```

[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]

 
                              H.R. 2436 
                        THE ENERGY SECURITY ACT
=======================================================================

                          LEGISLATIVE HEARING

                               before the

                         COMMITTEE ON RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION
                               __________

                             July 11, 2001
                               __________

                           Serial No. 107-48
                               __________

           Printed for the use of the Committee on Resources

 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 house
                                   or
         Committee address: http://resourcescommittee.house.gov

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                         COMMITTEE ON RESOURCES

                    JAMES V. HANSEN, Utah, Chairman
       NICK J. RAHALL II, West Virginia, Ranking Democrat Member

Don Young, Alaska,                   George Miller, California
  Vice Chairman                      Edward J. Markey, Massachusetts
W.J. ``Billy'' Tauzin, Louisiana     Dale E. Kildee, Michigan
Jim Saxton, New Jersey               Peter A. DeFazio, Oregon
Elton Gallegly, California           Eni F.H. Faleomavaega, American 
John J. Duncan, Jr., Tennessee           Samoa
Joel Hefley, Colorado                Neil Abercrombie, Hawaii
Wayne T. Gilchrest, Maryland         Solomon P. Ortiz, Texas
Ken Calvert, California              Frank Pallone, Jr., New Jersey
Scott McInnis, Colorado              Calvin M. Dooley, California
Richard W. Pombo, California         Robert A. Underwood, Guam
Barbara Cubin, Wyoming               Adam Smith, Washington
George Radanovich, California        Donna M. Christensen, Virgin 
Walter B. Jones, Jr., North              Islands
    Carolina                         Ron Kind, Wisconsin
Mac Thornberry, Texas                Jay Inslee, Washington
Chris Cannon, Utah                   Grace F. Napolitano, California
John E. Peterson, Pennsylvania       Tom Udall, New Mexico
Bob Schaffer, Colorado               Mark Udall, Colorado
Jim Gibbons, Nevada                  Rush D. Holt, New Jersey
Mark E. Souder, Indiana              James P. McGovern, Massachusetts
Greg Walden, Oregon                  Anibal Acevedo-Vila, Puerto Rico
Michael K. Simpson, Idaho            Hilda L. Solis, California
Thomas G. Tancredo, Colorado         Brad Carson, Oklahoma
J.D. Hayworth, Arizona               Betty McCollum, Minnesota
C.L. ``Butch'' Otter, Idaho
Tom Osborne, Nebraska
Jeff Flake, Arizona
Dennis R. Rehberg, Montana

                   Allen D. Freemyer, Chief of Staff
                      Lisa Pittman, Chief Counsel
                    Michael S. Twinchek, Chief Clerk
                 James H. Zoia, Democrat Staff Director
                  Jeff Petrich, Democrat Chief Counsel
                                 ------                                

                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on July 11, 2001....................................     1

Statement of Members:
    Hansen, Hon. James V., a Representative in Congress from the 
      State of Utah..............................................     1
        Prepared statement of....................................     3
    Kind, Hon. Ron, a Representative in Congress from the State 
      of Wisconsin, Prepared statement of........................   110
    Pallone, Hon. Frank, Jr., a Representative in Congress from 
      the State of New Jersey, Prepared statement of.............   109
    Rahall, Hon. Nick J., II, a Representative in Congress from 
      the State of West Virginia.................................     5
        Prepared statement of....................................     7
    Udall, Hon. Tom, a Representative in Congress from the State 
      of New Mexico, Prepared statement of.......................   111

Statement of Witnesses:
    Glenn, Richard, Arctic Slope Regional Corporation, Barrow, 
      Alaska.....................................................    68
        Prepared statement of....................................    70
    Herrera, Roger C., Arctic Power, Washington, DC..............    63
        Prepared statement of....................................    65
    Hood, Jerry, International Brotherhood of Teamsters, 
      Washington, DC.............................................    76
        Prepared statement of....................................    78
    Johnston, The Honorable J. Bennett, Former Senator from the 
      State of Louisiana, Johnston & Associates, Washington, DC..    56
    Kolton, Adam Michael, Alaska Wilderness League, Washington, 
      DC.........................................................    80
        Prepared statement of....................................    82
    Lance, Linda, The Wilderness Society, Washington, DC.........    90
        Prepared statement of....................................    92
    Norton, The Honorable Gale A., Secretary, U.S. Department of 
      the Interior...............................................     8
        Prepared statement of....................................    10

Additional materials supplied:
    Ahmaogak, Hon. George, Mayor, North Slope Borough, Statement 
      submitted for the record...................................    73
    Regelin, Wayne, Director, State of Alaska Department of Fish 
      and Game, Letter submitted for the record..................    43
    Slutz, James A., Director, Division of Oil and Gas, Indians 
      Department of Natural Resources, Letter submitted for the 
      record.....................................................    32

                     H.R. 2436, ENERGY SECURITY ACT

                              ----------                              

                        Wednesday, July 11, 2001

                     U.S. House of Representatives

                         Committee on Resources

                             Washington, DC

                              ----------                              

    The Committee met, pursuant to call, at 10 a.m., in Room 
1324, Rayburn House Office Building, Hon. James V. Hansen 
(Chairman of the Committee) presiding.

STATEMENT OF THE HONORABLE JAMES V. HANSEN, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF UTAH

    The Chairman. The Committee will come to order.
    Good morning. Today the Committee will hear testimony on 
H.R. 2436, the Energy Security Act. We welcome the witnesses to 
the hearing today, and we look forward to your remarks. I am 
sure this could be an interesting and lively discussion.
    The Energy Security Act was introduced in response to 
President Bush's call for a long-term energy policy for our 
nation.
    Several months ago, our nation was sent a wakeup call by 
California and put on notice that we have failed to develop an 
energy infrastructure that is capable of supporting a 21st 
century economy.
    We were expecting major power outages throughout the West 
and Northeast, and long gas lines and outrageous energy bills. 
While the situation has been rectified somewhat, there is still 
an urgent need to implement a comprehensive, long-term policy 
for the 21st century.
    I am afraid that the impacts of the current crisis are now 
beginning to be felt in places all across the country. While 
short-term fluctuations in energy supplies are inconvenient, if 
we fail to act in a responsible or a timely manner, our economy 
will be brought to a grinding halt.
    Our role in Congress should be to clear any unrealistic and 
overburdensome regulatory obstacles, then get out of the way 
and allow the markets to work.
    This is not a debate between Big Oil and the working man, 
nor is it between the big utilities and the suburban 
homeowners. This is a debate about how we as a nation can reach 
a balance between responsible development of our known, proven 
resources and the environment.
    We must take action and do so in an environmentally 
responsible way.
    Unfortunately, there are some who will crowd before the 
cameras, claiming that any legislation will open up all the 
public lands for development and that our national conservation 
areas, our wilderness areas and national forests and wild and 
scenic rivers, will be at risk.
    This is false. And I hope that we will have a spirited and 
honest discussion today and avoid demagoging the energy issue 
simply to score political points in the short term.
    During the course of this debate, we must not forget where 
our responsibilities lie. We have a responsibility to the 
small-business owners, the farmers and ranchers, to those who 
ship our goods, teach our kids, and protect our streets, and 
make sure that their hard-earned dollars are not eaten up by 
skyrocketing fuel costs.
    We have a responsibility to them to develop a reasonable 
and realistic energy policy to protect their long-term 
security. Energy security is as vital as national security to 
our nation. These two are inseparable.
    American farmers across the country have suffered because 
of the lack of an energy policy.
    Dairy farmers in the San Joaquin Valley have been forced to 
dump hundreds of thousands of pounds of milk because processing 
plants did not have power to take delivery of their milk. Dairy 
cows don't seem to want to cooperate when rolling blackouts and 
power contracts conflict with milking time.
    Poultry farmers are extremely nervous as summer rolls on. 
They don't know if the next rolling blackout will last so long 
that their birds die of heat exhaustion because the circulation 
fans are shut off in the barns.
    Higher natural gas prices have driven up the cost of 
fertilizers and diesel. It has become cost prohibitive to 
irrigate in many areas of the West. While we can live without 
radios, TVs and air-conditioning, we can't live without food. 
We should remember this as we discuss the energy policy of this 
nation.
    Small businesses have been hit particularly hard. Utility 
bills and transportation costs have soared. Eighty thousand 
independent truckers have turned in their trucks because profit 
margins are too narrow to make a go of it. Pay raises are being 
scrapped and benefits reduced as energy prices rise. Many small 
businesses have put a freeze on hiring altogether.
    Small business is the backbone of this country. By failing 
to act, we are telling the small-business owners on Main Street 
to fend for themselves. It is that simple.
    If we want our economy to keep growing and maintain our 
standard of living, we have to have an adequate supply of 
energy.
    There is a lot of work to do. However, the jurisdiction of 
the Committee on Resources is fairly limited to the energy 
resources and activities related to public lands.
    Unfortunately, these issues are also oftentimes the most 
contentious and emotional. Technology tax credits for hybrid 
engines do not seem to invoke the spiritual and philosophical 
fervor among the different viewpoints that drilling in ANWR 
does.
    While our colleagues on other Committees debate the fun 
stuff, we on the Resources Committee have to roll up our 
sleeves, get down in the trenches, and figure out a way to 
ensure a stable supply of fossil fuels until other technologies 
come on-line, which could be decades away.
    Finally, we must recognize that energy policy is also an 
issue of jobs and what type of jobs we want in the future. It 
is unrealistic to assume that we can rely solely on a high-tech 
or service-based economy without also paying attention to the 
engine that drives these sectors.
    As in all things, there must be a balance and a little dose 
of reality. This means that we must admit to ourselves that 
until the promise of clean, cheap, abundant energy materializes 
from whatever source--that may be solar, wind or hydrogen--the 
engine that drives the world's economy will continue to be 
almost entirely fossil fuels.
    Like it or not, this legislation is a first step in the 
right direction toward developing a long-term energy policy 
that will ensure a stable and abundant energy supply for future 
generations as well as a tool for creating good, high-paying 
jobs in the energy sector at a time when recession in other 
sectors such as technology has wiped out trillions of dollars 
in wealth.
    I hope that my colleagues will remember that as we discuss 
the bill today.
    The energy challenges we face are complex. They can't be 
met by a single action plan or legislation that comes under a 
single Committee's jurisdiction. But I am confident that 
through conservation, increased research, and increased 
production, as well as efficiencies in delivery of our energy 
resources from whatever source that may be, including our 
public lands, we will meet these challenges.
    I want to welcome our witnesses again. I look forward to an 
interesting and informative debate.
    Finally, I request opening statements be restricted to Mr. 
Rahall and myself. I would encourage members of the Committee 
to use their allotted 5 minutes for statements and questions. 
If time allows, we will try to have a second round on most of 
the questions.
    [The prepared statement of Mr. Hansen follows:]

  Statement of The Honorable James V. Hansen, Chairman, Committee on 
                               Resources

    Good morning. Today the Committee will hear testimony on H.R. 2436 
the Energy Security Act. We welcome the witnesses to the hearing today 
and we look forward to your remarks. I am sure that it will be an 
interesting and lively discussion.
    The Energy Security Act was introduced in response the President 
Bush's call for a long-term energy policy for our nation. Several 
months ago, our nation was sent a wake-up call by California that we 
had failed to prepare an energy infrastructure capable of supporting a 
21st century economy. We were expecting major power outages throughout 
the west and northeast, and long gas lines and outrageous energy bills. 
While the situation has been somewhat mitigated, there is still a 
desperate need to implement a comprehensive, long term policy for the 
21st Century.
    I am afraid that the impacts of the current crisis are just now 
beginning to be felt in places all across the country. While short-term 
fluctuations in energy supplies are inconvenient, if we fail to act in 
a responsible timely manner, our economy will be brought to a grinding 
halt. Our role should be to clear any unrealistic over-burdensome 
regulatory obstacles, then get out of the way and allow the markets to 
work.
    This is not a debate between big oil and the working man, nor is it 
between the big utilities and the suburban homeowners. This is a debate 
about how we as a nation can reach a balance between responsible 
development of our known, proven resources and the environment. We will 
do so in an environmentally responsible way even if those opposed to 
this legislation will crowd before the cameras claiming that H.R. 2436 
opens up all the public lands for development and that our national 
conservation areas, our wilderness areas and national forests and wild 
and scenic rivers are at risk. This is absolutely false. Instead, I 
hope that we will have a spirited and honest discussion today and avoid 
demagoging the energy issue simply to score political points in the 
short-term.
    During the course of this debate we must not forget where our 
responsibilities lay in the first place. We have a responsibility to 
the small business owners, the farmers and ranchers, to those that ship 
our goods, teach our kids and protect our streets to make sure that 
their hard-earned dollars are not eaten up by skyrocketing fuel costs. 
We have a responsibility to them to develop a reasonable and realistic 
energy policy to protect their long-term security. Energy security for 
our nation is as vital as our national security.
    American farmers across the country have suffered because of our 
lack of an energy policy. Dairy farmers in the San Joaquin Valley have 
been forced to dump hundreds of thousands of pounds of milk because no 
cheese plants had the power to take delivery of their milk. Dairy cows 
don't seem to want to cooperate with rolling blackouts and power 
contracts at milking time.
    Poultry farmers are extremely nervous as summer rolls on. They 
don't know if the next rolling blackout will last so long that their 
birds die of heat exhaustion because the circulation fans are shut off.
    Higher natural gas prices have driven up the cost of fertilizers 
and diesel. It has become cost prohibitive to irrigate in many areas of 
the west. While we can live without radios, tv's and air conditioning, 
we can't live without food. We should remember this as we discuss the 
energy policy of this nation.
    Small businesses have been hit particularly hard as utility bills 
and transportation costs have soared. 80,000 independent truckers have 
turned in their trucks because profit margins are too narrow to make a 
go of it. Pay raises are being scrapped and benefits reduced as prices 
rise. Many small businesses have put a freeze on hiring all together.
    Small business is the backbone of this country. By failing to act, 
we are telling the small business owners on Main Street to fend for 
themselves. It is that simple. If we want our economy to keep growing 
and maintain our standard of living, we have to have an adequate supply 
of energy. We should remember this as we discuss energy policy today.
    There is a lot of work to do. However, I must note that the 
jurisdiction of the Committee on Resources is fairly limited to the 
energy resources and activities related to public lands. However, these 
issues are also oftentimes the most contentious and emotional. 
Technology tax credits for hybrid engines do not seem to invoke the 
spiritual and philosophical fervor among the different viewpoints that 
drilling in ANWR does. While our colleagues on other Committees debate 
the fun stuff, we on the Resources Committee have to roll up our 
sleeves, get down in the trenches and figure out a way to ensure a 
stable supply of fossil fuels until other technologies come on line, 
which could be decades away.
    Finally, we must recognize that energy policy is also an issue of 
jobs and what type of jobs. It is unrealistic to assume that we can 
rely solely on a high-tech or service-based economy without also paying 
attention to the engine that drives those sectors. As in all things, 
there must be balance and a dose of reality and that includes admitting 
to ourselves that until the promises of clean, cheap abundant energy 
materializes from whatever source that may be, solar, wind or hydrogen, 
the engine that drives the world's economies will continue to rely 
almost entirely on fossil fuels.
    Like it or not, this legislation is a first step in the right 
direction toward developing a long-term energy policy which will ensure 
a stable and abundant energy supply for future generations. Again, we 
are now witnessing the direct results of relying solely on a high-
technology and service-based economy while ignoring other sectors such 
as the agricultural and extractive industries which are the true 
creators of wealth in our society.
    Therefore, H.R. 2436 will be a tool for creating good, high paying 
jobs in the energy sector at a time when recession in other sectors 
such as technology has wiped out trillions in wealth. I hope that my 
colleagues will remember that as we discuss the bill today.
    The energy challenges we face are complex. They can't be met by a 
single action plan or legislation that comes under a single Committee's 
jurisdiction. But I am confident that through conservation, increased 
research and increased production and efficiencies in delivery of our 
energy resources from whatever source that may be, including our public 
lands, we will meet these challenges.
    I want to welcome the witnesses again. I look forward to an 
interesting and informative hearing today.
                                 ______
                                 
    Mr. Chairman. Mr. Rahall?

STATEMENT OF THE HONORABLE NICK J. RAHALL II, A REPRESENTATIVE 
          IN CONGRESS FROM THE STATE OF WEST VIRGINIA

    Mr. Rahall. Thank you, Mr. Chairman.
    Mr. Chairman, I want to first express my appreciation to 
you for calling this hearing, because we on the Democratic side 
also recognize the pressing need to fashion a better national 
energy policy.
    We also welcome the debate on what the President has 
proposed and what we view as needed in this vital area.
    With that noted, I must point out that if we were following 
the President's legislative proposals on energy, the ones that 
he submitted to this body on June 28th, the only item this 
Committee would be considering would be opening the Arctic 
National Wildlife Refuge to oil and gas leasing. That is the 
only area within this Committee's jurisdiction included in the 
President's legislative initiatives on energy.
    But judging by the legislation that has been introduced by 
the majority just yesterday, which is the subject of this 
hearing, that's not going to be the case. We are not going to 
be considering just the President's proposals.
    So this begs the question: Why is the majority so intent on 
pursuing a broad array of what, with all due respect to the 
majority, could be viewed as unnecessary, uncalled for, and 
unjust giveaways that are part and parcel of this legislation?
    The effort here, I believe, is to engage in what I call the 
lightening rod school of legislating. You plop a controversial 
item like ANWR on the table, you introduce it in a long bill, 
and then you hope everyone focuses on just that item.
    Meanwhile, lying below the surface is a whole bevy of 
equally contentious items that consequently may escape the same 
level of scrutiny.
    Others today can butt their heads over whether or not the 
bit of tundra in northeastern Alaska should be leased to energy 
development. My role will be to expose what is in the rest of 
the package.
    And a central feature is this business of providing relief 
from the payment of oil and gas royalties to the American 
people, what I call a royalty holiday--it's July; I know 
there's a store in Old Town Alexandria that sells Christmas 
items in July, and we've heard of Christmas in July before. But 
this is what's happening in this bill under the guise of 
needing to give companies an incentive to drill.
    I must say, at a time when Americans are reading in the 
newspaper that profits for oil companies are soaring--124 
percent increase for Exxon and Mobil, for instance--when there 
is widespread public criticism that collusion and price-fixing 
has taken place, and when people still get acid indigestion 
when they go to pump their gasoline at the gas pump, providing 
a royalty holiday is simply the wrong message that we need to 
be sending.
    It is just plain wrong. The oil companies do not need a 
royalty holiday.
    And as far as I can tell, the rig count is very robust and 
the oil and gas drillers are going full tilt and do not need 
any type of royalty relief, thank you very much.
    This is something the market determines in a free-market 
economy. When demand is there, folks drill. When it is not, 
they park their rigs.
    You know it, we know it, many on the majority side know it 
as well, the American people know it.
