to develop and supply oil, gas, and geothermal resources 
from Federal lands in support of the Energy Policy Act of 2005 (EPAct). 
Other priorities include inspection and monitoring of ongoing mineral 
operations, providing expertise to ensure watershed health and public 
safety, and managing significant geologic resources. In addition to 
leasable energy resources, we manage many small operations; e.g., over 
four thousand mineral material permits providing for over ten million 
tons of sand and gravel and other materials which are critical for 
maintaining roads in rural communities. We are also involved in large 
operations such as ensuring environmental and water quality impacts of 
large gold and copper mines are minimized.
    As calculated by USFS and the Department of the Interior's Office 
of Natural Resources Revenue, the value of energy and mineral 
production from NFS lands typically exceeds $5 billion per year. Over 5 
million acres of NFS lands are currently leased for oil, gas, coal, and 
phosphate mining operations. At any given time, the Forest Service 
administers operations on approximately 90,000 mining claims and 
manages approximately 4,000 mineral material sale contracts (Forest 
Service Special Uses Data Base). Mineral receipts are derived from 
annual lease rentals, royalties on production, bonus bids for 
competitive leases, and mineral material sales. Of the total revenues 
received, between 25 and 50 percent are returned to the State and 
county where production occurred.
    The Minerals and Geology Management program works to mitigate 
potential threats to the environment and human safety associated with 
thousands of abandoned mines and other contaminated sites located on 
NFS lands. The program works to preserve valuable geologic resources 
and minimize the impacts of pollution on NFS lands to protect and 
enhance our Nation's water resources. NFS lands provide the largest 
single source of municipal water supply in the U.S., serving over 66 
million people in 33 states. Energy and mineral development can go hand 
in hand with conserving resources and it is the Forest Service's aim to 
do so.
    The Bureau of Land Management and the Forest Service work closely 
in managing and delivering the mineral and energy program in the United 
States. The BLM issues leases for exploration and development of energy 
minerals after receiving consent from the Forest Service for those 
National Forest System lands. When an oil and gas drilling permit is 
received by BLM on NFS lands, the Forest Service processes the surface 
use authorization and the BLM processes the drilling portion of the 
application and approves the drilling permit after consolidating the 
surface and sub-surface portions. The Office of Natural Resources 
Revenue at the Department of the Interior is responsible for the 
efficient, timely, and accurate collection and disbursement of all 
royalty payments and other revenues from the leasing and production of 
natural resources from federal lands.
Mineral Applications Processing
    The Budget requests $20.4 million to fund the processing of an 
estimated 7,975 mineral applications in FY 2012, depending on market 
demand for mineral resources from NFS lands. The energy component of 
this activity will continue to focus on increasing opportunities to 
develop and offer oil and gas, coal, and geothermal resources from 
Federal lands. Pilot offices authorized under the Energy Policy Act of 
2005 (EPAct) will continue to help the agency efficiently process 
energy leasing and permit applications, particularly with respect to 
processing of oil and gas lease nominations and surface use plan of 
operations relative to applications for permits to drill. This program 
provides for the review and approval of plans for proposed mineral 
activities, including exploration and development of locatable minerals 
under the authority of the Mining Law of 1872; coal, oil, gas, and 
geothermal exploration and production under the various mineral and 
geothermal leasing acts; and contracts for the extraction of mineral 
materials such as sand and gravel by the public and local, State, and 
Federal agencies under the Materials Act of 1947 and other statutory 
authorities.
Mineral Operations Administration
    The Budget requests $28.6 million to fund the administration of an 
estimated 9,560 active mineral operations in FY 2012. The program will 
emphasize meeting necessary administration levels to ensure compliance 
with operating plan requirements and specific environmental standards 
for protecting resources. This program provides for the inspection, 
oversight, and monitoring of approved mineral operations on NFS lands.
    Some of these active mineral operations are providing energy 
producing minerals. This funding will allow the US Forest Service to 
administer surface occupancy for a significant amount of oil, natural 
gas, coal and geothermal operations. The current production on NFS 
lands of oil (16.7 million barrels) and natural gas (194 million MCF of 
natural gas) is estimated to generate $361 million in bonus and royalty 
payments to the US Treasury in FY 2010, of which 25% (for Acquired 
Lands) and 50% (for Public Domain Lands) will be returned to the states 
and counties for schools and roads, in addition to the Secure Rural 
Schools payments. Also, nineteen percent of all U.S. coal is produced 
from NFS lands and the annual market value is in excess of $3 billion. 
(DOI Office of Natural Resources Revenue)
Geologic Resources and Hazards Management
    The Budget requests $5.8 million to fund the identification and 
management of an estimated 355 geologic resources and hazards. Managing 
geologic resources provides information on geologic and paleontologic 
conditions that inform land management decisions and project design and 
protects sites that have scientific or educational use. Identifying and 
managing geologic hazards provides for the safety of the public by 
protecting infrastructure, soil, and groundwater. This program provides 
assessments of geologic settings and active geomorphic processes for 
land management planning, environmental protection and restoration, and 
cost effective management of roads, recreation sites and other 
infrastructure.
Abandoned Mine Lands (AML) Safety Risk Features Mitigation
    The Budget requests $7.3 million to fund the mitigation of an 
estimated 560 abandoned mine sites. The AML program focuses on 
mitigating safety risk features and associated activities for abandoned 
mines in high-priority watersheds. This program provides for the 
inventory, assessment, and mitigation of abandoned mine safety hazards 
and environmental damage. This work includes closing underground mine 
openings and vertical shafts; re-contouring open pits, trenches, and 
associated roads; and removing or stabilizing abandoned buildings, 
equipment, and hazardous materials. Wherever feasible, AML work 
minimizes or mitigates adverse effects on AML-dependent wildlife and 
AML-associated cultural and historic resources.
Environmental Compliance Management
    The Budget requests $1.6 million to fund 22 environmental 
compliance audits, assuring that employee and public health and safety 
are protected. This program funds a national audit program which 
assesses Forest Service compliance with environmental statutes and 
trains field personnel on compliance and pollution prevention.
Environmental Restoration Management
    The Budget requests $15 million to fund restoration activities on 
50 known hazardous material sites on NFS lands. Cleanup of contaminated 
sites is critical for the long-term protection of surface and 
groundwater quality and contributes to overall ecological health. This 
program provides for the inventory, assessment, and cleanup of sites 
where there is a release, or threat of release, of a hazardous 
substance, pollutant, or contaminant. Restoration mainly occurs at AML 
sites, but also non-AML sites. Cleanup projects are typically initiated 
under requirements of the Comprehensive Environmental Response 
Compensation and Liability Act, Resource Conservation and Recovery Act, 
or Clean Water Act. This restoration helps minimize or eliminate 
threats to human health and the environment.
Special Use Authorizations for Alternative Energy Facilities
    One of the priorities of the Forest Service's program in FY 2012 
will be processing applications for land use authorizations that 
contribute to the Nation's energy needs. Special use authorizations for 
energy are managed by the Forest Service Lands and Realty Staff. The 
Forest Service's authorization of wind, solar, and hydroelectric energy 
producing facilities as well as transmission facilities will contribute 
to our energy independence as well as mitigate the effects of climate 
change.
    The Agency's FY 2012 budget request includes $11.2 million for 
processing land use proposals and applications under the National 
Forest System's Landownership Management Program, which will fund the 
issuance of approximately 3,700 new special use authorizations, with a 
primary focus on those associated with statutory rights and energy-
related uses. Priority will continue to be placed on energy and 
communications projects.
    The FY 2012 budget includes an allocation of $7.2 million for the 
Administration of Rights-of-Way and Other Land Uses, a non-
discretionary program that will continue to implement the cost recovery 
pilot program to improve customer service to applicants and holders of 
special land use authorizations and reduce the agency's backlog of 
expired authorizations. In FY 2010, the backlog of expired 
authorizations fell from 5,062 to 4,700. The agency will maintain and 
look to improve this trajectory. Processing applications for 
reauthorization of these uses, facilitates the development and 
transmission of affordable, reliable energy; supports economic 
development; and promotes public health and safety of populations in or 
near national forests and grasslands.
    A priority for the Forest Service is striving to improve the 
Nation's ability to deliver electricity, as well as transport oil, gas, 
and hydrogen. As directed by the Energy Policy Act of 2005 (EPAct), the 
Forest Service, Bureau of Land Management and U.S. Department of Energy 
(DOE) have identified 6,000 miles of energy corridors where 
transmission is well suited, 1,000 miles of which are on NFS lands, 
across 11 western states. The Forest Service will continue to work with 
other federal agencies, tribal governments, and states to refine 
corridor locations and enhance and facilitate energy production and 
transmission.
    The Forest Service is a participant in the 2009 inter-agency 
memorandum of understanding (MOU) for expediting the evaluation and 
authorization of high voltage and other significant electric 
transmission projects that cross lands managed by more than one federal 
agency. Expediting evaluation and authorization of these projects 
improves reliability of the electrical grid and supports transmission 
of renewable energy. The Forest Service is processing 26 applications 
that meet the MOU's goals of improving the country's electric 
transmission capabilities. The agency continues to enhance the process 
for siting electric transmission infrastructure on NFS lands by working 
closely with DOE and the Western Electricity Coordinating Council. As 
directed by the Energy Policy Act of 2005 (EPAct), the Forest Service 
is also working with DOE and the U.S. Department of the Interior on an 
assessment of electric transmission in the eastern United States and 
plans to submit a report to Congress on the assessment within the next 
few months. Currently, 14,400 miles of electric transmission lines and 
6,600 miles (Forest Service Special Uses Data Base) of pipelines are 
under special use permit on NFS lands. The Forest Service is issuing 
directives implementing the MOU to: 1) ensure better cooperation and 
coordination with other federal agencies in evaluating and authorizing 
electric transmission projects; 2) clarify private vs. public land 
siting, 3) optimize siting of rights-of-way for energy transmission 
corridors; and 4) expedite applications for electric transmission 
projects on NFS lands.
Renewable Energy Development
    Renewable energy resources are critical to satisfying the Nation's 
energy demands and will create energy-related jobs in the future. The 
Forest Service will continue to help increase the Nation's supply of 
renewable energy through the Woody Biomass Utilization Strategy and 
engaging in hydropower licensing, wind and solar energy development, 
and geothermal operations on NFS lands.
Biomass and Bio-energy
    Using forest biomass byproducts from ecological restoration 
activities as a source of renewable energy can help enhance economic 
opportunity and forest sustainability by providing raw material for the 
renewable bio-energy and bio-based products sector. In FY 2012 the 
Forest Service proposes $44 million for biomass and bio-energy 
programs. This sector is a growing source of green jobs in the U.S. and 
provides numerous benefits including improved forest health and 
productivity, reduced fire risk to communities, and economic 
opportunities. The Forest Service is working closely with other mission 
areas in USDA to pursue additional wood to energy options. In addition 
the Forest Service is working with DOE in converting Forest Service 
facilities to utilize wood energy.
    We aim to strengthen biomass utilization efforts through our work 
with other agencies outside of USDA that encourage market development 
for woody biomass. The Forest Service's woody biomass program is 
ensuring a sustainable and reliable supply of raw materials and 
fostering effective business models that assist growth in this emerging 
sector. Stewardship contracts remain an important tool in meeting this 
objective. This restoration tool ensures a more dependable wood supply 
encouraging investment in private sector facilities.
Solar and Wind
    In FY 2012, the Forest Service proposes $1.6 million as part of the 
Lands and Realty Program for solar energy development that is expected 
to fund authorization of several solar energy facilities. A future 
solar energy programmatic environmental impact statement (PEIS) will 
identify where solar energy facilities could be sited without 
significant environmental impacts on 3 million acres of NFS land that 
has been identified as potentially suitable for that purpose. Interest 
in solar energy development on National Forest System lands has been 
limited considering that large commercial solar energy production 
generally requires large, flat landscapes that are more prevalent on 
lands administered by BLM.
    The Forest Service proposes $2 million as part of the Lands and 
Realty Program to fund processing and administration of special use 
authorizations for wind energy facilities on NFS lands. The Forest 
Service will issue wind energy directives this year that will be used 
to evaluate proposals and applications for wind energy facilities on 
NFS lands. The directives will clarify the Forest Service's role and 
policies in connection with wind energy development; promote consistent 
evaluation and authorization of proposed wind energy facilities; 
increase efficiency in processing proposals and applications for those 
facilities; and foster early project collaboration among affected 
governmental agencies and the public. NFS lands have significant 
potential for wind energy generation though there are often public and 
environmental concerns that need to be taken into consideration, such 
as visual impacts from ridge top development and the potential impacts 
on migratory birds and bats. The Forest Service is administering nearly 
a dozen land use authorizations for wind energy site testing and 
feasibility.
Hydropower
    The agency proposes $5 million as part of the Lands and Realty 
Program for hydropower in FY 2012, funding the processing and 
administration of 220 special use authorizations. Because most of the 
viable utility scale hydropower sites in the U.S. have already been 
developed, new production will likely come from increased efficiency of 
existing dams or smaller in-stream facilities that do not interfere 
with fish passage. Proposals for small scale hydropower facilities are 
anticipated to increase and could provide additional power generation 
capacity of 10 percent above the existing 16,200 megawatts generated on 
NFS lands. The agency is also active in hydropower licensing 
proceedings administered by the Federal Energy Regulatory Commission 
(FERC) by developing conditions to ensure adequate protection and use 
of NFS lands. The Forest Service is currently reviewing ongoing 
procedures seeking to reduce the time and resources needed to establish 
appropriate terms and conditions for FERC hydropower licenses.
Geothermal
    In 2008, the Forest Service and BLM completed a joint Programmatic 
Environmental Impact Statement (PEIS) evaluating geothermal development 
on Federal lands in the western U.S. to provide efficiencies in 
processing geothermal lease applications on NFS lands. Currently, there 
are 137 geothermal leases covering approximately 155,000 acres of NFS 
lands. Leasing of NFS lands for geothermal development is similar to 
leasing of NFS lands for oil and gas development in that the Secretary 
of the Interior issues leases for NFS lands once there is agreement by 
the Secretary of Agriculture. The Forest Service stipulates conditions 
for disturbance of the surface for geothermal development on NFS lands. 
There is significant potential for increased geothermal production from 
National Forest System lands.
Conclusion
    This President's Budget request for FY 2012 takes a comprehensive, 
all-lands approach to conservation that addresses the challenges that 
our forests and grassland currently face, while also taking into 
consideration the need to reduce spending and to find the most 
efficient way to do our work. Our vision in creating healthy landscapes 
not only includes creating healthy ecosystems, but also creating 
healthy, thriving communities around our Nation's forests and 
grasslands and providing jobs in rural areas. Our minerals and energy 
programs will contribute to supporting sustainable domestic energy 
production and providing jobs and socioeconomic benefits to the 
American people, while protecting healthy ecosystems.
    Thank you for the opportunity to discuss the President's Budget 
request as it relates to our agency's energy and minerals programs. I 
look forward to sharing more with you about these programs and working 
with you in shaping the proposals laid out in the FY 2012 budget. I 
look forward to answering any questions you may have.
                                 ______
                                 