    We do not need to rob the Federal Treasury, and the states 
would share in on-shore royalties, to provide false incentives 
to drill, especially when royalty underpayments are already 
commonplace.
    The same goes with the royalty in-kind proposal, which is 
nothing more than a thinly disguised ruse to reduce royalty 
payments. This proposal would have the Federal Government 
receiving its royalty in the form of actual crude oil and 
natural gas.
    Federal bureaucrats would then be in the business of 
marketing oil and gas, joining the ranks of Exxon, Shell, 
Mobil, and the rest of them. I have never heard of such 
nonsense.
    And this surprises me, coming from the majority at a time 
when Russia and China are shedding themselves of state-run 
industries, why, in effect, is an effort being made here to 
toss the Communist Manifesto into our national energy policy?
    But I don't think that is quite the extent of it, if we 
examine the rest of the package. It is unfortunate but true 
that this legislation strips the ability of the Forest Service 
to consent over issuing leases on its lands. It reduces 
restrictions on drilling in areas protected for critical 
wildlife habitat, environmental and historical purposes. And it 
has the American taxpayer subsidize the costs the industry 
incurs in preparing leasing documents.
    Mr. Chairman, at some point in the debate, we as Democrats 
on this Committee will have an alternative to offer. We do have 
an alternative energy proposal that we will submit at the 
proper time. In my view, our alternative will represent a more 
balanced contribution on matters within this Committee's 
jurisdiction to overall energy legislation being developed by 
the House.
    We Democrats do not believe we have to short change the 
American taxpayer and short thrift the environment by doling 
out royalty holidays to Big Oil and by providing unfettered 
access to drilling rigs and to environmentally sensitive 
Federal lands.
    Our alternative will recognize the contribution that 
certain Federal lands can make to our nation's energy mix--
already one-quarter of America's oil consumption and over one-
third of our natural gas and coal use, while at the same time 
we recognize that there are environmental and social costs to 
energy development, which also need to be addressed in any 
national energy policy.
    As I said, and as I conclude, Mr. Chairman, we thank you 
for this hearing. We welcome the debate energy policy 
legislation.
    And hopefully as a result of this hearing, and perhaps from 
additional reflection and additional debate on this issue, many 
of the provisions in the bill that I have highlighted today 
will have been dropped by the final markup next week.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Rahall follows:]

Statement of The Honorable Nick J. Rahall, Ranking Democrat, Committee 
                              on Resources

    Mr. Chairman, I want to express my appreciation to you for calling 
this hearing because House Democrats also recognize the pressing need 
to fashion a better national energy policy. We also welcome the debate 
on what the President has proposed and what we view as needed in this 
area.
    With that noted, I must point out that if we were following the 
President's legislative proposals on energy, the ones he submitted to 
Congress on June 28th, the only item this committee would be 
considering would be opening the Arctic National Wildlife Refuge to oil 
and gas leasing. That is the only area within this committee's 
jurisdiction included in the President's legislative initiatives on 
energy.
    But judging by the legislation introduced by the Majority 
yesterday--which is the subject of this hearing--that is not going to 
be the case. This begs the question. Why is the Majority so intent on 
pursuing a broad array of what, with all due respect, could be viewed 
as unnecessary, uncalled for and unjust giveaways that are part and 
parcel of this legislation. The effort here, I believe, is to engage in 
what I call the lightning rod school of legislating. You plop a 
controversial item like ANWR in a long bill and hope everyone focuses 
on that. Meanwhile, lying below the surface is a whole bevy of equally 
contentious items that consequently may escape the same level of 
scrutiny.
    Others today can butt heads over whether or not that bit of tundra 
in northeastern Alaska should be leased to energy development. My role 
will be to expose what is in the rest of the package. And a central 
feature is this business of providing relief from the payment of oil 
and gas royalties to the American people--a royalty holiday--under the 
guise of needing to give companies an incentive to drill.
    I must say that at a time when Americans are reading in the 
newspaper that profits for oil companies are soaring--an 124% increase 
for Exxon-Mobil, for instance--when there is widespread public concern 
that collusion and price fixing has taken place, and when people still 
get acid indigestion every time they fill their vehicles up at the 
pump, providing a royalty holiday is simply the wrong message we need 
to be sending. It is just plain wrong.
    As far as I can tell, the rig count is very robust and the oil and 
gas drillers are going full tilt and do not need any type of royalty 
relief thank you very much. This is something the market determines in 
a free market economy. When demand is there, folks drill. When it is 
not, they park their rigs. You know it. I know it. The American people 
know it. We do not need to rob the federal treasury, and the States 
which share in onshore royalties, to provide false incentives to drill 
especially when royalty under payments are already commonplace.
    The same goes with the royalty-in-kind proposal, which is nothing 
more than a thinly disguised ruse to reduce royalty payments. This 
proposal would have the federal government receiving its royalty in the 
form of actual crude oil and natural gas. Federal bureaucrats would 
then be in the business of marketing oil and gas, joining the ranks of 
Exxon, Shell and the rest of them. I never heard of such nonsense. And 
this surprises me coming from the Majority. At a time when Russia and 
China are shedding themselves of State run industries, why is an effort 
being made to toss the Communist Manifesto into our national energy 
policy.
    But that is not the extent of it. It is unfortunate, but true, that 
this legislation strips the ability of the Forest Service to consent 
over leasing on its lands. it reduces restrictions on drilling in areas 
protected for critical wildlife habitat, environmental and historic 
purposes; and it has the American taxpayer subsidize the cost industry 
incurs in preparing leasing documents.
    Mr. Chairman, at some point in this debate Committee Democrats hope 
to offer an alternative to this legislation. In my view, our 
alternative will represent a more balanced contribution of matters 
within this committee's jurisdiction to the overall energy legislation 
being developed in the House.
    We Democrats do not believe we have to short change the American 
taxpayer and short shrift the environment by doling out royalty 
holidays to Big Oil and by providing unfettered access to drilling rigs 
into environmentally sensitive federal lands. Our alternative will 
recognize the contribution certain federal lands can make to our 
Nation's energy mix--already one-quarter of America's oil consumption 
and over one-third of our natural gas and coal use--while at the same 
time recognize that there are environmental and social costs to energy 
development which also need to be addressed in any national energy 
policy.
    As I said, Mr. Chairman, we welcome the debate on energy policy 
legislation. Hopefully, as a result of this hearing and perhaps with 
some additional reflection, many of the provisions I have highlighted 
in the bill as being troublesome can be dropped by the time we meet to 
consider the legislation next week.
                                 ______
                                 
    The Chairman. I thank the gentleman from West Virginia, the 
new Paul Harvey.
    [Laughter.]
    We are grateful to have as our first witness the Honorable 
Gale Norton, the Secretary of Interior.
    Madam Secretary, we will turn the time to you.

  STATEMENT OF THE HONORABLE GALE A. NORTON, SECRETARY, U.S. 
                   DEPARTMENT OF THE INTERIOR

    Secretary Norton. Good morning, Mr. Chairman, members of 
the Committee.
    I spoke to you recently about the President's overall 
energy plan, and today I am happy to return and comment on 
specific legislation addressing portions of the plan that 
require legislative changes.
    The President's national energy proposal dedicates more 
than half of its recommendations to increasing energy 
efficiency and conservation, encouraging the development of 
fuel-efficient vehicles, and encouraging renewable energy with 
tax incentives.
    The plan provides stability to what might otherwise be an 
uncertain energy future. It diversifies our energy supplies in 
the long run. In the nearer term, it provides assurances that 
traditional domestic energy sources will be available.
    Stabilizing our current energy situation by utilizing 
American ingenuity and emerging technology, is just one part of 
our effort to address energy needs.
    There are some aspects of the President's energy plan that 
can be addressed and implemented without legislative changes. 
And we are going forward with a number of those.
    For example, today the Department of Interior is announcing 
that it will bring state and local officials together with 
industry leaders and other citizens for a renewable energy 
summit this fall. The summit will focus on ways to maximize 
wind, solar and geothermal energy production on public lands to 
help stabilize our nation's energy needs.
    Already, Federal lands provide geothermal energy sufficient 
to serve 570,000 homes, and wind energy enough for 87,000 
homes. This, we believe, will be a head start on H.R. 2436's 
provisions to improve geothermal leasing. And we look forward 
to moving forward with the information that we have learned to 
implement the provisions of H.R. 2436.
    Americans have a core belief in American ingenuity. 
American ingenuity is a major factor in everything from our 
military victories and status as the only remaining Superpower 
to our development of cures for once-deadly diseases and our 
ability to vastly improve our air and water quality.
    American ingenuity is directly tied to our technological 
advancements. Nothing puts our nation's skills to test like a 
challenge, a challenge like the one we face today to ensure a 
comprehensive energy future. This ingenuity is already hard at 
work.
    For example, since 1985, energy producers in the Gulf of 
Mexico's Outer Continental Shelf produced more than 5 billion 
barrels of oil. Thanks to American ingenuity and high-tech 
advances, of that amount, only .001 percent, just one-one-
thousandth of a percent, was released into the ocean. By 
comparison, naturally occurring oil seeps in the shelf release 
150 times more oil than OCS production.
    President Bush addresses the need to keep our economy 
moving forward with good jobs and our determination to protect 
our environment. The underlying basis of this report is that 
our energy problem is inextricably tied to each of our lives.
    For example, we are concerned that household budgets can be 
stretched to the limits by high winter heating and summer air-
conditioning bills and increasingly expensive trips to the gas 
station. What difficult choices are families forced to make? 
Whether or not to maintain the family car? Buy new back-to-
school clothes?
    Rising energy costs also affect the budgets of our schools 
and hospitals. They affect our national prosperity and the 
availability of jobs.
    Planning for long-term availability from traditional and 
nontraditional sources can shield America's families from these 
impacts.
    The administration supports H.R. 2436 and urges the 
Committee and Congress to act expeditiously on this bill.
    We want to address short-term concerns about high energy 
costs through the LIHEAP program. The President has directed 
Interior to seek authority to redirect oil and natural gas 
royalties to the Low-Income Home Energy Assistance Program. 
This program helps low-income families heat their homes in the 
winter. The President strengthens the LIHEAP program by 
investing $300 million more than the fiscal year 2001 
appropriation.
    H.R. 2436 would allow the use of oil and gas royalty 
payments to bolster LIHEAP funding. We appreciate your support 
of this very important program.
    The President has also directed Interior to work with 
Congress to develop legislation that authorizes environmentally 
safe leasing of oil and gas in the Arctic National Wildlife 
Refuge.
    The President's plan emphasizes that Congress should 
require the use of the best-available technology and ensure 
that energy production activities protect the ANWR environment. 
This bill accomplishes those goals.
    I have visited ANWR again, since my last testimony here. I 
have now seen ANWR in both the summer and the winter. There are 
high-tech approaches that are being used on the North Slope.
    For example, ice roads used in the winter do indeed melt 
away in the summer with minimal impact. I was surprised to find 
out that one road I had seen in the winter turned out to be on 
the surface of the Arctic Ocean. So clearly, when that melts 
way, there is no impact.
    I saw the caribou from the central Arctic herd, which is 
the one that is in the Prudhoe Bay area. The Porcupine caribou 
herds' caribou were not in ANWR at all. They had calved in 
Canada.
    This is a unique area, and it is appropriate that we use 
the standards that are the most stringent in any energy 
regulatory statute. And that is exactly what is found in H.R. 
2436.
    The administration supports tough regulation like that 
found in this legislation.
    The President's budget calls for a 50-50 split of lease 
revenues from ANWR. The President's plan provides that the 
Federal share of the ANWR receipts would go toward two funds, 
one for renewable energy research and development, and another 
dedicated to the maintenance and improvements of public lands.
    Our country faces a national energy problem, but I believe 
it can and will be managed. Working with Congress, the Bush 
administration is committed to finding workable solutions that 
improve our national energy problem.
    American ingenuity has never let us down in the past. And 
by acting wisely today, it will help us provide for future 
generations.
    Thank you.
    [The prepared statement of Secretary Norton follows:]

 Statement of The Honorable Gale Norton, Secretary, U.S. Department of 
                              the Interior

    Mr. Chairman, members of the Committee, it is a pleasure to be here 
again to discuss the President's ``National Energy Policy'' report, and 
to present the Administration's position on H.R. 2436, the proposed 
Energy Security Act. The Administration supports H.R. 2436, and would 
like to work with the Congress as it moves through the legislative 
process to address a few concerns we have with the bill as currently 
drafted. The legislation before the Committee today, while not 
identical to the Administration's's National Energy Policy, advances 
these goals, and we would like to work with the Congress to bring this 
bill more closely into conformance with the Administration's Policy.
    The need for a national energy policy becomes clear when you look 
at the numbers. Take clean-burning natural gas, for example. Over the 
next 20 years, U.S. natural gas consumption has been projected to grow 
by more than 50 percent while production will grow by only 14 percent 
if it grows at the rate of the last 10 years. U.S. energy production is 
not keeping up with our growing consumption, creating a rapidly 
increasing gap between domestic supply and demand.
    Energy reserves contained in the lands and offshore areas managed 
by the Department of the Interior are an important source of potential 
energy production. The Department of the Interior manages energy 
production on all Federal lands, both onshore and the Outer Continental 
Shelf (OCS). These Federal lands provide nearly 30 percent of annual 
national energy production. In the year 2000, 32 percent of oil and 35 
percent of natural gas were produced from Federal lands. In addition, 
Federal lands produced 37 percent of domestic coal production and 48 
percent of geothermal energy production in 2000. Federal lands are also 
estimated to contain significant undiscovered domestic energy 
resources. Estimates suggest that these lands contain approximately 68 
percent of all undiscovered U.S. oil resources and 74 percent of 
undiscovered natural gas resources.
    The Department also owns and operates hydro power facilities in the 
17 western states. These facilities produce about 16 percent of all the 
hydro power in the United States.
    President Bush has developed a balanced plan to produce more 
reliable, affordable and environmentally clean energy that is built on 
three principles:
    * It is comprehensive and forward-looking.
    * It utilizes 21st Century technology to promote conservation and 
diversify supply.
    * And the plan will increase the quality of life for Americans by 
providing reliable energy and protecting our environment.
    The President's plan calls for increasing domestic energy 
production, seeks to improve the aging energy infrastructure network by 
creating a new high tech energy delivery network and promotes energy 
conservation. It is important to point out that more than 50 percent of 
the President's plan focuses on energy efficiency, encouraging the 
development of fuel efficient vehicles and encouraging consumer 
conservation. The President's plan proposes new tax incentives to help 
increase the contribution that alternative and renewable energy can 
make to our nation's energy supply.
    President Bush has directed his Administration to work with the 
Congress to develop comprehensive legislation that would help those 
with low-incomes pay higher energy bills, stabilize our current 
situation, while seeking those new resources and technologies to 
support our energy needs for the future.
    The President directed The Department of Interior to seek authority 
to redirect a portion of oil and gas royalties to the Low Income Home 
Energy Assistance Program whenever oil and natural gas prices exceed 
pre-set trigger prices.
    The President also directed us to work with Congress on 
legislation. authorizing the leasing of oil and gas in that portion of 
the Arctic National Wildlife Refuge (ANWR) defined as the Coastal Plain 
in section 1002 of the Alaska National Interests Lands Conservation 
Act. The President's plan emphasizes that Congress should require the 
use of the best available technology and require that energy production 
activities have no significant adverse impact to the environment in the 
ANWR 1002 area.
    The President has also proposed incentives to increase geothermal, 
coal and hydro power development that will enhance expeditious 
production of those resources, and royalty in kind provisions that will 
help us with the administration of our royalty in kind program.
    All of these steps are needed to solve the energy problems facing 
our country, and to secure our energy supply while protecting the 
environment.
    Please allow me to briefly address several aspects of the 
President's Energy Plan.
The Low Income Home Energy Assistance Program
    The Low Income Home Energy Assistance Program (LIHEAP) is a federal 
block grant program that helps low-income consumers pay their energy 
bills. It is the nation's core program for targeting home energy 
subsidies to low income households with vulnerable members (the 
elderly, disabled, or young child) and households with the lowest 
incomes and highest energy costs. Last winter, 1.2 million more 
American families applied for LIHEAP assistance to pay their heating 
bills, bringing the total to more than 5 million American families--up 
by 30 percent over last years's 3.9 million applicants. As many as 3.6 
million families in eighteen states and the District of Columbia risk 
being unable to pay their bills and having their energy cut off because 
of the effects of rapidly increasing energy costs. The low-income 
elderly are particularly vulnerable to disruptions in energy supply.
    The President's National Energy Policy includes strengthening 
LIHEAP by making $1.7 billion available annually, and the 
Administration has recently proposed a supplemental request that would 
increase fiscal year 2001 funding by $150 million. H.R. 2436 would 
authorize the Secretary of the Interior to use royalty in kind oil or 
gas for providing additional resources to LIHEAP.
    As part of its support for LIHEAP, the National Energy Policy 
recommends that Congress enact legislation that would allow the use of 
oil and gas royalty payments to bolster LIHEAP funding whenever oil and 
natural gas prices exceed certain prices. Specifically, a limited 
portion of royalties should be provided by the Department of the 
Interior to the Department of HHS's LIHEAP program as a cash payment, 
when oil and natural gas prices both exceed a certain trigger price. 
The Administration wants to work with the Congress to determine the 
appropriate trigger prices or the formula for determining them.
The Arctic National Wildlife Refuge
    As you know, The President is proposing to open the 1002 area, a 
small fraction of the 19 million acres in Arctic National Wildlife 
Refuge (ANWR) for oil exploration using the most high-tech, 
environmentally responsible methods. The President and I both believe 
that oil and gas development can successfully coexist with wildlife in 
Alaska's arctic region.
    Our support for enactment of authority to lease oil and gas 
resources in ANWR is a prime example of the Department's dual 
commitment to energy development and environmental conservation. We 
recognize that the ecological resources of the Refuge are unique and 
precious. We must respect and conserve this wealth for future 
generations of Americans. However, because of advances in technology 
and in our enhanced understanding of the ecology, we are now able to 
proceed with exploratory work with very little long-term effect.
    Further, the President's proposes that the Federal share of ANWR 
revenues should be earmarked for two new permanent funds to promote 
renewable energy technology and improve our national parks and public 
lands. Specifically, the National Energy Policy calls for 50% of the 
bonus revenues to be dedicated to renewable energy technology research 
and development, and that the Federal share of the royalties be 
dedicated to conservation and elimination of the maintenance and 
improvements backlog on federal lands. Use of the revenues from ANWR 
leasing for these purposes would pay permanent dividends to the 
American public by lowering the costs of developing renewable energy 
resources and identifying new resources, and by restoring and 
protecting wildlife habitat on public lands and addressing facility and 
site maintenance and improvement needs at National Parks, Refuges and 
Forests and on other recreation lands managed by the Federal 
government.