    Mr. Lamborn. OK, thank you for your statement. We will now 
begin questioning. Members are limited to five minutes for 
their questions, but we may have an additional round. And I 
appreciate the willingness on the part of our two witnesses to 
stay for an additional round, so thank you so much.
    I now recognize myself for five minutes. And Mr. Abbey, I 
would like to ask you some questions based on your written 
testimony.
    Mr. Abbey. You bet.
    Mr. Lamborn. And I am looking at initially pages 4 and 5 of 
your testimony. And you talk about new fee increases on those 
pages.
    And you talked about, first of all, a fee to recover 
inspection costs to the oil and gas program, allowing a savings 
of $38 million. So I assume that that is a $38 million fee 
increase.
    Before I talk about the other fee increases, in general, 
when you increase fees on industry, do they absorb that, or do 
they pass that on?
    Mr. Abbey. Well, if they, most of the time they would be 
passing that cost on to the consumer.
    Mr. Lamborn. So in effect, we can conclude that the economy 
will increase its costs when costs to consumers go up, and that 
could be a drag on the economy to that extent.
    Mr. Abbey. Well, you certainly could make that assumption. 
Again, what we are talking about is trying to, again, take 
steps to reduce the costs to the American taxpayer, and then 
place those costs on the industry that is benefitting from the 
developing----
    Mr. Lamborn. But the costs go to the American consumer.
    Mr. Abbey. That would be, that would be a business decision 
made by the industry.
    Mr. Lamborn. OK. The next one there is, you are proposing a 
per-acre fee on each non-producing lease of $4 per acre. How 
many acres are we talking about there, so I have an idea of how 
many dollars?
    Mr. Abbey. Well, at this point in time we have a little 
over 41 million acres under lease, with about 12 million acres 
in production.
    Mr. Lamborn. So how many acres again?
    Mr. Abbey. We have 41 million acres under lease, with about 
12 million acres under production.
    Mr. Lamborn. So potentially 29 million times $4, which 
would be over $100 million, if the full extent was assessed and 
paid.
    Mr. Abbey. If legislation was passed that allowed us to 
assess that fee.
    Mr. Lamborn. OK.
    Mr. Abbey. And I should say, too, that I was just reminded 
that that new $4-per-acre fee is really only going to be 
assessed against new leases, not on existing leases.
    Mr. Lamborn. OK. Because that would be unconstitutional. 
OK. And third, the BLM is proposing a rulemaking in 2011 to 
increase the onshore oil and gas royalty from its current 12.5 
percent level, to what? I don't, what is the ending percentage, 
if you have your way?
    Mr. Abbey. Well, there has been no determination on what 
the royalty rate might be. We are doing an analysis to 
determine, based upon what is being charged throughout the 
United States by states, as well as the international, or other 
countries. We are going through that analysis.
    I would say that the GAO has noted a couple of times in 
reports that have been submitted to the Department of the 
Interior that such an analysis is well overdue. We should 
determine what is a fair return to the American taxpayer, and 
then change our rules to reflect that fair return.
    Mr. Lamborn. But you conclude that you are seeking to raise 
$900 million over 10 years, so that would be 90, so whatever 
the percent increase is that you have a target of $90 million 
per year, or almost $1 billion over 10 years.
    Mr. Abbey. That was a target that the Office of Management 
and Budget came up with, and it was based upon, again, an 
assumption that, at a minimum, the new royalty rate would be 
similar to what is charged on offshore mineral development. 
Which is around a little over 18 percent.
    Mr. Lamborn. Well, in response I would say if they, they 
either absorb it, which hurts the return to investors and 
lowers investment, or they pass it on to the consumer, and that 
hurts the economy.
    Now, on the minerals side you are proposing an AML fee, 
abandoned mine lands fee, on the volume of material displaced, 
which doesn't take into account profitability or market prices; 
and rental payments and a royalty of not less than 5 percent on 
gross proceeds, once again ignoring market factors. If the 
commodity market is taking a hit at that point in time, and you 
are basing it on gross proceeds or on volume of materials 
displaced, you could be driving people out of business.
    Mr. Abbey. Well, the proposal that we have recommended, and 
we are working on draft legislation that we would be presenting 
to Congress, is really a very small royalty rate assessed 
against that industry.
    Again, our interest is bringing in a fair return to the 
American taxpayer for the use of their public assets.
    Mr. Lamborn. Last, you talk about lower-priority programs 
on page 2. You want to reduce funding for lower priority--what 
are the lower-priority programs that you have identified in 
your current budget? It is in the middle of page 2.
    Mr. Abbey. Well, the lower-priority programs, again, would 
reflect some reductions in land conveyances in the State of 
Alaska. We would also be looking at reducing funding in some of 
our other renewable--I mean, not renewable, but resource 
programs, like walleye, grazing, and those type of programs.
    Mr. Lamborn. And do you have a dollar amount that these 
lower-priority programs total up to?
    Mr. Abbey. Well, I don't have it with me, but it is part of 
our budget proposal that we have submitted.
    Mr. Lamborn. OK, thank you so much. And at this point I 
would like to recognize the gentleman from New Jersey.
    Mr. Holt. Thank you, Mr. Chairman. Director Abbey, is it 
correct that 2010 saw the highest level of oil production on 
BLM land in more than a decade?
    Mr. Abbey. Yes.
    Mr. Holt. And the second highest on BLM land for natural 
gas production ever?
    Mr. Abbey. That is true.
    Mr. Holt. OK. I just wanted to make sure that I was clear 
on my facts here.
    Now, there is interest in leases; that has not fallen off, 
has it?
    Mr. Abbey. Well, there was a slight decline in the interest 
in leasing new areas. Again, there are 41 million acres that 
have already been leased, with 12 million of those under 
production.
    But it does change with the market conditions. With the 
market of gas going up, certainly there is a renewed interest 
in leasing public lands for potential development, and we are 
seeing that reflected in nominations of public lands for 
possible leasing.
    Mr. Holt. Let me understand the philosophy behind 
administering fees. You believe that fees on oil and gas 
industry are about right, too high, or too low right now?
    Mr. Abbey. We believe that there should be an adjustment in 
those fees to reflect the true costs of doing business, and, 
again, a fair return to the American taxpayer.
    Mr. Holt. If those fees are not collected, could you say 
that it is actually at the taxpayer's expense, then; that it is 
money that otherwise would have been returned to the taxpayer? 
Because you return to the Treasury quite a bit of money each 
year. Do you know what it would be in a typical year?
    Mr. Abbey. Well, again, it is a good investment. We 
estimated that we would be returning about $5, in Fiscal Year 
2012, for every dollar that would be invested by Congress in 
Bureau of Land Management activities. That is across the board, 
and includes more programs than just Minerals.
    Mr. Holt. And totally, what would the total amount be from 
BLM activities?
    Mr. Abbey. It would be over $5 billion.
    Mr. Holt. Over $5 billion, with a B, OK. Now, is it true 
that oil prices are determined on a world market, that you 
know, if we drilled from Asbury Park to Yellowstone Park, we 
would still be contributing a rather small amount of oil to the 
world market? And the price is determined at an international 
level, is that correct?
    Mr. Abbey. That is true. You know, certainly public lands 
have a role, but our role is very small compared to the 
international market.
    Mr. Holt. And so if a fee is raised, that can't be 
reflected in a price to the, a change in price to the consumer, 
can it? I mean, it is a world market price. The company will 
then decide whether or not they are going to go for a lease, 
whether they are going to develop that lease, based on the 
world market price. But it is not passed on to the consumer, it 
cannot be passed on to the consumer.
    Mr. Abbey. Well, as we are looking, as far as our new fee 
proposals again, we believe it is well past time to do an 
analysis of determining what is a fair return from development 
of these Federal leases.
    Mr. Holt. I think most taxpayers would feel that these 
things should be, that generally resources of any sort should 
be paid for by those who use them, rather than the taxpayer 
underwriting profitable activities of somebody else, of some 
special or some individual corporation.
    Now, I guess you still haven't quite answered the question, 
because earlier I thought I heard you say that, agreeing with 
the Chairman, that an increase in the fee would be passed on to 
the consumer. But it is a world-determined price for the oil.
    Mr. Abbey. It is a world-determined price for the oil.
    Mr. Holt. How would that be passed on to the consumer, 
then?
    Mr. Abbey. It would be based on a business decision made by 
the industry themselves, how they would absorb those additional 
costs.
    Mr. Holt. That is right. And it would not be passed on to 
the consumer. I just wanted to clarify that point.
    Well, we will come back with some other questions; I see my 
time is exhausted. But I will be interested to hear more about 
your plan for fees. Thank you.
    Mr. Lamborn. OK, thank you, Mr. Ranking Member. And now we 
will go to the Member from Pennsylvania, Representative 
Thompson.
    Mr. Thompson. Thank you, Chairman, Ranking Member, for this 
hearing. Mr. Ferguson, Mr. Abbey, thank you for being here and 
testifying.
    I represent Pennsylvania's Fifth Congressional District; it 
includes the Allegheny National Forest. And to my knowledge, 
this forest has more privately owned mineral rights than any 
other national forest in the country. In fact, 93 percent of 
the mineral rights are privately owned.
    A constant concern I have is over the unnecessary 
litigation that the Forest Service faces. And I truly believe a 
large part of the litigation is not for legitimate site-
specific concerns, but rather, an effort by some 
environmentalists to slow the leasing and the permitting 
processes.
    What is the Forest Service and BLM doing to help ensure 
that the permitting and leasing processes are completed in a 
timely manner?
    Mr. Ferguson. Well, in the situation with the Allegheny 
National Forest, with so much of that being privately owned, 93 
percent as you have stated, the BLM is not very involved, 
because there is not a large percentage of Federal minerals 
that need to be leased in that particular situation.
    But each of the forest plans, or for the Allegheny there is 
a forest plan that talks about the availability of public lands 
for leasing. And then if there is interest by a company or an 
individual, they would make a recommendation to the BLM to have 
those parcels offered through their leasing program.
    I am not sure if that is where you are going with the 
Federal side, but that is the Federal process.
    Mr. Thompson. OK. Well, I strongly believe that certainly 
some in the environmental community are only filing lawsuits 
against the Forest Service and BLM for no other reason to, 
really, to further delay production. And actually also to fund 
their organizations, since we have these funds that will pay 
their fees to do that, to sue the Federal government.
    Would you agree that the process of suing your agency needs 
some reform?
    Mr. Ferguson. If there was a way to limit litigation, I 
think it would be fantastic. It takes a tremendous amount of 
time for our employees to respond. It takes them away from some 
of the other jobs they have. I am just not that familiar with 
some of the possibilities as far as reform actions. But I do 
know it takes a lot of resources in terms of responding to 
litigation.
    Mr. Thompson. Are you aware that the Forest Service entered 
into a settlement agreement with the Sierra Club regarding oil 
and gas drilling in the Allegheny National Forest in April of 
2009, that severely restricted and indefinitely banned new oil 
and gas drilling on private mineral property interests in the 
national forests?
    Mr. Ferguson. I was aware of that settlement, yes, sir.
    Mr. Thompson. As a result of the settlement agreement, a 
preliminary injunction was granted against the Forest Service 
in the Federal Court in Erie, Pennsylvania, Judge McLaughlin, 
on December 15, 2009. And in the litigation between Minard Run 
Oil Company and the Pennsylvania Independent Oil and Gas 
Association v. the U.S. Forest Service and the Sierra Club, the 
preliminary injunction was issued in part because the Judge 
found that many small oil and gas businesses in the Allegheny 
National Forest would suffer irreparable harm, and potentially 
go out of business, unless the Forest Service was prohibited 
from requiring the application of the NEPA to these private 
mineral estates in the Allegheny National Forest.
    Are you aware of this preliminary injunction?
    Mr. Ferguson. Yes, sir, I am.
    Mr. Thompson. Does the Forest Service intend to abide by 
that preliminary injunction?
    Mr. Ferguson. Yes, sir, we do intend to abide by that. And 
we are recognizing their rights for access.
    Mr. Thompson. It is my understanding that the Forest 
Service is in the process of drafting a regulation actually 
relating to the ``management of National Forest System surface 
resources with privately held mineral estates.''
    Now, my concern is, although you are telling me your intent 
to abide by the preliminary injunction, that this a back-door 
way maybe to not do that, to violate it. Can you tell me what 
the status is of that regulation?
    Mr. Ferguson. Yes, sir. We are going through some of the 
early stages of developing the regulations. It is not ready 
for, it is not at the draft stage yet. We are pulling 
information together.
    There will be a point in time where we will have a draft 
and a number of public opportunities will be available to get 
feedback. I would be more than happy to come up and visit with 
you and your staff and give you an update when we get to that 
point.
    Mr. Thompson. I look forward to that. And I do have one 
question, and I will hold the rest for my second round. Can you 
cite for me the legal authority that the Forest Service is 
using to draft this regulation, when the Federal Courts have 
thoroughly reviewed these facts and filed this injunction?
    Mr. Ferguson. In 1992 the Energy Policy Conservation Act 
had a specific statement that directed the Forest Service to 
develop regulations for the Allegheny National Forest. That is 
where the, where the effort was based, in the 1992 Energy 
Policy Conservation Act.
    Mr. Thompson. OK. We will come back and talk more next 
round. Thank you, Chairman.
    Mr. Lamborn. I thank the gentleman, and now I would like to 
recognize Representative Bordallo for five minutes of 
questions.
    Ms. Bordallo. Thank you very much, Mr. Chairman. I have a 
question for Director Abbey.
    While I understand no decisions have been made at your 
agency, if we look at what happened in 1995, it can give us 
some idea of what might happen if the majority forces a 
shutdown of the Federal government. Would a shutdown of the 
government mean that no new permits to drill would be issued 
onshore?
    Mr. Ferguson. That is true.
    Ms. Bordallo. It is true. So a shutdown could actually harm 
domestic oil production.
    Mr. Ferguson. It would harm domestic oil production during 
the period of time that the government was shut down.
    Ms. Bordallo. I see. Now, significant revenue is generated 
to the Federal government from visitors to BLM lands. Would 
that revenue stream also be lost if a shutdown occurs?
    Mr. Ferguson. It would.
    Ms. Bordallo. That sounds pretty serious.
    Mr. Ferguson. Well, again, I am not sure, you are smarter 
than me, no doubt. But I am not sure a shutdown would serve 
anyone well.
    Ms. Bordallo. Thank you. Thank you very much, Mr. Chairman.
    Mr. Lamborn. I thank the gentlelady. Now for the next 
Member who was here when the gavel came down, Representative 
Fleischmann.
    Mr. Fleischmann. Thank you, Mr. Chairman. My name is Chuck 
Fleischmann; I represent the Third District in Tennessee. My 
first question is for Director Ferguson.
    Director Ferguson, you may recall that at one point the 
Forest Service had 35 million acres of Federal oil and gas 
leases. That figure is now 5.3 million acres. Can you please 
explain to me what has caused this drastic drop in leasing 
acreage, sir?
    Mr. Ferguson. Probably a number of factors are at play 
there. I am not familiar with the timeline, when we had 35 
million acres, in terms of the historical time period.
    We see cycles in the industry, and you know, there are 
fluctuations in terms of where there are expressions of 
interest. And it is totally market-driven. So we are trying to 
respond to public inquiries that come in to the BLM originally 
that come to us, and we look at those and see if they are 
consistent with our land plans, our forest plans, and make 
recommendations along that line.
    So I can't give you a real specific answer, because I don't 
know the timeframe. I would be happy to get some more 
information and try to make that a little more clear.
    Mr. Fleischmann. Thank you. Next question for Director 
Abbey. Director Abbey, given the long list of processes and 
regulations for leasing through environmental analysis and 
permitting, sir, what could the government do to streamline 
those processes and encourage domestic oil and gas development? 
Also, what are the steps that the Bureau of Land Management are 
taking to expedite oil and gas leasing process?
    Mr. Abbey. Well, in the President's blueprint for a secure 
energy future, he noted several possible provisions that might 
provide incentives for quicker development of existing leases 
and new leases. In that blueprint, there was a suggestion that 
Congress entertain shorter lease terms, as part of the Minerals 
Leasing Act. Also, there is the possibility of rewarding rapid 
development with lease extensions once there is an indication 
of progress being made in developing those leases.
    And another suggestion was that we would reward rapid 
development through graduated royalties. Again, that would 
require a regulatory rule change for us. But there are 
opportunities for us to work together with Members of Congress, 
within the Administration, and with industry and all public 
land stakeholders, to encourage responsible development of 
these resources that this nation is very dependent upon.
    We are willing and are moving forward in that direction. We 
are hosting various forums over the course of the next month to 
talk to the stakeholders regarding fracking, and the use of 
fracturing technology in development of natural gas on public 
lands. We are interested in hearing what the public has to say 
regarding that particular technology and any concerns that they 
may have, so that we can incorporate that as part of our 
analysis.
    The Bureau of Land Management again takes to heart the role 
that we play in developing our national resources, both 
renewable and conventional, to serve the public. And I think 
the program that we have in place, and the ones that we are 
implementing, not only provides greater opportunities to 
develop these resources, both renewable and conventional, but 
also to do so in a more responsible and environmentally sound 
manner.
    Mr. Fleischmann. Thank you. One follow-up question in the 
time remaining. Director Abbey, the President's budget imposes 
over $60 billion in tax and fee increases over 10 years on 
American energy production. Can you please tell me what the 
economic effect will be of these proposed taxes and fees on the 
energy industry?
    Mr. Abbey. I think you have some people that will be coming 
up on the second panel that could probably provide a response 
to that particular question.
    I will say this. That again, as we look to the future, our 
desire is to pass on to the industry the cost of doing business 
on these public lands. We are looking at, again, assessing fees 
to cover the full cost of inspections and enforcement actions 
on all the applications for permits to drill that we are 
approving. And as we look to the future, we are also looking at 
what is a fair return to the American taxpayer.
    Mr. Fleischmann. Thank you, sir. I yield back.
    Mr. Lamborn. I thank the gentleman. Now the gentleman from 
Colorado, Mr. Coffman.
    Mr. Coffman. Thank you, Mr. Chairman. Mr. Abbey, I am 
concerned with some of the proposed funding increases. In this 
budget request there are $29.9 million for an increase for 
recreational and cultural resources in the national landscape 
conservation system. There is an increase of $20.4 million 
requested for land acquisition. But the BLM has not requested 
an increase for oil and gas processing.
    Why do you rate land acquisition as more vital than energy 
development?
    Mr. Abbey. Well, in many cases acquisition of inholdings 
actually reduce the cost of managing public lands. We have 
worked very closely with public-land stakeholders, with 
interest groups, to identify those lands that would complement 
our management of key areas, sensitive environmental areas. We 
have identified those as part of the 2012 budget proposal.
    Our intention is that if these, if the monies were made 
available, that we would acquire those lands from willing 
landowners.
    I would point out, you know, Congressman Coffman, that 
managing public lands for multiple use is not just about 
developing our energy, or every acre for oil and gas. It is 
about bringing balance to public lands. Recognizing and 
protecting significant historic and cultural resources, 
sensitive watersheds and habitats, and wild and scenic rivers 
is just as important as providing acres for oil and gas 
leasing.
    Mr. Coffman. In 2009, Americans utilized renewable energy 
resources, such as wind, biofuels, hydroelectric, geothermal, 
and solar, to meet around 8 percent of our nation's total 
energy needs. Obviously it is unrealistic to assume that our 
nation will be able to use renewable energy utilization of all 
of our--let's see--will be able to use renewable energy 
utilization for all our needs in the near future.
    That being said, Mr. Abbey, I would like to know what your 
plan to increase conventional, non-renewable energy sources is 
in the future.
    Mr. Abbey. Well, Congressman Coffman, again, as consistent 
with our land-use plans, we are moving forward, making public 
lands, appropriate public lands, available for leasing. Again, 
we are implementing leasing reforms to try to bring greater 
certainty to the industry and to our public land stakeholders 
in those lands that we are evaluating for leasing, have the 
greatest chance of being leased and development.
    We are doing so to ensure that leasing is performed in the 
proper places, and again, incorporating all the safe and 
environmentally responsible, in a responsible manner. In other 
words, adopting best-management practices for any development 
on these public lands.
    Mr. Coffman. Now, as I understand it, you have specific 
goals for renewable energy on public lands, in terms of 
increasing renewable energy on public lands relative to output. 
Am I correct on that?
    Mr. Abbey. We do. Congress actually established some of 
those goals.
    Mr. Coffman. OK. What are your goals in terms of oil and 
gas, of actually oil and gas output on public lands? Would you 
have specific goals on that, as well?
    Mr. Abbey. We don't have specific targets. Again, our 
desire is to make sure that we act responsibly, making 
appropriate public lands available for such development, and to 
ensure that best-management practices are adopted and 
implemented on the ground.
    Mr. Coffman. Well, I don't understand. It is odd that you 
have specific targets on the renewables side, but you don't 
have specific targets on the non-renewables side. Why is that?
    Mr. Abbey. Well, again, it is part of the Congressional 
desire to see this nation diversify our energy portfolio, to 
release, or to decrease our reliance on foreign energy sources. 
Again, Congress did establish goals for us relative to 
renewable energy development. We are looking at, we are already 
halfway to achieving those goals.
    This year we will be reviewing 19 renewable projects, nine 
solar projects, five geothermal leasing project proposals, and 
five wind projects.
    Mr. Coffman. Thank you. You know, I just want to make a 
point. That it would seem to me that actually, that you ought 
to have targets on the non-renewables side. And just as you are 
trying to reduce our dependence on foreign oil, I have a 
feeling that producing more oil inside the United States might 
accomplish that.
    Mr. Chairman, I yield back.
    Mr. Lamborn. OK, thank you. I would now like to recognize 
the gentleman from Oregon, Representative DeFazio.
    Mr. DeFazio. Thank you, Mr. Chairman. Just in response to 
my colleague, I think he was here for the hearing where we had 
the head of the Energy Information Administration there. And he 
and every other expert up there agreed that in fact, OPEC sets 
targets, and they produce to meet those targets or restrict to 
meet those targets. And incremental additions, particularly in 
the short term, to U.S. oil supply would be offset by OPEC 
because they want to maintain their price targets. And we have 
a bipartisan problem there, because neither Clinton, Bush, nor 
Obama wanted to take OPEC to the WTO, but that is not for this 
hearing.
    Mr. Abbey, you talked about greater certainty for 
leaseholders, and I guess that was in part of a longer 
response. And I just kind of want to get to what that means. I 
don't know whether, is the former naval petroleum reserve, is 
that under your jurisdiction in Alaska, the leasing there?
    Mr. Abbey. The national reserve? Yes, it is.
    Mr. DeFazio. OK. What about all the non-performing leases 
in there, where there are known, very substantial reserves?
    Mr. Abbey. The challenge in developing those resources in 
the RA is infrastructure. Even though there has been areas that 
have been leased, there has been some exploration performed on 
those leases; the concern on the part of the industry, and I 
think to all of us, is the lack of infrastructure. That if 
those resources were developed, how do you deliver it to the 
market.
    Mr. DeFazio. Well, it seems to me it is a good deal closer 
to the pipeline from Prudhoe Bay than is ANWR over here.
    Mr. Abbey. Well, there is. And again, it would require some 
additional pipelines and additional investments and costs by 
the industry to deliver that resource.
    Mr. DeFazio. Investments and costs? Is it just going to 
spring up magically out of the ground, and go to the refinery 
by itself? Doesn't all this involve very substantial investment 
and costs?
    I mean, I have been looking at this for a number of years. 
I mean, it was the Clinton Administration that lifted the 
moratorium on leasing in there, and let the leases; yet, we 
have had no development. That is quite a few years. And yet on 
that side of the aisle we hear that the government is holding 
people back. Is the government preventing the development of 
those leases?
    Mr. Abbey. No.
    Mr. DeFazio. OK. On the other hand, does the government 
have stringent use-it-or-lose-it kind of performance 
requirements? Can you just sit on top of a pool of oil and say 
well, we will get to it some time?
    Mr. Abbey. Well, the government, the Bureau of Land 
Management issues 10-year leases. And if the industry does not 
develop those leases within that 10 years, that lease does 
expire.
    Mr. DeFazio. Well, I would assume that quite a few of 
those, if they were let in the Clinton Administration, must be 
at or past that 10-year point. Have we taken any of them back?
    Mr. Abbey. There has been some that have been relinquished, 
yes.
    Mr. DeFazio. OK, but others where there is more prospect of 
there being substantial amounts of oil that haven't been 
relinquished?
    Mr. Abbey. Well, where there has been exploration and 
another type of activity performed on those leases, they have 
not been relinquished.
    Mr. DeFazio. OK. So if they just perform some exploration, 
then the 10-year limit doesn't apply. It isn't 10 years to 
develop and extract the oil from the lease; it is 10 years to 
do something.
    Mr. Abbey. Exactly.
    Mr. DeFazio. And then what happens after they do something? 
Like explore and find out there is oil there? Does the 10-year 
clock start over again to actually extract the oil?
    Mr. Abbey. The lease can be extended.
    Mr. DeFazio. Can be.
    Mr. Abbey. Yes.
    Mr. DeFazio. Can it not be?
    Mr. Abbey. I am not aware that we have accepted leases back 
where there has been activities--well, let me backtrack. We do 
have areas where----
    Mr. DeFazio. Accept them back. I am not talking about 
accepting them back. I am talking about taking them back if 
these people are sitting on pools of oil that are known, they 
are refusing to develop it because it would cost money. And 
might drive down the price a little bit if it is a large 
supply, and it is longer-term, as opposed to the short-term 
stuff.
    Mr. Abbey. If there has not been any active exploration or 
development in those leases within that 10-year period----
    Mr. DeFazio. Yes, but you just used exploration. I could 
explore, find out there is a pile of oil down there, huge pool 
of oil; and then just say well, we will save that for later, 
when the price is even higher.
    Mr. Abbey. Well, within that 10-year period there has to be 
some production. That is true.
    Mr. DeFazio. There does have to be production. That seems 
to contradict what you said earlier. I think this----
    Mr. Abbey. Let me get some clarification real quick.
    Mr. DeFazio. Yes.
    Mr. Abbey. Well, I was just informed that Congress does 
give companies more time in the NPRA, due to infrastructure 
problems there. And so there is an exception there in Alaska 
for the National Petroleum Reserve.
    Mr. DeFazio. But my understanding is, with the decline in 
Prudhoe Bay, we are not using the pipeline capacity, fully 
utilizing it. And this is much closer than ANWR, where we don't 
know if there is or isn't oil. We know there is oil in the 
petroleum reserve; that is what it was kept for.
    I guess then I would ask, on a bipartisan basis, maybe my 
colleagues would like to join with me in forcing these people 
to do something about accessing, investing, and extracting that 
oil. Thank you. Thank you, Mr. Chairman.
    Mr. Lamborn. OK, I thank the gentleman. Now we will hear 
for up to five minutes, questions from Representative Rivera 
from Florida.
    Mr. Rivera. Thank you very much, Mr. Chairman. Gentlemen, 
thank you for being here today.
    Mr. Abbey, just to follow up on some of the line of 
questioning we just heard, when did companies apply for permits 
to build pipelines into the Naval Petroleum Reserve, Alaska?
    Mr. Abbey. I don't have the specific dates. I do know that 
there have been some proposals for pipelines within the 
National Petroleum Reserve in Alaska.
    I do know that at least one company is having problems 
getting the necessary permit from the EPA and the Corp of 
Engineers.
    Mr. Rivera. Do you have any idea when those applications 
may have started? Weeks, months, years?
    Mr. Abbey. I don't. We would certainly be happy to provide 
you that for the record.
    Mr. Rivera. I would appreciate that. Because my 
understanding is it has been several years. And I guess the 
follow-up question then is what are you doing to move forward?
    Mr. Abbey. Well, the Bureau of Land Management again takes 
the applications that we receive, the proposals that we 
receive. We go through the necessary NEPA analysis. We make a 
determination of whether or not such an action is appropriate, 
but it still is consistent upon the proponent acquiring and 
obtaining all the necessary permits from other agencies who has 
a role to play, as well.
    Mr. Rivera. Well, let's talk about that a little bit, the 
other agencies that have the role to play. I assume you are 
alluding to the Army Corps, the EPA?
    Mr. Abbey. I am, as well as State agencies.
    Mr. Rivera. And in terms of the Army Corps and the EPA, why 
are, what are they doing in terms of preventing going forward 
and developing in the NPRA?
    Mr. Abbey. Well, they have their own review processes, and 
also they provide permits that are required in order for some 
of those proposals to be developed.
    Mr. Rivera. And anything that you, in your capacity, are 
doing to expedite any of these efforts?
    Mr. Abbey. We routinely coordinate our actions with the 
EPA, as well as the Army Corps of Engineers. We share our 
information, our analysis, with them. But they, in turn, have 
their own processes, and they are the ones that make a decision 
of whether or not they issue their permits.
    Mr. Rivera. Let me move forward then and talk a little bit 
about the question on the Energy Policy Act of 2005, where it 
states that it is the Policy of the United States that, I am 
quoting, ``oil shale, tar sands, and other unconventional fuels 
are strategically important domestic resources that should be 
developed to reduce the growing dependence of the United States 
on politically and economically unstable sources of foreign oil 
imports.''
    My question is how do you square that policy direction from 
Congress, which I think seems pretty clear, with the recent oil 
shale settlement agreement with a number of environmental 
groups that result in taking the oil shale resource off the 
table, particularly at this time when it is so desperately 
needed?
    Mr. Abbey. Well, first, we have not taken the oil shale off 
the table. We have a very aggressive research and demonstration 
program that is in place. We have issued six oil shale leases, 
five in Colorado, one in Utah, that are currently being 
evaluated as far as the technology that is being planned to be 
used by the companies that have those six RD&D leases.
    In addition, we are reviewing three other nominations that 
have come to us, and that, for additional RD&D leases. Two of 
those three are located in the State of Colorado; one is also 
located in Utah.
    So we are aggressively looking at the technology to 
determine what would be the true impacts of developing that 
significant resource that does exist in Wyoming, in Colorado, 
in Utah primarily, so that it could help offset our needs for 
domestic oil and oil shale-type materials.
    Mr. Rivera. So it is your position that any agreements with 
these environmental groups are not essentially repealing the 
National Policy Directive set by Congress.
    Mr. Abbey. We do not see a repealing at all. In fact, 
again, it does require us to go back and do some initial 
analysis to determine just how much resource impacts could 
occur, would occur under the development of these oil shale 
materials. Again, we do not have a full understanding of the 
quantity of water that would be required in order to produce 
oil from oil shale. There are some other impacts that might be 
experienced as a result of developing such a resource.
    So we wanted to make sure that we have an aggressive RD&D 
program that would give us the answers that we need in order to 
move forward responsibly to develop such a resource.
    Mr. Rivera. Thank you, Mr. Chairman.
    Mr. Lamborn. OK, thank you. I now recognize for up to five 
minutes the gentleman from Arizona, Representative Gosar.
    Dr. Gosar. You know, Mr. Abbey, what I am noticing is a 
total lack of coordination in efforts. And I am seeing this 
over and over. And as a businessman, it is apparent that we 
have some problems.
    In fact, when my colleague on the other side of the aisle, 
Mr. DeFazio, asked you some questions, you were careful in your 
discussion about pinpointing about some of the problems in the 
process, when the process is part of the problem.
    I am from Arizona's First District, and NEPAs are now 
taking over five years to accomplish. And all we have to take 
is a letter with a stamp on it to hold it up. That is where we, 
Mr. Ferguson, need to have some tort reform in regard to this 
litigation.
    But it is, the problem is, particularly when you see an 
administration actually going and thwarting a process of 
putting in infrastructure. So I want to pinpoint that the 
problem is a lack of coordination.
    Now, Mr. Ferguson, how are stone quarry reclamation bonds 
figured?
    Mr. Ferguson. There is a process that we follow where they 
look at projected reclamation costs for the type of activity, 
equipment use, and things along that line. Our regulations 
require us to update those periodically, and they look at a 
couple different things. They can look at local, more localized 
rates. They can also look at a more generalized regional rate 
for the reclamation efforts that are required.
    Dr. Gosar. Who has the authority to set those?
    Mr. Ferguson. That would be actually managed at the 
district or forest level, by the District Ranger, and 
ultimately from an authority standpoint, the District Ranger 
and Forest Supervisor.
    There is usually a geologist or a minerals administrator 
that gets involved in the process of gathering the information 
from the local sources in pulling together the projection of 
what the reclamation costs would be, and then calculating the 
bond.
    Dr. Gosar. That is interesting. Is there a means to review 
that decision, with the checks and balances, in case somebody 
didn't have their facts and figures right?
    Mr. Ferguson. I would suggest having meetings with the 
District Ranger and the Forest Supervisor to, you know, in 
terms of a formal process. Once the bond is established, there 
probably is an appeal process. But I would encourage just 
having some face-to-face talking, you know, time with the local 
supervisor, would probably be a good, effective way to try to 
deal with that, as well.
    Dr. Gosar. What if the regional supervisor basically says 
my word is it, and that is it, and I don't care what Congress 
or anybody else does? Is that a prudent use of oversight?
    Mr. Ferguson. That is a good question.
    Dr. Gosar. Well, let me just make it more specific. Let me 
give you a nice story. I really have some concerns about the 
reclamation bond requirements imposed on the stone quarry 
industry.
    As you know, the last three years have just plummeted. And 
in fact, my district is one of the poorest. And so when you 
talk about looking at rehabilitating a quarry, costs are 
probably pretty low; not greater, probably pretty low.
    So what happened is that we had some bonds set. And in the 
end of 2010 the bond was set for $627,000. In 2011, that bond 
went up to $940,800. And when they questioned it, the regional 
geologist in Williams took that to a rate of $1,183,800. Wow.
    I am astonished here. You know, over 200 families have jobs 
there. And so it seems like we would have some workability with 
people. And what began--I want to reiterate, I am from 
Arizona's First District, where we seem to have a constant 
problem here. And it was wonderful that the Chief came out to 
work things out in the Schultz Pass fire.
    But it seems to be that we have rogue bureaucrats at the 
local level deciding fates of everybody, without a discernible 
policy, without a checks and balances. I have a whole list of 
questions in regards to this quarry industry, and I would like 
to see them answered, if I may.
    Mr. Ferguson. I would just offer that there are some 
opportunities to look at that bond value calculation. There are 
also opportunities to do some other, or look at other 