    I do want to emphasize that the Administration supports the strong 
environmental protections provisions that are included in the pending 
legislation. Section 707 of H.R. 2436, entitled Coastal Plain 
Environmental Protection, establishes an environmental standard of no 
significant adverse effect on fish and wildlife, their habitat, and the 
environment. Section 707 also requires the application of the best 
commercially available technology for oil and gas exploration, 
development, and production. These would be the most stringent 
environmental protection requirements ever applied to Federal energy 
production.
    Section 707(d) of H.R. 2436 requires the leasing program, among 
other things,----
     Lto set seasonal limitations on exploration, development 
and related activities, where necessary, to avoid significant adverse 
effects during periods of concentrated fish and wildlife breeding, 
denning, nesting, spawning, and migration,
     Lto limit exploration activities, except for surface 
geological studies, to the period during which ice roads, winter trails 
with adequate snow cover, ice pads, and ice airstrips could be used,
     Lto design standards for all pipelines and roads that 
minimize adverse effects on passage of migratory species, such as 
caribou, and on the flow of surface water,
     Lto require consolidation of facility sitings, and
     Lto require stringent reclamation and rehabilitation 
standards.
    While this title provides a good, safe and environmentally sound 
arrangement for leasing in the 1002 Area of ANWR, it attempts to 
accomplish this under the structure of the Mineral Leasing Act. Under 
that Act, 90% of the bonus, rent and royalty revenues are distributed 
to the State of Alaska and 10% to the U.S. Treasury. We recognize the 
historical antecedents of the 90%-10% distribution. However, the 
legislation of two decades ago authorizing the oil and gas leasing 
program in the National Petroleum Reserve-Alaska provides for a 50%-50% 
split of lease revenues between the State and the Federal government. 
We believe that the 50%-50%division of revenues should also apply to 
leasing in ANWR.
OCS Lease Sale 181
    I'd like to take a minute to bring you up to date on the actions we 
have taken with respect to Lease Sale 181 in the Eastern Gulf of 
Mexico. I recognize that this sale, and the OCS program in general, is 
of great interest to members of this Committee. The OCS provides more 
than 26 percent of the natural gas and 25 percent of the oil produced 
in the United States. The Minerals Management Service (MMS) administers 
about 7,500 active leases on 40 million acres of the OCS. In addition, 
the OCS contains about 19 percent of the Nation's proven natural gas 
reserves, 18 percent of its proven oil reserves, and is estimated to 
contain more than 50 percent of the Nation's remaining undiscovered oil 
and natural gas resources.
    On July 2, 2001, we proposed a Notice of Sale for oil and natural 
gas production in a portion of the Outer Continental Shelf in the 
Eastern Gulf of Mexico, also known as Sale 181. This area was first 
proposed for possible lease sale by Interior Secretary Babbitt and 
President Clinton after negotiations with Florida Governor Lawton 
Chiles and other coastal governors in 1997.
    As part of determining the area to be offered, we listened and 
worked carefully with officials and affected citizens around the Sale 
181 area. I believe the outcome is a balanced and common sense proposal 
consistent with the President's National Energy Policy. Our modified 
181 area has been adjusted from 5.9 million acres to 1.5 million. The 
adjusted area is at least 100 miles from any portion of the Florida 
coast. For example, it's northern border is more than 100 miles from 
Pensacola, Florida and the eastern edge is 285 miles from the shores of 
Tampa Bay.
    The proposed 181 Area will help expand our domestic sources of oil, 
and reduce our dependence on foreign oil. The proposal also works to 
meet the President's commitment to develop our nation's energy needs in 
an environmentally safe way. The Department projects the adjusted area 
contains 1.25 trillion cubic feet of natural gas--enough to serve one 
million U.S. families for 15 years. The area also contains 185 million 
barrels of oil--enough to fuel the automobiles of a million families 
for nearly six years.
Other Recommendations
    While we believe the Committee has done an excellent job in putting 
together a bill that will ensure increased environmentally sound 
production of energy from our public lands, we have a few more concerns 
with the bill as introduced, and want to work with the Congress to 
address them as the legislation moves forward.
    We have concerns about the potential cost of extending the 
Deepwater Royalty Relief Act provisions for two years. I understand 
that the Minerals Management Service has stated that there is no longer 
any need to provide incentives for production of oil and gas in water 
depths of less than 800 meters. I have also heard from industry that 
those incentives are in fact needed to sustain and increase the 
production levels of oil and gas that we have seen since enactment of 
the Deep Water Royalty Relief Act in 1995. Whatever is done in the 
short run, it does appear appropriate to ask the National Academy of 
Science to look into this issue, so that we can do what is best for the 
nation's long-term energy security.
    We have a technical issue to point out as well. Currently, under 
section 27 of the OCS Lands Act, the Secretary of the Interior has the 
authority to transfer royalty in kind oil without compensation to the 
Department of Energy for the filling of the Strategic Petroleum 
Reserve. In both 1999 and 2000, the Secretary of the Interior exercised 
this authority. The exercise of this authority should obviously be 
limited to times of extreme national need, recognizing that the cost to 
the Treasury is usually significant. We recommend that H.R. 2436 be 
amended to retain our current section 27 authority.
    The bill authorizes the United States Geological Survey to 
establish and operate regional technology transfer centers that would 
conduct oil and natural gas exploration and production research and 
archive and provide public access to data regarding oil and natural gas 
reserves and production. I understand that the Department of Energy 
currently has similar authority, and I ask that this provision make 
clear that these centers are not intended to duplicate efforts already 
underway by DOE.
    We look forward to working with you on these and any other concerns 
that arise as the bill moves through the legislative process.
Conclusion
    Mr. Chairman, while the challenge facing us is significant, it is 
not insurmountable. By building on new 21st century technologies, this 
country can produce ample domestic resources while enhancing and 
protecting the environment. I look forward to working with this 
Committee and others in Congress to implement Interior's pieces of the 
President's National Energy Policy.
    Mr. Chairman, this concludes my statement. I would be pleased to 
answer any questions that you or members of your Committee might have.
                                 ______
                                 
    The Chairman. Thank you, Madam Secretary. We appreciate 
your comments.
    We will now go for questions.
    Mr. Rahall?
    Mr. Rahall. Thank you.
    The Chairman. I have to limit everyone to 5 minutes, 
strictly to 5 minutes. We are going to be here all day unless 
we do that.
    Mr. Rahall. Thank you, Mr. Chairman.
    Madam Secretary, the bill that is the subject of today's 
hearing contains a provision requiring that the development of 
leases issued within the Coastal Plain be subject to what is 
known as project labor agreements.
    What is the administration's position on this requirement?
    Secretary Norton. This provision was negotiated between 
Congress and the unions, and so we have not been directly in 
those discussions. We do not object to those provisions.
    Mr. Rahall. The administration supports the project labor 
agreements in this legislation?
    Secretary Norton. We do not object to those. And we believe 
that the legislation should be adopted.
    Mr. Rahall. Okay.
    The bill contains two royalty relief provisions, one 
allegedly for OCS deep water leases and a general provision, 
which our analysis shows is not limited to marginal wells, as 
is being advertised. Your testimony noted some concern over 
extending the deep water royalty holiday, and I am looking for 
something more definitive.
    In that regard, on June 28, 2000, then-candidate George 
Bush attacked Al Gore for his support for extending the deep 
water providing royalty relief program. And I have that full 
press release here in front of me.
    At the time, candidate Bush stated, and I quote, ``I look 
forward to hearing his explanation as to why big gas producers 
ought to be given a royalty tax break.''
    So my question to you, Madam Secretary, does the 
administration still hold that view? Is the administration 
outright opposed to the inclusion of deep water royalty relief 
in this legislation?
    Secretary Norton. Our administration has had the experience 
of going forward with leasing in the Gulf of Mexico with 
reduced royalty provisions that provided royalty relief only in 
the 800 meter and deeper water. And we found that we had a 
higher response to that lease sale than what we expected and 
what we had to lease sales in the past.
    And so while we think that this issue in the long run is 
best resolved by the suggestion to have a study so that we 
really have a solid basis for making those decisions, we 
believe that at the current time our existing authority to 
allow some royalty relief is sufficient. And so we would like 
to see changes in the provisions that are in this legislation 
that would mandate royalty relief in shallower water.
    Mr. Rahall. Is it accurate then to say that earlier this 
year you rejected--rejected--the need for continuing royalty 
relief under the 1995 Deep Water Royalty Relief Act?
    Secretary Norton. That is correct. While we do provide some 
royalty relief for deeper water, it does not appear to be 
necessary for the areas where production is already taking 
place, where we understand the technology, and where we are 
utilizing essentially routine approaches in going forward with 
production.
    Mr. Rahall. So today you are saying you do support some 
royalty relief?
    Secretary Norton. In more than 800 meters' depth.
    Mr. Rahall. Okay. Thank you.
    Mr. Chairman, I have no more questions right now.
    The Chairman. I thank the gentleman.
    We are not just going to take everybody for 5 minutes. It 
is going to take us all day.
    On the Republican side, raise your hand if you have 
questions for the Secretary.
    Mr. Tancredo is recognized.
    Mr. Tancredo. Thank you, Mr. Chairman.
    Thank you, Madam Secretary, for coming today. And I want to 
really commend you for your outstanding work on this 
legislation.
    I remind my colleagues that some of these proposals we see 
today were on the table during the previous administration. And 
rather than taking leadership, we saw only procrastination.
    The proposal is about all the issues that our former 
Secretary of Interior did not want to approach, even though it 
is painfully clear that energy issues needed attention in that 
administration, the Clinton administration, which they never 
received. Just because something is controversial does not mean 
it can be ignored.
    And now, with new and strong local leadership by the 
President and my friend from Colorado, Secretary Norton, these 
issues have been brought before the Congress again.
    Secretary Norton, I think often taxpayers forget that in 
addition to their income tax are gas taxes, estate taxes, et 
cetera; the Federal Government draws a significant amount of 
revenue from oil and gas royalties and lease payments.
    But in addition to the important revenue, this legislation 
is full of what appears to me to be some important 
administrative cost savings, both on the side of the private 
companies and within the Department of Interior. I am thinking 
specifically of Title II, Subtitle C, which contains the 
royalty in-kind provisions and the cost-sharing programs with 
the state geologic surveys.
    Would you expand upon some of the potential cost savings? 
And also, do you think this legislation is a net gain for the 
country fiscally? And if so, at what magnitude?
    Secretary Norton. I do believe that this approach will 
allow us to be more efficient in our regulation. It basically 
will require us to look at the ways in which we can make our 
process operate in a way that is going to make more sense, to 
look across the board at what our leasing processes are, at 
what standards are applied, and make sure that those really fit 
the situation that we face.
    The royalty in-kind provision is one where I think we can 
see some efficiencies. And I think as we learn through time, we 
can go to a much more efficient kind of process.
    The approach that we use right now is trying to estimate 
and to appraise and to hypothesize what the price is on the oil 
and gas that is produced from our Federal lands. The royalty 
in-kind approach basically says, put it on the market, sell it; 
that's the way to find out how much it is worth.
    And so we have gone through tremendous efforts trying to 
decide what the valuation is of our oil and gas. And I think it 
would more efficient and recognizes that we have a much more 
competitive marketplace for natural gas marketing especially. 
And this allows us to take advantage of the pricing 
efficiencies that come from having the marketplace set those 
prices.
    Mr. Tancredo. Thank you, Madam Secretary. I have no other 
questions.
    The Chairman. The gentleman from California, Mr. Miller.
    Mr. Miller. Thank you, Mr. Chairman.
    And, Madam Secretary, welcome to the Committee.
    Madam Secretary, really since the Exxon Valdez oil spill, I 
have been involved in really active oversight on the operations 
of this system.
    As we tragically learned in the Valdez oil spill, this 
system isn't just at Prudhoe Bay. This is a system that really 
runs from the Arctic Circle all the way down to southern 
California or further, wherever the tankers and the pipelines 
and others take us.
    And I have been involved with Alyeska and the corporations 
and others in constant meetings about upgrading and improving 
this system. And I don't want to pretend for a moment that 
those companies do not take this in a very serious light, 
because they have dedicated hundreds of millions of dollars to 
doing this and have responded to inquiries from myself and 
Chairman Dingell and others in an ongoing basis.
    But again yesterday, we read in the paper again about a 
series of concerns raised by employees on the Arctic Slope, 
questions of malfunctions and the readiness of very important 
valves with respect to blowouts and spill containments.
    And I just wonder what we can expect from your office in 
the way of increased oversight. I don't think, if we are going 
to expand this system--I don't happen to agree with that--but 
if you are going to expand this system for another 20 or 30 
years, if there isn't something done to increase public 
confidence in the operations of this system--because obviously 
we know when things go bad in this industry, they can go bad 
quickly and in a very big way.
    And I wondered, can you enlighten us as to what we might 
expect in terms of oversight from your office under the joint 
authority?
    Secretary Norton. The approach that we would use would be 
having Federal regulators who would oversee any of the 
production activities on Federal lands. The discussion in the 
newspaper was about the production that is taking place on 
state lands.
    Mr. Miller. Right.
    Secretary Norton. And we would certainly expect that we 
would have stringent standards in place and that those 
stringent standards--
    Mr. Miller. With respect to the offshore and national 
petroleum reserve and pipeline, I assume you are talking about?
    Secretary Norton. On all of those things, and wherever we 
have--the things that we are talking about--
    Mr. Miller. Would you put--
    Secretary Norton. --in terms of the expansion--
    Mr. Miller. Would you put that in the category of increased 
oversight by your office or the status quo?
    Secretary Norton. My understanding was you were talking 
about--
    Mr. Miller. The report also raised the questions about the 
right to do surprise visits, whether or not rigs were doctored 
and dealt with before the inspectors came along. We know, you 
know, that is not exactly the best way to do oversight.
    Secretary Norton. On the Federal side, on the Federal lands 
that are on the North Slope, we would expect to have a high 
level of scrutiny, including surprise visits. We have two 
inspectors that are already operating in the NPRA area that has 
only exploratory wells at this point in time.
    So we are already at a high level of scrutiny and expect to 
increase that level of scrutiny.
    Mr. Miller. If I might, Madam Secretary, I would like to 
follow up in correspondence with you for some questions as a 
result of this hearing.
    Mr. Chairman, if that is all right, if I could forward 
those on that topic?
    The Chairman. Without objection.
    Mr. Miller. Thank you.
    On another matter, the legislation before us designates the 
1987 study, the 1002 report, as being adequate for discussions 
of environmental impacts. And I just wondered whether or not 
you concur with that or the administration concurs with that.
    Most members of this Committee weren't in Congress when 
this report was done. We have obviously had 10 years of 
additional experience, and clearly this report was done before 
the Exxon Valdez, which brought into focus the nature of this 
system, the length of the system, and the consequences of it.
    And I just wondered whether you support the notion that we 
are going to designate this as adequate or whether you think 
there should be an update of this report, with respect to 
cumulative impacts; with respect to some of the issues of water 
usage that have been raised; and obviously, the off-site 
impacts from additional drilling with respect to the age of the 
pipeline, those issues that are raised; and the shipments?
    Secretary Norton. I think it is important to note the very 
limited way in which that report would be utilized, and only at 
the very beginning stages. As we move forward toward actual 
impacts taking place, there would be additional studies that 
would be--
    Mr. Miller. But that report, we understand why this is 
being done. That report is key to going forward in a rapid 
fashion. I am asking whether or not that key, which is the 
linchpin in terms of moving forward with rapid--and that is 
clearly what the sponsors want to do--whether or not you 
believe that is adequate or whether or not you believe there 
ought to be an attempt to make some update based upon what we 
have learned over the last 15 years?
    Secretary Norton. Under the existing H.R. 2436, there would 
be additional studies before there are actual impacts on the 
ground. And I think that through those studies, we would see 
the advances in technology that have taken place in the 15 
years since that original study was done, and to see that the 
environmental impacts can be further minimized as a result of 
the newer technology.
    The Chairman. The time of the--
    Mr. Miller. Mr. Chairman, I would make same request with 
respect to this topic, if I might--
    The Chairman. Without objection.
    Mr. Miller. --as a result of this hearing, forward 
questions to the Secretary.
    Thank you, Madam Secretary.
    The Chairman. The gentleman from Maryland, Mr. Gilchrest.
    Mr. Gilchrest. Thank you, Chairman.
    Good morning, Madam Secretary. Welcome.
    Three quick questions that you may be able to answer now or 
maybe we can correspond on these later.
    One is, I am Chairman of the Subcommittee that has 
jurisdiction over wildlife refuges, and what we will be doing 
over the course of the next few months is to hold hearings on 
existing oil and gas leases on some of those refuges to see the 
type of oversight that has been used and to ensure that those 
existing oil and gas leases are living up to Americans' 
expectations of environmentally sensitive and so on and so 
forth. And we would just like to see what oversight existing 
authority and the previous administration has in those areas. 
So sort of a heads up on that.
    Number two, could you tell us where geothermal, hydropower, 
and maybe even wind and solar, are promising on our Federal 
lands?
    And the third is, you mentioned technological advances and 
American ingenuity, which are, I think, two characteristics 
that have made this country great. But in that process, 
technological advances and American ingenuity, when you go 
through this seminar this fall dealing with alternative energy 
sources, will it go beyond geothermal, hydropower and so on to 
possibly a rapidly promising technology known as a fuel cell, 
of which, I understand, in the next couple of years it is 
possible to run all of your electrical needs in your house with 
one of these devices, and within 10 or so years, the kinks will 
be out of the technology so that it will become mobile. In 
other words, in less than 20 years, we could be operating 
vehicles with long lives with fuel cells.
    Secretary Norton. The fuel cell technology is indeed 
exciting. That is something that primarily the Department of 
Energy is pursuing. And while we would look forward to working 
with Energy on the conference that we are proposing, this 
conference would be based primarily on the public lands 
opportunity to contribute to--
    Mr. Gilchrest. I understand that. And your jurisdiction is 
the public lands and hydropower and geothermal and wind and 
solar and things like that.
    But with American ingenuity, the crossover of technologies 
from one department to another--I think it is sort of an 
American characteristic to look at other sources other just 
your area of jurisdiction.
    You may not have the authority to do that, and I don't know 
how the Secretary of Energy feels about that, but it just seems 
that some of these aquaculture fish farms out west could depend 
a little bit on geothermal and wind and solar and things like 
that.
    But the promising technology other than those would be 
interesting to build into the mix.
    Secretary Norton. We are working with the Department of 
Energy on using advanced technologies within our parks and 
within other activities that we undertake. We have alternative 
fuel vehicles in a number of our parks.
    So we are really trying to work with them to use ourselves 
as an experimental population to help in the advancement and 
development of some of these things.
    Mr. Gilchrest. Thank you very much.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    The past Chairman of the Committee, Mr. Young, has now 
joined us.
    And, Mr. Young, we would like to present to you a present, 
whether you want it or not.
    [Laughter.]
    Would you hand Mr. Young his present, please?
    I am going to tell you what it is; it is a pair of custom-
made boots and it took forever to have those made for you 
because of the odd shape of your foot.
    [Laughter.]