approaches to how some of that reclamation can be done.
    If the operators have equipment out there, and they are 
actually able to do some of that reclamation themselves, you 
know, make their footprint smaller, do some of that 
rehabilitation, then that would be a way of decreasing that 
bond calculation. So it is based on the footprint on the 
ground.
    So I think there are some possibilities that are out there 
to negotiate, do some reclamation. It is going to be less 
expensive for that operator if his equipment is already there, 
if they meet the standards. So I think there are some 
possibilities there.
    Dr. Gosar. Mr. Chairman, just one follow-up then.
    Mr. Lamborn. Quickly.
    Dr. Gosar. So there are checks and balances that we can 
mitigate this. And so who would people go to if they have 
somebody sitting in a power of authority, just saying this is 
the only way? I mean, actually the comment came back that 
Congress can't do anything about it, it is my way or the 
highway.
    Mr. Ferguson. Well, I think that the decision maker, as I 
said, is that district ranger or the forest supervisor. There 
is a regional forester that also exists in the organization, so 
I would knock it up to the next level, if that is where you 
feel like you need to go.
    Dr. Gosar. I would like to take it a step further. I would 
like to see the checks and balances all the way through, so 
that we can move this along for people in Main Street America.
    Mr. Ferguson. I understand.
    Mr. Lamborn. OK, let's have a second round. And you can 
certainly do a follow-up in the second round. Once again, I 
appreciate the two witnesses staying a little bit longer. I 
appreciate that; I know your time is valuable. But there are a 
lot of important questions that we would love to ask.
    I will start the second round. And this question is for 
both of you; it affects both of your agencies. And I have also 
asked this question of Interior Secretary Salazar when he was 
here. And it has to do with a situation, and I believe it is in 
the Teton Forest of Wyoming. And apparently there is a forest 
supervisor who has taken it upon herself to urge BLM to cancel 
leases that, oil and gas leases, that were duly authorized by 
BLM.
    There is no way that this can happen, is there? And are you 
familiar with the situation? This is for both of you.
    Mr. Abbey. Well, certainly, I will begin the answer, and 
then maybe Tony would like to augment my response. But the 
Bureau of Land Management's position at this point in time is 
awaiting the final outcome, so the Forest Service 
administrative appeals process, before we determine how best to 
address those leases.
    The forest supervisor has made a determination, I believe 
maybe based upon litigation, or certainly an appeal to go back, 
reevaluate the analysis that provided such lands for leasing. 
And that administrative appeal is still going on, as far as I 
know.
    Mr. Ferguson. I will just add to that. That is correct. The 
administrative process is running through its course right now.
    The decision that the forest supervisor made was to 
withdraw the consent to leasing that had been previously 
provided to the BLM. There was an appeal process of 45 days, 
and then there is a final decision that will be made on that 
appeal by the regional forester that we expect sometime on or 
around the first week of May.
    So we are still in the administrative process regarding the 
consent that was provided for leasing to occur.
    Mr. Lamborn. OK, thank you. Mr. Abbey, I want to thank you 
for clarifying something earlier. There was some discussion 
about the concept of use it or lose it. And you correctly 
pointed out that people make payments upfront when they are 
given a permit; they make annual permits thereafter. That is a 
use-it-or-lose-it structure, already in place, for those who 
understand how business and free enterprise operates.
    Mr. Abbey. They pay rent on those leases, yes.
    Mr. Lamborn. That is right. So they have every incentive 
right now to make their investment pay off. And if they want to 
watch that disappear because for some reason it is no longer 
economically feasible, they pay a financial penalty currently. 
Because they pay payments for nothing. To me, that is already 
use it or lose it.
    Mr. Abbey. Well, they are holding those parcels. They are 
not being available to other companies who might have a desire 
to develop those parcels.
    Mr. Lamborn. You also talk about, Mr. Abbey, about making 
people pay their own way. But don't we already have a system in 
place where they pay for permits, they pay bonus bids at the 
beginning, they pay annual lease payments? There are other 
miscellaneous fees depending on the situation. So aren't there 
already a lot of payments made by those being issued permits 
today? Aren't there already payments in place?
    Mr. Abbey. There are payments in place. There are fees that 
are being collected for some of the actions that you just 
described.
    One of the concerns, and one of the greater concerns that 
we have, though, is making sure that there is a fair return to 
the American taxpayers. And that pretty much deals with the 
royalty rates, the 12.5 percent royalty rate that has been in 
place for a number of years.
    As mentioned earlier, the Bureau of Ocean Energy Management 
collects a royalty rate of 18.75 percent for offshore, 
production of offshore leases. Onshore is 12.5 percent.
    Mr. Lamborn. OK. There are so many things I would like to 
ask you, but to shift gears quickly to one other subject. On 
page 3 of your testimony you talked about transferring $16.7 
million from the realty and ownership management activity to a 
renewable energy project.
    So my assumption from that is that the realty and owner 
management activity as it is currently structured is a lower 
priority for you, if you can just shift $16.7 million from it. 
Is that correct?
    Mr. Abbey. No, sir, it is not. The amount of monies that we 
are proposing to shift is the amount of money that we have been 
using in order to process rights-of-way applications for solar 
and wind energy project proposals.
    This would be an administrative action that requires 
Congressional concurrence, because it would be done through the 
appropriations process. But it would take the amount of money 
that we are currently using to manage our Renewable Energy 
Program, and put it in a specific sub-activity that is targeted 
for renewable energy. So it is more than administrative action 
than actually de-emphasizing any aspect of the Lands Program or 
the Renewable Energy Program.
    Mr. Lamborn. OK, thank you. At this point I would like to 
recognize the Ranking Member for up to five minutes.
    Mr. Holt. Thank you. I would like to pursue this renewable 
energy matter for a bit longer. The goal is aggressive; I think 
I said earlier it would be 10 billion watts of renewable energy 
on public lands overall.
    Can you tell us kind of what your schedule is? How you are 
going to do that? And whether, how the permitting process 
differs. I mean, are there more hurdles to jump through? Does 
it take longer than for the other energy permits?
    Mr. Abbey. Well, process-wise, it is very similar. In the 
Renewable Energy Program, when we are talking about solar or 
wind, the applications are filed through our rights-of-way 
program. So the proponents are seeking a right-of-way in order 
to develop commercials-scale projects on public lands.
    Once we receive a perfected application, then we go through 
the NEPA analysis to assess the impacts or the likely impacts 
of approving that project, to determine whether or not the 
project, as proposed, is in the right location; whether or not 
the large footprints of solar projects or wind projects can be 
successfully mitigated; and to determine what terms and 
conditions that we would apply to a record of decision that 
might be issued.
    Again, the process is very similar to what we perform for 
conventional energy, except it is different, different 
authorities.
    Mr. Holt. And what about the pace of this? When will we, 
you know, are you on track for the 10,000 megawatts?
    Mr. Abbey. Well, we are a little over halfway there. We 
anticipate approving another 4,000 megawatts based upon 
projects that are under review for this fiscal year. We have 
already approved a little over 5,000 megawatts through 2010. 
And if we successfully approve, or if we approve in the 
neighborhood of 4,000 this year, we have another 4,000 to 5,000 
megawatts that we would probably be reviewing in Fiscal Year 
2012.
    Mr. Holt. And how quickly will that actually be electrons 
on the grid?
    Mr. Abbey. Well, we hope as soon as possible, just like we 
hope that----
    Mr. Holt. Do we need a use-it-or-lose-it requirement there?
    Mr. Abbey. No, we don't. Because we already have diligence 
as part of our record of decision. So the terms and conditions 
of the rights-of-way is that the proponent would be required to 
move forward and demonstrate progress toward constructing their 
project in a timely manner.
    Mr. Holt. Just have a short answer, Mr. Ferguson. How much 
of this renewable energy is targeted for Forest Service land?
    Mr. Ferguson. The only target that we have specifically 
identified at this point in time is in the hydropower area. And 
we are looking at trying to increase our current capacity by at 
least 10 percent. And we have a number of projects that are on 
the board, on the table, that would allow that to be met 
without any trouble at all.
    Mr. Holt. Good. Well, thank you. Mr. Abbey, under the 
Mining Act there is no real obligation for dealing with 
abandoned mines and reclaiming them. What is the status of that 
now? How many abandoned mines do you estimate are on lands 
under your jurisdiction? And what level of public hazard do 
they provide? Either in kind of physical hazard, or water 
pollution, or whatever else might result.
    Mr. Abbey. Well, many of these abandoned mines are 
significant. We have identified 31,000 abandoned mine sites on 
public lands, with almost 65,000 features. And those features, 
you know, include such things as open entryways, mine tailings 
and other environmental hazards.
    Unfortunately, each year we see deaths as a result of some 
of these abandoned mine sites, where people have fallen into 
shafts or, through their own exploring of some of the abandoned 
mines, they get trapped, and unfortunately die.
    But there is a significant environmental cost to the 
American taxpayer.
    Mr. Holt. Has BLM written a proposal on what should be 
done, under perhaps different law, to deal with this?
    Mr. Abbey. We submit an appropriations request each year to 
Congress, to provide funds to move forward and, to the best of 
our abilities, mitigate hazards associated with those mine 
sites that are closest to the population. The amount of money 
that we have received through the Appropriations process has 
not necessarily been sufficient in order to take the actions 
that are required to mitigate the hazards associated with these 
mines.
    We believe that the fee that we are proposing as part of 
our 2012 budget proposal would provide us with the funding that 
are necessary for us to move forward as aggressively as 
possible to mitigate the hazards associated with these 
abandoned mines quicker, rather than later.
    Mr. Holt. Thank you. And let me just say to the Chairman, 
it is worth pointing out that I think as things exist now, 
going forward, any hazards that result from these activities 
are a cost borne by the taxpayer. Thank you.
    Mr. Lamborn. OK, I thank the gentleman. Representative 
Thompson.
    Mr. Thompson. Thank you, Chairman. Mr. Ferguson, I promised 
we would get back to just a couple questions yet on the 
Allegheny National Forest.
    Mr. Ferguson. OK.
    Mr. Thompson. And it is a situation that relates to other 
forests, obviously, our national forest public lands. You know, 
specifically where this Administration implemented a moratorium 
on the rights of individuals who own private, privately owned 
subsurface rights.
    And that was overturned, not once, but twice, by a Federal 
Judge. And despite that, the Administration still continues to 
trample, it looks like finding a back-door way to trample on 
the rights of the taxpayers, I think, and certainly the private 
owners, with this regulation relating the management of 
national forest surface resources with privately held mineral 
estates.
    Is it true that this rulemaking was initiated in support of 
the Sierra Club litigation in the Allegheny National Forest?
    Mr. Ferguson. Not to my knowledge, sir.
    Mr. Thompson. OK. That is my understanding, that that was 
the event that triggered that. And again, I want to come back 
to how you justify in the proposed rulemaking, now you had 
referenced the Conservation Acts of 1990s?
    Mr. Ferguson. 1992, there was very specific language 
regarding the Allegheny National Forest in this regulation.
    Mr. Thompson. OK. I was specifically going to look at that. 
Within the Forest Service regulations, as a general rule--and I 
am quoting from it--as a general rule, the Forest Service does 
not have the authority to deny the exercise of a mineral 
reservation or outstanding mineral right. Now, that is the 
regulations that exist today. So I will take a look at that 
1992 Act.
    To what extent is the Forest Service going to consult about 
this rulemaking with Native American tribes and States such as 
Pennsylvania?
    Mr. Ferguson. In terms of the tribal consultation, there is 
a 120-day consultation period prior to anything going out in 
draft that will be occurring with tribes. And then there will 
be an opportunity for comments and interactions with the State 
after the draft is published.
    So consultation with the tribes occurs prior to publication 
of any proposed regulations.
    Mr. Thompson. OK, thank you. I want to come back to the 
loss of leases that this new policy--and this is for both 
gentlemen. Has the agencies done a cost-benefit analysis of 
such a policy change, in terms of rescinding leases for, quote, 
non-production?
    Mr. Abbey. The oil and gas program?
    Mr. Thompson. Yes. Well, I don't care what it is for, 
minerals, it doesn't matter.
    Mr. Abbey. Well, let me just point out, you know, the 
Bureau of Land Management has issued 7,100 applications for 
permit-to-drill authorizations to the companies themselves to 
go out and drill on public lands. Those 7,100 permits are the 
ones that are not being developed.
    Mr. Thompson. Well, but my question is, has there been a 
cost-effective analysis done of really the cost side? I think 
the benefit side, too, because I think you may lose the revenue 
of these leases. And once the Federal government takes this 
move, that people aren't going to, other folks aren't going to 
come in and bid on them, because who is going to want to deal 
with this type of conditions?
    Specifically, let me put out this. Have you considered the 
liability costs when you rescind these leases for ``non-
production?'' Specifically, you know, when you cancel a lease, 
we are talking about costs which I think we are going to be 
liable for. Bonus bids, rents that have been paid by these 
companies, prospective production. Have those been, there is a 
cost--do we know what the costs of those, the exposure of that 
liability will be for your agencies, for the Federal 
government, and ultimately for the United States taxpayers?
    Mr. Abbey. Sir, we are not proposing to rescind any 
existing leases. The----
    Mr. Thompson. I recognize it is future ones. But I am 
talking about the liability costs for those future ones.
    Mr. Abbey. Well, those future leases would be issued based 
upon the terms and conditions of the decisions affecting those 
leases. So there would be a diligence requirement to the 
companies to move forward in a more aggressive manner to 
develop their leases, or the leases would be lost.
    Mr. Thompson. I understand that you are, the agency is 
considering rescinding leases, current leases in Wyoming. So 
that there are current leases on the table.
    Mr. Abbey. There are leases that we have issued that we are 
doing some additional environmental work, so that we can, so 
that the companies can receive those leases, and move forward 
and develop those leases.
    Mr. Thompson. Let me finish up, because my time, I am down 
to the last couple seconds. Can either of you gentlemen tell me 
what percentage of the country that the United States owns, 
through our public lands, our Bureau of Land Management, Forest 
Service? Is it 10 percent, 20 percent, 30, 40, north of 40 
percent? I am not exactly sure myself. I know I have heard it 
is somewhere in that 40-to-60-percent range. That is a 
significant amount of ground.
    So the question I have for you, and this comes down to the 
line of questioning that was with land acquisition, how much is 
enough? And when we look at the consequences of taking land and 
putting it into the public sector out of the private sector, it 
comes at a cost of acquisition; you are budgeting for that. I 
know the Allegheny National Forest is looking at taking more 
land out of the private sector, and putting it into the forest. 
It is a cost to the taxpayer, because it comes off the tax 
rolls, so everybody else's property tax and tax rates go up. It 
is a cost-economic activity. Because where homes were built and 
property taxes would be paid, or businesses would be built and 
jobs are created.
    So my final question is, do you have an adequate budget 
currently, or as proposed, to manage and maintain the current 
public lands that the government owns? Or would you need more 
money to do it adequately?
    Mr. Abbey. Well, the acquisitions that we are proposing for 
2012, again, would augment the management of our existing 
programs. And by that, I mean in some respects it will bring 
some efficiencies for managing some of these environmentally 
sensitive areas.
    Let me just point out, too, that the Bureau of Land 
Management not only acquires lands subject to appropriations by 
Congress, but we also dispose of public lands that have been 
determined to be an excess, through our land-use planning 
processes. So it is not just a one-way street.
    The Bureau of Land Management does have the authority to 
dispose of appropriate public lands that would be consistent 
with decisions that are reached through land-use plans.
    Mr. Thompson. I appreciate both the testimony from both of 
you gentlemen. And you know, I understand it is a two-way 
street. I would like it to be a hiking path for us acquiring, 
taking any more land out of the private sector. And a four-lane 
highway as returning land from the public sector to the private 
sector.
    And frankly, the Forest Service folks I deal with, they 
tell me they don't have enough money to maintain what they have 
now. So to acquire more land is, I don't understand that. Thank 
you.
    Mr. Lamborn. Thank you. I now recognize the gentlelady from 
Guam, Mrs. Bordallo.
    Ms. Bordallo. Thank you. Thank you very much, Mr. Chairman. 
Just to clarify an earlier point. The Administration projects 
that this non-producing lease fee would generate as much as 
$874 million over 10 years. It will increase revenue overall 
for American taxpayers. You agree with that.
    Mr. Abbey. That is a projection based upon, you know, some 
assumptions. But we do agree with those, that projection.
    Ms. Bordallo. All right. Director Abbey, a recent GAO 
report raised serious questions regarding BLM's management of 
oil and gas wells that have not been producing for many years. 
Now, these wells could pose a danger to the environment and 
American taxpayers. What actions are you taking to mitigate the 
risks posed by these idled and orphaned wells?
    Mr. Abbey. Well, again, we take that report seriously, and 
we are moving forward to encourage the companies who are in 
possession of some of these idle wells who have not been 
producing for a number of years, to move forward and plug those 
wells. Unfortunately, we do have some orphan wells, as we refer 
to them, where still there is no responsible party holding 
those orphan wells.
    And so, in order to mitigate the hazard associated with 
those orphan wells, we are actually implementing our own plug-
in programs to lessen the impacts from such wells.
    Ms. Bordallo. So you have something that is ongoing, is 
that correct?
    Mr. Abbey. We do. And again, it can be a serious problem if 
we are not on top of these idle wells. And we are working very, 
very closely with the industry to make sure that they are not 
going to sit around for long periods of time before there is 
some action to mitigate the hazards associated with it.
    Ms. Bordallo. Meanwhile, the taxpayers would bear the costs 
of these orphan----
    Mr. Abbey. For the orphan wells.
    Ms. Bordallo. I see. Director Abbey, according to the GAO, 
the minimum bond amounts for oil and gas companies were set in 
the fifties and the sixties, and have not been updated, and may 
not be sufficiently high to serve as a proper incentive for 
companies to plug wells and reclaim the land.
    Would you agree that we should look at this issue of 
whether bonding requirements for oil and gas companies are too 
low?
    Mr. Abbey. Congresswoman, we are doing that right now. 
Again, we accepted the criticism that GAO noted in their 
report; we have provided new directions to our offices on what 
our expectations are, as well as what the American taxpayer's 
expectations are of our performance. And so we are updating 
those bonds to reflect today's costs.
    Ms. Bordallo. What would be the time period with this 
updating?
    Mr. Abbey. It is ongoing, but it is a very high priority 
for us. Because we want to make sure that the American 
taxpayers are protected, and reclaiming some of these areas.
    Ms. Bordallo. I have another question for you, Mr. Abbey, 
just to clarify your answer to the questions posed earlier by 
my colleague from Oregon.
    Under current law, a company is issued a lease for 10 
years. So a company can sit on these leases for five, six, 
seven, eight, nine years without doing anything to develop 
them, as long as they begin activity before 10 years. Is this 
correct?
    Mr. Abbey. That is true.
    Ms. Bordallo. All right. And then, of course, they can go 
on and get an extension.
    Mr. Abbey. Once they have demonstrated progress toward 
developing them.
    Ms. Bordallo. Before the 10-year period is up.
    Mr. Abbey. Yes.
    Ms. Bordallo. What is the payment, annual payment, to hold 
onto these wells?
    Mr. Abbey. Let me ask real quick.
    Ms. Bordallo. I understand it is very low.
    Mr. Abbey. It is $2 per acre, per year. And the exception 
is in Alaska, where there is a different fee.
    Ms. Bordallo. Lower or higher?
    Mr. Abbey. It would be higher in Alaska.
    Ms. Bordallo. I see. Mr. Chairman, thank you, they have 
answered my questions.
    Mr. Lamborn. Thank you, and I thank the gentlelady. Now we 
will go to Representative Fleischmann. He has departed, so next 
on the line would be Representative Gosar.
    Dr. Gosar. Well, I was glad to hear that certain fees 
haven't gone up since the fifties, and yet we are dealing with 
ones in my neighborhood that are going up concurrently into the 
next millennium.
    But Mr. Ferguson, I hope you understand that these bonds 
are due on the 31st of March. And people have exhausted--and I 
am trying to work with people at the local level, so we would 
love to have your help in looking at this.
    Mr. Ferguson. We will sure look into it.
    Dr. Gosar. Thank you, Mr. Abbey. Or thank you, Mr. 
Ferguson. Mr. Abbey.
    Mr. Abbey. Yes.
    Dr. Gosar. Prior to 1970 the old Atomic Energy Commission, 
now the DOE, left behind a legacy of abandoned, unreclaimed 
conventional uranium mines on a Navajo reservation, located 
partially in my Congressional District, which has never been 
cleaned up. No bonding was required, a situation which allowed 
the government to mine on the reservation with reckless 
abandon.
    This same government imposes a reclamation bond requirement 
for private businesses. The fact that the government has failed 
to clean up these exposed tailings is a scandal that led to 
confusion and misunderstanding regarding uranium extraction in 
the 1950s and sixties, and a good record of commercial uranium 
mining on the BLMs off the reservation were impugned.
    There is a huge distinction which is lost in the public eye 
here. The draft environmental impact statement on the million-
acre withdrawal in northern Arizona, proposed by the Secretary 
of the Interior, withdrawal from mining validates this. Some 
estimates that the full withdrawal of one million acres could 
mean $29 billion in lost economic activity over 42 years, from 
northern Arizona and southern Utah.
    At a March 21, 2011 St. George coordination meeting with 
Arizona and Utah county and city officials, BLM officials said 
that they did not recommend the withdrawal of one million acres 
of prime breccia-pipe uranium mines, one of the most 
significant deposits of energy in the U.S. The USGS estimates 
that 326 million pounds of uranium in the area equals to about 
22.4 years' electricity equivalent for California, assuming no 
other resources of energy, based on its findings.
    Did BLM believe that anything it found in the draft EIS 
make local officials believe they should recommend a 
withdrawal?
    President Obama has reiterated, in a variety of statements 
recently, that his Fiscal Year 2012 budget reflects a goal of 
increasing the use of nuclear power to provide a good portion 
of this country's electricity needs. Yet, the Administration 
seems to be working against itself with the Energy Secretary 
Chu out promoting nuclear power, and the Interior Department 
out trying to withdraw some of the nation's highest-grade 
deposits of uranium in northern Arizona.
    The Nuclear Energy Commission, or institute, calculated 
that the proposed withdrawal, now the subject of a two-year 
segregation order, would have major disruptive effects on 
future domestic supplies, even after new mines are fully 
operational in the State of Wyoming.
    Today, the nation's utilities import over 90 percent of the 
fuel they use in our 104 operating reactors. When 30 years ago, 
America was entirely self-sufficient in providing uranium to 
fuel our nuclear power plants.
    We cannot substitute reliance on foreign countries for oil, 
with a reliance on foreign countries for uranium. We have the 
resources in our country. And I am troubled that the areas 
withdrawn from the mining of 40 years are now being proposed 
for this withdrawal.
    First question. We have the funding. It seems that we are 
lacking the prioritization about cleaning up our mess. Is that 
true?
    Mr. Abbey. Congressman, I am not familiar with the 
reclamation requirements that you noted there on the Navajo 
Indian reservation, but it certainly is something, now that you 
raised it to my attention, that I am going to have to look into 
and see what we can do to clean up the remnants of our past.
    Dr. Gosar. Part of that was with the Bennett Freeze, in 
which we arbitrarily put a line here and did nothing, did not 
even allow people to replace a window. They can't even drink 
the water, because we have unusually high radiation. So I would 
hope that we would get an answer in regards to that.
    And then looking at the priority schedule of cleaning up a 
mess before we are starting to purchase something. As a 
businessman, there are a lot of things I would like to do, but 
I can't do, because I have some obligations.
    Do you believe American utilities should purchase 
domestically mined uranium?
    Mr. Abbey. I do.
    Dr. Gosar. Do you think this is the best way of going about 
it? Or should we start looking at our domestic supply?
    Mr. Abbey. I do believe that we should look at our domestic 
supply before, you know, considering other alternatives.
    I would say this. There are supplies of uranium that exist 
outside the Arizona strip, so there are other alternative sites 
and sources for uranium.
    Dr. Gosar. Should we look at these on a case-by-case basis, 
instead of just randomly taking out a whole segment?
    Mr. Abbey. Well, again, it is a business decision. For 
example, there in the area that has been in the proposed 
segregated area, there are 3,000 mining claims that currently 
exist within those areas. Any future withdrawal, if there is a 
withdrawal in that particular area, it would be subject to 
grandfather rights. So any of those mining claims with valid 
existing rights could continue to produce.
    Dr. Gosar. Well, I have a whole host of more questions, so 
I would love to submit them, Mr. Abbey, for your comment.
    Mr. Abbey. You bet.
    Dr. Gosar. Thank you.
    Mr. Lamborn. Thank you. Mr. Sarbanes.
    Mr. Sarbanes. Thank you, Mr. Chairman. Thank you all. 
Director Abbey, I just wanted to ask you, I kind of look at the 
public lands, when it comes to production of various sources of 
energy and resources, as like a giant outdoor laboratory, in a 
sense. Where we have the opportunity, on behalf of our 
taxpayers and the American public, to insist on a certain set 
of standards as these new technologies are brought to bear and 
so forth, and these public lands are made available to private 
interests to develop.
    And I wondered if you could just maybe speak to that 
concept a little bit; and whether you could point to instances 
where you think the activity on public lands, as a result of 
the oversight that is brought to bear by your agency and 
others, really does kind of push the best practices to a new 
level and set higher standards. Particularly, I guess, when it 
would come to requiring certain safety standards. Things where 
exploration and production in another setting might not be as 
attentive to those kinds of standards, but where, because it is 
public lands, we kind of bring a higher expectation to bear.
    I am sure there are examples you could cite, where maybe we 
haven't been as good, the government hasn't been as good at 
insisting on the highest standard. But I wonder if you could 
speak to that, that concept, and maybe point to examples where 
you think it is that dynamic between the private interests who 
are pushing forward to explore and produce, and the public 
oversight that has actually resulted in some pretty good best 
practices that have set the standard for that particular 
industry.
    Mr. Abbey. Well, that is an excellent question. No doubt we 
are living with the legacies of our past. And we would be 
foolish if we didn't learn the lessons from those legacies.
    And I am proud to report that in many respects, we are 
taking those lessons and incorporating them into our decisions 
that we are making today, based upon the latest technologies, 
and based upon working with not only the industries who are 
proposing actions on these public lands, but also with the 
public land stakeholders, who care an awful lot about their 
assets. They want to make sure that any development to these 
lands or any uses that take place on these lands are done so in 
a responsible manner.
    That is a responsibility that we have, as the Bureau of 
Land Management, for managing these 245 million acres of lands 
that we manage on behalf of the American public.
    So again, as we go forward, we are working very, very 
closely to implement best management practices through any of 
the authorizations that we are issued. Whether that is 
reflected in the Renewable Energy Program that we are currently 
managing, or whether it is in the conventional energy program 
that we are also managing.
    I am proud to report in many respects that the industries 
themselves are the leaders in bringing forward this technology, 
and sharing the lessons that they have learned elsewhere, and 
working with us to try to limit the footprints from future 
development on these lands.
    There is still work to be done. There are still lessons to 
be learned. But again, it is a lesson and actions that we 
continue to move forward, so that we can be as responsible as 
we can in managing these public assets.
    Mr. Sarbanes. I would encourage you to try to position the 
department, the Bureau, as well as you can to bring a really 
high standard of expectation with respect to the hydraulic 
fracturing practices. The reason being that that is going to be 
getting a lot more attention, going forward. There are 
obviously new discoveries, particularly in this area. The 
Marcellus shale, which has set off a race to lay stakes in both 
private and public venues.
    It would be great if BLM could end up being a resource as 
that industry further develops, as to what the best practices 
are. And you know, going forward, I will be interested to hear 
sort of the results of studies and investigation that you can 
do of how that is working on public land, so we can bring that 
kind of expertise to bear with respect to our, our interest in 
these new, these new possibilities in this area.
    And with that, I yield back my time.
    Mr. Lamborn. OK, thank you. Representative Duncan.
    Mr. Duncan. Thank you, Mr. Chairman. And Director Ferguson, 
Director Abbey, thank you guys for coming to the Committee 
today, and talking about the budget and about concerns.
    You know, world events have really magnified the fact that 
America is very, very dependent on foreign sources of energy. 
We have had numerous hearings about opening up Federally owned 
lands to energy exploration and production.
    And we had one hearing where we talked about the Wildlands 
Act, and the fact that Secretary Salazar issued a Secretarial 
Order in December to expedite the designation of wilderness 
areas from wilderness study areas. And a lot of questioning him 
on the reason behind taking those. And I believe you, Director 
Abbey, were here, talking about taking those lands off the 
table for energy production.
    We have the resources in this country. And I will tell you, 
folks in my State of South Carolina are hurting because of 
rising gas prices. It is affecting commodity prices all the way 
down to the bread on the grocer's shelves. And I remember when, 
in August of 2008, we saw rising fuel prices; I remember the 
impact the tremendous diesel prices had on my business.
    And so when we are trying to have an economic recovery from 
this recession, this is going to slow it, if not stall it. And 
so as we address those rising gas prices and our ever-
increasing dependence on foreign sources of oil because of 
things like Deepwater Horizon and the de facto moratorium in 
the Gulf, and the fact that we are not harvesting American 
resources, it comes to light that we need to expand what we do 
in this country.
    And so I understand that the second-largest revenue source 
for this country, second only to taxation, is what we receive 
in royalties and revenues from oil and natural gas leases, both 
offshore and onshore. In fact, in your written remarks you 
referenced that.
    You also referenced that the BLM currently manages more 
than 38 million acres of oil and natural gas leases, but only 
43 percent of that acreage is currently in production. I think 
at a time when we are trying to lessen our dependence on 
foreign oil, and we definitely have needs in this country, that 
that should increase from 43 percent. I think that is way low.
    The Wall Street Journal had an article this past Friday I 
thought was kind of interesting, and it talked about the secret 
to Brazil's energy success. And Steven Hayward goes on to say 
in that article, he mentions the blueprint for a secure energy 
future by the Administration that was announced last week.
    And he talks about the expansion of wind, solar, hydrogen, 
and other things, which I think are part of it. But what about 
expanded domestic oil production?
    And the article goes on to talk about the President 
applauding Brazil for expanding their offshore drilling. And in 
fact, he expressed enthusiasm for aggressive offshore drilling 
in Brazil.
    Brazil increased their domestic oil production over the 
last 20 years by 876 percent--876 percent. Most of that 
production has come from offshore, I understand that; but they 
achieved energy independence, independence from foreign sources 
of oil, the old-fashioned way. They drilled for it.
    I think that is what Americans are wanting us to do. They 
are wanting us to tap the American resources that we have, oil 
and natural gas resources, both offshore, but also, sir, 
onshore. And on Federal lands that we have.
    And it seems to me that the Administration continues to set 
aside this land, through efforts such as Secretary Salazar's 
effort with the Wildlands Act and the Wildland Secretarial 
Order that designate that property as wilderness areas. When, 
Mr. Chairman, I think that Congress has the only statutory 
authority to designate wilderness areas.
    And so as we continue to address American energy 
independence and the budget deficits, I think we need to 
address the fact that we receive a large amount of our income 
as a nation from oil and natural gas leases, the royalties 
coming from production, and the fact that we do have the 
resources here. And I can spout a lot of different percentages 
and projections on what we should have under the nation's land.
    But we need to tap America's resources for American energy 
issues. Mr. Chairman, I thank you for having this hearing so we 
can bring these issues out. Thank you, and I yield back.
    Mr. Lamborn. OK, and I thank the gentleman. And unless 
anyone else wants to ask questions who hasn't asked questions--
--
    Mr. Costa. Mr. Chairman, just a quick question. And I don't 
know, maybe it was covered in the opening statement.
    Mr. Lamborn. The gentleman is recognized.
    Mr. Costa. Thank you. Maybe it was covered in the opening 
statement by the Director of Minerals and Geology Management 
with USDA.
    But the amount of revenues that we have received as part of 
the royalty program to the Federal government is traditionally 
about the second-largest source of revenues besides our tax 
payments to the Federal government by American citizens.
    And I wonder if you offered in your testimony--if you 
haven't, if you could--the breakdown between those amount of 
revenues from royalties on public lands that are on Forest 
Service land, versus those that are broken down in other 
Federal land holdings in which we derive income from oil and 
gas leases.
    And of course, I assume here that with mineral extractions, 
it possibly is also minerals, as well as other, as a part of 
those revenues--precious metals, gold, et cetera.
    Mr. Abbey. Well, Congressman Costa, unless Tony has the 
information, I don't think either one of us has that breakdown 
today. But we would be happy to provide that information to you 
as part of the record.
    Mr. Costa. No, I think it would be important to get a 
better understanding on those. Because obviously, as we try to 
reduce our dependency on foreign sources of energy and use all 
the energy tools in our energy toolbox, when it comes to the 
USDA's management of Forest Service lands that are a part of 
that contribution of energy, I would like to, one, and I think 
the Subcommittee would probably like a breakdown of the 
revenues we derive from those leases on U.S. Forest Service 
land.
    Mr. Abbey. OK. We can sure work on that. Thanks.
    Mr. Costa. Thank you.
    Mr. Lamborn. OK. I want to thank you all for being here, 
for giving us of your valuable time. Members of the Committee 
may have additional questions for the record, and I ask you to 
respond to those in writing.
    One last matter of business, I ask unanimous consent to put 
into the record a page from the BLM official web site, titled, 
``Leasing of Onshore Federal Oil and Gas Resources,'' which 
does point out that of the 279 million acres of Federal land 
that have oil and gas potential, 145 million are closed, and 20 
million more acres are inaccessible because of surface 
occupancy or ground disturbance being prohibited. If there is 
no objection, that is put into the record.
    [The page from the BLM website follows:]

            Leasing of Onshore Federal Oil and Gas Resources

    The BLM administers the leasing of minerals found beneath the 258 
million surface acres managed by the Bureau, 57 million surface acres 
where the minerals are Federally owned but the surface is in non-
Federal (mostly private) ownership, as well as another 385 million 
acres whose surface is managed by other Federal agencies. About half of 
these 700 million subsurface acres are believed to contain oil and/or 
natural gas.
    Development of onshore Federal oil and natural gas resources 
happens in five phases:
      Land Use Planning
      Parcel Nominations and Lease Sales
      Well Permitting and Development
      Operations and Production
      Plugging and Reclamation
    Numerous opportunities for public involvement during land use 
planning and then during environmental review of specific projects help 
ensure that development is both efficient and environmentally 
responsible.
    Oil and gas resources found on U.S. Forest Service lands are leased 
under Land and Resource Management Plans (LRMPs) developed by the 
Forest Service.
                                 ______
                                 
    Mr. Lamborn. Thank you for being here. And we will call up 
the next and final panel. That will consist of Shawn Bolton, a 
County Commissioner from Rio Blanco County in Colorado; James 
Schroeder, President and CEO of Mesa Energy Partners, LLC, and 
President of the Western Energy Alliance; Laura Skaer, 
Executive Director of the Northwest Mining Association; and 
Whit Fosburgh, President and CEO of the Theodore Roosevelt 
Conservation Partnership.
    So if you could all come to the table, that would be great. 
And as I pointed out earlier, you will have five minutes to 
present each of your testimony. You have to push the button in 
front of you to activate the microphone. The light will turn 
yellow when there is one minute left, and red when the five 
minutes are up.
    And we appreciate your being here. You will have, as I am 
currently contemplating it, one round of questions; maybe two, 
if there are burning questions that we still have, and if your 
time allows for that.
    But thank you all for being here today, and we will just 
jump right into the testimony. Mr. Bolton, thank you for coming 
all the way from Colorado. It is good to see you here. You may 
begin.

                  STATEMENT OF SHAWN BOLTON, 
                COMMISSIONER, RIO BLANCO COUNTY

    Mr. Bolton. Mr. Chairman, thank you for the opportunity to 
appear before you today.
    Rio Blanco County is a rural county in northwest Colorado, 
with a population of about 6,000 people--75 percent of the 
county consists of Federally managed lands, with about two-
thirds BLM lands and one-third national forest.
    In addition to serving as the Commissioner, I am the CEO of 
Bolton Fencing and Construction, LLC, a small business that 
provides full-service construction to the oil and gas industry; 
from well pad and road construction, to pipelines and 
reclamations. We employ 50 to 80 people in the high season.
    My small business is like many that support the oil and gas 
industry in that we provide good, high-paying jobs in rural 
counties across Colorado and the West; and are the economic 
engines for our communities.
    Rio Blanco County gets about 90 percent of our tax 
assessment from the oil and gas industry, and 75 percent of 
property taxes are from oil and gas. Over one-third of all jobs 
in the county are directly related to the oil and gas industry. 
Given the large amount of Federal land and high proportion of 
our tax base from oil and gas, the energy programs of the BLM 
and the Forest Service have a huge impact on job creation and 
government revenue in my county.
    When Federal policies constrain leasing, permitting, and 
project approvals, it directly impacts my small business and my 
county. I have noticed, in my county over the last several 
years, that more and more decision making is being done in 
Washington, rather than the practical, on-ground approach by 
land managers who understand the lands and their natural 
resource values, as well as the local economic and social 
factors in Rio Blanco County.
    Distant Federal agencies in Washington are imposing a one-
size-fits-all approach. Instead of listening to local 
communities and the businesses like mine who support them, 
Washington seems to have, Washington seems driven by an 
environmental lobby that gives exclusive preference to removing 
more lands from environmentally responsible, multiple 
productive uses, and locking them away for passive recreational 
purposes only.
    I am particularly concerned about the new Wildlands policy. 
We have already seen a situation where an 800-acre parcel was 
removed from a lease-sale because it supposedly met Wildlands 
criteria. Just because an environmental group proposes an area 
as wilderness does not mean it meets the criteria.
    I urge Congress to defund the implementation of the 
Wildlands policy, and pass legislation that prevents the 
Interior Department from unilaterally taking lands away from 
multiple use, and manage them as de facto wilderness, without a 
Congressional Wilderness designation.
    There is already a process in place, through Federal Land 
Policy Management Act, to identify wilderness-characteristic 
lands. There is a critical environmental concern, special 
recreation management areas and other designations to protect 
resource values on BLM lands, through the Resource Management 
Plan process.
    In fact, the White River field office, which includes most 
of Rio Blanco County, is currently updating its RMP. And the 
county is participating as a cooperating agency.
    Wilderness-characteristic areas can be identified as part 
of that process, but be subject to the scrutiny of local 
representatives, such as myself. I would urge the BLM to weigh 
the input of cooperators and the public in Rio Blanco County 
more heavily than the form letters organized by environmental 
groups from people across the country who are not directly 
impacted by these decisions made in these planning documents, 
and whose livelihoods and communities are not affected.
    Increased State and Federal regulation and the 
corresponding uncertainty has caused activity in Rio Blanco 
County and throughout the Piceance Creek Basin, western 
Colorado, to plummet. While low natural gas prices affect the 
entire country, activity in the Piceance Basin has been slower 
to rebound because of the added cost of regulation.
    When the Federal government adds in further regulation that 
slows leasing, environmental analysis required by oil and gas 
project approvals, and permitting, the costs become too great 
in our county and region, and the break-even price means that 
the producers will go elsewhere, to lower-cost regions of the 
country that don't have the additional regulatory burden of 
Federal lands.
    Ultimately, this affects the budget of the BLM. Less 
activity on public lands means less revenue to the Federal 
government. I urge this Committee to consider the negative 
impact of BLM budget, which imposes more costs through new fees 
and new regulations, which will ultimately result in less 
economic activity and jobs in my county.
    I look forward to addressing any questions, and thank you.
    [The prepared statement of Mr. Bolton follows:]

  Statement of Shawn Bolton, Commissioner, Rio Blanco County, Colorado

    Mr. Chairman, thank you for the opportunity to appear before you 
today. Rio Blanco County is a rural county in northwestern Colorado 
with a population of about 6,000 people. Seventy-five percent of the 
county consists of federally managed lands, with about two-thirds BLM 
lands and one-third National Forests, including parts of the White 
River and Routt National Forests.
    In addition to serving as commissioner, I am the CEO of Bolton 
Fencing & Construction LLC, a small business that provides full service 
construction services to the oil and natural gas industry, from well 
pad and road construction to pipelines and reclamation. I employ 50 
people to 80 in the high season. My small business is like many that 
support the oil and gas industry, in that we provide good, high paying 
jobs in rural counties across Colorado and the West and are the 
economic engines for our communities.
    Rio Blanco County gets about 90% of our tax assessment from the oil 
and gas industry and 75% of property taxes are from oil and gas. Over 
one-third of all jobs in the county are directly related to the oil and 
gas industry. Given the large amount of federal land and the high 
proportion of our tax base from oil and gas, the energy programs of the 
BLM and the Forest Service have a huge impact on job creation and 
government revenue in my county. When federal policies constrain 
leasing, permitting, and project approvals, it directly impacts my 
small business and my county.
    I have noticed in my county over the last several years that more 
and more decision making is being done in Washington. Rather than the 
practical, on-the-ground approach by land managers who understand the 
lands and their natural resource values as well as the local economic 
and social factors in Rio Blanco County, distant federal agencies in 
Washington are imposing a one-size-fits-all approach. Instead of 
listening to local communities and the businesses like mine who support 
them, Washington seems driven by an environmental lobby that gives 
exclusive preference to removing more lands from environmentally 
responsible multiple, productive uses, and locking them away for 
passive recreation purposes only.
    I am particularly concerned about the new wild lands policy. We 
have already seen a situation where an 800 acre parcel was removed from 
a lease sale because it supposedly met wild lands criteria. Just 
because an environmental group proposes an area as wilderness doesn't 
mean it meets the criteria. I urge Congress to defund implementation of 
the wild lands policy and pass legislation that prevents the Interior 
Department from unilaterally taking lands away from multiple use and 
managing them as de facto wilderness without a Congressional wilderness 
designation. There is already a process in place through the Federal 
Land Policy Management Act (FLPMA) to identify wilderness 
characteristics lands, areas of critical environmental concern (ACEC), 
special recreation management areas, and other special designations to 
protect resource values on BLM lands through the Resource Management 
Planning (RMP) process. In fact, the White River Field Office which 
includes most of Rio Blanco County is currently updating its RMP, and 
the county is participating as a cooperating agency. Wilderness 
characteristics areas can be identified as part of that process, but 
then subject to the scrutiny of local representatives such as myself. I 
would urge BLM to weigh the input of cooperators and the public in Rio 
Blanco County more heavily than the form letters organized by 
environmental groups from people across the country who are not 
directly impacted by the decisions made in these planning documents, 
and whose livelihoods and communities are not affected.
    Increased state and federal regulation and the corresponding 
uncertainty has caused activity in Rio Blanco County and throughout the 
Piceance Basin in western Colorado to plummet. While low natural prices 
affect the entire country, activity in the Piceance Basin has been 
slower to rebound because of the added costs of regulation. When the 
federal government adds in further regulation that slows leasing, 
environmental analyses required for oil and gas project approvals and 
permitting, the costs become too great in our county and region, and 
the break even price means that producers will go elsewhere to lower 
cost regions of the country that don't have the additional regulatory 
burden of federal lands.
    Ultimately, this affects the budget of BLM, as less activity on 
public lands means less revenue to the federal government. I urge this 
committee to consider the negative impact of BLM's budget, which 
imposes more costs through new fees and new regulations which will 
ultimately result in less economic activity and jobs in my county and 
less revenue to the federal government as oil and gas activity is 
driven to other areas of the country without federal public lands.
    I look forward to addressing any questions or comments the 
Committee may have. Thank you Mr. Chairman for your time today.
                                 ______
                                 
    Mr. Lamborn. Commissioner Bolton, thank you for coming all 
this way to be here, and thank you for your testimony.
    Mr. Schroeder.

 STATEMENT OF JAMES SCHROEDER, PRESIDENT AND CEO, MESA ENERGY 
       PARTNERS, LLC; PRESIDENT, WESTERN ENERGY ALLIANCE

    Mr. Schroeder. Mr. Chairman and the members of the 
Committee, thank you for allowing me to appear today.
    The BLM and Forest Service budgets set the tone for how 
Federal land managers implement their multiple-use mandates, 
and whether they enable the productive use of Federal lands or 
whether they discourage production of energy that all American 
citizens own.
    The fees proposed in the budget on the oil and gas industry 
would have a significantly negative impact on energy 
development, production, jobs, and economic development in 
communities across the West.
    Mesa Energy Partners is a privately held oil and natural 
gas development production partnership. We employ seven folks. 
Mesa is currently developing a six-well project on a 74,000-
acre government unit on BLM land in the Piceance Basin of 
Colorado.
    Independent producers such as Mesa are small businesses, 
averaging 20 employees. Yet this community of companies drill 
90 percent of the wells, produce 82 percent of America's 
natural gas.
    I have been operating on Federal lands, both BLM and 
National Forest, for 20-plus years, and have conscientiously 
worked closely with BLM field offices, local Forest District 
offices, regional foresters, State BLM offices, and the 
Washington office of both agencies.
    The ever-increasing and often over-reaching bureaucratic 
procedures on public lands have resulted in expensive and 
inefficient operations when compared to operations on State and 
private lands. These prolonged procedures ultimately mean that 
Federal lands cannot be developed in a timely manner; and as 
such, not as productive as they may be.
    These inefficiencies have negatively affected the budget 
deficit, and result in less energy for the American people. 
Fewer jobs, less economic energy, or economic activity in the 
western community.
    Producers provide an extraordinary return on investment to 
the American taxpayer. In year 2010, oil and gas companies 
returned in excess of $40 per every $1 spent by the government.
    Over the last two years, policy changes in Interior have 
added additional layers of analysis and rework of prior 
decisions that are causing public land energy development to be 
less efficient and return less revenue to the Federal 
government.
    Just two years ago, BLM's onshore program returned in 
excess of $46 for every dollar spent by the Administration. The 
balance has tipped too far toward constraining oil and gas 
development at the expense of government revenue, jobs, and the 
economy. The justification for increased fees rings hollow when 
the government is already reaping a more-than-healthy return of 
40 to one on investment.
    In order to effectively evaluate budget requirements, it is 
necessary for any business to perform a look-back and determine 
what and where expenditures and budget allocations have been 
made, in order to effectively allocate capital in the future. 
With that in mind, I would like to reflect on the fact that the 
BLM has been put in a position to spend an inordinate amount of 
time in dealing with avoiding litigation. We have heard that 
the BLM may spend nearly half of its resources on litigation 
and legal reviews.
    BLM is constantly harassed by lawsuits from special 
interest groups with an agenda of preventing any oil and gas 
development on public lands. DOI's approach to alleviate the 
situation has been a further delay of the oil and gas 
development in order to remove the controversy. But the source 
of the problem still remains: the ease with which financially 
unaccountable groups can sue.
    Litigation threatens to reduce the productive use of 
Federal lands, the development of critically needed resources, 
and impacts creating jobs and economic growth.
    Last year alone, new regulation and bureaucratic delays 
prevented nearly $4 billion in investment by oil and gas 
companies, and a corresponding 16,000 jobs in the West. That is 
according to the Western Energy Alliance.
    In Mesa County, western Colorado, a county that is 
dependent on resource development, and in which there is a 
disproportionate percentage of Federal acreage, the 
unemployment rate is currently in excess of 11 percent. Not 
healthy, nor satisfactory.
    In stark contrast, development on non-Federal lands in 
North Dakota, the unemployment rate is below 3 percent. The 
allocation of funds for litigation needs to be brought under 
control, and managed in a fashion that allows BLM to make 
decisions in the best interests of the American people.
    Congress needs to pass legislation that prevents the 
Federal government from using taxpayer dollars to reimburse 
special interest groups who abuse the Equal Access to Justice 
Act to fund their litigation programs, and to hold these groups 
financially responsible for frivolous lawsuits that prevent 
this country from delivering economic growth.
    I look forward to questions that you may have. Thank you.
    [The prepared statement of Mr. Schroeder follows:]

Statement of James Schroeder, President and CEO, Mesa Energy Partners, 
        and President, Western Energy Alliance (formerly IPAMS)