    But anyway--
    Mr. Young. Well, thank you, Mr. Chairman. This is indeed a 
surprise. I am a little reluctant to open them.
    I hope they are hip high--
    [Laughter.]
    --because a lot of times in these hearings, we hear a lot 
of stuff that gets over the low-cut loafers, I can tell you 
that right now.
    [Laughter.]
    The Chairman. You are in for a disappointment.
    [Laughter.]
    Mr. Young. I do appreciate this. And I will cherish them, 
wear them, and use them when they're appropriately needed, with 
the sharp-pointed toe where it really belongs.
    [Laughter.]
    Thank you, Mr. Chairman. I do appreciate it.
    The Chairman. They were made that way with that in mind.
    [Laughter.]
    And members of this Committee have chipped in to buy those 
for you.
    Mr. Young. And I hope they understand that I do deeply 
appreciate it.
    The Chairman. Okay, we thank you.
    With that in mind, Mr. Kildee?
    Mr. Kildee. Thank you, Mr. Chairman.
    And I thank you, Mr. Young, for what you do.
    Mr. Young. I deeply appreciate your contribution.
    [Laughter.]
    Mr. Kildee. In conjunction, Madam Secretary--thank you for 
being here again--with Mr. Gilchrest's question, I think it is 
very important that the departments of the executive branch do 
not operate in isolation. I am sure that you concur in that 
yourself.
    But it seems that the Department of Energy, the Department 
of Interior, and the Department of Treasury all play a vital 
role in the future energy needs of this country. And I 
certainly hope that is formalized in some way because you 
should be talking one to another because you have interrelated 
solutions, I think, to the energy needs of the country.
    As co-Chairman of the congressional automotive caucus, I am 
disappointed that the administration has been so timid on the 
question of fuel efficiency, not just CAFE standards but such 
things as tax credits for both R&D in the automotive industry, 
for alternative energy sources, tax credits for the customer 
who would purchase such vehicles, such as a vehicle with fuel 
cells.
    And I agree with Mr. Gilchrest that the future of fuel 
cells, both for mobile and stationary sources, is very, very 
promising. I have talked to some of the power companies in the 
country who indicate that some of them could have something the 
size of a refrigerator in one's backyard that, with the fuel 
cells, could produce the energy for that home.
    So I think that the fuel cells, both the for the automotive 
industry and for other sources of energy, is very, very 
important.
    But I think that we should emphasize some incentives for 
that, and tax credits are a great way to deal with incentives, 
both for the customer who purchases that vehicle and for the 
automotive industry that has to spend a great deal of money on 
research.
    We do allow some write-offs for R&D. Certain research and 
development has a great societal purpose. And I think right now 
the societal purpose of fuel efficiency is very high.
    So I would hope that you would talk with people in the 
administration and the Treasury on increasing tax credits, both 
for R&D and for the purchasers of some of the hybrid vehicles.
    I have driven hybrid vehicles, both at the Ford Company and 
General Motors and at Chrysler, which is located in my 
district. And I think the future is here, right now, with some 
of those vehicles.
    So I was disappointed that the tax bill that went through 
the House rather rapidly did not address that. But I would just 
commend you, as Secretary of Interior, to counsel with others 
in the administration, particularly the Treasury and the 
Department of Energy, to put together an energy package that 
includes with less timidity fuel efficiency and encouraging 
alternative sources.
    Secretary Norton. The President's plan does include a tax 
credit for consumers who purchase automobiles that are fuel 
efficient alternative energy types of automobiles. And so that 
portion of your suggestion is a part of the President's plan.
    There are also additional Department of Energy efforts in 
working with companies on development of new technologies. I am 
not as familiar with that portion of the plan as I am with the 
ones that deal directly with Interior. But the spirit of your 
remarks is reflected in the President's plan.
    Mr. Kildee. I appreciate that, and I hope the President 
will push that and pursue that. I wish he included that on the 
tax bill, because that was really greased up to pass, if I may 
use that term.
    But thank you very much, Madam Secretary.
    The Chairman. The gentleman from Nevada, Mr. Gibbons.
    Mr. Gibbons. Thank you very much, Mr. Chairman.
    And, Secretary Norton, welcome. Pleased to have you here 
before us today.
    And I know there are many on this Committee and throughout 
Congress who are going to criticize your organization for 
slowness in getting things done, but we understand, and I hope 
they will understand, the critics especially, that staffing 
levels have been held up by the leadership in the Senate. And 
so it is difficult to have an agency running at full speed 
without everybody on board.
    I have just two questions that I want to enter into the 
record, if I may, Madam Secretary.
    Your statement didn't mention a provision within the bill 
which is an outgrowth of a recommendation from a group 
established by your predecessor, Secretary Babbitt. It is 
called the Green River Basin Advisory Council. It consisted of 
state and local officials, environmentalists, and industry 
people.
    And one of the ideas that they came forward with was to 
allow lessees to pay for cumulative impact studies when the BLM 
lacked sufficient appropriated funds to get the job done in an 
early and timely fashion, to help remove some of the delays.
    In return, the lessees would then receive a credit against 
future royalty obligations for money they put up for third-
party prepared studies done to BLM specifications, for the BLM, 
of course.
    But the solicitor at the time, and that would be Mr. John 
Leshy, said that the Secretary lacked authority under the 
Mineral Leasing Act to grant an eco-credit. Of course, when we 
offered him the authority in legislation, Secretary Babbitt 
then declined that authority.
    Do you have any thoughts about this concept?
    Secretary Norton. The need for environmental planning and 
environmental analysis is obviously critically important to 
ensuring that we go forward with any development activities in 
an appropriate way. And it does make sense to ask that we do 
allow that money, instead of coming directly from the taxpayers 
to pay for that, to essentially be put forward by the 
applicants.
    Mr. Gibbons. One final question, if I may, we have advanced 
the idea of MMS collecting royalty in-kind natural gas volumes 
from the Gulf of Mexico leases, and perhaps some onshore 
fields, like the Powder River basin coal bed methane or the San 
Juan basin, and designing a pilot program with the HHS folks to 
actually send that product or those molecules to the LIHEAP-
approved utilities which serve low-income qualified households.
    Does the language in this bill provide you the flexibility 
necessary to do such a demonstration program?
    Secretary Norton. We have been doing some pilot testing of 
royalty in-kind already, on a more limited basis, in Wyoming, 
Texas, and the Gulf of Mexico. And we are now building on that.
    I think this bill does allow us the flexibility to do the 
type of LIHEAP program that you are talking about. And we will 
certainly work with you to make sure that it does allow that 
type of flexibility.
    Mr. Gibbons. Great. Thank you, Madam Secretary.
    Thank you, Mr. Chairman.
    The Chairman. On the Democratic side?
    Mr. DeFazio. Here, Mr. Chairman.
    The Chairman. The gentleman from Oregon.
    Mr. DeFazio. Madam Secretary, on page 2 of your testimony 
you point out that ``more than 50 percent of the President's 
plan focuses on energy efficiency, encouraging the development 
of fuel-efficient vehicles.''
    Could you please tell me, what is the measure? Is it 50 
percent of pages, 50 percent of the tax credits, 50 percent of 
the energy that we are going to capture through this plan? What 
is the measure? What is 50 percent?
    Secretary Norton. We counted the recommendations and half 
of them dealt with that.
    Mr. DeFazio. Okay, so half of them dealt with it. What 
percentage of the energy gained is going to come from those 50 
percentage of the recommendations rhetorically?
    Secretary Norton. I have not quantified that.
    Mr. DeFazio. Okay. So wouldn't that be a more important 
measure since over the last 20 years we have captured four 
times more energy through efficiency measures than increased 
production measures?
    Secretary Norton. Well, I apologize. It is a little simpler 
for us to count the number of recommendations.
    Mr. DeFazio. Right. Okay, well, at least we know what we 
are measuring here.
    I am a bit puzzled by one of the earlier questions of Mr. 
Rahall, in particular, about project labor agreements, and I 
happen to be a big supporter of them. I think they are a very 
efficient, effective way to administer projects.
    However, you said the administration has no objection to 
the Republican bill which would require only in Alaska project 
labor agreements.
    Now, I kind of wonder how that jibes with the February 17, 
2001, executive order by the President of the United States 
where he says: ``shall ensure that neither the awarding 
government authority nor any construction manager acting on 
behalf of the government shall in its bid specifications reject 
agreements, project agreements or other controlling 
documents.'' That is a special executive order rescinding the 
Clinton administration order mandating project labor 
agreements, that were ballyhooed by the President.
    I guess I have a two-part question.
    One is, you said you have no objection. Do you support 
project labor agreements in this or does the President, 
notwithstanding his earlier executive order prohibiting them?
    And secondly, if it is good for Alaska, why isn't it good 
everywhere else?
    Secretary Norton. As I said previously, this was not a 
portion of the President's plan. It was something that was 
negotiated by Congress, and we do not object to it.
    Mr. Young. Will the gentleman yield?
    Mr. DeFazio. Well, I don't have a lot of time, Don. You 
have lots of time.
    Well, I will yield to you.
    Mr. Young. I would just like to suggest to you that you 
know why it is in the bill.
    Mr. DeFazio. Yeah, because you wanted it in there.
    [Laughter.]
    Mr. Young. That is exactly right.
    [Laughter.]
    Mr. DeFazio. Okay.
    Mr. Young. I admit it, I accept it, and thank you a lot.
    Mr. DeFazio. Couldn't you want it somewhere else?
    [Laughter.]
    Mr. Young. Remember, my job is to take care of my people, 
and I am doing it.
    [Laughter.]
    Mr. DeFazio. But we would like to take care of working 
people everywhere. So if the gentleman would like to extend it 
to the lower 48, I would be thrilled to support that effort. So 
we will talk about that later.
    Further, on the issue of the Arctic National Wildlife 
Refuge exploration and drilling, I wonder if the administration 
would support restoration of the prohibition on the export of 
oil from Alaska, in supporting the Arctic National Wildlife 
Refuge exploration and drilling.
    That is, assure the people of the United States that if 
there such a crisis in the United States of America that we 
have to go into this previously wild and pristine area to 
drill, that that oil is not going to China or Japan or 
somewhere else, that that oil would remain in the United 
States, which was the law until 1996, which unfortunately was 
passed by a Republican Congress and signed by President Bill 
Clinton to allow the export of that oil.
    Would you seek or support a reimposition of the ban?
    Secretary Norton. Our primary concern is trying to provide 
energy for America's future, and our focus is trying to make 
sure that that is the audience that we are addressing, that is 
the market that we are addressing. I will be happy to get back 
to you with a further statement as to--
    Mr. DeFazio. Okay. Well, that is an encouraging first step.
    And I have legislation to reimpose the ban or the President 
could do it by executive order. So if you could take a step 
unilaterally or support legislation; that would be great.
    I was reading an interview with you and it said that ``Star 
Trek Voyager'' is your favorite television show. Is that true?
    [Laughter.]
    Secretary Norton. Yes, and unfortunately it is now off the 
air.
    [Laughter.]
    Mr. DeFazio. Well, I would just observe, Madam Secretary, 
if that is your favorite show--
    The Chairman. The time--
    Mr. DeFazio. Just very briefly, because I did yield 
generously to him. Thirty seconds? Then we should have perhaps 
a more forward-thinking energy policy. You know, the Stone Age 
didn't end because they ran out of rocks.
    [Laughter.]
    They evolved. They went on. We went to new technologies.
    And I would observe that this is mostly a petro-based 
energy policy. And really, I would like to see the 50 percent 
in efficiency and alternatives expressed in more than words.
    Thank you, Madam Secretary.
    The Chairman. The time of the gentleman has passed.
    We have two votes coming up, and the Secretary is going to 
leave. We are going to try to finish with her before we go 
vote.
    Let's do this: one question each in a hurry. Okay?
    On the majority side, you are next. Do you have a question 
for the Secretary over here?
    On the minority side?
    Mr. Faleomavaega, one question.
    Mr. Faleomavaega. One question.
    Madam Secretary, thank you for coming this morning.
    Madam Secretary, there are some 5.4 million Americans who 
depend entirely on imported fuel for their resources. And I am 
speaking mainly, as you know, of the State of Hawaii, Puerto 
Rico, the insular areas. And I don't see anywhere in the 
proposed legislation anything dealing with the energy needs of 
these areas in our country, and I would really appreciate if 
you can pursue this.
    On the question of ANWR, I would like to know what the 
position of the Native Alaskan tribes are in the State of 
Alaska concerning ANWR.
    And secondly, I would like to note also that there is a 
question about alternative sources of energy, and I don't see 
anywhere in this legislation about doing comprehensive research 
and study, especially on areas like deep ocean water energy 
resources, and I would really appreciate if you could address 
that issue.
    Secretary Norton. As to the issue of your area and Hawaii 
and the source of oil and gas, we would be happy to work with 
you further on that.
    As to ANWR, the Alaska Federation of Natives, which is a 
statewide organization, voted to support opening ANWR. There 
are native lands that cannot be used by the natives for oil and 
gas as they would like to do because of the restrictions, and 
they cannot act until Congress allows them to utilize their own 
lands.
    The Chairman. The gentleman from California, Mr. Calvert.
    Mr. Calvert. Just real quick, Mr. Chairman, I appreciate 
the time. I would encourage the members to--I will do a little 
advertising--to get on my hydrogen act bill, which is named 
after Bob Walker and George Brown, because that is the next 
energy source.
    But I just wanted to point out to the Secretary that 
California does a great job with wind, solar, geothermal; we 
probably use more of those types of energy sources than any 
other state in the union, but we still have a little problem 
that has been well-publicized.
    And we certainly appreciate your efforts to attempt to find 
fuel to get us through this next number of years until we can 
move to a hydrogen-based economy, which at some point I think 
we will get into.
    So I know many of the members here are already on that 
bill, Mr. Chairman, and I appreciate their support. But in the 
meantime, we are going to need to find additional hydrocarbon 
resources throughout the country and Alaska to get us through 
this period.
    I appreciate the time.
    The Chairman. Madam Secretary, we have a little problem 
here. We are going to have to go.
    Maybe I understand it wrong, but I don't think you can 
spend the day with us, and we have a whole bunch of other 
witnesses sitting there, who have been very patient.
    What are your druthers?
    Secretary Norton. I would be happy to accept any questions 
in writing, to reply, and to talk with members with specific 
questions, if that helps.
    Mr. Pallone. Mr. Chairman?
    The Chairman. Well, let's try--Mr. Pallone?
    The gentleman from West Virginia.
    Mr. Rahall. Obviously, we had a larger turnout on our side 
of the aisle today, and there are members, and I think they are 
entitled to their 5 minutes. Obviously, they can't do it today.
    I would ask the Chairman and Madam Secretary if she would 
be so kind as to consider a reappearance before our Committee--
I recognize schedules are tight today--at another time, so that 
our members and additional majority members will have time for 
their 5 minutes.
    Mr. Kind. Mr. Chairman, I have a housekeeping question as 
well for Madam Secretary.
    In her last appearance on June 6 before the Committee, 
testifying about the national energy policy, a lot of members 
submitted written questions.
    We were wondering if you will have an opportunity to 
respond to those important questions prior to the markup of 
this legislation, which I believe is going to take place next 
week.
    The Chairman. The gentleman is correct. We are intending to 
mark this up next week.
    Secretary Norton. Those are on their way. They were, 
unfortunately, in the OMB process. We could not deliver them to 
you in advance of this hearing. But those will be to you very 
quickly.
    The Chairman. I would suggest that the members write 
questions to the Secretary.
    Mr. Pallone?
    Mr. Rahall. Can they be answered before the markup, Mr. 
Chairman?
    Mr. Pallone. I just wanted to--
    The Chairman. It is up to the Secretary.
    Mr. Pallone?
    Mr. Pallone. I just want to ask you very quickly, at the 
New Jersey shore, which I represent, and other members, on a 
bipartisan basis, they are in an uproar over the possibility of 
offshore drilling off the coast of New Jersey and the Mid-
Atlantic.
    There have been two proposals, one from the outer 
continental shelf policy Committee and another from MMS itself 
to try to study and look into exploration off the coast of New 
Jersey.
    We now have a moratorium in place in our Interior 
appropriations bill on an annual basis. There is an executive 
order of the President, President Clinton, for a 12-year 
moratorium for the Mid-Atlantic.
    Does the administration support continuing those moratoria 
or is the administration--
    Secretary Norton. Yes.
    Mr. Pallone. You do. In both cases, both the 1-year annual 
appropriation plus the executive order?
    Secretary Norton. We don't have any proposals to take the 
moratoria off the table.
    Mr. Pallone. Okay.
    Secretary Norton. Those are currently in place, and we have 
not proposed making changes to those.
    Mr. Pallone. All right, I appreciate that.
    The Chairman. We probably have time for one quick question. 
Mr. Inslee?
    Mr. Inslee. Well, Mr. Chair, I spent 4 days in the Arctic 
refuge last week, and we have before us an issue that will 
substantially damage that, and I believe that we ought to have 
5 minutes to get our questions answered before we destroy our 
precious national resource.
    We have questions outstanding for weeks we haven't received 
back from the Secretary. I understand she has a busy schedule.
    We ought to have 5 minutes to get our questions answered 
before we take a vote to destroy the Arctic wildlife refuge.
    The Chairman. Mr. Underwood?
    Mr. Underwood. Basically, I just wanted to reiterate the 
point about the insular areas and the lack of an energy policy 
on this, and also the fact that ocean thermal energy is not 
part of your discussion or apparently not part of anything that 
you have submitted either for the record or in your 
conversation this morning.
    Secretary Norton. Thank you.
    The Chairman. We are going to miss a vote unless we recess 
right now.
    [Recess.]
    The Chairman. The Committee will come to order.
    The Secretary has agreed to take these questions, if 
members want to take their 5 minutes. That is very gracious of 
her. I think of all of the times that people have had to run 
and many of us did not get our time in.
    Madam Secretary, we appreciate you graciously staying with 
us. We know you have other things to do, but we truly 
appreciate that.
    The gentleman from Wisconsin, do you want to get your 5 
minutes now?
    Mr. Kind. Thank you, Mr. Chairman.
    And I want to thank Madam Secretary for your graciousness 
with your time and agreeing to stay and answer a few more 
questions.
    As you are aware, we are in all likelihood going to be 
going to markup on this legislation that the Chairman and 
others have introduced in this Committee. It is a very 
important piece of legislation, and I am happy to hear that you 
are going to try to expedite the response time in regard to the 
written questions we had submitted after the June 6 hearing as 
well.
    The first question I have for you, Madam Secretary, I had 
an opportunity to review your written statement that you 
submitted to the Committee for today's testimony. You had 
stated in your written statement, and I quote, ``The President 
has also proposed royalty in-kind provisions that will help us 
with the administration of your royalty in-kind program.''
    But I have had a chance to review the administration's 
report of the national energy policy development group that was 
released in May, as well as the President's legislative 
initiatives that were recently released just a couple of weeks 
ago in June, and I can't find any reference at all to royalty 
in-kind in those two major documents.