    Mr. Chairman and Members of the Committee--thank you for the 
opportunity to appear before you. The BLM and Forest Service budgets 
set the tone for how federal land managers implement their multiple-use 
mandates and whether they enable the productive use of federal lands, 
or whether they discourage production of energy that all American 
citizens own. The fees proposed in the budget on the oil and gas 
industry would have significant, negative impacts on energy production, 
jobs and economic development in communities across the West.
    Mesa Energy Partners, LLC is a privately held oil and natural gas 
development and production partnership of seven employees. Mesa is 
currently developing a six well project on a 74,000 acre government 
unit on BLM land in the Piceance Basin of Colorado. Independent 
producers such as Mesa are small businesses, averaging twenty 
employees, yet this community of companies drills 90% of the wells and 
produce 82% of America's natural gas.
    I have been operating on federal lands, both BLM and National 
Forests, for 20 plus years, and have conscientiously worked closely 
with BLM field offices, local forest district offices, regional 
foresters, state BLM offices and the Washington offices of both 
agencies. The ever increasing and often over-reaching bureaucratic 
procedures on public lands have resulted in expensive and inefficient 
operations when compared to operations on state or private lands. These 
prolonged procedures ultimately mean that federal lands cannot be 
developed in a timely manner and as such are not as productive as they 
might be. These inefficiencies have a negative effect on the federal 
budget deficit and result in less energy for the American people, fewer 
jobs, and less economic activity in communities across the West.
    Producers provide an extraordinary return on investment to the 
American taxpayer; in FY 2010, oil and gas companies returned $40.12 
for every dollar spent by the government. Over the last two years, 
policy changes at Interior have added additional layers of analysis and 
rework of prior decisions that are causing public land energy 
development to be less efficient and return less revenue to the federal 
government. Just two years ago, BLM's onshore program returned $46.07 
for every dollar spent administering the program. The balance has been 
tipped too far towards constraining oil and gas development, at the 
expense of government revenue, jobs and the economy. The justification 
we often hear that new fees are necessary because industry needs to pay 
it's fair share rings hollow, when we are already doing so 40 times 
over.
    In order to effectively evaluate budget requirements, it is 
necessary for any business to perform a ``look back'' and determine 
where expenditures and budget allocations have been made in order to 
effectively allocate capital in the future. I would like to reflect on 
the fact that the BLM has been put in a position to spend an inordinate 
amount of its budget dealing with or trying to avoid litigation. We 
have heard that the BLM may spend nearly half of its resources on 
litigation and legal reviews.
    BLM is constantly harassed by lawsuits from special interest groups 
with an agenda of preventing any oil and gas development on public 
lands. DOI's approach to alleviate the situation has been to further 
slow oil and gas development in order to remove the controversy, but 
the source of the problem remains--the ease with which financially 
unaccountable groups can sue. Litigation threatens to reduce the 
productive use of federal lands and the corresponding jobs and economic 
growth. Last year alone new regulations and bureaucratic delays 
prevented $3.9 billion in investment by oil and gas companies and a 
corresponding 16,200 jobs in the West, according to Western Energy 
Alliance.
    The allocation of funds for litigation needs to be brought under 
control and managed in a fashion that allows the BLM to make decisions 
in the best interests of the American people. Congress should pass 
legislation that prevents the federal government from using tax payer 
dollars to reimburse special interest groups who abuse the Equal Access 
to Justice Act to fund their litigation programs, and to hold these 
groups financially responsible for frivolous lawsuits that prevent this 
country from delivering economic growth.
Budget Details
Royalty Rate Increase
    The budget contains the line ``The Administration believes that 
American taxpayers should get a fair return on the development of 
energy resources on their public lands'' and states that Interior will 
undertake rulemaking to adjust onshore royalty rates. Yet industry 
already returns $40.12 for every dollar spent administering the onshore 
oil and gas program. Interior Secretary Salazar has indicated publicly 
that Interior is considering applying the 18.75% offshore rate. 
Currently set at 12.5%, the onshore rate provides an excellent return 
to taxpayers. Paradoxically, although the offshore rate is higher, it 
returned just $30.08 for each dollar spent by the government in 2010.
    Comparison of the onshore rate to the offshore royalty rate is 
misleading. The reserves found on onshore federal lands are 
significantly different from the conventional reserves offshore, such 
as in the Gulf of Mexico. Unconventional reserves on public lands in 
the West are less productive and more expensive to develop, and the 
12.5% onshore royalty rate reflects that difference. Producers assume 
100% of the risk and expense for developing these unconventional 
resources with no guarantee of any return on investment whatsoever, 
while providing a huge rate of return to the taxpayer.
    Administration officials often compare the federal onshore rate to 
states such as Texas which have a higher royalty rate in some 
instances. The comparison does not take into account the fact that 
these states have a regulatory and permitting environment that 
encourages production. For example, permitting is done within an 
average of nineteen days in Texas, versus over a year for federal 
permits. Environmental analyses that take several years and cost 
hundreds of thousands if not millions of dollars on federal lands are 
not required by these states. Increasing the royalty rate for federal 
lands, which are already extremely expensive to develop, could become 
prohibitively expensive with a higher royalty rate.
Fees
    All fees are unnecessary, as industry returns over $40 for each 
dollar spent administering the entire onshore program, including all 
permitting, inspection, enforcement, leasing, and environmental costs.
    Inspection Fees: The inspection fees seem to be another way for the 
government to decrease efficiency while removing more capital from the 
actual production of domestic energy. The inspection fees proposed in 
BLM's budget would create a huge administrative burden for BLM, which 
would have to determine which leases meet one of four categories 
depending on surface disturbance and number of wells, track the data, 
and invoice operators accordingly. Despite the additional 
administrative burden, BLM's budget projects a return of $38 million to 
the federal government. BLM is already trying to do too much with too 
few people, and coupled with all the other new requirements this 
Administration has placed on them, would further constrain the onshore 
oil and gas program. In the end, it is feasible to suggest that the fee 
would return a lot less than anticipated, even before taking into 
account the production and economic activity that would be lost capital 
is shifted away from production and into increased fees.
    Non-producing Acreage Fee: The budget proposes a $4 annual non-
producing acreage fee. The fee does not take into account all the 
preparatory work done on a lease before it goes into production, such 
as geophysical exploration, environmental analyses, permitting, 
wildlife and cultural resource surveying, and numerous other regulatory 
activities necessary before a well is drilled. Besides being 
inequitable to charge companies a non-producing fee when, in many 
cases, the government is the entity holding up production on federal 
leases, the fee would significantly increase the cost of developing on 
federal lands, making less capital available for producing American 
energy and creating jobs. A DOI IG report, Oil and Gas Production on 
Federal Leases: No Simple Answer already addressed how punitive fees on 
non-producing acreage would de-incentivize industry (Oil and Gas 
Production on Federal Leases: No Simple Answer, U.S. Department of the 
Interior, Office of Inspector General, Royalty Initiatives Group, 
February 27, 2009). That same report found that Interior's systems were 
so bad, that they could not tell with any certainty whether leases are 
producing. The IG recommended that those data problems be fixed before 
the Department could adequately determine ways to encourage diligent 
development.
    APD Fee: The Application for Permit to Drill (APD) fee continues to 
create problems for my company. We are required to pay a fee for each 
APD submitted, whether that APD is approved or not. Besides the fact 
that this is akin to charging taxpayers to file their income taxes, the 
fee has been particularly inefficient since its enactment in 2008 at 
$4,000, now at $6,500 and proposed to become permanent in the FY 2012 
budget. Since the fee was first enacted, BLM has consistently delivered 
less service and permitting times have increased significantly, from a 
few hundred days to over 500 days in many cases. In addition, the 
permitting process has become more ad hoc, resulting in more Conditions 
of Approval, surveys and other requirements, many of which are not 
supported by law and regulations.
                                 ______
                                 
    Mr. Lamborn. OK, thank you, Mr. Schroeder. Ms. Skaer.

STATEMENT OF LAURA SKAER, EXECUTIVE DIRECTOR, NORTHWEST MINING 
                          ASSOCIATION

    Ms. Skaer. Thank you very much for the opportunity to 
testify here today on behalf of our more than 2,000 members 
located in more than 40 States.
    Since 1973, we have been painfully aware of the need to 
lessen our dependence on foreign oil. But until recently, our 
growing dependence on foreign sources of minerals always took a 
back seat to energy with the public and our policymakers. There 
is evidence this is changing, and the fact this Committee is 
holding this hearing indicates you understand the seriousness 
of our mineral vulnerability.
    But unfortunately, the Obama Administration's budget 
priorities not only fail to address this issue, they actually 
compound the problem, resulting in serious national defense and 
economic consequences, while impeding private sector job 
creation.
    The Administration talks the talk, but its 2012 budget 
doesn't walk the walk. And agency testimony today ignores the 
reality that all energy production, including renewables, 
requires minerals, minerals we have in America.
    Instead of advancing policies to increase access to mineral 
deposits, reduce unconscionable permit delays, and encourage 
domestic mineral exploration and development, the 
Administration prioritizes protection and wilderness over 
multiple-use and resource production, and proposes fees and 
taxes resulting in fewer private sector jobs, less mineral 
production, and an increased reliance on foreign sources of 
minerals.
    Specifically, the President's budget and regulatory 
legislative proposals will increase the costs to explore and 
produce hardrock minerals critical to infrastructure 
development, manufacturing, national defense, energy 
production, in every aspect of our lives by imposing a gross 
royalty and increased fees on top of what is now the highest 
corporate tax rate in the world. Demonstrate a lack of 
understanding of the differences, both in terms of geology and 
capital investment, between finding and producing hardrock 
minerals and oil, gas, and coal, by imposing a leasing system.
    Proposals do not address the most significant risk to 
mining projects in the U.S.--permitting delays that have caused 
our country to rank dead last among 25 mineral-producing 
countries, and attract only 8 percent of worldwide exploration 
spending. If this isn't a call to action, I don't know what is.
    They further exasperate permit delays by requiring three 
procedural Federal notices to unnecessarily go through a four-
month Washington office review and approval process per notice. 
No permits, no jobs.
    They threaten to lock up access to rare and hard-to-find 
mineral deposits through regulatory initiatives like 
Secretarial Order 3310, the Wildlands Order, and propose 
mineral withdrawals like northern Arizona. Again, no access, no 
jobs.
    They do not address critical work-force retirement and 
training issues in the BLM and Forest Service locatable mineral 
programs, where more than 60 percent of those professionals 
will be retiring within the next five years. And the proposals 
do not include Good Samaritan legislation to encourage AML 
cleanup.
    Mr. Chairman, members of the Committee, we are entering an 
era of resource nationalism, where many countries, led by 
China, are using country over resources to attract long-term 
manufacturing jobs. In a nutshell, they are saying you want the 
minerals you need for manufacturing? Locate your plant where we 
control the minerals. And in today's highly competitive global-
minerals industry, geologic, economic, and political risk 
factors determine where a company invests, and where high-
paying jobs are created; not only mining jobs, but the 
manufacturing jobs, as well as many indirect jobs.
    If we are going to attract new wealth-creating, job-
creating mining investments that pay an average wage of 
$75,000, with an indirect job multiplier twice the national 
average, our country must adopt policies that will encourage 
investment and production of America's vast mineral resources 
to supply the metals and materials necessary to create and 
sustain U.S. manufacturing jobs, a robust economy, and our 
standard of living.
    Unfortunately, the President's budget and legislative 
proposals do not move us in that direction.
    We urge this Committee and Congress to reject the 
President's budget proposals, and instead access, enact 
policies that will guarantee access to mineral-potential lands; 
guarantee the certainty and security of tenure required to 
invest hundreds of millions to more than $1 billion to find and 
develop a mine, all before any return on investment; most 
importantly, to guarantee timely permits, and to address the 
work force retirement issues.
    Mr. Chairman, we look forward to working with the Committee 
to find solutions to these issues, and we will be happy to 
answer any questions you might have. Thank you.
    [The prepared statement of Ms. Skaer follows:]

             Statement of Laura Skaer, Executive Director, 
                      Northwest Mining Association