    Has the President in fact proposed that? If so, where is 
it? And can we obtain a copy of the proposal?
    Secretary Norton. I apologize. You are correct in your 
reading of that. And we did make a mistake in the written 
testimony.
    The President did include provisions for trigger prices to 
trigger that royalties would go into the LIHEAP program, but it 
did not address the royalty in-kind aspect of that.
    Mr. Kind. Just so I am clear on the administration's 
current position, are you now here endorsing the legislation 
that has been submitted, 2436, in regard to the royalty in-kind 
provisions contained in the legislation? Or hasn't the 
administration taken a position on that?
    Secretary Norton. We believe that the provisions that are 
in 2436 are consistent with the energy plan, so we are 
endorsing generally those aspects of 2436.
    Mr. Kind. I am a little confused because I was part of the 
bipartisan group that went down to the White House just a 
couple of weeks ago to have a conversation with the President 
and Vice President in regard to the energy policy.
    During that meeting, Representative Rahall directly posed 
that question with the President, and he at the time indicated 
that they weren't moving forward on any proposal regarding 
royalty in-kind. He gave that assurance to Representative 
Rahall.
    Now, is this a reversal in that policy position in 
endorsing the legislation that has been submitted and we will 
be marking up next week?
    Secretary Norton. I am not aware of what the statement was 
that was interpreted in that way.
    Mr. Kind. Well, perhaps we can follow up and just get some 
clarification from the administration on that provision in 
particular.
    I don't know, Madam Secretary, if you had an opportunity to 
review the article that appeared in the Wall Street Journal 
yesterday titled ``How Many Inspectors Make Safety Checks in 
Alaska's Oil Fields? Answer: Only 5 and That Worries Some 
People as Bush Backs Drilling.''
    I think it an very important article in the fact that it 
raises so many substantive issues in regard to our ability to 
go into Alaska generally and the Arctic National Wildlife 
Refuge specifically and be able to extract these resources in a 
environmentally friendly way, in a clean fashion, which the 
administration touts as feasible and possible.
    Yet this article, which I would ask unanimous consent to 
submit for the record at this time, Mr. Chairman, without 
objection, raises some very important questions.
    [The article follows:]
                        THE WALL STREET JOURNAL.
                              july 11,2001
fueling controversy: how many inspectors make safety checks in alaska's 
                              oil fields?
    answer: only five, and that worries some people, as bush backs 
                 drilling; legislature trusts industry

                             By Jim Canton

    DEADHORSE, Alaska--As Congress begins debate this week on President 
Bush's proposal for expanded oil drilling here on Alaska's North Slope, 
concerns about safety are intensifying.
    On April 15, a corroded pipeline spilled roughly 100,000 gallons of 
crude oil and saltwater onto the delicate tundra. Crews working in 
below-zero conditions plugged the leak in 12 minutes--but that was long 
enough to poison vegetation across an area the size of two football 
fields.
    Alaska's 25-year-old oil infrastructure is showing its age, just as 
a new energy boom is poised to hit the state. The problem stems from a 
combination of industry and government behavior: As North Slope wells 
have been steadily depleted in recent years, oil production has 
declined, and energy companies eager to cut costs have held back on 
much-needed investments in replacement parts and equipment. Alaska's 
legislature, meanwhile, eager to please the industry, has gutted the 
state agencies responsible for regulating oil-field safety. Indiana, 
which takes a full year to produce the amount of crude oil that Alaska 
pumps in three days, employs nine oil-field safety inspectors. Alaska 
has five.
    ``By and large, we are distrustful of big government up here,'' 
explains State Rep. Eldon Mulder, the Republican co-chairman of 
Alaska's House Finance Committee and a key hand in the killing of 
proposals for more-stringent regulation. Slumping production has hurt 
the state economy and should be cured by more drilling, he says. And, 
he adds, ``the industry has done a good job regulating itself.''
    Others are more skeptical. Although the state hasn't had a 
catastrophic oil spill since the Exxon Valdez incident in 1989, critics 
of the industry, including some who work in it, say danger signs 
abound. The 100,000-gallon spill in April, at a Phillips Petroleum Co. 
field called Kuparuk, was just one of 50 modest-size and small spills 
attributed to pipeline corrosion and other wear and tear in the past 
five years, Alaska regulators say. Yet the industry consortium that 
runs the vast oil field beneath the North Slope and Prudhoe Bay--North 
America's largest--says it has slashed maintenance spending by 10% this 
year, to about $100 million, after years of holding the level roughly 
even.
    A page one Wall Street Journal article in April reported that oil-
rig technology touted by President Bush as environmentally friendly and 
central to his expanded drilling plans has malfunctioned at rising 
rates in the past five years on rigs in western Prudhoe Bay. These 
technological problems, such as failures in spot checks of emergency 
shut-off valves, are all the more worrisome because of the state's 
relatively light regulation and reduced maintenance by the industry. 
Federal authorities in Alaska delegate most responsibility for the oil 
industry to the state.
    If the safety valves on some rigs fail in a real emergency, as much 
as 3.5 gallons per second of crude oil could gush into the ecosystem. 
``These valves are meant to protect against catastrophic failure,'' 
says Lou Grimaldi, one of the five state oil-safety inspectors. 
``They're absolutely crucial.''
    Industry officials acknowledge they have had maintenance problems 
in recent years but say the troubles are being addressed and pose no 
safety risk. ``This place is safe and getting safer,'' says George 
Blankenship, Prudhoe Bay manager for London-based BP Amoco PLC, which 
operates the field for the consortium. Other BP officials add that this 
year's maintenance-spending cut reflects expected consolidation after 
BP's 1998 acquisition of Amoco Corp., which had operated part of the 
Prudhoe Bay field.
    The Bush administration's call for more drilling responds to a 
projected shortfall of 7.5 million barrels of oil per day in the U.S. 
over the next 20 years. Environmentalists counter that stepped-up 
conservation could cover any shortfall. But the White House maintains 
that more fuel is needed and singles out Alaska as a particularly rich 
source of reserves.
    The administration's most controversial proposal--to allow drilling 
in the North Slope's pristine Arctic National Wildlife Refuge--was 
probably doomed by the Democrats' recent takeover of the Senate. But 
with White House encouragement, industry is gearing up for expanded 
exploration and production in other parts of Alaska where congressional 
permission isn't required.
    A unit of Phillips Petroleum, for example, recently struck oil in 
three large fields in the National Petroleum Reserve, a 23-million-acre 
area west of Prudhoe Bay in which the White House directly controls 
drilling. Wells are being drilled in the Beaufort Sea, as well as Cook 
Inlet near Anchorage. State officials also want to build an 1,800-mile 
pipeline to transport natural gas from the Arctic, through Canada, to 
the lower 48 states--a plan that would raise concerns about potential 
pipeline explosions and fires.
    Some Alaskans wonder whether the state's creaking pumps and 
pipelines, and the skeletal staff of regulators who oversee them, can 
handle a fresh oil boom. ``The people doing the job now are stretched 
far too thin,'' says Democratic State Rep. Ethan Berkowitz, minority 
leader of the Alaska House.
    The state legislature's parsimony during the past decade has left 
Alaska's oil industry with less safety oversight than many states that 
produce a fraction of Alaska's output. Indiana, for one, pumps 2.5 
million barrels of oil a year, compared with Alaska's current level of 
400 million annual barrels, which amounts to 20% of the nation's 
domestic oil supply. Alaska spends about $3 million a year to monitor 
oil-field safety. Indiana spends $1.4 million, deploying its nine 
inspectors mostly across a 480-square-mile oil patch. The five 
inspectors employed by Alaska's Oil and Gas Conservation Commission, by 
contrast, oversee wells spread across 1,000 square miles of icy 
emptiness.
    California, which produces about 300 million barrels of oil a year, 
has 40 oil-field safety inspectors. Canada's Alberta province, which 
produces 700 million barrels a year, has 110. But the stakes are much 
higher on Alaska's North Slope, where the typical well gushes 750 
barrels a day, far more than wells in these other places.
    Overwhelmed by its task, Alaska's tiny inspection cadre has 
abandoned the technique, used by its counterparts in some other states, 
of making surprise visits. The Alaskan inspectors schedule their 
arrival at drill sites ahead of tine.
    ``There is no question that the legislature has done a very myopic 
job in terms of environmental responsibility,'' says Alaska Gov. Tony 
Knowles, who is a Democrat but generally a strong industry backer. 
Alaska's Republican-controlled legislature, the governor says, has 
mounted a dangerous budgetary ``attack'' on the state's safety 
agencies.
    Take the Alaska Department of Environmental Conservation, the 
state's pollution watchdog. Its budget has been reduced by 55% since 
1991--more than triple the 15% decline in Alaska's overall state 
spending during that period due to lower oil revenues. In December, the 
department's staff, worried that aging gear on the North Slope and 
elsewhere could cause a major spill, petitioned lawmakers for a 
$500,000 grant to monitor pipeline corrosion and study spill-prevention 
techniques.
    As it happened, the legislature was considering the request in 
April when the Phillips Petroleum pipeline burst at the Kuparuk field. 
Although the level of damage is still being studied, scientists with 
environmental groups say that sludge and seawater killed surface plants 
and thawed underlying permafrost, making it unlikely the vegetation 
will ever fully recover. ``Migratory birds also suffer, because even a 
drop of crude on their eggs can cause them not to hatch,'' says Pamela 
Miller, an environmental consultant in Anchorage.
    Still, the legislature rejected the department's request, siding 
with industry lobbyists who argued that oil companies were capable of 
monitoring pipeline corrosion themselves. ``There appeared to be a 
certain amount of duplication'' between the industry's efforts and the 
department's request, Republican State Rep. Loren Leman, majority 
leader of the Alaska Senate, says in an interview.
    Lawmakers did appropriate $3.6 million to help fund an industry 
lobbying campaign on behalf of Mr. Bush's proposal to drill in the 
Arctic wildlife refuge. ``There's nothing to oversee if there's nothing 
coming out of the ground,'' says State Rep. Mulder, explaining 
lawmakers' preference for lobbying over safety spending.
    The oil industry generates two-thirds of Alaska's revenue and 
provides annual royalty payments of thousands of dollars for each of 
the state's roughly 500,000 citizens. The drop in oil revenues in the 
early I 990s hit Alaska hard, forging strong political will to boost 
production. Michele Brown, commissioner of the state's Department of 
Environmental Conservation, says, ``The legislature doesn't care for 
our mission. 
    The paucity of resources makes it hard for Alaska's oil-safety 
inspectors to do their job. Stretched by the state's vast terrain and 
its 3,500 wells, the five inspectors say they schedule their field 
tests with the oil companies to ensure that inspectors don't travel 
hundreds of miles only to discover that necessary personnel or 
equipment aren't around.
    Lost is the element of surprise that regulators in some other major 
oil-producing states swear by as the crucial component in keeping oil 
companies honest. ``You want to make sure that what's going on in the 
field is what you-think it is,'' says Philip Asprodites, Louisiana's 
commissioner of conservation. His staff of 35 inspectors runs surprise 
safety checks on oil rigs in the Gulf of Mexico.
    Instead, Alaska's safety regulators operate on trust, often 
established between inspectors and industry employees over years of 
working side by side in the state's desolate reaches.
    On a snowy day on Prudhoe Bay, Mr. Grimaldi, one of the five 
inspectors, watches a BP Amoco roustabout adjust pressure gauges inside 
an instrument shed, simulating a leak that instantly shuts down the oil 
well beneath them. The valves work flawlessly, as well they should: The 
valves just underwent their regular tests by the company, which also 
knows the inspector has a journalist in tow.
    Despite the close coordination with the company, Mr. Grimaldi says 
BP wouldn't rig a test by fiddling with equipment before he arrives. 
``The No. I thing these guys have going for them is we can trust 
them,'' he says. BP's supervisor on hand for this day's test is Merv 
Liddelow, whom he has known for many years and with whom he once worked 
at another company.
    At the reporter's request, Mr. Grimaldi makes an unscheduled check 
of a BP rig with a troubled history, known as G pad. Nearly a third of 
this platform's safety-valve components flunked a state test in March. 
It passed a scheduled retest in April, and this time, without prior 
warning to the company, it passes again.
    Out of the inspector's earshot, however, a BP Amoco worker, who 
declines to be named for fear of retaliation, says maintenance crews 
were dispatched to G pad the night before the scheduled April retest to 
assure everything was working well. When valves on one well continued 
to fail, that well was shut down--and was therefore bypassed by the 
state inspector the next day, the worker says.
    A BP spokesman confirms the company performed its own preparatory 
maintenance on the eve of the inspector's visit in April. But the 
spokesman adds that the company was merely taking steps to head off any 
more safety-valve problems. He says the bypassed well, were it 
operating, would not have significantly affected G pad's overall 
success rate.
                                 ______
                                 
    Mr. Kind. And they highlight in the article that there are 
only five oil safety inspectors currently working in Alaska, 
whereas the State of Indiana, which produces oil over a year 
equivalent to the amount of oil produced in just 3 days in 
Alaska, has nine inspectors.
    And obviously, the question arises, is there sufficient 
safety programs or safety inspectors in place right now in the 
State of Alaska in order to address some of these safety 
concerns? What is your opinion?
    Secretary Norton. First of all, we would intend to have 
however many inspectors it takes to ensure that we have not 
just appropriate standards in place, but also compliance with 
those standards.
    Second, I think it is important to recognize that the North 
Slope is a little different than other areas, and some of the 
comparisons in that article are not quite correct. I would be 
happy to provide you with the specific information.
    But having visited there, I think there are 20 or 25 sites 
where production takes place on the North Slope compared to 
probably thousands of sites in a state in the lower 48 that is 
in production. And so, in terms of being able to inspect on 
site-by-site basis, per amount of oil produced, that is not an 
appropriate measure. It really is the facility itself that 
needs to be--
    Mr. Kind. And I am not sure about the accuracy of the 
report in the Wall Street Journal yesterday, but one of the 
troubling features of it, it indicated that State Legislature 
in Alaska has actually appropriated more money for lobbying 
purposes here in Washington to drill in the Arctic National 
Wildlife Refuge than they are appropriating for safety 
inspection programs in the State of Alaska.
    If that in fact is true, then I think there is more work 
that we should be doing together in order to beef up the safety 
inspection teams in Alaska, given the amount of production that 
is currently taking place in some very valuable lands.
    The Chairman. The time of the gentleman has expired.
    Mr. Kind. Thank you, Mr. Chairman.
    The Chairman. Mr. Pallone and Mr. Faleomavaega each have--
    Mr. Faleomavaega. Four more minutes.
    The Chairman. You get 4 more minutes and then Mr. Pallone 
and then we will--
    Mr. Faleomavaega. I didn't use more than a minute.
    The Chairman. Mr. Pallone?
    Mr. Pallone. Well, I am not going to use all 5. But I just 
wanted to ask a question about two American Indian issues that 
have come up in the context of energy.
    You are probably familiar with Weatherman's Draw in 
Montana. This is also known as the Valley of the Chiefs. It is 
a sacred site to Native Americans.
    And I know that the Sierra Club and about 10 different 
tribes have basically appealed to you, to the Secretary's 
office, because of the fact that drilling has been allowed 
there. Exploratory wells are being drilled, and they are very 
much opposed to this.
    And they also feel very strongly that not only shouldn't it 
happen because it is such a sacred site, but also that there 
was no consultation with the American Indians, with the tribes 
that consider this a sacred site.
    And I just wondered if had reviewed this, if we could you 
to be supportive of not allowing drilling there, or at least 
have some consultation with the tribes.
    I know that the Blackfeet Tribe were here a couple weeks 
ago with our Ranking Member Rahall and had actually proposed 
that they could lease part of their reservation instead of the 
sacred site.
    And I just wondered if you could comment on any of that, 
Madam Secretary.
    Secretary Norton. It is my understanding that there have 
been discussions about an exchange like that, that would avoid 
the Weatherman's Draw site and that would take place on a 
private basis. That is an issue that we are continuing to 
monitor. It is on our radar screen at this point.
    Mr. Pallone. Would you be willing to play a role, though, 
in trying to work that out?
    Secretary Norton. To the extent that it is appropriate, my 
department at least certainly would be playing a role. We need 
to look at what we can do while it is in an appeal process.
    Mr. Pallone. Okay.
    Secretary Norton. It was my understanding that there was at 
least a statement made that the company was not planning on 
going forward with any activity in that area--
    Mr. Pallone. Well, they are doing--
    Secretary Norton. --in a significant--
    Mr. Pallone. They are doing exploration.
    But if you are willing to have the department work 
something out, I would appreciate that. I think that is what 
you are saying, that you are willing to have the department try 
to work it out if possible.
    Secretary Norton. We are certainly willing to try to work 
something out.
    Mr. Pallone. Okay.
    Let me ask another thing. Under the 1992 Energy Policy Act, 
you were authorized as Secretary to request funding for 
American Indian renewable energy projects. And given that there 
is such a potential for renewable clean energy products by 
tribes, are you going to have any funding or be seeking any 
funding for the American Indian renewable energy project? And 
what is the department's plan to help tribe develop their 
renewable resources?
    Secretary Norton. My new Assistant Secretary for Indian 
Affairs was just confirmed a week before last. And in my first 
meeting with him, I asked him to look at working with tribes on 
energy issues, and that is part of what we would like to 
consult with the tribes about.
    Mr. Pallone. Could we, as members of the Committee, myself 
or others, follow up with that a request a meeting with him to 
talk about what is going on in those areas?
    Secretary Norton. Certainly.
    Mr. Pallone. Okay. I appreciate it.
    Thank you, Mr. Chairman.
    The Chairman. I thank the gentleman.
    Apparently, the word in Wall Street Journal upset the folks 
in Indiana, and they have written me a letter refuting most of 
that, signed by Mr. Slutz, James A. Slutz, Director of the 
Division of Oil and Gas. I will submit that for the record for 
your perusal.
    [The Letter from Mr. James A. Slutz, Director, Division of 
Oil and Gas, Indians Department of Natural Resources, follows:]
[GRAPHIC] [TIFF OMITTED] T3674.003

    The Chairman. The gentleman from American Samoa, you have 4 
minutes left.
    Mr. Faleomavaega. Thank you, Mr. Chairman.
    Madam Secretary, I can fully appreciate the complexity of 
so many of the areas in your responsibility and the issues that 
you take within the Department of Interior.
    It has come to my attention that at a recent hearing held 
at the other body, my good friend, the good Senator from 
Hawaii, Senator Akaka, raised some questions with a couple of 
your subordinates concerning insular areas, and they knew 
absolutely nothing about territories, which is part of your 
jurisdictional authority.
    I am a little concerned. And maybe perhaps at some time 
later your subordinates who do have direct administrative 
authority over these areas as assistant secretaries will meet 
with those of us who do represent the insular areas. And that 
would really be helpful to us so that we will know exactly who 
to talk to when we need to get some results or things on the 
issues that we are concerned about within the department, if 
that is all right with you.