Executive Summary
    Chairman Lamborn, Ranking Member Holt and Members of the Committee, 
the Northwest Mining Association (NWMA) appreciates this opportunity to 
provide testimony on the Effect of the President's FY-2012 Budget and 
Legislative Proposals for the Bureau of Land Management and the U.S. 
Forest Service's Energy and Minerals Programs on Private Sector Job 
Creation, Domestic Energy and Minerals Production and Deficit 
Reduction.
    At a time when Members of Congress, the Administration, the media 
and the public are acknowledging that the United States has become 
increasingly vulnerable and dependant on foreign sources of strategic 
and critical minerals, the Administration's budget and legislative 
priorities not only fail to address this serious issue, they actually 
compound the problem. As you know, this vulnerability has serious 
national defense and economic consequences. This increased 
vulnerability and reliance on foreign sources of minerals is not new to 
NWMA or the mining industry, as we have been delivering that message 
for the past ten years.
    While Members on both sides of the aisle are beginning to introduce 
legislation to address these mineral vulnerability issues, the 
Administration's budget ignores this reality by proposing increased 
fees and royalties; advocating policies that make access to mineral 
lands and permits more and more difficult; fails to address serious 
workforce issues in both the Bureau of Land Management (BLM) and the 
U.S. Forest Service (USFS); and basically ignores Congressional 
mandates to manage public and National Forest Lands for multiple-use, 
sustained yield and the production of fiber, food, minerals and energy 
the Nation requires.
    The Federal Land Policy and Management Act of 1966 (FLPMA) 43 
U.S.C. 17.01 et seq lists twelve policies with respect to the public 
lands of the United States. Section 102(a)(12) states that it is the 
policy of the United States that:
        the public lands be managed in a manner which recognizes the 
        Nation's need for domestic sources of minerals, food, timber 
        and fiber from the public lands including implementation of the 
        Mining and Minerals Policy Act of 1970 (30 U.S.C. 21a) as it 
        pertains to the public lands;
    The Mining and Minerals Policy Act of 1970 declares, in part:
        [t]hat it is the continuing policy of the Federal Government in 
        the national interest to foster and encourage private 
        enterprise in (1) the development of economically sound and 
        stable domestic mining, minerals, metal and mineral reclamation 
        industries,. . ..
    The Multiple-Use and Sustained Yield Act of 1960 (16 U.S.C. 528) 
and the National Forest Management Act of 1976 contain similar policy 
declarations for the USFS.
    It is within the context of these statutes and congressional 
declaration of policy that NWMA finds the Administration's budget 
proposals relating to private sector job creation, domestic minerals 
and energy production, and deficit reduction woefully lacking. Instead 
of allocating budgetary resources to wealth and job creating mineral 
and energy resource programs, and providing incentives and required 
certainty to attract mineral investment, the Administration's budget 
and legislative proposals focus on protection, removing lands from 
productive use, increasing royalties, fees, and taxes, increasing 
uncertainty and regulatory burdens and implementing controversial and 
job killing policies revolving around climate change. While the 
Administration talks the job creation talk, their proposals clearly do 
not walk the job creation walk.
    The Administration's job killing budget and legislative proposals 
include increased fees and a gross royalty/leasing system for seven 
hardrock minerals that will discourage exploration, development and 
production of those metals on public lands and increase our Nation's 
dangerous reliance on foreign sources of minerals as well as energy. 
The President's FY-2012 budget also fails to address project delays 
caused by bureaucratic red tape, a broken NEPA process and a failure to 
address workforce issues.
    Finally, if the Administration was truly interested in reducing the 
environmental impact of abandoned hardrock mines, it would have 
included Good Samaritan legislation similar to H.R. 3203 introduced by 
Chairman Lamborn in the 111th Congress.
Northwest Mining Association: Who We Are
    NWMA is a 116 year old, 2,000 member, non-profit, non-partisan 
trade association based in Spokane, Washington. NWMA members reside in 
42 states and are actively involved in exploration and mining 
operations on public and private lands, especially in the West. Our 
diverse membership includes every facet of the mining industry 
including geology, exploration, mining, engineering, equipment 
manufacturing, technical services, and sales of equipment and supplies. 
NWMA's broad membership represents a true cross-section of the American 
mining community from small miners and exploration geologists to both 
junior and large mining companies. More than 90% of our members are 
small businesses or work for small businesses. Most of our members are 
individual citizens.
Bureau of Land Management Budget and Legislative Proposals
    Our testimony will focus on the budget and legislative proposals 
impacting the hardrock mining industry, namely the proposed gross 
royalty and leasing system for seven locatable minerals, the abandoned 
mine land fee for hardrock minerals, regulatory proposals, such as 
Secretarial Order 3310 and the proposed Northern Arizona withdrawal, 
the failure to address delays in the NEPA/permitting process and 
replacing and training new professionals to replace an aging workforce. 
Instead of focusing on enhancing the programs that create jobs, lessen 
America's reliance on foreign sources of minerals and promote the 
production of the minerals, food, timber and fiber Americans require, 
the Department has elevated protection as its budgetary and legislative 
priority.
A. Proposed Leasing/Gross Royalty System for Seven Hardrock Minerals
    The President's FY-2012 budget includes a legislative proposal to 
institute a leasing process under the Minerals Leasing Act of 1920 for 
seven hardrock minerals--gold, silver, lead, zinc, copper, uranium and 
molybdenum. These seven minerals currently are subject to location 
under the General Mining Laws of the United States. The President's 
proposal would include a new leasing process and subject these seven 
minerals to annual rental payments and a royalty of not less than 5% of 
gross proceeds. One half of the royalty proceeds would be distributed 
to the states and the other half would be deposited in the General 
Treasury. Existing mining claims would be exempt from the leasing 
system but would be subject to increases in annual claim maintenance 
fees.
    This proposal would have the effect of killing private sector job 
creation and discouraging private investment in the exploration, 
development and production of domestic mineral resources. It would 
increase our nation's reliance on foreign sources of minerals and lower 
the United States' standing among the twenty-five largest mineral 
producing countries in the world.
    The leasing proposal will increase uncertainty by failing to 
recognize that unlike coal and oil and natural gas, which are typically 
located in vast sedimentary basins, economically viable deposits of the 
seven minerals mentioned in the President's proposal are rare and hard 
to find. Discovery, delineation and development of metallic ore bodies 
require years of fact-finding, including ground, aerial and satellite 
reconnaissance, exploration drilling, environmental baseline gathering, 
workforce hiring and training, mine and mill planning, design and 
construction and closure and reclamation.
    In a 1999 report, the National Research Council of the National 
Academy of Sciences recognized just how rare economically viable 
mineral deposits are: ``Only a very small portion of Earth's 
continental crust (less than 0.01%) contains economically viable 
mineral deposits. Thus, mines can only be located in those few places 
where economically viable deposits were formed and discovered.'' 
Hardrock Mining on Federal Lands, National Research Council, National 
Academy Press, 1999, 
p. 2-3.
    On page 24 of the same report, the National Research Council 
Committee included a sidebar on ``How Hard is it to Find a Mineral 
Deposit?'' This is what the NRC Committee had to say:
        The art and science of finding new mineral deposits is much 
        better than pure luck, but it is still far from perfect. 
        Moreover, the search for new mineral deposits is costly, time 
        consuming, and without guarantee of success. For example, 
        Roscoe (1971) showed that the number of mineral indications in 
        Canada that had to be investigated to discover a significant 
        mineral deposit was about 100 in 1951 and rose to about 1,000 
        in 1969. There is no reason to expect that this trend has 
        changed. Similarly, in a probabilistic analysis of exploration 
        experience in the United States by Homestake Mining Company, 
        Anderson (1982) concluded that from an initial sample of 1,000 
        reconnaissance examinations (more or less equivalent to casual 
        use activities), 100 drillable exploration targets (roughly 
        equivalent to notice-level activities) would emerge in which 
        there would be a 75% chance of finding one deposit with 3 
        million ounces of gold. The statistics may not be quite as grim 
        as they first appear, because there are many cases of someone 
        with a better concept, more persistence, or luck finding an 
        economic deposit in a prospect or worked-out mine that several 
        companies have deemed worthless. Successful projects can be 
        spectacularly profitable, but overall, mining has one of the 
        lowest returns on investment of major industries (Dobra, 1977).
    It is not uncommon for mining companies to spend millions of 
dollars just to identify 100 drillable exploration targets. Sometimes 
more than $100 million can be expended before a decision is made to 
build a mine. At a recent mining conference in Denver, the chief 
financial officer of a large gold company told the audience that his 
company was initially surprised when it spent $2 billion dollars to 
explore for, develop and build a mine but they now consider that to be 
a common figure. Bear in mind that all of this investment occurs up 
front before production and the beginning of cash flow. Furthermore, 
the combination of cyclical price volatility and the variations in the 
concentration and geologic characteristics of these seven metals within 
a single ore body can turn ore with economic value into waste rock at a 
sudden downturn in the market.
    These are among many reasons that these metals were not removed 
from the operation of the Mining Law when the Mineral Leasing Act was 
passed in 1920. Congress recognized then, as it should today, that in 
order to encourage private enterprise in the development of hardrock 
minerals, there must be an incentive for those who take substantial 
risk to explore for, find and develop a mineral deposit. The Mining Law 
has served this Nation well for 139 years by providing a self-executing 
process to enter upon federal lands open to mineral entry to explore 
for, find, use and occupy those lands for all uses reasonably incident 
to prospecting, exploration, processing and mining. The Mining Law has 
provided the necessary framework and security of tenure or certainty 
required to attract mineral investment and take the risk to find that 
true needle-in-a-haystack, one-in-ten thousand economically viable 
mineral deposit.
    Removing these seven minerals from the operation of the Mining Law 
and placing them in a leasing system will result in less mineral 
investment in the U.S. and exacerbate our dangerous reliance on foreign 
sources of critical and necessary minerals.
    The President's proposal came as a surprise because it is 
inconsistent with Secretary Salazar's testimony before the Senate 
Energy and Natural Resources Committee on July 14, 2009. While 
supporting a need to amend the Mining Law of 1872, including patent 
reform and providing a fair return to the taxpayers for the extraction 
of valuable resources and the creation of an AML Fund that included a 
Good Samaritan provision, the Secretary never suggested a leasing 
program. In fact, neither Congressman Rahall's Mining Law Reform bill 
introduced in the 110th (H.R. 2262) and 111th (H.R. 699) Congress nor 
Senator Bingaman's bill (S. 796) introduced in the 111th Congress 
contained a leasing system for hardrock minerals. Both Representative 
Rahall and Senator Bingaman's legislation recognized the importance of 
the self-initiation rights under the Mining Law to encourage the search 
for and production of hardrock minerals.
B. A Gross Royalty Not Less Than 5% Will Adversely Impact Investment in 
        Domestic Mining.
    A royalty assessed on gross proceeds increases the economic risk of 
a given mining project investment and acts as a disincentive to 
investment. This disincentive becomes pronounced when one considers the 
cyclical nature of commodity prices. In other words, as commodity 
prices decrease, the rate of return required to justify a mining 
investment increases. A gross royalty becomes a fixed cost that, in 
times of low commodity prices, can mean the difference between a mine 
closing prematurely, resulting in lost jobs, and a mine continuing to 
operate because it can cover its fixed costs thereby keeping people 
employed during times of low prices. In other words, a gross royalty 
raises the ``cut off grade'' between recoverable ore and waste rock. 
The life of a mine is shortened by causing what otherwise would be 
valuable minerals below the cut off point to be lost. A gross royalty 
prevents conservation of the resource and is not an environmentally 
sustainable policy. Early mine closures waste public minerals by 
leaving minerals in the ground. Premature closures of mines means more 
mineral deposits have to be discovered, more mines built, impacting 
more land.
    Unlike oil, natural gas and coal which are generally marketable as 
found in place in the ground, hardrock minerals require extensive and 
costly processing and beneficiation to produce a marketable product. A 
gross royalty does not consider these costs. A gross royalty is 
punitive in periods of low commodity prices. During periods of low 
commodity prices, a mining company would continue to have to pay the 
gross royalty even if it meant operating at a loss. Since no mine can 
be operated at a loss for any significant amount of time, the result is 
that some mines will shut down prematurely creating loss of jobs; loss 
of federal, state and local taxes; and indirectly adversely impacting 
suppliers of goods and services to the mine and the mine employees. The 
economic devastation from a gross royalty would be significant, 
especially in the rural West where most hardrock mines are located and 
mining provides some of the best jobs available, jobs that average more 
than $75,000 per year.
    On the other hand, a net royalty does not cause a mining company to 
operate at a loss. With a net royalty, operators pay higher royalties 
when their net is high during periods of robust mineral prices and/or 
operating costs are lower. When mineral prices are depressed, and/or 
operating costs are higher, operators pay lower royalties, so the 
royalty does not cause premature mine closures resulting in job losses. 
Because mineral prices are cyclical in nature, there have been and 
always will be periods of lower commodity prices. A net royalty 
provides the best incentive to explore for minerals on federal lands, 
regardless of the economic cycle. A net royalty promotes conservation 
of the resource, ensures a longer royalty stream from operating mines, 
and promotes job retention.
    The Metals Economics Group produces an annual report ``World 
Exploration Trends'' which tracks global exploration and industry 
trends. The 2011 report estimates that nonferrous exploration budgets 
for 2010 will total $12.1 billion. Despite significant mineral 
resources, the United States attracts only 8% of total world-wide 
exploration dollars, while Latin America attracts 27%, Canada 19%, 
Africa 13%, and Australia 12%. The following report provides insight 
into why the U.S. lags in attracting job creating exploration dollars.
    An internationally respected minerals industry advisory firm, Behre 
Dolbear,prepares an annual report ranking the twenty-five largest 
mineral producing countries in the world. The latest report is entitled 
2011 Ranking of Countries for Mining Investment--Where ``Not to 
Invest'' and is attached and incorporated by reference. Behre Dolbear 
considers seven criteria in ranking countries:
          The country's economic system
          The country's political system
          The degree of social issues affecting mining in the 
        country
          Delays in receiving permits due to bureaucratic and 
        other delays
          The degree of corruption prevalent in the country
          The stability of the country's currency
          The country's tax regime
    While the United States ranks high (eight or above on a one to ten 
scale) for its economic and political system, the United States 
received a ranking of three with respect to social issues affecting 
mining; ranked last in delays and receiving permits (the only country 
to receive a one on the one to ten scale); and a rating of three with 
respect to its tax regime. Behre Dolbear considers the total taxes 
applicable to a mining project, including income taxes, severance and 
excise taxes, duties and imposts, and royalties. The reason the United 
States received a three is that its ``corporate tax rate is 35% plus, 
which, when combined with state levies effectively makes it the highest 
corporate tax rate in the world.'' This high corporate tax rate 
provides a significant disincentive for mineral investment in the 
United States. A gross royalty would only exacerbate this disincentive, 
and any net royalty must take into consideration the overall government 
take.'' According to the study, when the ``government take'' from 
combined taxes and royalty reaches 50%, a mining project's economic 
viability is threatened.
    In addition, the Administration doesn't seem to understand that our 
lifestyle and standard of living is made possible by mining. 
Furthermore, it doesn't understand that the production of solar, wind 
and geothermal electricity capacity requires minerals. The 
Administration proposes key funding increases for renewable energy 
development while proposing new fees and taxes on mineral production, 
proposing a new leasing system and enacting policies that will 
adversely impact the security of tenure necessary to attract mineral 
investment, and failing to address significant workforce issues in the 
Mining Law program. The bottom line is that all energy production, 
including renewable energy requires minerals, and lots of them. And 
they need American minerals--unless, of course, we are willing to trade 
our unhealthy dependence on foreign oil for a dangerous dependence on 
foreign sources of critical minerals. In 1995, the United States 
Geological Survey reported that the United States was import reliant on 
43 nonfuel minerals with a $51 billion value. In 2010, the U.S. had 
become import reliant on 63 minerals and 100% reliant on 19 minerals 
with a value of $90.4 billion. Unfortunately, the President's budget 
and legislative proposals will discourage mineral production in the 
United States and further increase our Nation's reliance on foreign 
sources of minerals.
C. Abandoned Mine Land Fee
    The President's FY-2012 budget proposes to levy an undetermined fee 
on the production of hardrock minerals beginning January 1, 2012 with 
the receipts distributed through a competitive grant program. The 
President's AML proposal of a fee based on the volume of material 
displaced is significantly different than any AML fee proposed in the 
past either through Mining Law Reform bills introduced in the last two 
Congresses or the Secretary's testimony in July, 2009. What is 
noticeably absent from the President's proposal is a Good Samaritan 
provision.
    A Good Samaritan law, similar to the one introduced by Chairman 
Lamborn in the last Congress (H.R. 3203), will do more to bring about 
the cleanup and reclamation of abandoned hardrock mines than any fee 
imposed on production or material moved.
    It appears the President's proposal is based on the coal AML 
program administered by the Office of Surface Mining (OSM). As was 
discussed in more detail earlier in this testimony, increasing fees on 
hardrock production is counterproductive to private sector job 
creation, domestic energy and minerals production and deficit 
reduction. Because most currently producing mines are located in the 
same mining districts as most abandoned hardrock mines, a Good 
Samaritan provision would enable mining companies to utilize current 
permitted processing and tailings facilities, equipment and mine 
personnel to reclaim nearby abandoned mines without the legal risk of 
incurring cradle to grave liability under the Clean Water Act (CWA) and 
the Comprehensive Environmental Response, Compensation and Liability 
Act (CERCLA).
    On October 2, 2007 at a legislative hearing on H.R. 2262 entitled 
Royalties and Abandoned Mine Reclamation, I provided testimony on 
hardrock AML issues including the need for Good Samaritan legislation. 
As I stated at that time, the mining industry supports the creation of 
a new federal AML fund to be financed from royalties owing under any 
Mining Law legislation enacted by the Congress to augment the monies 
available to state AML Funds to address safety and, where needed, 
environmental hazards at AML sites. Our industry also strongly supports 
the enactment of comprehensive Good Samaritan legislation like H.R. 
3203, which would allow mining companies with no previous involvement 
at an AML site to voluntarily remediate and reclaim that site in whole 
or in part without the threat of potential enormous liability under the 
CWA, CERCLA and other federal and state environmental laws. I have 
attached a copy of that testimony for the record of this hearing and 
incorporate it by reference.
    Rather than imposing a new AML fee on the production of hardrock 
minerals for reclaiming abandoned mine sites, Congress should first 
pass Good Samaritan legislation and use, in addition to state AML 
funds, monies collected from existing claims maintenance and location 
fees that are not used to administer the General Mining Laws or provide 
for mineral program workforce hiring and training as discussed below. 
Over the past five years, the amount of claim maintenance and location 
fees collected has exceeded the amount allocated by the Secretary of 
the Interior for administration of the General Mining Laws by more than 
$20 million per year. We submit that this would be a much better use of 
those excess funds than depositing them into the General Treasury.
Addressing Permit Delays and Workforce Training
    The hardrock mining location and claim fees have brought in between 
$51.5 and $67.3 million over the last five years. These monies are 
earmarked for administering the Mining Law Program, yet, over the same 
time period, only $32.7 to $36.7 million have been appropriated to run 
the program. The balance has gone to the Treasury.
    During this same time period, Mining Law/Minerals Program managers 
and BLM/USFS field personnel responsible for the locatable minerals 
programs have been retiring at an unprecedented rate. Within the next 
five years, more than 60% of BLM and USFS employees responsible for the 
respective locatable minerals programs will retire or be eligible for 
retirement. Yet, there appears to be no effort at the departmental 
level to address this issue. The President's FY-2012 budget certainly 
doesn't address it.
    The 2011 Behre Dolbear report ranking countries for mining 
investment ranked the United States dead last in delays and receiving 
permits due to bureaucratic and other delays, and near the bottom with 
a rating of three out of ten on the degree of social issues affecting 
mining in the country. Here is what Behre Dolbear had to say about 
social issues in the United States:
        The United States' rating remained at three. Mining projects in 
        the United States (especially those proposed on public lands) 
        continue to be fiercely opposed. The 2010 mid-term 
        Congressional elections refuted the Democratic Party's singular 
        control of the government, which may give the mining industry 
        breathing room from the onslaught of unchecked regulatory 
        initiatives that have reduced its cost competitiveness. Unable 
        to achieve its goals through legislation, the Obama 
        Administration has turned to regulation through the 
        Environmental Protection Agency (EPA) and other agencies.
    With respect to permitting delays, Behre Dolbear ranked the United 
States worst among the twenty-five countries rated stating:
        Permitting delays in the United States are the most significant 
        risks to mining projects. A few mining friendly states (Nevada, 
        Utah, Kentucky, West Virginia, and Arizona) are an exception to 
        this rule but are negatively impacted by federal rules that 
        they are bound to enforce. The United States is ranked lowest 
        at a one due to the average 7-to 10-year period required before 
        mine development can begin.
    The delays are not due to environmental regulations being stronger 
in the United States than in other countries because most countries 
have environmental regulations equal, at a minimum, to the standards 
established by the World Bank Group. Rather, it is abuse of the NEPA 
process, unnecessary bureaucratic red tape and the fact that virtually 
every mining project is litigated.
    Attached as Table 1 is a list of hardrock mining projects in Nevada 
that have been through the NEPA process to obtain plan of operation 
approval from the BLM. I have highlighted the length of time it has 
taken to complete the process and obtain a plan of operation. This 
chart is evidence supporting the United States' current ranking of last 
among 25 mineral producing countries in the world with respect to the 
time it takes to process plans of operations and obtain necessary 
permits (Behre Dolbear Group Inc., 2011 Ranking of Countries for Mining 
Investment--Where ``Not to Invest'') These delays represent jobs that 
are not being created, jobs by an industry that pays an average wage of 
$75,000 and has an indirect job multiplier equal to twice the national 
average.
    Most of these projects do not reflect the substantial delays 
resulting from a BLM Instruction Memorandum issued on December 23, 2009 
(IM 2010-043) requiring all Federal Register Notices be sent to the BLM 
Washington Office for review and approval prior to publication in the 
Federal Register. This Instruction Memorandum also implemented a 12 to 
14 step review and approval process that is taking approximately four 
months per Notice, prior to publication. Included are three procedural 
notices required by NEPA: (1) Notice of Intent to prepare an EIS which 
starts the public scoping process; (2) Notice of Intent to publish the 
Draft Environmental Impact Statement; and (3) Notice of Intent to 
publish the Final Environmental Impact Statement and Record of 
Decision. Note that all three Notices are purely procedural--nothing 
substantive.
    Contrast the BLM policy with the USFS policy which allows these 
purely procedural Federal Register Notices to be sent directly to the 
Federal Register by the local forest supervisor. This is not to say 
that the USFS NEPA process does not have its own problems, rather, 
merely to contrast the USFS' policy with the BLM's policy that is 
inhibiting job creation by unnecessarily adding up to a year to what is 
already a very broken, anti-job NEPA process. We can think of no 
rational reason for the BLM to require these three procedural Notices 
to each undergo a four month review and approval process in the 
Washington, D.C. office prior to publication in the Federal Register. 
It is no wonder the United States ranks last in terms of permitting 
delays.
    As mentioned previously, claim maintenance and location fees are 
bringing in $20 million a year more than is being appropriated to 
administer the BLM's locatable minerals program. This is not taxpayer 
money. This is money from the mining industry, and we believe some of 
this more than $20 million per year could and should be used to hire 
and train the necessary professionals to help break the backlog of 
permit delays and replace an aging workforce. We believe this should be 
BLM's and the USFS's number one budgetary priority for locatable 
minerals.
    Among all of the programs administered by the BLM and USFS, 
hardrock mining is the most technically complex, legally complex and 
capital intensive. Hardrock mineral deposits result from complex 
geological forces, and, as discussed earlier, are rare and hard to 
find. The variation in geology among the different metals as well as 
variations within a metal require specific geologic and engineering 
knowledge and training.
    In addition, BLM and USFS professionals responsible for managing 
the locatable mineral programs require an understanding of the General 
Mining Laws of the U.S. and their relationship with other laws and 
regulations, including environmental laws and regulations. The 
technical and legal issues are far more complex than other mineral 
resources like coal, oil and gas. Additionally, hardrock mine 
development is the most capital intensive activity taking place on 
federal lands. Hundreds of millions to several billions of dollars of 
investment is required, up front, before there is any cash flow or 
return on investment.
    These factors demand professionals with specialized education and 
training in geology and mining engineering, so they understand the 
complex technical, legal and capital investment issues associated with 
hardrock mining.
The U.S. Forest Service
    While we have focused our testimony on the BLM's budget proposals, 
the U.S. Forest Service budget contains many of the same misguided 
priorities as the BLM, with a focus on protection and climate change 
rather than production. Based on information compiled by the USFS 
Minerals and Geology Management staff, the nine largest locatable 
mineral mines producing on National Forest Lands produce metals worth 
$1.03 billion, more than all other USFS programs combined. This 
represents wealth creation, high paying jobs and significant state and 
local tax revenues. It also supports U.S. manufacturing jobs by helping 
to ensure a domestic supply of minerals.
    As mentioned above, the USFS faces similar workforce issues as the 
BLM. As of January 25, three-quarters of the USFS's certified mineral 
examiners were eligible for retirement. A December 20, 2010 workforce 
analysis by the USFS shows 61% of USFS employees eligible for or will 
be eligible for retirement by 2015. Thus, it is likely that within the 
next three or four years, the USFS will lose over 60% of its mineral 
management expertise, yet, little is being done to replace this 
workforce, and the Administration's proposed budget actually reduces 
the amount of monies budgeted to manage the mineral wealth of our 
National Forest System Lands. The budget shows reductions in monies to 
administer mineral operations, process mineral applications and manage 
the abandoned mine land program.
    In these times of robust mineral prices, we believe the Forest 
Service should be increasing its budget request for mineral application 
processing, so it can hire and train the professionals needed to 
administer the program and process plans of operation.
Conclusion
    The U.S. minerals industry operates in a highly competitive global 
environment. The search for new mineral deposits occurs around the 
globe. Major mining companies operate internationally and weigh many 
factors in determining whether the potential return on mineral 
investment is worth the geologic, economic and political risk.
    There can be no question that mining creates new wealth and 
provides high paying jobs with an indirect job multiplier more than 
twice the national average. As mining companies weigh the geology/
mineral potential, economic and political risk, they will invest in 
mineral development where they can obtain access to the land; access to 
regulatory approvals; access to capital; and access to the resources 
necessary to build and operate the mine such as people, water and 
energy. While the United States scores high in terms of its economic 
and political systems, lack of government corruption and currency 
stability, it ranks last or near the bottom in terms of permitting 
delays, social issues and tax policy. Thus, in the Behre Dolbear 2011 
Ranking of Countries, the United States is sixth behind Australia, 
Canada, Chile, Brazil and Mexico.
    We also are entering a period of resource nationalism where many 
countries, led by China, are asserting control over natural resources 
located within their country. Unlike the Arab oil embargo of the early 
70's, countries like China are using resource nationalism not to 
control the market or the market price for a given commodity, but to 
attract long term manufacturing jobs. Manufacturing require minerals. 
Manufacturing concerns require a stable and affordable supply of metals 
and minerals. In a nut shell, resource nationalism says ``if you want 
our minerals, locate your manufacturing facility in our country.''
    This is most evident and transparent in China with rare earth 
minerals. China currently controls 97% of global rare earth production. 
China has announced that it is cutting back on rare earth exports in 
favor of internal consumption. Rare earths are required not only in 
wind turbines and hybrid vehicles, but also in dozens of consumer 
products like flat screen TV's, computer monitors, and energy saving 
CFL light bulbs. China is telling these manufacturing concerns that 
they have a choice. They can hope to obtain the rare earths they need 
in the global market place at the global commodity price, or they can 
relocate their manufacturing facility in China and be guaranteed a 
supply of rare earths at a discount. China has been very transparent in 
this policy because first and foremost they want to create 
manufacturing jobs.
    If the United States is going to compete in this global mineral 
environment fueled by resource nationalism, it must adopt policies that 
guarantee access to lands with mineral deposits, must provide a 
competitive tax regime, and must reduce permitting delays. We should be 
embarrassed that we rank last among the twenty-five largest mineral 
producing countries in terms of permitting delays. The fact that a 
country with a mineral resource base as rich as the United States 
attracts only 8% of world-wide exploration spending should be a call to 
action.
    Unfortunately, the President's FY-2012 budget and legislative 
proposals for the BLM's and USFS's energy and mineral programs do not 
answer this call to action. Instead of advancing policies that will 
encourage mineral production, job creation and deficit reduction, the 
Administration's proposals will result in less domestic energy and 
minerals production, adversely impact private sector job creation, and 
increase the United States' dangerous reliance on foreign sources of 
strategic and critical minerals. This will have a negative impact on 
our balance of payments and will not contribute to deficit reduction, 
as we watch other countries reap the benefits of mineral investment and 
the resulting private sector jobs, both in mineral exploration and 
development as well as manufacturing.
    We urge this Committee and Congress to reject the President's 
budget and legislative proposals and, instead, enact incentives that 
will encourage investment and production of America's vast mineral 
resources to supply the strategic and base metals and materials 
necessary to create and sustain U.S. manufacturing jobs, a robust 
economy, and our standard of living.
    Thank you for the opportunity to provide testimony on these 
important issues. I will be happy to answer any questions.
                                 ______
                                 

                                 
    Mr. Lamborn. OK, and thank you for your testimony. Next 
we will have Mr. Fosburgh.

    STATEMENT OF WHIT FOSBURGH, PRESIDENT AND CEO, THEODORE 
               ROOSEVELT CONSERVATION PARTNERSHIP

    Mr. Fosburgh. Thank you. My name is Whit Fosburgh; I am the 
President and CEO of the Theodore Roosevelt Conservation 
Partnership, a national nonprofit that is dedicated to 
guaranteeing every American quality places to hunt and fish.
    My testimony is going to stand in fairly stark contrast to 
the other folks on this panel. But in summary, one, over the 
last decades sportsmen have seen a massive push to open Federal 
lands to unbridled oil and gas development, often with 
devastating impacts to fish and wildlife.
    Two, industry is only using a relatively small percentage 
of its lands that are already available to it to produce 
energy.
    Three, the reforms recently announced by the Obama 
Administration, including leasing reforms, massive release 
planning, and the Wildlands Policy, are steps to restore some 
balance to the system--not to block oil and gas development, 
but to ensure that it happens in a responsible manner, and that 
special places for fish, wildlife, and recreation can be 
conserved through an open public process.
    First, let me state upfront that the TRCP and our partners 
in the conservation business support energy development on 
public lands. Increasing domestic energy production is an 
important national goal, and energy production is a legitimate 
component of public lands multiple-use mandates. As are mining, 
fish and wildlife conservation, and wilderness.
    But there are ways to do energy development right, and to 
do it in the proper places. And too often this has been 
avoided, forgotten, or ignored.
    In the last six years, as Mr. Holt pointed out, more than 
40 million acres of public lands have been opened up to oil and 
gas development. Laws were changed to make sure that oil and 
gas development took precedence over other uses, including fish 
and wildlife conservation.
    The meager BLM Wildlife staff has literally been 
overwhelmed by the onslaught of drilling proposals, often 
forcing agency biologists to expedite applications, rather than 
to monitor and manage fish and wildlife habitat. This problem 
promises to get even worse if proposed budget cuts actually 
happen.
    The rush in applications and permits has even outpaced 
industry's ability to produce. Of the 40-plus million acres of 
public lands already leased by industry, development is 
occurring in only about 12.2 million acres.
    In 2010, BLM approved 4,090 wells; only 1,480 were spudded. 
According to recent press reports, 7,200 approved APDs were 
available to industry as of early 2011.
    While there is clearly not a lack of land available for 
energy production, where it is occurring, the impacts to fish 
and wildlife should give everyone reason to pause before 
rushing headlong into further streamlining the process, or 
opening up more lands for leasing. And I will use mule deer as 
an example here.
    Mule deer, unlike their brethren white-tails in the East, 
are easily disturbed by human activities, especially when they 
are in their critical winter ranges. A recent report on mule 
deer and how mule deer have been addressed in energy projects 
in the Greater Green River Basin of Wyoming, Colorado, and Utah 
showed that of the 10.2 million acres of mule deer critical 
winter range on BLM and Forest Service lands, 2.4 million acres 
have already been leased for development. Many of these leases 
came with stipulations limiting or preventing winter drilling 
activity, which is appropriate. But such stipulations are 
routinely waived or modified at the request of industry
    For example, in Wyoming 83 percent of the waiver requests 
were approved in the 18-month period between 2007 and 2008. Not 
surprisingly, according to a scientific study commissioned by 
BLM and the industry, and released last November, the mule deer 
herd in the Upper Green River Basin has declined by about 60 
percent since development began in Pinedale in 2000. And 
industry touts the Pinedale Anticline project as a model for 
responsible development on public lands.
    The leasing reforms proposed by the Administration will 
help ensure that fish and wildlife needs are better considered 
in future energy leasing on public lands. But these reforms 
really do nothing to conserve fish and wildlife and hunting and 
fishing on the 40-plus million acres that have already been 
leased. Frankly, the greatest threat to energy production on 
public lands is not restricted policies from this or any other 
administration; it is a failure on the ground to achieve real 
balance and real multiple use, thereby inviting controversy, 
protests, or lawsuits.
    When mule deer, sagegrass, cutthroat trout, and other 
iconic western species continue to decline, and hunting and 
fishing opportunities are lost, we will have squandered a 
national legacy that was left to us by Theodore Roosevelt and 
held in trust for future generations. We will have traded 
short-term profits for a sustainable natural resource that 
provides jobs forever.
    2010 saw more than 58 million visitors at BLM lands, with 
the resulting benefit of $7.4 billion to the economy. In 
Wyoming, Colorado, and Utah, the three States I noted in my 
mule deer example, hunters and anglers, more than 2.2 million 
hunters and anglers bought fishing and hunting licenses, 
providing license revenues of more than $1.2 billion back to 
those States.
    You can have energy projects and healthy fish and wildlife 
on public lands, but that means that the agencies need the will 
and the budgets to do their jobs. It means that game and 
species of fish and wildlife, not just endangered species, 
should be considered before projects begin, not just after 
declines are seen. And it means that there should be a way to 
protect special places, either for biological reasons or the 
fact they are simply too important for outdoor recreation to 
millions of people who enjoy them.
    Thank you very much for the opportunity to be here, and I 
would be happy to answer any questions.
    [The prepared statement of Mr. Fosburgh follows:]

            Statement of Whit Fosburgh, President and CEO, 
              Theodore Roosevelt Conservation Partnership

    Mr. Chairman:
    Thank you the opportunity to testify before the House Natural 
Resources Committee, Subcommittee on Energy and Mineral Resources. My 
name is Whit Fosburgh, and I am the president and CEO of the Theodore 
Roosevelt Conservation Partnership, a national nonprofit conservation 
organization (501-3c) that is dedicated to guaranteeing every American 
places to hunt or fish. As a lifetime hunter and angler and a long-time 
professional in the conservation field with experience at numerous 
levels of government and non-governmental organizations, I am honored 
to provide comments on the important issue of energy development and 
its potential impacts on fish, wildlife and sportsmen. The quality of 
life in this nation, one enjoyed by sportsmen and non-sportsmen alike, 
depends on a sound economy fueled in part by responsible energy 
production that is balanced with the needs of fish, wildlife, habitat 
and water.
    First and foremost, the TRCP and the sportsmen's community in 
general support responsible energy development. We understand and 
appreciate the need for exploration and production of our domestic 
energy resources but maintain it must be done responsibly and in a way 
that conserves and sustains other values with those of energy 
production. We advocate true multiple use and sustained yield of 
public-lands resources, including energy production, while maintaining 
a fish and wildlife conservation legacy for this and future 
generations.
    Policy changes during the last two years are positively affecting 
the management of public-lands energy resources and beginning to return 
balance to a dynamic that previously held energy as the primary value 
of millions of acres of our Western landscapes. Energy leasing reform 
announced by Secretary Salazar is a very positive step toward resolving 
this bias. Federal budgets for fish and wildlife programs, however, 
have been neglected and are inadequate. Further budget cuts would cause 
irreparable harm. The model for public-lands energy development is 
broken, and we wish to provide recommendations for fixing it based on 
our extensive experience working on Western energy and fish and 
wildlife issues.
    Our energy policy must acknowledge that two-thirds of the nation's 
land is privately owned land and that significant access and permitting 
on Western public lands for energy development already has occurred 
there. We do not support energy policies that eliminate protections for 
fish and wildlife resources, reduce or eliminate public involvement in 
public-lands energy development, or prioritize energy development over 
valuable fish and wildlife uses and values. We believe that evaluation 
to potential impacts from energy development should be done before 
leasing occurs and that the public, the owners of federal mineral 
interests, should have more opportunity to provide needed input on how 
their public lands are affected by energy development. The leasing 
reforms implemented by Secretary Salazar are a needed step in the right 
direction and will allow for a better application of multiple-use on 
public lands. This also applies to the Master Lease Planning part of 
the lease reforms which will map out where and how energy will be 
developed in those areas that have not already been significantly 
affected. We also believe that clear air, clean water, and a healthy 
environment are essential to our well being as a country and no 
shortcuts, loopholes, or other actions should diminish proper 
environmental reviews or limit the federal government from protecting 
these essential resources. Administrative actions that addressed these 
problems have our support as well. Overall, we believe more can be done 
at the planning or leasing stages for protection of fish, wildlife, 
water and recreation that will allow for less conflict, better 
multiple-use, and more certainty for the development of our public land 
energy resources. Finally we believe that fish and wildlife agencies 
need an adequate budget to manage fish and wildlife resources and that 
draconian cuts are not acceptable, nor is diverting funding intended 
for fish and wildlife programs to other uses. Having given an overview 
of our position l will discuss some of these issues in detail.
    The TRCP is addressing problems with development of oil and gas 
resources on public lands in the Rocky Mountains and elsewhere. Since 
1995, the conservation and sporting community has been working with 
officials from USDI, USDA and CEQ to address inadequate energy policies 
and practices. In 2001, we began discussions with former DOI Secretary 
Gale Norton and other officials to fix the problems in places like 
Wyoming and New Mexico, where development was accelerating. The rapid 
pace and narrow approach of development was preventing the BLM from 
sustainably managing wildlife and fish resources. We were especially 
concerned with the severe impacts on mule deer, pronghorn, elk, sage 
grouse, trout and other desirable fish species and the recreational 
opportunities they provide for tens of thousands of sportsmen every 
year on public lands.
    During the energy boom that began in the late 1990s, energy 
development practices and policies on public lands drastically changed. 
In the face of pressure to gain access and permitting to meet industry 
demands, fish and wildlife were determined by federal officials to be 
an impediment to development rather than a valuable resource to be 
managed in tandem with development. This approach is borne out by 
congressional testimony by industry, policies guiding BLM management of 
lands with energy potential, public statements by industry associations 
and the previous administration, and the authorization and development 
of major energy projects, such as Wyoming's Pinedale Anticline, 
Atlantic Rim and Jonah natural gas fields and coal-bed natural gas 
fields in New Mexico and Wyoming.
    The 2005 Energy Policy Act further prioritized energy development 
over other resources and concerns through actions like the Halliburton 
loopholes for the Clean Water Act and Safe Drinking Water Act, the 
establishment of pilot offices in seven BLM offices for the purpose of 
expediting permits for drilling, and the establishment of ``statement 
of adverse impacts to energy development'' for actions that were 
perceived to delay or deny immediate approval. All led to BLM policies 
that fostered a ``minerals trump everything else'' direction given by 
BLM directors to employees. This paradigm shift within the BLM led to 
practices that detracted from the agency's ability to manage other 
resources like fish and wildlife, including redirecting appropriated 
funding intended for fish and wildlife management to energy planning 
and permitting, instructing biologists and other specialists to 
prioritize energy above their fundamental tasks of managing fish and 
wildlife habitats, and reinterpreting or rewriting long-standing 
policies of the multiple-use, sustained-yield mandate from FLMPA and 
MUSYA. In a very short time, the culture of the BLM changed. Minerals 
development, sportsmen, the public, and fish and wildlife played second 
fiddle to energy development.
    As previously mentioned, the TRCP and sportsmen support responsible 
energy development but will not sit idly by while public resources are 
ignored to meet the financial needs of energy companies. Public lands 
are held in trust for the American people and must be managed to meet 
the multiple needs of the citizenry--today and in the future. This 
includes the mineral wealth located on public lands and held in split-
estate situations. Public polling consistently finds that Americans, 
particularly sportsmen, want development and fish and wildlife on 
public lands. In fact, polls show that public-lands users want the 
federal government to do more to protect fish and wildlife during 
energy development. Polling results have been consistent regardless of 
energy prices and the fiscal recession our country has experienced.
    In 2007, the TRCP commissioned a poll of public-lands users. 
Results of the poll included the following:
          85 percent wanted more protection for fish and 
        wildlife during energy development;
          79 percent opposed unlimited energy development;
          90 percent wanted energy development to be adjusted 
        to protect fish and wildlife;
          89 percent wanted energy planning to encompass 
        sustaining fish and wildlife resources;
          94 percent wanted plans to be clearer for lay people 
        and allow for better public participation;
          91 percent supported revenues derived from energy 
        development to be used to benefit or mitigate fish and 
        wildlife.
    Polls executed after the recession and high gasoline prices in 2008 
showed similar results. A poll commissioned by Trout Unlimited and 
Sportsmen for Responsible Energy Development showed that 75 percent of 
respondents wanted more protections for fish and wildlife on public 
lands during energy development and 85 percent opposed limiting or 
eliminating the ability for the public to be involved during energy 
development planning and permitting. A poll done this year done by 
Public Opinion Strategies and FM3 (a Republican and a Democratic 
polling company) showed that 77 percent of respondents wanted stronger 
laws and enforcement for fish and wildlife protection rather than 
lessening restrictions (this is up from 74 percent in 2009). Clearly 
the American public and public-lands users and sportsmen want more to 
be done for fish and wildlife, even after experiencing some serious 
pain at the gas pump and through the hardest financial times since the 
Great Depression.
    Because of this and the fact that policies and process used to 
lease and develop public energy resources did not adequately take into 
account fish and wildlife resources, the TRCP and sportsmen began to 
take action. Unlike other activities on public lands, public minerals 
leasing historically included little opportunity for public 
involvement. Lease parcels were secretly nominated by industry six to 
nine months ahead of a sale, and 45 days before sale they were made 
available for public review. Interested or affected citizens then had 
30 days to find the information on a BLM website, print sale notice, 
review, interpret, and decide whether to express concerns about these 
irretrievable commitments being made on our public lands. If concerns 
were great enough, the public was forced to formally protest to the BLM 
15 days before the sale date. Some of these sales included hundreds of 
thousands of acres across numerous states.
    Problems plague the management of our federal mineral estate, as 
evidenced by the disaster in the Gulf of Mexico last summer and facts 
brought to light by the investigation into the former MMS. Onshore, the 
BLM has experienced similar problems. In 2005, the Government 
Accountability Office released a report, ``Oil and Gas Development: 
Increased Permitting Activity Has Lessened BLM's Ability to Meet Its 
Environmental Protection Responsibilities.'' The report highlighted the 
fact that the dramatic increase (255 percent) in permitting and 
approvals for oil and gas activities from 1999-2004 in six BLM field 
offices had caused the agency to ignore or neglect its responsibility 
to inspect and enforce environmental protections or ensure 
environmental impacts were properly mitigated. This shift in priorities 
basically created single-use focus for energy development at the 
expense of multiple use, including fish and wildlife management. This 
exclusionary approach created unmanageable workloads, fostered industry 
expectations that their interests were above all others, and gave BLM 
the excuse to move monies intended for fish and wildlife management to 
energy programs. It created bureaucrats whose only job was to process 
and approve permits in timeframes that made adequate review impossible. 
BLM biologists and other resource specialists who were supposed to be 
managing habitats, range resources and other valuable natural resources 
became office fixtures dealing with mountains of paperwork related to 
drilling permits. Because of promises made at higher levels and a focus 
on maximizing access and permitting at industry's request, the BLM had 
its ability to manage public lands outstripped by the demand for more 
permits. This led to programs like fish and wildlife management being 
ignored or neglected even where world-class wildlife resources were at 
stake. This cultural shift still is evident, although recent market 
downturns and recession along with new policies from the current DOI 
have allowed for some catching up. Thousands of permits are still 
approved by BLM each year, however. In FY2010, the BLM approved 4,090 
wells, while only 1,480 were spudded. (Greenwire recently reported 
7,200 approved APDs were available to industry as of early 2011.) 
Additionally, of the over 41 million acres of public lands leased by 
industry, development is occurring only on 12.2 million acres. A GAO 
report from 2008 showed that in a 20-year period from 1987 to 2007, 
only 6 percent of onshore leases had any development activity, and only 
5 percent of the leases ever produced oil and gas. This same report 
reported that DOI was not doing enough to encourage diligent 
development, and companies allow many leases to expire (after 10 years) 
without attempting to develop oil or gas resources. The report 
concluded that changes were needed to ensure development proceeded in a 
timely fashion and that the American public's resources were being 
developed as promised.
    Industry already has significant access to public lands with high 
and moderate potential to produce oil and gas. In fact there are less 
than half of all the leases in effect producing oil and gas with 22,676 
leases producing oil or gas out of50,544 leases in effect, meaning only 
45% of the valid leases producing energy. Public lands are a big 
contributor to our nation's energy demand with 114,367,122 barrels oil 
and 2,825,507,717 MCF gas produced in FY 2010. This is even with the 
practice of companies shutting in wells that could be producing oil and 
gas while waiting for prices to rise to make a better profit. These 
numbers prove that public lands are a big contributor to our domestic 
energy supply even though industry has not developed 55% of the leases 
they currently hold. The energy lease reforms implemented by DOI will 
have no affect on these existing leases and should provide more 
certainty for industry and fish and wildlife for new leases.
    The business strategy used by industry is competitive in nature and 
based on market forces that do not accurately reflect the access and 
availability that industry has to public lands. In fact, more acres are 
leased on high-potential producing areas than can be drilled in near 
future, and a limiting factor has been rig availability and investment 
strategies by the companies. The fact is the policies used to develop 
our energy resources on public lands were developed in different times 
and did not account for some of the concerns of today. The last 
significant revision of the Mineral Leasing Act was in 1987 (FOOGLRA), 
and much has changed since then. Also, the model used by business 
worked when energy resources were relatively easy to access and 
produce, but it does not work where significant conflict exists with 
other values, such as fish and wildlife resources.
    Probably one of the best examples of the need for better policy and 
coordination concerns mule deer management. Mule deer are a Western 
deer species related to white-tailed deer but with very different 
requirements. They respond to human-caused disturbance much 
differently. Where white-tailed deer are generalists and highly 
adaptable, mule deer mostly inhabit larger Western landscapes and often 
rely in different seasonal habitats that allow for annual migrations 
from summer to winter range. Mule deer experts agree that one of the 
limiting factors for mule deer is available winter habitat. These 
winter habitats often are deemed ``crucial'' for survival by state game 
and fish agencies and have been afforded protection from disturbance 
for more than 40 years in many states. Energy leases that are within 
winter range often restrict development seasonally, restrictions not 
specific to energy development, as most winter ranges are closed to 
vehicle traffic and human activity to protect deer from unnecessary 
stress.
    A recent evaluation and report of how mule deer have been addressed 
in federal land use planning and major energy projects of the greater 
Green River Basin of southwestern Wyoming, northwestern Colorado and 
northeastern Utah showed that of the 10.2 million acres of mule deer 
crucial winter range on BLM and FS lands, 2.4 million acres already 
have been leased for development. More than 15,000 wells have been 
drilled in this winter habitat, mostly outside of the critical winter 
season. But how long these protective measures will continue to be 
applied to mule deer crucial winter range is unknown. Recent statements 
from industry indicate that these measures intended to protect deer and 
other wildlife are perceived as unnecessary and impediments to 
development. Requests for relief from these stipulations have increased 
in recent years. In Wyoming, where the bulk of requests for an 
exception, modification or waiver to wildlife protective restrictions 
were processed, 83 percent of requests were approved in an 18-month 
period in 2007-2008. Fewer requests were made in Colorado and Utah, but 
they were approved at a rate of 95-100 percent in the same time period. 
These protective stipulations were not intended to be enforced and 
granted as standard practice. State game and fish agencies and BLM 
offices indicate that requests for relief are becoming harder to reject 
and pressure is mounting for major modifications or elimination of 
winter protection policy for big game and sage grouse.
    At the Pinedale Anticline in western Wyoming, the BLM has granted 
thousands of wells to be drilled during the winter season, and the 
results on the deer herd have been staggering. As of the latest 
monitoring report in 2010, the wintering population of the segment of 
the deer herd that winters within the project area has dropped by 60 
percent from levels that were documented before development began 
(approximately 6,000 deer used to winter on the mesa before 
development, now approximately 2,000 deer do so). This reduction is 
well documented and has occurred with less that 3 percent of the 
surface (habitat) being disturbed and under 1,000 wells. Additionally, 
most of this development occurred with only limited winter drilling, 
but the BLM ignored the science and data available and authorized, in 
2008, unlimited winter drilling and more than 4,000 additional wells. 
This pressure, along with proposed development on important migratory 
and fawning habitats, could further reduce this renowned mule deer 
herd. The BLM promised to use adaptive management on this project, but 
recent official responses by BLM managers indicated they are opting not 
to adjust development operations, even though evidence of unacceptable 
impacts is well documented. This is probably the most egregious example 
of how wildlife has been pushed aside for the sake of energy 
development and a result of past policies and existing culture within 
the BLM. Furthermore, the ``Pinedale model'' is showing up in proposals 
in other important habitat such as Colorado's Piceance Basin.
    One should not discuss problems with past public-lands energy 
development policy and management without mentioning sage grouse. Sage 
grouse are sagebrush obligates that require large tracts of quality 
sagebrush habitats to persist. Science and experience have shown that 
sage grouse do not do well in areas developed for energy. In Wyoming's 
Powder River Basin, research has shown that more than 80 percent of 
leks (breeding grounds) were significantly impacted by development. In 
addition, the standard practice of quarter-mile buffers has been proven 
to be ineffective at maintaining local leks.
    States like Wyoming recognized the need to do something different, 
and through the leadership of former Governor Dave Freudenthal, Wyoming 
instituted a strategy to preserve sage grouse ``core'' areas to balance 
development with wildlife. This effort has received much attention and 
has the potential to protect important sage grouse habitats and 
populations. It is being replicated by other states. Even though the 
BLM was part of Wyoming's core strategy, it was slow to agree to 
coordinate on federal public lands (the Wyoming strategy and executive 
order signed by the governor only applied to state lands), and to date 
no similar policy is in place for conservation of core habitats on BLM 
lands. Also with significant amounts of core sage grouse habitats 
already leased for development, how effective these efforts will be for 
sage grouse conservation if they apply only to future leasing is 
unclear. In Wyoming, where more than 50 percent of the remaining sage 
grouse populations reside and the best habitat remains, 14 million 
acres of sage grouse habitat (47 percent) and 6.2 million acres of 
designated core sage grouse habitat (40 percent) already were leased as 
of 2008. In fact, the Wyoming BLM continued to lease areas within core 
habitats while the core conservation strategy was being developed--
while they served on the sage grouse implementation team. In one area 
of southern Wyoming called the Atlantic Rim, the BLM authorized 
development of a coal-bed methane project of more than 300,000 acres 
that included some of the region's best sage grouse habitat and more 
than 80 active sage grouse leks with the acknowledgement that sage 
grouse would be significantly impacted or eliminated. (This took place 
during the FWS review of Endangered Species Act listing petitions, 
which I will mention next).
    In 2010, the FWS determined that sage grouse were ``warranted but 
precluded'' for listing under the ESA as a threatened species. This 
means that enough evidence exists to list the species, but because of 
federal resources or higher-priority species, the service will not move 
forward with listing at this time. Now a candidate species, sage grouse 
are one step closer to listing (and thereby complicating energy 
development activities) and will be evaluated annually to determine 
whether their status will be changed. In its review, the FWS identified 
energy development as a real threat to habitat and noted that the BLM 
did not have ``adequate regulatory mechanisms'' to prevent a listing. 
The FWS has basically identified what the BLM must do to prevent a 
listing, and adjusting how it manages energy development is at the top 
of the list. Worth noting is that the TRCP and sportsmen do not want an 
ESA listing and have initiated many actions to prevent a listing from 
occurring, as it would undoubtedly affect hunters first because most 
states would immediately stop hunting these game birds. In 2008, TRCP 
along with some our conservation partners asked the DOI to undertake an 
evaluation of the current management actions being done by BLM during 
energy development and make adjustments for the benefit of the sage 
grouse. This was done outside of the ESA process and through a rule 
making request, which would have given DOI great flexibility to 
accommodate the needed changes based on the science while coordinating 
with the energy industry and other affected stakeholders. 
Unfortunately, DOI ignored our request and now sage grouse futures lie 
in the more restrictive ESA process.
    The problems with mule deer and sage grouse are important to this 
testimony because they offer examples of how BLM policy for energy 
development has affected fish and wildlife resources and therefore 
sportsmen. Significant new information and science are available 
regarding these two species to better balance wildlife with energy 
development during project planning, but unfortunately this science has 
not been embraced by the BLM and often is ignored or discounted because 
energy development is prioritized. Instances exist of adjacent BLM 
offices not treating the same science the same way and, more than once, 
not even recognizing that new information was available during its 
analysis. Ironically, much of the recent research on mule deer and sage 
grouse has been funded in part by the BLM, and the BLM participates in 
numerous technical working groups for these two species. In the most 
extreme case, long-term research projects on the Pinedale Anticline 
that began in the late 1990s were abandoned in 2008 for less-rigorous 
``monitoring,'' and BLM stated that there ``is not enough information'' 
to do things differently. Having been extensively involved in this 
project, the TRCP was only able to conclude that the BLM and industry 
did not like the results of the research; therefore, they ensured it 
did not continue. Even more perplexing is that BLM managers now state 
that this information cannot be used in future attempts to address the 
impacts to grouse and deer. This is not how science should be used in 
management or how we should be managing public lands and resources.
    The development of National Environmental Policy Act documents to 
deal with proposals from industry has become a primary function of many 
BLM offices that manage energy development. Much time and effort are 
spent over many years to accommodate industry's desire to develop their 
leases, detracting from other functions of BLM employees. Given the 
``energy first'' culture that exists in many offices, the goal is to 
build a defendable NEPA document and subsequent decision, after which 
the BLM moves on to the next document. The BLM also has allowed 
commitments made in the decision documents to go unmonitored and are 
all too eager to modify decisions or complete new NEPA documents at 
industry's request. Land use plans are altered, ignored or 
reinterpreted to meet the demands of lease holders, and employees find 
themselves constantly attending planning meetings, processing permits 
or writing NEPA documents. All of this activity benefits energy 
development and takes away from other important duties like managing 
fish and wildlife habitats.
    BLM policies also significantly affect state wildlife agencies' 
workloads and duties. These agencies have the legal authority for 
management of fish and wildlife within their borders, with the 
exception of species listed under ESA and migratory birds. Western 
states have very little property of their own and have to rely on 
public lands, FS or BLM, to provide habitat to meet state-set 
population objectives. Coordination between state and federal agencies 
is essential for proper management, and often states serve as 
cooperating agencies during federal energy development activities and 
planning. The recent boom in development activities has overwhelmed 
state agencies, and they are struggling to keep up with the workload. 
State employees are tied up in endless meetings, embroiled in 
controversial decisions regarding development in sensitive wildlife 
habitats and neglect duties enable proper management of species for the 
public's benefit. States also are being pressured to support 
development in winter range and other important habitats. Because of 
the non-regulatory relationship the states have with federal agencies, 
recommendations for addressing impacts to fish and wildlife do not have 
to be followed, and therefore increased impacts are experienced during 
development. State agencies feel the impact of political or economic 
pressures from their governors and can be made to feel helpless when 
deals are struck at high levels within states. Additional resources to 
deal with the increased workload have been slow in coming, and recent 
budgets in many states leave even less resources for the future.
    Federal agencies are not immune to resource shortages. The BLM has 
increased its energy program budgets as it increased the priority for 
energy development without commensurate increases in fish and wildlife 
program budgets. A slight increase was implemented in order to process 
more permits more quickly, mainly through the pilot energy offices, but 
no increase was requested to deal with mitigation of impacts from 
energy development or maintain functional fish and wildlife programs 
within offices where energy development boomed. The result has been 
neglect of long-standing fish and wildlife programs, high turnover of 
employees because of the nature of the energy workload, and a loss of 
important habitat management plan implementation at local levels. 
Future requests will be much harder to achieve, and any cuts to 
existing fish and wildlife programs will be much more pronounced. Add 
on the fact that renewable energy development will increase energy 
workloads further and many experienced fish and wildlife biologists are 
retiring rather than change jobs to administrative roles, the future is 
not bright.
    Until now I have discussed problems with previous policies and 
budgets, but now I want to focus on some of the benefits of responsible 
fish and wildlife management of our public lands. The American system 
of public lands is unique, found nowhere else in the world. A 
fundamental American value, it was left to us by our predecessors and 
held in trust for future generations. FY 2010 saw more than 58 million 
visitors to BLM lands with a resulting benefit of $7.4 billion dollars 
to the economy. Most of these visits were to enjoy scenery, hunt, fish, 
camp, watch wildlife or have other great outdoor experiences. Americans 
and people from all over the world come year after year to experience 
our public lands, and they bring the economic benefits with them. This 
sustainable economic engine is dependent on healthy environments, clean 
air, clean water and abundant fish and wildlife. In 2010 in Wyoming, 
Colorado and Utah, more than 2.2 million hunters and anglers bought 
licenses, providing license revenues of more than $1.2 billion dollars 
back to those states. This figure does not include the federal match 
generated through the Pittman-Robertson and Dingell-Johnson acts or 
revenue from expenditures on food, hotels, equipment, or other 
purchases made by these hunters and anglers. Nationwide it is estimated 
that 1.2 million jobs are provided annually by the outdoor industry, 
many hunting and fishing related. These jobs and economic benefits are 
sustainable, provide growth in hard times, and allow people to 
reconnect with nature. Federal policies and budgets significantly 
affect our ability to continue these benefits.
    Some places in this country are valuable or special and should not 
be developed. These ``special places'' have values that could not be 
replaced or mitigated if development took place. Places like the Rocky 
Mountain Front in Montana, Valle Vidal in New Mexico and Wyoming Range 
in Wyoming provide unique experiences for hunters and anglers and 
critical habitats for fish and wildlife. In the past decade, these 
areas have been threatened through lease nominations and sales and 
other development proposals. Previous policy prevented the BLM from 
identifying all but congressionally designated lands or previous 
administrative withdrawn areas during land use planning development. 
Local campaigns or legislation have been required to deal with threats 
to these areas, many of which have very little energy development 
potential or would be very difficult to develop because of their 
landscapes. We promote the identification and protection of these 
places to balance fish and wildlife values with areas that have been 
and will be developed for energy development. Not all lands are 
suitable for development; nor is development compatible with other uses 
in all areas.
    We also promote responsible development when energy development 
takes place. Acknowledging that some places will be developed more than 
others and some may become industrial zones, most lands can be 
developed while concerns about fish, wildlife and recreation are 
addressed. As stated previously, sportsmen want to see energy 
development balanced with fish and wildlife resources. The TRCP and our 
conservation-sportsmen partner organizations have developed a set of 
recommendations, revised in 2011, that can help achieve balance during 
energy development. The ``FACTS for Fish and Wildlife'' comprise 25 
specific recommendations in five targeted areas--Funding, 
Accountability, Coordination, Transparency and Science. The FACTS 
recommendations accompany this testimony. If the FACTS are employed, 
conflicts with sportsmen-conservation groups can be reduced, and we can 
expand development of our domestic energy resources.
    Finally, I delivery this testimony to ensure a bright future for 
fish and wildlife, voice concerns about past policies and budget 
allocations, and express interest in working with Congress to address 
these important issues as we determine future energy policy. Sportsmen 
want some certainty that Western fish and wildlife resources can be 
sustained at levels that provide quality hunting and fishing 
opportunities--ones of which we can be proud. We want a system of 
public lands that provides energy AND fish and wildlife, not one that 
provides energy OR fish and wildlife. We believe recent policy changes 
by the Obama administration take a positive step toward that goal, but 
we still have concerns about successful implementation and benefits on 
the ground. We also are concerned that future cuts to fish and wildlife 
budgets in our federal natural resources agencies could have drastic 
consequences for hunting and fishing, along with other important uses 
of our public lands.
                                 ______
                                 