    Secretary Norton. I would be happy to do that. We have our 
incoming Assistant Secretary for Policy Management and Budget 
that is pending confirmation, and she would be the appropriate 
person for you to speak with.
    I did work on those issues myself when I was at Interior 
previously and have met with a number of people from the 
territories, and look forward to working with you and others in 
the future.
    Mr. Faleomavaega. As a followup of the question that I had 
raised earlier--it was so quick that I didn't even have a 
chance to elaborate on this--as Mr. Underwood had indicated 
earlier also, but the question of deep ocean water as an 
alternative source as energy technology.
    This technology was developed with one of our most noted 
nuclear scientists, Dr. John Craven, out in the State of 
Hawaii. And I wanted to know if the administration if willing 
to commit resources to do this study, even in a more 
comprehensive fashion so that perhaps this is another area that 
our nation can look into, not just for the insular areas where 
we have the Pacific Ocean, but certainly coastal states where 
there is deep ocean water in which this kind of technology can 
also be utilized.
    Will the administration be willing to entertain possible 
amendments to look into this area?
    Secretary Norton. I would be happy to talk with the 
Secretary of Energy. That may well fit under some of the 
existing research type of programs that are already part of our 
package.
    Mr. Faleomavaega. As another followup on the question, 
Madam Secretary, of ANWR, there was a recent lead article out 
of the L.A. Times questioning some of the real concerns of the 
native Alaska tribes on the development of ANWR, and I 
understand also that the Gwich'in tribe is probably the most 
directly impacted because of their tribal dependence so much on 
the caribou and the life structure and how this tribe also 
meets their basic needs. It is my understanding this tribe has 
never asked for any royalties on anything dealing with oil, as 
opposed to other tribes.
    Have you had an opportunity to talk to the leaders of the 
Gwich'in tribe, Madam Secretary, on this issue?
    Secretary Norton. In my most recent visit to Alaska, I 
spent several hours--I visited one of their villages, Arctic 
Village, and spoke with the leaders of the Gwich'in tribe. They 
do not have royalties from their lands. They have leased 
apparently in the past, but there was no finds of petroleum on 
their lands.
    The tribe that is in the Coastal Plain, I have also met 
with them, with the residents of Kaktovik, and they do desire 
to have development.
    I would like to continue working with both groups of 
natives to try to address the concerns of both groups.
    Mr. Faleomavaega. Do you honestly believe that this 
proposal does address seriously not only the environmental 
concerns but that the development of ANWR can be done in a safe 
way in a similar fashion when we developed the Alaska pipeline 
system? Is this your basic position?
    Secretary Norton. I believe it is. We see 25-year-old 
technology in parts of Prudhoe Bay and yet the caribou herds 
have increased. And we can go forward with environmentally 
responsible technologies.
    Mr. Faleomavaega. Thank you, Mr. Chairman.
    Thank you, Madam Secretary.
    The Chairman. On the majority side? Questions for the 
Secretary?
    Mr. Peterson?
    Mr. Peterson. Welcome. I look forward to working with you.
    I was reviewing your statement. I just got here, so I 
missed most of the discussion.
    But I agree with you that there is no silver bullet to this 
issue, that we really have to do a lot of things if we make 
energy abundant, because we will solve the energy problem when 
people have choices of energy and they can use the most cost-
effective one, in my view.
    And that is not really out there today. We have a lot of 
people locked on one or two kinds of energy, and they rise or 
fall or their business flourishes or dies because of the cost 
energy.
    I just quickly made a list here of what I think needs to be 
a part of it. Of course, conservation first, and then hydro, 
geothermal, fuel cells, wind, solar, gas, improved access to 
gas, oil, coal, and nuclear.
    I mean, I think if we leave any of those out, in my view, 
we are short-changing Americans for a strong energy future 
because the future of energy will depend on the success of this 
county. Do you agree with that overall philosophy?
    Secretary Norton. Very definitely. And I think that is 
consistent with our plan.
    Mr. Peterson. The one that concerns me, I guess, is that we 
find Congress is willing to lock up one land after another. I 
guess I am not sure there is a place we should drill or explore 
that will be agreed to by everybody, but it appears to me that 
we have a lot of naysayers in Congress who are seemingly 
willing to lock up every piece of property they can to future 
energy availability.
    But the one that bothers me is the--for the short term; 
this is not a long-term problem, but for the short term, the 
dependence on natural gas for power generation I think has some 
huge negative problems, can bring on some huge negative 
problems, if we cannot get enough gas into the pipeline to keep 
costs from exploding even further.
    In my district, home heating last year increased from 100 
to 135 percent. And it looks like it might even be more 
difficult next year.
    That had a huge impact on this country's economy because 
that money immediately came out of the holiday Christmas 
spending. When you have costs driving up, when you have home 
heating costs up, you have business operational costs up that 
dramatically, you have a huge impact on businesses, you have a 
huge impact on our seniors who are trying to stay in their 
homes in the north; I come from the Northeast.
    So I am concerned the overdependence on gas with the 
inability to transport gas because of pipelines and the 
inability to drill for enough new gas quick enough--because 
every power plant we hook up, 95 percent of them, I am told, 
are gas, and everyone of them, it takes a lot of gas wells to 
fill that high-pressure line that is going to supply that power 
generation.
    And if we want to negatively impact America's economy, you 
raise home heating costs and business costs drastically again 
next year, and you are going to have a potential of a very 
negative impact on our economy.
    Secretary Norton. We chose as a nation to approach natural 
gas as one of our main sources because of the air quality 
benefits. And we continue to recognize those air quality 
benefits.
    One of the reasons for having a comprehensive approach is 
to look at both supply of natural gas and whether there are 
alternatives that can, with some adjustments, provide the same 
kinds of air quality benefits as well.
    So we want to look at both of those kinds of approaches, so 
that we have both the supply to meet our needs as well as a 
diverse range of sources.
    Mr. Peterson. Well, the charts I guess that have scared me 
are the charts showing natural gas entering the system in the 
next year is a shorter curve than gas being consumed for power 
generation, which is something we normally didn't do in this 
country. We sort of saved gas as that clean home heating fuel.
    You know, I just lost a major business. Their energy costs 
last year, they did not lock in gas prices, and their prices 
went from $3 a thousand to $10 and $12 a thousand last winter. 
I am losing that business. It cost them $2 million in energy 
costs unanticipated, a $2 million increase.
    So I am losing it. And I know a lot of other businesses 
that had to shut down temporarily during the winter.
    You talk about fertilizer factories, sold their gas because 
they made more money than making fertilizer.
    I don't think people realize how dependent--something that 
happened a few years ago--the tank bill, the underground tank 
bill, where we removed all the underground tanks. A lot of my 
businesses had the ability to use fuel oil or gas. And when 
they removed their underground tank, gas was all-time world 
cheap, so they didn't put in tanks.
    They no longer have that dual capacity. And so they were 
stuck.
    Companies that had dual capacity last year immediately 
kicked into fuel oil, because it was cheaper. But those who did 
not have that chance to alter were stuck on gas.
    My concern in the short term is that it can impact our 
economy with huge spikes. If we have huge spikes again next 
winter, we are really going to put the hurt on seniors and on 
businesses who depend on high usage of gas.
    And I guess that is one of the concerns. If anybody has 
added up how much we are adding to the system and how much new 
gas we are putting into the system, and do those numbers meet. 
I am afraid they don't.
    Secretary Norton. We share those concerns.
    Mr. Peterson. Okay.
    The Chairman. The time of the gentleman has expired.
    Mr. Smith or Mr. Inslee, which one of you?
    Mr. Smith is recognized for 5 minutes.
    Mr. Smith. I just wanted of follow up a little bit on Mr. 
Peterson's questions, also Mr. DeFazio's questions, because I 
do have some sympathy for the administration's position in 
terms of drilling for natural gas or oil, in the sense that we 
can't just close off the entire country. I think we need to 
have a more serious examination of weighing the options, what 
makes on spot better than another.
    I think right now one side is saying drill everywhere, the 
other side is saying drill nowhere, and I wish we could come to 
sort of a list of principles, ``Here are the goals that we want 
to achieve.''
    The thing that I find most disturbing about the 
administration's position now sort of follows up on what Mr. 
DeFazio was asking about earlier, about how it is being 
portrayed that half of the energy plan focuses on energy 
efficiency and renewable sources. But it really, at this point, 
is just half of the rhetoric, maybe even two-thirds of the 
rhetoric.
    But that doesn't really do much for us, because if you are 
going to seriously improve options like wind or fuel cells or 
energy efficiency, there are really three ways to do it: one, 
invest heavily in R&D in any one of those areas; two, give big 
tax credits to people to use those technologies; or, three, 
fairly aggressively set standards on the things that use the 
energy--for instance, electric motors, set a standard to have 
the highest energy efficiency required on selling of electric 
motors.
    And when I look at the budget, at what has been proposed--
well, first of all, given the fact that we just passed the tax 
cut that has grown a little bit even since we past it, and 
there was nothing in there, tax credits for energy, I wonder 
where we are going to find the money, even if all of a sudden 
there is a new found commitment to do anyone of those things.
    But in looking at it, other than rhetorically, where is the 
support for these programs. Because if we don't make the 
investment or push it, it is not going to happen.
    So I guess, how are we planning actually implementing the 
rhetoric on alternative sources of fuel and increased energy 
efficiency without that significant investment? And where are 
we going find the money?
    Secretary Norton. We are looking at a number of different 
kinds of things, both within my Department and across the 
Administration. I think if you will look at the recommendations 
that we have made, you will see that there are many of those 
that do deal with conservation.
    In my Department, we are going ahead with steps to look at 
geothermal leasing, at solar areas that might be leased, at 
wind energy areas so that we can move forward with those kinds 
of things--
    Mr. Smith. Specifically.
    Secretary Norton. --through our planning process.
    Mr. Smith. I mean, it is awful easy to make a 
recommendation that, ``We should use more wind. We hope we 
do.'' But, okay, how? What is the recommendation? And if it 
costs a significant amount of money, how are we planning on 
funding it, since it is certainly isn't in the President's 
budget that he submitted?
    Now, he is talking about it a lot, but in the budget that 
we are working our way through, it is not there. So I guess, 
what are the specific recommendations and what is the specific 
plan for implementing it?
    Secretary Norton. There are a number of Department of 
Energy programs dealing with alternative energy research and 
development.
    From my Department's perspective, what we need to look at 
is whether we have obstacles in the way to geothermal and to 
solar and wind development. That is why we are bringing 
together those people who are actually involved in that 
industry to work with us and help us discover if there are some 
of those obstacles that we can work on.
    The inventory that is suggested in H.R. 2436 is something 
that would allow us to move forward with that, and to see what 
we can do to make that a realistic contributor to our energy 
needs.
    Mr. Smith. That really doesn't help me at all. It is okay; 
I appreciate the answer to the question. But basically, in sum, 
it is: We are going to take a look at it, and we hope to figure 
it out.
    And it just doesn't seem good enough. I mean, there are--
you are right--very specific programs that have been around for 
years, for that matter. Many of them very helpful.
    And I suppose part of it has to be a winnowing process of 
which ones are working, which ones aren't. But another part of 
it has to be saying, ``Here's the money. Here's what we are 
going to do.'' And that is what I find noticeably absent from 
the administration's plan at this point, other than cranked up 
rhetoric about how much we like energy efficiency and renewable 
sources.
    It takes more than rhetoric to make this happen. And I hope 
we can take those steps forward.
    Thank you, Mr. Chairman.
    The Chairman. The gentleman from Nebraska, Mr. Osborne.
    Mr. Osborne. Thank you, Mr. Chairman.
    Thank you, Madam Secretary, for your testimony today.
    It has already been touched on briefly in the discussion of 
natural gas, but one of our major concerns in farm country has 
been fertilizer and natural gas supply. And I noted in your 
testimony that you mentioned that roughly 74 percent of the 
untapped or unrealized reserves are on Federal properties.
    Could you be a little bit more specific, flesh that out a 
little bit? Because as far as the farm economy is concerned, 
people kind of ignore it, they forget about it, but this has 
been a huge impact. The fertilizer costs have doubled and 
tripled. And with farmers, it has just been almost impossible 
to make any kind of profit.
    So this is a critical issue. And as was mentioned earlier, 
it doesn't look like it is going to get any better very soon.
    So we appreciate all you can do. But if you could flesh 
that out a little bit, I would appreciate it, as to where those 
resources are and what are the probabilities that we can have 
fairly quick access to them.
    Secretary Norton. I would be happy to provide you with some 
of the specifics about where those resources are located. One 
of the areas that we may be looking toward is having a gas 
pipeline bring North Slope gas production to the lower 48. And 
that is a large resource that would soon be available to us 
even from the existing Prudhoe Bay areas.
    Mr. Osborne. Mr. Chairman, I yield back my time.
    The Chairman. The gentleman from Washington, Mr. Inslee?
    Mr. Inslee. Thank you, Mr. Chair.
    Madam Secretary, thank you for coming back. We appreciate 
it.
    I just spend 4 days last week with the caribou and the 
plovers and the mosquitoes, and I learned some things.
    And one of the things I learned about is a fellow named 
Clarence Rhode, who used to work for the Department of Interior 
in the 1950's. Mr. Rhode was one of the people who had the 
vision for the Arctic National Wildlife Refuge way back in the 
1950's, and he saw that some day there would be an attempt to 
encroach in this area, which was pretty perspective of him.
    He died on August 21, 1958, when he was ferrying people 
around, doing scientific research about the caribou herd and 
the like in the Wind River drainage, and he crashed into a 
mountain.
    And I am here to say that we are going to speak for his 
vision, to not allow that vision to be shattered now, 43 years 
later, for several reasons.
    One: I have seen that country and there is one thing I can 
tell you for sure. After I went to Prudhoe Bay and the Aichilik 
River on the refuge, I know Prudhoe Bay and Prudhoe Bay is not 
a wildlife refuge. It is a wonderful production facility, but 
it would be shattering the vision of many people in the 
Eisenhower administration who had the foresight to recognize 
how unique this entire ecosystem is--entire ecosystem, meaning 
it is not just the caribou, it is the entire ecosystem.
    This is the largest intact ecosystem in America, and that 
is the site that the administration wants to drill on.
    What I saw on Prudhoe Bay was a honeycombed area over a 100 
miles, honeycombed with oil production facilities, pipelines, 
gravel roads, and ice roads that do leave a track on the 
tundra, because I saw them with my own eyes. They are still 
there.
    And it is disturbing to me that the administration ignores 
its own science, of the U.S. Government.
    In 1995, the Fish and Wildlife Service did a study on this, 
and they concluded, quote, ``Full development of the Coastal 
Plain would result in the irretrievable loss of the wilderness 
character of the area. The refuge, including the Coastal Plain, 
is a world-class natural area.''
    Continuing, ``Full leasing and development of the refuge 
Coastal Plain would have a major impact on the Porcupine 
caribou herd. Research indicates that displacement of the herd 
to the foothills south and east of the 1002 area would subject 
the herd to the area of highest predator density, reduce the 
amount and quality of preferred forage species available during 
calving--this is the maternity ward for the largest caribou in 
North America; that is my language--``and restrict access to 
important coastal insect relief habitat.''
    To me, it is stunning when the science recognizes--and I 
keep hearing about the central herd increasing. The central 
herd has 100 miles of Coastal Plain to deal with. You can 
displace the coastal central herd with a couple of buildings; 
it doesn't hurt it. The Porcupine herd--and you know this, 
because you have been there--has only 25 miles of coastal 
plain, has one-fourth area involved in the calving area.
    And that is why this research has been stunningly, I think, 
dramatic, in saying that we run a risk of damaging this intact 
ecosystem.
    I am also disturbed that the vision of the Gwich'in people, 
who live with the caribou, who have put solar panels up in the 
Arctic Village to run their washroom, isn't a vision shared by 
this administration, because a fair statement is, for every 
drop of conservation, for every drop of research in new energy, 
there are 55 gallons of money for the oil industry.
    And as I understand your proposal, and I need you to 
correct me if I am wrong, and the legislation that is proposed 
here, the only money you get for research of these new 
technologies that the Gwich'in people themselves are using in 
the Arctic Village is if we agree to this blackmail of agreeing 
to drill in the Arctic refuge.
    That doesn't sit well with us, to say you don't do research 
unless you agree to destroy the largest, most intact ecosystem 
in North America. That doesn't sit well.
    Finally, I am very disturbed that 2 years after the 
pipeline explosion in Bellingham, Washington, that killed 3 
children, a year-and-a-half after a New Mexico explosion 
killing several people in New Mexico, at the same time that the 
administration wants to open up hundreds of miles of new 
pipelines in the Arctic refuge, we haven't seen the 
administration push one inch for improving pipeline safety in 
this country.
    And let me tell you why that is necessary. I was in the 
control room of the Endicott drilling facility up on the North 
Slope on Prudhoe Bay. And I was talking to a really nice fellow 
who operates the entire production facility at Endicott.
    He sits there with these computer banks. He turns the well 
on and he turns the well off. And if there is a leak, he is 
supposed to know what to do.
    I asked him about the Office of Pipeline Safety and the 
instruction he had from the Office of Pipeline and Safety and 
the certification and the testing and the information. He had 
never heard of the Office of Pipeline Safety.
    The Chairman. The time of the gentleman--
    Mr. Inslee. We need this administration--and I would just 
like to give you, if want to comment on any of the things I 
have said, I would appreciate your perspective. If I am 
inaccurate in any of my assumptions, I would like to know.
    The Chairman. Would the Secretary like to respond?
    Secretary Norton. The approach that you have described is 
not the kind of approach we want to utilize. We have involved 
the scientists of the Fish and Wildlife Service in our 
proposals, in going forward with exploration in the ANWR area.
    The Coastal Plain is not even where the calving occurred 
this year, as I am sure you know from having visited Alaska 
this year. The herd calved in Canada and did not rely on the 
Coastal Plain at all, and that has been the case in the past.
    We believe that we can go forward and still allow that 
caribou herd to flourish, as well as to protect the rest of the 
wildlife and other resources in that area. We will maintain 
high standards to do that.
    Mr. Inslee. If I can just make one comment, Mr. Chairman, 
in response to something the Secretary said?
    The Chairman. Briefly.
    Mr. Inslee. You are correct that the calving that occurred 
in the migration route this year is an aberration which occurs 
about every 15 to 20 years. And they had twice the calving 
mortality as a result of that, because these calves take place 
right here in the 1002 area.
    The traditional and typical calving area, where the calves 
spend their very first days of life, is right here in the 1002 
area where you want to put a major oil production area. We 
think that is wrong.
    And thank you for staying to take our questions. I 
appreciate it.
    The Chairman. The gentleman's time has expired.
    The gentleman from Montana.
    Mr. Rehberg. Thank you, Mr. Chairman.
    And welcome, Secretary Norton. Thank you for being here.
    And I want to congratulate you and applaud you for your 
resolve in trying establish a meaningful energy policy in spite 
of the opposition that seems to be occurring in the United 
States Congress.