FACTS for Fish and Wildlife--Revisited
Balanced Management for Energy and Fish and Wildlife Can Be 
        Accomplished with the FACTS
    Energy and our ability to access affordable, reliable fuel and 
electricity are fundamental to the American way of life. Oil, natural 
gas, coal and biomass, as well as wind, solar, geo-thermal and nuclear 
energy, must be transported via pipelines or transmission lines. These 
realities pose challenges for both energy development activities and 
natural resources management in our nation.
    Energy production and transmission have been controversial for a 
long time in America, and in 2011 we still have no comprehensive policy 
that drives energy production and transmission. As a result, both have 
followed a scattershot approach throughout the country, often based 
around variables such as markets, investment, permitting and access 
instead of an agreed-upon national strategy. One consequence of this 
approach is neglect of how energy production and transmission affects 
fish, wildlife and outdoor recreation, often to the detriment or 
exclusion of these values and resources.
    Sixty-seven percent of U.S. lands are privately owned. In the West, 
the division of private and public lands is about 50/50 with some 
states like Nevada (81 percent) and Utah (63 percent) being mostly 
publicly owned. Because wildlife do not understand or respect 
artificial boundaries like state lines or property lines, it is 
imperative that lands be managed across boundaries.
    Traditionally, conservation and sportsmen organizations with a 
stake in energy issues have focused on public lands, and rightfully so, 
as those lands are held in trust for all Americans and are mandated to 
provide multiple-use, sustained yield for many values, including fish 
and wildlife. But as our needs for expanded energy resources 
(particularly renewable energy) and transmission capacity increases, 
the impetus for managing fish and wildlife throughout all lands--
regardless of ownership--is increasing as well. Good stewardship and 
conservation benefit both public and private lands, and management 
recommendations for fish and wildlife on public lands can easily be 
adopted on private lands.
    In 2006, the TRCP released the ``FACTS for Fish and Wildlife,'' 
specific recommendations for balancing fish and wildlife needs with the 
development of energy resources. This revision, developed in 2011, 
updates those recommendations, expands their applicability to broader 
geographic regions and private lands, and addresses forms of energy 
development beyond traditional oil and gas. The ``FACTS Revisited'' 
will allow for better fish and wildlife stewardship through better 
policy and management during energy development.
    The FACTS recommendations are applicable, with a few exceptions, to 
land and water, traditional or renewable energy, public or private 
lands, and infrastructure associated with development. They can 
increase our ability to responsibly manage fish and wildlife during 
energy development, balance competing values, become conservation 
stewards and ensure a future for our fish and wildlife populations. 
These practices--driven by the FACTS--will sustain and uphold our 
nation's shared natural resources and unique outdoor legacy.
Funding Accountability Coordination Transparency Science
    The TRCP's recommendations and priorities regarding management of 
fish and wildlife during energy development are organized under the 
five fundamental areas of Funding, Accountability, Coordination, 
Transparency and Science.
Funding
    Successful fish and wildlife management requires adequate funding. 
Traditionally, fish and wildfire programs are underfunded or rely on 
funding sources other than federal monies. While funding alone will not 
solve the problem, it plays a critical role in our ability to balance 
energy development with the needs of fish and wildlife. Funding must be 
secure, substantial and properly allocated to make a difference.
          Determine adequate funding for sustainable fish and 
        wildlife management, including monitoring, in areas proposed 
        for energy development.
          Prior to development, identify and secure appropriate 
        funds for fish and wildlife monitoring and mitigation, 
        including compensation if necessary or required.
          Establish a long-term, dedicated ``mitigation trust'' 
        to benefit fish and wildlife that is funded by royalties, 
        rents, fines or voluntary payments.
          Ensure that funds designated and intended for fish 
        and wildlife management are not redirected to other causes.
          Work cooperatively with various funding sources to 
        leverage additional federal or state grants.
Accountability
    Doing what you said or promised defines accountability. It also 
entails accepting responsibility for actions that you may or may not 
have taken. On public lands, promises are made through various decision 
strategies and should be considered ``contracts with the people'' that 
mandate proper stewardship of the nation's lands and minerals. On 
private lands, accountability increases trust, enabling projects to 
transcend conflicts that can delay or stop development.
          Proactively address fish and wildlife management and 
        needs with a specific ``conservation strategy'' for each energy 
        field or project. Finalize conservation strategies before 
        development starts and specify recommendations and actions to 
        minimize impacts and establish plans for mitigation, detailed 
        monitoring and adaptive management.
          Establish and update regularly a system of tracking 
        commitments, in plans or agreements, along with any actions 
        contrary to those commitments.
          Ensure that laws, regulations and policies intended 
        to conserve and protect fish and wildlife during energy 
        development are not abdicated or abridged.
          Utilize lease development plans or master lease 
        planning to evaluate and address potential impacts to fish and 
        wildlife prior to development.
          Notify the public and allow public comment on energy 
        development projects involving public lands or resources. 
        Provide the public with information regarding modifications to 
        current development plans.
Coordination
    Energy development and natural resource management do not occur in 
a vacuum. Coordination is essential in ensuring that fish and wildlife 
are properly managed between boundaries. All stakeholders must be 
involved, and experts that manage fish and wildlife at the local, state 
or national levels must be included in energy project planning and 
implementation. Coordination enables us to address unanticipated or 
unforeseen actions that arise during development. A key stakeholder in 
the administration of public lands and fish and wildlife resources, the 
public must be included to build trust and brainstorm management 
tactics.
          Foster broad-based coordination between fish and 
        wildlife managers, landowners and affected stakeholders to 
        ensure fish and wildlife sustainability.
          Establish expanded coordination across geo-political 
        boundaries between property owners (public and private). Ensure 
        that managers consider the movement corridors of fish and 
        wildlife.
          Coordinate among all affected stakeholders during 
        planning and implementation of public-lands energy projects.
          Include state fish and wildlife agencies in energy 
        development planning and monitoring fish and wildlife during 
        and after development.
          Establish a process for annual review and adjustments 
        of actions that affect fish and wildlife. An adaptive 
        management strategy is appropriate if based on established 
        adaptive management guidelines and science.
Transparency
    ``There is no disinfectant like sunshine.'' That statement was used 
to describe how transparency can avert undesirable activities, 
particularly in the public interest. Transparency is essential to 
building trust among stakeholders. Transparency can prevent unnecessary 
delays, stoppages or bad press. Openness during energy development 
enables fish and wildlife management that benefits all stakeholders, 
not just project proponents.
          Identify ``special places'' with exceptional resource 
        concerns or values where energy development should not be 
        allowed. Map these places and incorporate these values into 
        management plans.
          Provide up-to-date information through a range of 
        media and informational outlets to the public and fish and 
        wildlife managers for energy development projects.
          Guide leasing and development by complete and up-to-
        date baseline information on fish and wildlife resources and by 
        coordinated plans for energy development and fish and wildlife 
        management.
          Provide the public with information about all 
        proposed public-lands energy leases and development; allow 
        sufficient time for public comment.
          Make all meetings related to public-lands use and 
        energy development part of the public record.
Science
    Science is the foundation of good land and resource management. It 
is essential to understanding how fish and wildlife react to energy 
development and maintaining sustainable populations during and after 
development. Utilizing known science enables a balanced approach that 
sustains both energy AND fish and wildlife instead of either energy OR 
fish and wildlife.
          Utilize science in all fish and wildlife decisions, 
        particularly when specific research has been conducted on the 
        impacts of energy development. Assure that mitigation and 
        monitoring based on new scientific information is implemented 
        in the energy development process.
          Incorporate science-based mitigation, using tested 
        and proven methods of adaptive management, when making 
        decisions about fish and wildlife management and energy 
        development. Identify and address ``gaps'' in science prior to 
        development and implement coordinated research to address these 
        gaps.
          If necessary, utilize a third-party review of 
        development and mitigation proposals.
          Establish a credible and qualified ``science review 
        team'' and engage science-based organizations for fish and 
        wildlife management and development decisions.
          Establish a process to incorporate new information 
        and science into planning and implementation of existing and 
        new energy projects.
    The TRCP supports and promotes responsible energy development that 
balances land and resource values that sustain fish and wildlife 
populations and maintain opportunities for hunting and fishing. Our 
work is guided by the HTRCPHH HHFishHH, HHWildlifeHH HHandHH HHEnergyHH 
HHWorkingHH HHGroup, a team comprised of representatives of our 
conservation partner organizations, and a staff of experienced wildlife 
and policy experts. By combining the science-based expertise of the 
FWEWG with an active network of sportsmen, the TRCP Center for 
Responsible Energy Development is working with hunters and anglers 
throughout the country to conserve our outdoor traditions by supporting 
a balanced approach to energy development and the management of fish 
and wildlife resources.
    A 501c3 nonprofit corporation, the TRCP is a coalition of hunting, 
fishing and conservation organizations, labor unions and individuals 
who represent the wide spectrum of America's outdoor community. In 
order to guarantee all Americans quality places to hunt and fish, the 
TRCP strengthens laws, policies and practices affecting fish and 
wildlife conservation by leading partnerships that influence decision 
makers.
    For more information: Steve Belinda, Director of Energy Programs, 
[email protected], 307-231-3128

              Theodore Roosevelt Conservation Partnership

                            Washington, D.C.

                              202-639-8727

                              www.trcp.org

                                 ______
                                 
    Mr. Lamborn. Thank you, and I enjoyed your comment there, 
particularly toward the end, that these uses are not 
incompatible.
    We are going to have a round of questions. And then since 
it is just the two diehards here, we will have a second round 
of followup questions, assuming your time allows for that.
    First of all, I will start for my five minutes with Mr. 
Schroeder. According to the Interior Department, industry has 
over 38 million acres of leases, yet is producing from only 16 
million acres. Why isn't industry producing on the acreage it 
already has? We have heard something about that during our 
hearing today.
    Mr. Schroeder. From an independent perspective, which I 
represent, the independent is burdened by process. First and 
foremost, the costs associated with bureaucratic delays, and 
uncertainty of receiving a permit.
    I was speaking to a party outside, and they were indicating 
that with the budget of the government coming to a close on 
Friday, that the efficiencies of the government are not there 
by virtue of not being able to plan ahead. That is exactly what 
happens with the environment of the bureaucratic process that 
we are caught in, in the Federal land bank, if you would. You 
can't reach out, you are delayed. APDs, drilling permits are 
normally a year in abeyance. Other issues, such as species 
evaluations and what-have-you, take an inordinate amount of 
time.
    I don't deny that we don't have compatibility, that we are 
all striving for the same. But when the inefficiencies of the 
bureaucracy cause delays, there is no way that you can get to 
the properties and develop them in a timely sense.
    Second, the activity that has been suggested that has not 
taken place on public lands, there are a number of pre-drill 
explorations, such as seismic and what-have-you, that aren't in 
those numbers. There is a lot of geologic and geophysical 
acquisition, if you would, before you can make the final 
decision of whether to drill or not to drill.
    Last, some of the acreage is not defined as being 
productive once you go through the initial evaluation phase. So 
there is a multiple of issues that affect these numbers. And 
until you really drill down and understand what activity is 
being generated on those lands, I am not sure that you can just 
arbitrarily say we have X number of acres leased, and only Y 
number of acres that really are receiving any type of 
development.
    Mr. Lamborn. So the bottom line is you can have a lease, 
but that doesn't mean you have a permit.
    Mr. Schroeder. Absolutely. And that is one of the biggest 
problems, is that you can get a lease, followed by litigation 
to that lease, after you have paid for it. And then second, it 
takes probably a year to a year and a half to get a drilling 
permit to allow you to develop that lease.
    So your property rights, if you would, are being imposed 
upon by virtue of you paying for that property.
    Mr. Lamborn. OK, thank you. Now, speaking of litigation, 
Commissioner Bolton, I would like to ask you a question. How 
are environmental lawsuits affecting your county? Do you 
believe they inhibit economic growth?
    Mr. Bolton. Very much so, in the same aspect as Mr. 
Schroeder was talking about. When you go out and you lease 
something, when they can't come in and drill it in a county 
such as ours with so much public lands, then we don't get the 
jobs. We don't get the tax base in our county that, you know, 
is derived from those activities.
    That is about how simple it is. No jobs, no money. And in 
rural communities in particular in Colorado, we can be hurting 
for jobs, most definitely. We have probably dropped about 600 
people in our county, I think, over the last couple of years, 
with this decrease in activity.
    I think we had, the numbers might not be exact, but we 
probably had 20 to 30 rigs running in our county. And now, by 
April here, I think we are going to be down to maybe four. So 
with those rigs, you lose all the jobs, you lose all the 
service companies that work with them companies.
    Mr. Lamborn. Thank you. One last question. Ms. Skaer, you 
stated--well, let's see. I will save it for the next round, 
because we are almost to the end of our five minutes.
    Mr. Holt. Go ahead. You are on a roll.
    Mr. Lamborn. OK. OK, thank you, thank you. Ms. Skaer, you 
have stated that the NEPA process is partially to blame for the 
difficulty mineral resource companies have in getting 
exploration and mining permits in a timely fashion; and that 
the cost of delays caused by this process prevents some 
projects from being realized.
    Please comment further on the degree to which this is a 
problem. And what do you recommend as to possible changes to 
the NEPA process to help eliminate this problem?
    Ms. Skaer. Right now, the average to obtain a permit in the 
United States is between seven and 10 years for a mineral 
project. There is significant capital investment that goes on 
upfront. And after that seven to 10 years, which is assuming 
there is no litigation, but you can't assume that any more. 
Because in my 14 years at Northwest Mining, I have begun to see 
that every mineral project, every mining project gets sued, at 
every step of the, of the process.
    You compare that to provinces in Canada, which have 
essentially the same environmental requirements that we have, 
yet large-scale metal mines are receiving permits in two to 
three years. And it is, their process doesn't have this need of 
agency need to try to get a bulletproof, litigation-proof 
proposal, which is just impossible.
    A few years ago, Representative Cathy McMorris-Rodgers 
chaired a NEPA task force that looked at ways to reform the 
NEPA process. You know, I would like to see the Committee kind 
of dust that off and take a look at it. It has some very good 
recommendations in it, including putting some sidebars on the 
time to process permits.
    We would also like to see proposals that would require an 
organization that would oppose a mine, if they want to appeal, 
they should have to post bonds. Alaska and Montana are two 
States I know of that have that requirement, where you have to 
post a bond if you are going to appeal, to pay the costs of 
delay if you lose that appeal.
    The same should be true on the litigation side. If an 
organization that goes through the administrative appeal 
process, and the project is approved, turns to the Courts, they 
should have to pay the costs if they lose in Court of the 
delay, and the opportunity costs, and the lost jobs that are 
caused by preventing that project from coming into production.
    Mr. Lamborn. And there is precedent for that in other parts 
of our legal system, our Judiciary.
    Ms. Skaer. Yes, there are.
    Mr. Lamborn. And one last thing. If you have to take seven 
to 10 years, I would imagine that that would have a chilling 
effect on investors, because you also have to factor in where 
will the market for that mineral be in seven to 10 years. And 
if it is marginal, they may just pull the plug.
    Ms. Skaer. That is certainly true, you know. Metals, 
minerals, commodities have cyclical markets. And while we are 
in a time of unprecedented high metal prices right now, it was 
just 10 years ago that we had unprecedented low mineral prices, 
and we will have low mineral prices again.
    So in making those business decisions, as companies weigh 
the political risk involved in how long does it take to get a 
permit versus, you know, trying to look in your crystal ball 
and determine where metal prices will be down the road, you 
begin to understand why companies will take the political risk 
of investing in countries where they might risk nationalization 
of their investment down the road; but because they can get 
their permits quicker, you know, they believe that they might 
be able to get that return on investment before, you know, some 
change of a dictatorship occurs in some of these countries.
    Mr. Lamborn. OK, thank you. Representative Holt.
    Mr. Holt. Thank you, Mr. Chairman. Ms. Skaer, I would like 
to ask you to elaborate briefly on your suggestion of a Good 
Samaritan cleanup procedure. What sorts of projects would be 
covered by that?
    Ms. Skaer. They would be covered, what we would look at is 
what we call the orphaned or abandoned mines, mines that were 
built in this country prior to a regulatory system in place, 
prior to our first environmental law, which was NEPA, in 1969. 
Projects which, you know, lack a current responsible party.
    Mr. Holt. And the idea, of course, would be to do away with 
an impediment for cleaning them up. But what would provide the 
incentive?
    Ms. Skaer. Well, there are a couple of incentives. One is 
that most of these abandoned mines happen to occur in the same 
mining district where existing mines are. Mr. Holt, the fact is 
that these historic abandoned mines are an albatross around the 
industry today. When you go to permit hearings, scoping 
hearings on new projects, mining opponents will go into the 
past and use----
    Mr. Holt. My question is, what would provide the incentive 
for a company, for a miner, for a person, to clean it up? If we 
remove the impediments, some of the liability that results, 
that may be to the good. But what would provide the incentive?
    Ms. Skaer. Well, part of the incentive----
    Mr. Holt. Is it just to look after the welfare of the 
industry, because it looks bad for the industry?
    Ms. Skaer. No. It is cleaning up, you know, one, it is the 
right thing to do to clean up these abandoned mines.
    Mr. Holt. But do companies make decisions out there just 
out of straight altruism? You know, invest money to clean it up 
just because, you know, it is the right thing to do?
    Ms. Skaer. In part, that is true. There is also a 
business----
    Mr. Holt. If you could give us, you know, draft legislation 
on that, I would be interested to see it.
    Mr. Schroeder, do you really believe that all fees to the 
oil and gas industry are unnecessary?
    Mr. Schroeder. No. I hope I didn't give that impression.
    Mr. Holt. Did I misunderstand you? Could you clarify that, 
please?
    Mr. Schroeder. No, I hope I didn't give that impression. I 
was talking strictly to new fees. Currently we have fees 
associated with lease bonus, which gives us the opportunity at 
some point to develop those leases. And they have an annual 
lease rental, as we discussed earlier.
    In addition there are application fees with respect to 
drilling permits.
    Mr. Holt. And so they are plenty high already, I guess you 
are saying. And we don't need any----
    Mr. Schroeder. I believe they are, yes. You know, they have 
been raised over the last few years, and in addition of 
covering, quote-unquote, the expenses by the BLM, a good 
portion of the BLM activities are done through third-party 
consultants. And we pay for those.
    Mr. Holt. And if they were raised, they would cut into 
profits, I guess?
    Mr. Schroeder. Excuse me?
    Mr. Holt. If they were raised, they would cut into profits.
    Mr. Schroeder. Absolutely.
    Mr. Holt. That is your reasoning.
    Mr. Schroeder. Yes.
    Mr. Holt. I see. All right. Now, what does it mean to you 
about the size of the fees? The fees don't seem to be any 
impediment here. There are applications made, and thousands of 
permits issued. There doesn't seem to be a lack of demand; 
companies seem to think that they are getting a bargain here.
    Mr. Schroeder. I can't respond to what other companies feel 
they are receiving or not. You would have to take a look at 
where that fee structure is with respect to who is making the 
applications. And again, I am representing the independent 
producer, and by virtue of we run on a different scale, if you 
would, than, quote-unquote, all the references to big oil. We 
can't afford to have non-performing dollars out of our capital 
budget, put forward into receiving a permit on acreage that we 
have successfully purchased, and have property rights to, to 
sit there for a year or two waiting for a response, to be able 
to develop that acreage.
    Mr. Holt. And to whom do we owe the greater responsibility 
for return on this use? Is it the developer, the extractor, or 
is it the public?
    Mr. Schroeder. I think it is a shared rate of return. And I 
think that is demonstrated by virtue of the royalties, the 
bonuses, the permits that have been received by the American 
citizen relative to development on public lands.
    Mr. Holt. With your permission, Mr. Chairman, may I go? Mr. 
Fosburgh, do you think that BLM actions, such as implementation 
of the Wildlands Order, would adversely affect oil and gas 
production? Or to turn it more to your area of expertise, do 
you think that they, that particularly the Wildlands Order, 
would benefit the constituency that you are speaking of here?
    Mr. Fosburgh. Well, I have no doubt, Mr. Holt, that the 
Wildlands Order will benefit hunters and anglers. Because it 
becomes, it creates a process whereby the public, including the 
folks that we represent, can get engaged to say what areas 
matter to them. And that they get them set aside so they not 
get trashed. I mean, that is the bottom line.
    Now, clearly that is probably going to mean that some areas 
are going to be off limits to oil and gas development. But 
there are probably some areas that ought to be off limits to 
oil and gas development. It is not appropriate every place. 
There are special places that ought to be protected, and this 
is finally a mechanism, you know, which we lost when that 
Norton-Leavitt settlement back in the 2000s happened, to set 
these areas aside. Because it would really mean a lot to the 
general recreationalists and hunters and fishermen.
    Mr. Holt. And would you have any comments on the effects on 
revenue, of these actions?
    Mr. Fosburgh. Well, I think that people understate 
routinely the value of the recreation economy, including 
hunting and fishing. I threw out some statistics in my remarks, 
but every time somebody goes to Grand Junction or Pinedale or 
anyplace like that to hunt and fish, they do a lot more than 
just buy a license. You know, they go there, they stay in a 
motel, they stay at restaurants. They buy ammo, they buy 
fishing rods.
    You know, the trickle-down economy is pretty well 
documented by the Outdoor Industry Association and lots of 
others. The Fish and Wildlife Service makes some documentation 
of this every 10 years. And it is significant.
    And the good thing about it is these are jobs that give 
forever. You are not going to play out, you know, a mule deer 
herd if you manage them properly. You are always going to play 
out a non-renewable resource eventually.
    Mr. Holt. And do you have any comment on Mr. Schroeder's 
assertion that any new fees would be unnecessary?
    Mr. Fosburgh. Well, you know, frankly, I don't know that 
the issue is fees as much. I mean, obviously we have a budget 
deficit and we need to deal with it. You know, I am not the 
National Taxpayers Union. You know, I don't really, it is not 
my job to say that they are paying too much or they are paying 
too little.
    What I want to make sure of is that the special places out 
there in the fish and wildlife are getting protected. And if 
that is, a way to do that is to have a little bit higher fees, 
I think the polling all shows that the general public supports 
making industry pay a little bit more if that means better 
protection over fish and wildlife.
    If it is simply an issue of putting more money into the 
coffers of the Federal government, I am a lot less passionate 
about that. I would much rather see, you know, if there are new 
fees, that translate into better management on the ground.
    Mr. Holt. Well, I thank you for your articulate comments, 
because it is often the case in a hearing such as this that 
ordinary citizens who are not engaged in development activities 
are not as heard, not as well heard. And I thank you for your 
testimony.
    Mr. Lamborn. And I have a couple of follow-up questions, 
and then----
    Mr. Holt. Yes, I have completed mine.
    Mr. Lamborn. OK. But if one gets sparked, feel free to jump 
in.
    Mr. Schroeder, I have two final questions. If costs are 
increased on oil and gas--and I realize that my colleague, 
Representative Holt, correctly pointed out that sometimes they 
cannot be passed on, because there is an inelastic price 
ceiling set by a global market. Like in oil, for instance.
    So if prices cannot be passed on and have to be absorbed, 
what does that do to profitability; and hence, investment? By 
either shareholders, if it is a public company, or other 
investors if it is a privately held company.
    Mr. Schroeder. Generally, it marginalizes profitability. 
And you are right that a lot of those costs cannot be passed 
on. Even with natural gas, which is a domestic resource, it is 
governed by marketplace and competition within the United 
States.
    And with respect to investment for smaller companies, as 
Laura indicated, that if you can't invest in a timely manner, 
that investment opportunity usually diminishes, and they can go 
elsewhere to invest in a given project.
    Mr. Lamborn. So if we look at the raw numbers from one of 
the Federal agencies saying that so many permits have been 
issued, that doesn't address the marginal ones that fell away 
and were never done in the first place.
    Mr. Schroeder. That is correct. And again, we have to 
understand, too, without getting in too much detail, not 
knowing where these permits are and what areas are located in, 
you can have multiple permits off of a given well pad, after 
the initial well is drilled.
    So therefore, it doesn't, it doesn't evaluate, let's say 
perhaps maybe on an acre-by-acre basis, the numbers that are 
being proposed that we have X number of tens of millions of 
acres undefined.
    Mr. Lamborn. OK, thank you.
    Mr. Schroeder. You really need to drill down into those 
numbers to see what they represent. But the bottom line is for 
small independents, your equity capital goes away, and your 
profitability diminishes. And with the imposed numbers that are 
coming from Washington, it gets pretty marginal, relative to 
can a small independent stay in business.
    Mr. Lamborn. OK. Thank you. And finally, Ms. Skaer 
addressed litigation and its impact on minerals. What is the 
impact of litigation in the environment we have, where almost 
everything that moves gets sued, in oil and gas? And then do 
you have any--what is that doing, and do you have any 
recommendations how to keep that under control?
    Mr. Schroeder. Is that directed to her?
    Mr. Lamborn. No, to you. Yes, she addressed mineral, and if 
you could address oil and gas.
    Mr. Schroeder. Excuse me, excuse me. As far as litigation? 
Litigation is just a nasty process, it really is. There is no 
way that with anyone being able to sue for any occasion, that 
allows you, from an efficiency standpoint, either by the 
agencies themselves or by operators themselves, that they can 
logically and efficiently process and develop. There is no way 
that you can do that.
    And I feel sorry for the BLM, to be honest with you, from 
the standpoint that over 50 percent of their time is wrapped up 
in litigation.
    Now, we are talking about raising fees to offset their 
permitting inspections and what-have-you. That is not where the 
money is going. The money is going into litigation. It is not, 
it is not helping them at all to raise money whereby you think 
that there are going to be more efficient inspections, or a 
better process.
    The litigation is chewing up their budget, and it is 
chewing up their resources.
    Mr. Lamborn. Any recommendations on keeping that under 
control?
    Mr. Schroeder. There has to be, like Laura indicated, there 
has to be some ramifications of a party suing for the purpose 
of suing. That if it isn't legitimate, that they pay for their 
own costs associated with that.
    Right now the American public is paying for all of those 
costs. Again, a net back against the revenue that is generated 
from energy per se, a good portion of that is going back in to 
offset that litigation. And I don't think that is where the 
American people----
    Mr. Lamborn. And is the leaseholder having to pay lease 
payments while these lawsuits wend their way through the 
Courts?
    Mr. Schroeder. Oh, absolutely, absolutely.
    Mr. Lamborn. So the lease isn't shortened, the lease isn't 
extended, and the annual payments aren't forgiven.
    Mr. Schroeder. And many times over, there is no opportunity 
to develop that lease while that litigation is going on. So we 
talk about well, we have all these permits out there, we have 
leased all of this acreage. But how much of it is being 
challenged through litigation, whereby the operator who 
purchased that lease has no rights to develop it until the 
litigation is finalized?
    Mr. Lamborn. OK, thank you. Anything from----
    Mr. Holt. No, thank you, Mr. Chairman.
    Mr. Lamborn. OK. I want to thank you all for being here. Be 
aware that Members of the Committee may submit questions to you 
in writing. We would ask for a prompt response on those for the 
record.
    Thank you for being here, and this hearing is adjourned.
    [Whereupon, at 12:44 p.m., the Subcommittee was adjourned.]

                                 
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