    My question is specific to the Missouri Breaks.
    And I defy anybody on this Committee to fly over the 
Missouri River and locate the natural gas pipeline that goes up 
to the shores and under the river and continues on south 
providing a much needed natural gas supply.
    Does anything in the existing statutes, now that the area 
has been put into a monument, in the House, whether it stands 
or not--2 weeks ago I made an amendment on the Interior 
approps, limiting oil and gas exploration or consideration 
within that Missouri Breaks. Is there anything within existing 
law that is going to preclude our opportunity to expand the 
size of that natural gas pipeline if necessary to bring 
additional product to the lower 48 from Canada?
    Secretary Norton. I am not aware of the situation as to the 
pipeline. I do believe that President Clinton preserved 
existing oil and gas rights within that area as a part of the 
declaration of the monument itself. So I don't know what 
provisions would have applied as to the pipeline.
    Mr. Rehberg. I would hope that the administration will look 
into the opportunities. The infrastructure is already in place. 
I am not sure of the congressmen, when they made the vote on 
the floor, truly understood that the infrastructure is already 
in place. Those pipelines are already buried, and there is de 
facto creating a wilderness around private property within the 
Missouri Breaks.
    But there is an opportunity--if pipeline supply is truly 
one of the problems that exists in our ability to develop full 
energy policy. The pipeline already exists, the easement 
already exists, and I hope the administration would take the 
time to establish whether they can in fact expand the size of 
that pipeline.
    I don't know. I have been asking that question. Nobody 
seems to be able to answer the question for me, as to whether 
you would be limited under that designation of monument status.
    But the pipeline is already in place, and I think it would 
play an important role. And if it isn't covered, I would like 
to have an amendment in this bill and hope that I would get the 
administration's support to give us that opportunity to expand 
the size of the pipeline.
    Secretary Norton. As you are aware, we have just started a 
process of consulting with the governors and with state elected 
officials on the future of the monuments, as well as with 
Members of Congress, and so we will be happy to obtain 
additional information about that as part of our planning 
process.
    Mr. Rehberg. That brings up another point. Your letter to 
our governor actually has slowed down the process that I had 
hoped to be able to bring to this Committee a reasonable 
discussion on the private property that is included within that 
monument. Your opening up the opportunity for their input has 
actually slowed that process down.
    So I hope that you will work expeditiously, because it will 
affect our energy policy as we develop that through Congress.
    Secretary Norton. We felt it was important to get local 
input, and we look forward to working with you to make sure we 
are doing things in the right way.
    Mr. Rehberg. Thank you, Mr. Chairman.
    The Chairman. The gentleman from New Jersey, Mr. Holt.
    Mr. Holt. Thank you, Mr. Chairman.
    And thank you, Madam Secretary, for taking some more time 
for our questions.
    There are lots of things I would like to talk with you 
about with regard to mix of energy resources and conservation 
and a number of other things, and Porcupine caribou and so 
forth.
    But one thing I would like to focus on with regard to 
possible drilling in area 1002 is the environmental mediation 
or the steps that might be taken to mitigate environmental 
damage, and to really get answer to the question: Is it 
possible--is it even possible--to drill up there without 
unacceptable environmental damage?
    And, you know, ice roads sound attractive. Now, I notice in 
your testimony that you say that the bill would limit 
exploration activities to a period of the year when ice roads 
could be used. Now, are you saying ice roads would be used?
    Secretary Norton. Oh, absolutely.
    Mr. Holt. Almost exclusively, exclusively? That would be 
the norm?
    Secretary Norton. That would certainly be the norm. And 
that is already what is taking place.
    One facility I visited, the Alpine facility, is a large 
producing facility, and it has absolutely no permanent roads to 
it. And I think that is exactly the model that we would see 
utilizing, ore without permanent roads.
    Mr. Holt. Madam Secretary, where would the water for these 
ice roads come from?
    Secretary Norton. It has come from nearby water sources. 
That is one of the things that in the Coastal Plain area we 
would need to study, and that would have to be a part of the 
environmental planning process, is making sure that the water 
would be available in a way that is environmentally 
responsible.
    I know that in the Coastal Plain, the 1002 area, that is 
one of the concerns. And that is certainly something we would 
have to deal with, the availability of that water.
    Mr. Holt. Well, we scientists are often doodling, doing 
back-of-the-envelop calculations. And I just did a calculation 
of how much water it would take to make a rather thin ice road, 
and it is on the order of a million gallons per mile.
    Now, as I understand it, we are talking about 60, maybe 100 
miles of roads. As I looked up some figures here, it appears 
that in all of the 200-and-some-odd miles of river in that 
area, there might be 9 million gallons available.
    Well, we are off by a factor of 10 at least in the water 
that is even available to build ice roads, assuming that ice 
roads would be environmentally attractive, that they would 
leave no permanent scar on the land. And yet I hear from my 
colleagues who have just flown over this area that the ice 
roads melted some time ago but leave a very visible trace long 
after they are melted.
    So just in this one area, just on this one point, it raises 
very real questions about whether it is even possible to go in 
there without unacceptable environmental damage.
    I certainly would like to see from you facts and figures 
about even the possibility of building ice roads of appropriate 
thickness, of appropriate length, with the water that is 
available.
    Secretary Norton. We would be happy to look at that and 
provide you with information.
    Mr. Holt. Thank you, Madam Secretary.
    The Chairman. The gentleman from Alaska, Mr. Young.
    Mr. Young. I thank the gentleman.
    First I ask to submit for the record a letter from our Fish 
and Game in the state. It quotes, ``There is no evidence of 
negative effects on waterfowl population from oil development 
on the Coastal Plain on Alaska. Development of the 1002 area of 
the Arctic coast would have no measurable effect on waterfowl 
production for the nation because relatively few birds nest in 
this area.''
    The Chairman. Without objection.
    ]The letter from Mr. Wayne Regelin, Director, State of 
Alaska Department of Fish and Game, follows:]
[GRAPHIC] [TIFF OMITTED] T3674.001

[GRAPHIC] [TIFF OMITTED] T3674.002

    Mr. Young. And, Mr. Chairman, and, Madam Secretary, I do 
thank you for being here.
    I wished I was wearing my new boots, from what I have heard 
recently.
    Number one, these pictures that Mr. Inslee showed, I wished 
he had identified really the Coastal Plain. If you will take 
the time to look at the back page of the 1002 area, that was 
not an ice road made by recent oil activity.
    This is not a virgin area. This is an area that has people 
living in it. It has people living in it. It has warning sites. 
It has military activity, did have military warning sites, has 
a large native village living there. And that they can cast 
this area as a pristine last Serengeti is nonsense.
    I wish you would take the time to go up there and see it, 
by the way.
    It is nonsense.
    Secondly, may I suggest respectfully that the caribou 
argument is full of holes. The so-called calving area, as has 
been said before, is not an aberration. Three years in a row 
they calved in a migratory route, not in this so-called 
hospital room. This is something that has been brought up by 
certain environmental groups.
    And thirdly, the people that live in that area, that live 
on those caribou say this can do no harm to the caribou, the 
Alaska native. And that is something I think you ought to 
listen to, instead of the environmental community that knows 
diddly-squat about this issue period.
    And thirdly, may I suggest that Rhode's idea of the 
refuge--when this area was considered and was established as a 
refuge, it was said to be open for oil drilling. That was 
specifically in the legislation by this Congress.
    And then fifth, may I suggest is when we pass the Alaska 
National Lands Act, Senator Tongass and Senator Jackson and 
Senator Stevens and, yes, Congressman Udall, agreed to let the 
1002 area open for oil development, if it was decided it was 
important to this nation.
    This was never a wilderness area. It was a refuge to be 
open for drilling, and we set aside approximately 17 million 
acres as wilderness area, but left the 1002 area open, the 
barren, flat area of the whole refuge area that I have been on 
many times.
    So this area is and has one of the largest, I believe, 
deposits of oil. To say we can't drill there, and it will do 
irreparable harm, is really a factitious argument because we 
can. We have proven it in the Alpine field; we have proven the 
new technologies from the time we first opened Prudhoe Bay.
    Before everybody jumps off this cliff because you are 
responding to the environmental community, not scientifically, 
I would suggest respectively you go up there.
    Mr. Inslee went up and took a lot of pictures that have 
nothing to do with the 1002 area. It is what you see in the 
postcards. It is what you see in the propaganda on the 
television by the environmental community.
    It is a dishonest presentation of so-called facts.
    The facts are, this is 74 miles away from the existing 
pipeline, the largest single deposit of oil left in United 
States that should be developed for this country.
    It is not my oil; it is your oil. But it should be 
developed for this country.
    No one has said during this hearing anything about the 
moneys we are spending overseas to the OPEC countries, the 
billions of dollars you send over out of your taxpayers' 
pocket. Why don't you talk about that for awhile?
    The money they take that bleeds this economy; the money 
that goes into those countries would take and be an enemy of 
this country.
    No one says anything about that. You are worried about 
something that does not exist, an area that should be drilled 
for this nation, if you believe in this nation.
    Now, if you believe in the foreign countries, then you will 
keep supporting the system that is in place now, the 
importation of foreign oil, and be dependent upon. That is what 
we have been.
    Billions of dollars. The trade deficit we have today is not 
because of manufactured TVs and such. It is because of the 
importation of oil--refined oil and crude oil and gas.
    And yet we try to develop something.
    And this President, Madam Secretary, may I suggest, this 
President is tying to lead this country out of a terrible, 
terrible problem that this Congress and previous 
administrations have allowed to happen. And I commend him for 
that. I commend you for it.
    Mr. Kind. Will the gentleman yield for a question?
    Mr. Young. Not until I am finished. I am on my soapbox 
right now.
    [Laughter.]
    Mr. Kind. I know you are.
    [Laughter.]
    I hate to interrupt.
    Mr. Young. We sit here in Congress and grouse and complain 
and talk about conservation and talk about all of the good 
things. Where were you the last 20 years?
    I have been trying to open this thing and did it in 1995, 
trying to get production online and refineries built in place, 
and nobody says, ``Not in my backyard. We will buy it from 
overseas.'' Bleeding your taxpayers.
    I think you ought to be ashamed of yourselves. I think you 
ought to think about this country for a change. It is not about 
your election. Think about what is right for this country. It 
is not about those interest groups that say, ``Oh, we can't do 
it.''
    Let's think about America for a change.
    Mr. Kind. Will the gentleman yield for question?
    Mr. Young. I will yield for a question.
    The Chairman. Hang on a minute.
    Does the gentleman ask for an additional minute for the 
gentleman from Alaska to respond for a question?
    Mr. Kind. Without objection.
    The Chairman. The gentleman asks without objection one 
additional minute.
    Mr. Kind. We certainly appreciate the knowledge and 
experience that the gentleman from Alaska brings to this 
debate, and it is a very important debate.
    But I wondering if the gentleman from Alaska had an 
opportunity to review the Wall Street Journal article that 
appeared just yesterday. And I know when I raised this issue 
during the June 6 hearing, citing the Anchorage Daily News, you 
called that paper I think it was ``piece of rag.''
    But I am wondering if you have had a chance to review the 
Wall Street Journal article in regard to the oil safety 
concerns that were raised in it, the safety inspection teams 
that are currently in place with current drilling operations in 
Alaska, and if you may be able to provide the rest of the 
members on the Committee with your refutation of the facts 
contained in the Wall Street Journal article.
    I think that would be--
    Mr. Young. Well, in the first place, I don't usually read 
that rag, by the way. That is number one.
    Secondly, they say Alaska is assigned more inspectors per 
well than either Indiana or Louisiana. This is the most heavily 
inspected oil field in the world. That is what people don't 
understand.
    We have done the job right. We have had problems, yes, 
because it was a project built too soon because this Congress 
in fact said had to be done. And I don't want to go through 
that again.
    Right now we have the time to do what is correct. And this 
Secretary says she will do it correctly. We can assure it in 
the legislation.
    Remember, we have more inspectors in Alaska than Indiana 
and Louisiana all put together, the most inspected oil field in 
the world--in the world.
    And so I am suggesting it can be done. But you would say it 
can't be done because you are worried about someone's 
presentation about the environment. It has nothing to do with 
environment. It has nothing to do with the environment.
    If I didn't think we couldn't do this correctly, I wouldn't 
be supporting it. I have always said; I always will. If I 
thought it hurt the caribou, I wouldn't be supporting it.
    Mr. Kind. Well, I guess that is completely contrary to what 
the article reads in yesterday's Wall Street Journal, so if you 
have different facts, I think it would be helpful.
    Mr. Young. Well, I would gladly give you different facts. 
By the way, if you believe everything--
    Mrs. Cubin. Regular order.
    Mr. Chairman, regular order.
    Mr. Young. Are you regulating me?
    [Laughter.]
    The Chairman. The time of both gentlemen has expired.
    The gentlelady from Minnesota. The gentlelady from 
Minnesota is recognized.
    Ms. McCollum. Thank you, Mr. Chair.
    And, Secretary Norton, I do have some questions, although 
tempting it would be to get in the middle of the rhetoric on 
both sides here.
    Could you tell me what, from reading your letter, what the 
goals are going to be for the regulations, state regulations, 
Federal regulations? Are you going to look at perhaps some 
different regulations, more stringent because being in the 
Arctic National Wildlife Refuge?
    Secretary Norton. The regulations that we would like to see 
are very stringent regulations, and the ones that are outlined 
in H.R. 2436 meet that standard. They are the most stringent 
regulations that are in any statute, as far as oil and gas 
operations are concerned.
    Ms. McCollum. So, Madam Secretary, it is your opinion that 
we don't need to look at doing anything different in this area, 
with all the controversy going on between the two groups, to do 
anything more?
    Secretary Norton. I am saying we are doing something that 
is quite different. We are doing something that is quite 
stringent.
    Ms. McCollum. Well, Madam Secretary, you said you were 
using regulations that are already in place.
    Secretary Norton. No, no, that are in the proposed 
legislation.
    Ms. McCollum. Yes. I mean, they are there. You have already 
decided what they are going to be. We have the right to amend, 
add to them, but you have laid them out.
    Could you please tell me, or get back to me--and I still am 
waiting to hear back from the letter I sent you on the Great 
Lakes drilling; I realize that you have been really busy, but I 
am assuming you got it, although I didn't get an 
acknowledgement.
    Could you please get back to me with what your definition 
of reclamation is, because that can be very wide open? I don't 
know if you mean removing any gravel if gravel roads are there, 
making sure that water is restored if water is pumped out.
    Because when I visited some of the oil sites, they were 
working very, very hard on coming up with scientific ways of 
doing reclamation in the sites that are in the Prudhoe Bay 
area. And I commend the oil companies for working on it.
    But they had different types of reclamation going on, 
trying to figure out which would work best and which would be 
least disruptive.
    And then, could you tell me, is it the Department of 
Interior's intention to treat both the elected leaders, the 
tribal leaders, at the same scale as those who are serving on 
the tribal corporation? Does elected leadership have any more 
value, any more input to you, when you are discussing with 
individuals versus the tribal corporations? Because I noticed 
in the bill that they appear to be given equal weight.
    So my basic questions are, the standards that you have come 
up with, how do they compare with what is going on with the 
scientific studies that are going up there, with the Arctic 
council, with how that is going to interplay with what is going 
on with the global warming, with what is going on with what is 
happening with the permafrost in the area, with what is going 
on with the ozone in the area.
    Because I agree with some of the comments the gentleman 
from Alaska made. You know, this isn't just about the caribou. 
This is about the air, this about the water quality and 
everything else.
    And from what I witnessed up there, British Petroleum wants 
to do a good job. I think that they are capable of doing a good 
job much later on, in the future, than they are now, without 
leaving an industrial footprint that is there.
    But I want some followup on the questions. And I will 
submit those again to you in writing.
    Thank you very much, Mr. Chairman, for the time.
    And thank you for staying.
    Secretary Norton. Thank you.
    The Chairman. The gentleman from Utah, Mr. Cannon.
    Mr. Cannon. Thank you, Mr. Chairman.
    And, Madam Secretary, thank you for being here. I 
appreciate that.
    And I also appreciate your contributions over a very long 
period of time to the careful development and balance with 
which we use our natural resources.
    Let me just ask you, actually, a couple of questions that 
you can respond to, I hope.
    This legislation places great emphasis on conducting a 
comprehensive inventory of the energy resources on our Federal 
lands. Do you think this is necessary? And if so, what 
information do you think we could learn from this activity?
    Secretary Norton. I think it is important for us to examine 
what are the areas that have the highest potential for energy 
sources, whether that is wind or geothermal or the more 
traditional sources. That helps us in our planning process to 
identify those areas where we can have that type of energy with 
the least environmental impact.
    And so I think this gives us the opportunity to look across 
the board and to make intelligent decisions about how to 
balance environmental protection and energy needs.
    Mr. Cannon. We have done these kinds of inventories many 
times in our history. In fact, I ran into a book recently that 
was published in the century before the last century about 
mineral resources in Utah, for instance. A great little 
interesting piece based on very old technology.
    We have done a lot of things. We have a lot of technology 
that helps us assess what our energy resources are.
    And secondly, we have some new things that we are looking 
at for energy. As you mentioned, wind and thermal and other 
kinds of things.
    Do you expect that if we do an inventory like this we will 
come up with some new insights and new possibilities for 
development in an environmentally friendly fashion?
    Secretary Norton. I certainly hope that that is what we 
find from those kinds of inventories.
    Mr. Cannon. By doing this inventory, do we do anything that 
would put Federal lands at risk? In the process of conducting 
an inventory, is there anything that would be damaging or a 
matter of concern to the lands?
    Secretary Norton. Not that I am envisioning at this point.
    Mr. Cannon. I mean, it seems to me these are noninvasive 
kinds of things, generally speaking.
    Secretary Norton. Right.
    Mr. Cannon. It is a matter of coordinating data. It is a 
matter of finding what is there, looking with new technology.
    But you are not anticipating in this inventory that we 
would do anything destructive? We are not going to cut any 
roads or do crazy new things, are we?
    Secretary Norton. What I am anticipating is largely looking 
at the information that we already have and looking at the 
kinds of information that we would get through our ongoing 
planning processes, just to make sure that we have really 
consolidated the information and thoroughly understand the big 
picture.
    Mr. Cannon. Let me just point out that understanding the 
big picture I think is going to be very, very important, partly 
because we are using an enormous amount of energy that comes 
from other countries and looking to exploit areas around the 
world that are not going to have the environmental care taken 
with them that we would take in America.
    So if we care about the Earth as a whole, we ought to be in 
America not just shunting off the responsibility to other 
countries but taking an affirmative, aggressive role in 
deciding what the resources are, what the costs of developing 
them are, and how we can protect and guard our stewardship in 
the process.
    Enough of my homilies, by the way. Let me ask another 
question.
    The national energy policy in its first recommendation 
suggested any regulatory activity that affects energy should 
include a detailed statement regarding the impacts of that 
action.
    Do you believe that this would apply to negotiations that 
could affect power production from Federal hydropower 
facilities?
    Secretary Norton. Yes.
    Mr. Cannon. Could you elaborate?
    [Laughter.]
    Secretary Norton. Okay.
    I think that we need to consider hydropower as one of our 
resources, looking at how we can enhance hydropower production 
from existing facilities.
    We have a lot of balancing that needs to take place, 
especially in years like this year where we have a lack of 
water through much of our territory that has Bureau of 
Reclamation projects. And so we need to factor in energy as one 
of the considerations that we have in trying to manage those 
projects.
    Mr. Cannon. With that in--
    Secretary Norton. This is really an analysis kind of thing 
that we would go through.
    Mr. Cannon. As part of that analysis, are you looking at 
the Colorado River and the Glen Canyon Dam and other dams 
there, and their peaking capacity and how we can make 
adjustments to help meet the peak power demands in the 
Southwest?
    Secretary Norton. That is an ongoing issue that we fairly 
continually look at as part of our management.
    Mr. Cannon. I notice my time has expired, so whatever is 
left, I yield back, Mr. Chairman.
    The Chairman. Thank you.
    The gentleman from Massachusetts, Mr. Markey.
    And happy birthday on your 29th birthday.
    Mr. Markey. Thank you, Mr. Chairman, very much. I 
appreciate it.
    Mr. Young. His hair used to be black.
    [Laughter.]
    Mr. Markey. That is the cruelest cut of all. You know that.
    [Laughter.]
    Thank you, Mr. Chairman.
    Let me turn, Madam Secretary, to the issue of the red dot.
    [Laughter.]
    Now, everyone in the room is familiar with the red dot. The 
red dot has been circulated in many forms, Madam Secretary, 
most recently in the form of a mousepad that got sent to each 
of our districts. But it is on every single document that is 
sent out by Arctic Power or any of the advocates.
    And it asserts that the footprint in the refuge from the 
drilling would only represent 2,000 acres, just a little, 
teeny, tiny red dot.
    [Laughter.]
    Now, who could object to that little red dot?
    [Laughter.]
    So the first poster here shows you the little red dot in 
larger scale placed randomly on the 1002 area of the refuge, 
the area where some of the Committee would start drilling.
    As you know, this red dot is intended to mislead us into 
believing that the impact of the refuge would be very, very 
small. Who could object to that?
    And I would like to just correct that misinformation today, 
Madam Secretary, with your assistance, if I could.
    Now, none of us of course know exactly what the industry 
will do if we let them loose in the refuge--
    [Laughter.]
    --because drilling and producing oil is a messy, inexact, 
unpredictable business.
    But one thing we know for certain: It won't look anything 
like this little, teeny, tiny red dot on a white background.
    For one thing, we are talking about a delicate and pristine 
ecosystem that has escaped the interference of human 
development for eons.
    Now, this first transparency begins to give you a visual 
feel for some of the wildlife values that are at stake. This 
data is all based on official reports of the U.S. Fish and 
Wildlife Service.
    The yellow area is the area typically used by the Porcupine 
River caribou herd for giving birth and regaining energy for 
the migration that has occurred every year for eternity, but 
always brings the herd back to the 1002 area. Always. For eons.
    The blue triangles and the pink squares show the spawning 
and migration routes of fish. The black crosses represent the 
denning locations of radio-collared female polar bears. The 
light green represents the common use areas of the tundra 
swans. The maroon dot shows the distribution of radio-collared 
musk oxen.
    My point is that this is a very special refuge area, set 
aside to protect a one-of-a-kind ecosystem. This is the reason 
this are is called the biological heart of the Arctic refuge.
    And I guess you could argue that our heart is just a very 
small part of our body. Why would anyone mind if they went into 
your heart--
    [Laughter.]
    --as opposed to, you know, your fingers? It's all the same, 
huh? The heart is the same as any other part.
    So this is just a little dot, say the drillers.
    But the question is, how do you produce and deliver oil 
from the dot? Is the oil going to come out by helicopter? Is it 
going to come out by balloon? Maybe we could you use the 
Russian transport that brought back our reconnaissance plane in 
pieces from China.
    How are we going to get the oil out from the heart?
    Maybe we will do it with a nice big pipeline. Ah, a 
pipeline to bring out oil. Let's see what that might look like, 
if we actually had to build a pipeline. Oh, a little bit 
different.
    [Laughter.]
    Now, this is taken from the 1987 environmental impact 
statement of the Department of Interior. As you can see, it is 
not a red dot. It represents impacts estimated by the 
Department of Interior spreading over 130,000 acres to 303,000 
acres, one-fifth of the entire 1002 area--not a 2,000-acre dot.
    Now, this shows the pipeline needed to get the oil out of 
the refuge, the feeder lines to the well heads and the impact 
area around the facilities.
    The surface area is extensive and stretches across the 
entire refuge. It shows oil development less as a cartoon and 
more as a serious--may I have one additional minute, Mr. 
Chairman?
    The Chairman. The gentleman has one additional minute.
    Mr. Markey. I can't help but notice that it looks a huge, 
pink snake--
    [Laughter.]
    --that sprawls over the entire area.
    So my question to you, Madam Secretary, is this: Do you 
expect the ultimate result of drilling in the refuge to look 
like the red dot sent around as propaganda to every Member of 
Congress by the drillers? Or do you expect it to look more like 
the pink snake that Department of Interior describes in its own 
research?
    Secretary Norton. Mr. Chairman, if I may reply to that?
    I anticipate and I double-checked just yesterday with the 
technical people on my staff, that 2,000 acres is the 
anticipated footprint of the drilling activities, and that is 
at full production.
    Mr. Markey. How about the pipelines? What about the 
pipelines?
    Secretary Norton. The pipelines, I have seen pipelines that 
were put in just a few years ago. They have no roadways next to 
them. It is simply the pipe itself.
    And that is something that will be a part of the 
transportation facilities. But it is not the kind of huge, wide 
highway or even larger that you depict on that.
    The technology has moved forward so that the impacts that 
would have been predicted 15 years ago are dramatically less 
than the impact that we would anticipate today.
    Mr. Markey. This is based on Department of Interior 
information.
    Secretary Norton. It is based on 15-year-old information.
    Mr. Markey. You can't get the oil out without constructing 
a pipeline.
    The Chairman. The time of the gentleman has expired.
    Madam Secretary, you are the most popular witness we have 
had this year.
    [Laughter.]
    And we have some very patient people waiting here, but I 
have to ask the gentleman from Alaska, whose district this is, 
is that dot in the right spot?
    Mr. Young. That is a cumulative acreage disturbed by the 
drilling. That is all it is, trying to bring the size to the 
1002 area.
    And it is not misleading at all. And, staff, it is not 
misleading at all.
    Mr. Markey. So the lobbyists are wrong, then.
    Mr. Young. No, the dot is exactly the amount of acreage 
that will be disturbed by the drilling in 1002. You keep 
forgetting this is a small area set aside by this Congress to 
drill in.
    Mr. Markey. So we should stop having lobbyists send us this 
erroneous--
    Mr. Young. Who said it was wrong?
    Mr. Markey. Oh, okay.
    Mr. Young. I mean, if you can't understand a dot, you ought 
to start eating M&Ms.
    [Laughter.]
    Mr. Markey. This dot is inaccurate.
    The Chairman. The time of the gentleman has expired.
    The gentleman from Tennessee, Mr. Duncan.
    Thank you, Mr. Markey.
    Mr. Duncan. Thank you, Mr. Chairman.
    I had to Chair a Subcommittee hearing at the Water 
Resources and Environment Subcommittee, so I won't try to 
repeat any questions that the Secretary has already been asked.
    I will simply say that Mr. Cannon said the key word awhile 
ago, I think, when he said the word balance. And I think that 
is what we need to try to get back to, some balance and 
moderation in our environmental policies.
    We have these groups all over the country that protest any 
time that anybody tries to dig for any coal or drill for any 
oil or cut any trees or produce any natural gas. And what they 
are doing now is really hurting the poor and the low-income and 
the working people of this country because they keep destroying 
jobs, they keep driving up the cost of energy.
    And it may not be hurting some of these environmental 
elitists, but it is starting to hurt a lot of middle-income and 
lower-income people. And so I applaud the President for this 
energy plan that he has come forward with.
    In fact, I think just a few years ago, it probably would 
have been considered a very liberal plan because it does have a 
great deal in there about conservation and development of 
alternative resources and things of that type.
    But some of these groups have to keep raising the bar and 
have to keep telling people how bad things are, and have to 
keep denying that there has been improvements over the last 25 
or 30 years so that they can keep getting in their big 
contributions. And I think that is what a lot of this is about.
    But I will repeat that we are letting the energy debate be 
controlled by extremists. And what we need to do is get some 
balance and moderation. And I think that is what the 
President's plan does.
    I would imagine, and probably Chairman Young can tell us 
more about this, but I can imagine that many of these same 
arguments were used many years ago to stop the development in 
Prudhoe Bay and the pipeline that we have. And I hate to think 
where we would be in this country today if we hadn't had all 
those billions of barrels of oil.
    As he pointed out a few minutes ago, it is certainly a 
matter of national security. I am sure of these contributions 
to these groups come from the OPEC countries, and foreign 
companies, and so forth, that stand to gain huge profits if we 
don't develop any of our own natural resources.
    But I mentioned in here one time, when the Secretary was 
here before, that I had the mayor of a small town in my 
district, Englewood, Tennessee, who came to me a few months ago 
and said that he had senior citizens in his district who were 
having to choose between eating or paying their utility bills, 
because we are letting these extremists drive up the price of 
energy.
    And I have mentioned in here before that I represent about 
half of the Great Smokey Mountains National Park. We have 
between 9 and 10 million visitors a year to that park. I read 
in Time magazine about 3 months ago that the entire Arctic 
National Wildlife Refuge had 1,000 visitors last year to 19.8 
million acres.
    That is 35 times the size of the Great Smokies. Yet all of 
these 9 or 10 million visitors we get to the Great Smokies 
think it is huge.
    And most people look at a map of the entire United States 
on one little page in a book, and they don't realize how 
unbelievably huge this country is. And we just can't fathom how 
huge this Arctic wildlife refuge is.
    And as Chairman Young said, almost all of the people that I 
have talked to who are opposing this drilling have never been 
there before. I have been up there twice.
    And I can tell you that when these groups show these 
pictures of the mountains and the trees in opposing this, none 
of this drilling is going where the mountains and the trees and 
the Brooks Range are.
    It is amazing how they have distorted this issue almost 
worse than Nazi propaganda.
    And I repeat that who they are hurting are the poor and the 
lower income and the working people of this country.
    So I applaud you, Madam Secretary, for trying to bring some 
balance and moderation into our environmental policies. And I 
know it is going to be difficult, but I hope you are 
successful. And I thank you for being here today.
    The Chairman. I thank the gentleman.
    The gentleman from Oklahoma, Mr. Carson.
    Mr. Carson. Thank you, Mr. Chairman.
    And thank you also, Madam Secretary, for staying around.
    You recently visited my own congressional district, the 
Tall Grass Prairie in Pawhuska, Oklahoma, to exemplify your 
interest in development alongside ecological preservation as 
well. So thank you for coming to northeast Oklahoma.
    At the same time, I am sympathetic to opening up ANWR for 
exploration and production. You know, the EIA at the Department 
of Energy says that price of oil, in 10 years, per barrel is 
going to be $17 to $18 in time.
    Obviously, the amount of recoverable oil in ANWR is 
extremely sensitive to what the price of world oil going to be.
    Are there any estimates that you have, if the Department of 
Energy's predictions are right, about how much recoverable oil 
there is going to be in ANWR?
    Secretary Norton. Our estimate that looks just at the 
Federal areas within ANWR is 7.7 billion barrels of oil.
    Mr. Carson. And that is based on what assumptions, though, 
about price, percentage recoverability, and things like that?
    Obviously, it is sensitive to a number of important 
modeling assumptions here about the world oil market. I mean, I 
guess there seems to be a strong sense, if what the Department 
of Energy is true, that you are not going to have much 
recoverable oil, even though I am sympathetic to the desire to 
open it up. I guess it is an empirical question of how much is 
actually there.
    Secretary Norton. I would happy to provide you with all of 
the details on that. I know it is a very complex type of 
analysis.
    Mr. Carson. Sure.
    Secretary Norton. And I would be happy to provide you with 
the basis for our determination.
    Mr. Carson. One last question for you on a related subject 
about hydropower. That section of the bill that deals with 
hydropower, what changes does it make in the current regulatory 
scheme that deals with hydropower and how does it address the 
crisis in licensing of hydropower facilities that we are 
having?
    Secretary Norton. It is my understanding that that is 
handled in separate legislation, that this is primarily 
focusing on the aspects that look at enhancing what we have on 
existing Federal Bureau of Reclamation type dams, for example, 
so that we are making sure that the dams we are currently 
operating are maximizing their hydropower capability.
    Mr. Carson. Thank you for staying this afternoon as well.
    And thank you, Mr. Chairman.
    The Chairman. I thank the gentleman.
    The gentlelady from Wyoming.
    Mrs. Cubin. Thank you, Mr. Chairman.
    And thank you, Madam Secretary, for being here. I too 
apologize for not having been here earlier, so I won't ask 
questions just to have you repeat answers. But if there is 
something that we wanted to ask that isn't already covered, 
then if you wouldn't mind, I will submit that in writing to 
you.
    Secretary Norton. Great.
    Mrs. Cubin. One point that I want to make is that people 
who don't live in a place like I live in where you have mining 
and oil and gas exploration--excuse me, Mr. Young.
    The Chairman. The gentlelady will--
    Mrs. Cubin. Excuse me, this is really important. I am on 
your side, too.
    Can you imagine how he cowers in front of me?
    The point that I want to make is people like Mr. Young and 
Mr. Hansen and myself, who live in areas where minerals are 
produced, where forests are harvested, we see every single day 
how it is possible--not only possible, it is healthy for 
wildlife to be able to live in amongst oil wells and mines.
    And let me tell you about a thing. When I took some Members 
of Congress back to my state because they were voting 
differently on environmental issues every single time than I 
thought they should, took them back to Wyoming. We went to the 
largest open pit mine in the Western Hemisphere, the Black 
Thunder Mine.
    And as we were driving out of the big pit, up on the edge, 
there was overburden in a pile like that, and up on the very 
rim of the mine was the biggest buck deer you have ever seen. 
And that buck deer followed us along, followed us along, as we 
were driving out of the mine pit in the bus.
    We then went to a gas field, and Newt Gingrich was along, 
and he was just astounded because a rabbit ran across his foot.
    There was a mother pronghorn antelope and her baby sitting 
in the shadow of a compressor station.
    As we went on, there were literally herds of antelope right 
intermingled in between the pumpers on an oil field.
    And so people who look at illustrations like this and say, 
``Oh my gosh, those animals can't live there if minerals are 
produced or if man steps foot on that,'' they are just dead 
wrong.
    And besides that, the pink snake looks like something way 
worse than a pink snake to me.
    [Laughter.]
    And I just want to remind everybody that that is 15 years 
old, that footprint of that pipeline. That is based on 15-year-
old information.
    And it simply isn't fair. It shouldn't be on the record.
    And last point is, wildlife can live quite nicely and 
reproduce and have a good home, and allow for development of 
minerals, too.
    Thank you so much for being here.
    The Chairman. Madam Secretary, you have the record. You 
have worn them all out.
    Secretary Norton. Thank you.
    The Chairman. And we appreciate your excellent testimony 
and your patience and your good answers.
    And I also want to thank all the other witnesses who have 
been here. We are going to go ahead with the hearing. These are 
all important things that we want to hear.
    And we will excuse you and ask our former colleague, the 
Honorable J. Bennett Johnston, former Senator from the State of 
Louisiana, to please come up.
    Senator, we appreciate you being with us. Thank you so 
much. We appreciate your patience. We will turn the time to 
you, sir.

STATEMENT OF THE HONORABLE J. BENNETT JOHNSTON, FORMER SENATOR 
FROM THE STATE OF LOUISIANA, JOHNSTON & ASSOCIATES, WASHINGTON, 
                              D.C.

    Mr. Johnston. Thank you very much, Mr. Chairman. I am 
delighted to be here, back with the Committee again, in support 
of your bill H.R. 2436.
    I am testifying for myself and not for Chevron, on whose 
board I serve, although I would assume--I have not discussed 
the bill with them--I would assume they would support the bill 
because I think is common sense, and I think it supports the 
policy of this country to have a reasonable energy policy.
    Mr. Chairman, I was asked to focus on royalty relief today. 
I will be prepared on other parts of the bill, with which I am 
quite familiar.
    But let me say, with royalty relief, in 1995, when we 
worked with Mr. Young and others on this Committee and you to 
give royalty relief, the reason was that domestic resources 
were depleting fast.
    At that time, 50 percent of our oil was imported. Today it 
is 57 percent. By 2020, it is supposed to be 70 percent.
    And with that importation, we export our jobs, we export 
our tax money, we export the economic impact which domestic 
production will give us. And we were not getting the kind of 
production in the Gulf of Mexico that we thought we should, so 
we came up with a proposal to give incentives to develop and 
drill in the Gulf of Mexico.
    The theory was that in a competitive market, that the value 
of that lease will be reflected. The higher the royalty, the 
lower the bonus; the lower the royalty, the higher the bonus--
that the real value will be reflected.
    We had economic models of that we projected to say that if 
we gave royalty relief, that we would have higher bonuses, we 
would have more activity, we would have more wells developed.
    We were greatly challenged, Mr. Chairman, you will recall, 
on the figures that we put out and that MMS put out reflecting 
what we thought would be the success of this bill. In fact, Mr. 
Chairman, the bill was much more successful than even what we 
had projected.
    The acting director MMS, Ms. Kelleher, said after the first 
2 years that deep water royalty relief for new leases has 
contributed to record-breaking lease sales in the central and 
western gulf over the last 2 years. A January 2000 study of MMS 
showed a large increase in bidding activity partly attributable 
to royalty relief.
    Bonuses have exceeded $5 billion in this period of time. 
Investment in the period of 1998 to 2005 is estimated to be 
$9.5 billion in drilling alone.
    So, Mr. Chairman, I would say, to quote the old adage, ``If 
it ain't broke, don't fix it.'' And if it is a huge success, 
don't change it.
    Now, Mr. Chairman, I can tell you that exploration and 
production budgets of oil companies are done on a very rational 
basis. What you do is you balance risk and reward. There are 
huge risks in drilling for oil and gas.
    In the central gulf, about between one in three and one in 
four wells produce a geologic success; that is, you find oil in 
producible quantities.
    But more importantly, Mr. Chairman, of those where you find 
oil, only one-third are an economic success.
    So, in effect, about 10 percent of the wells drilled, of 
the exploration programs in the Gulf of Mexico, lead to wells 
that produce oil. That means that nine-tenths do not produce.
    So, in effect, Mr. Chairman, what the royalty relief bill 
has done is, first, give more bonuses, because when nine out of 
10 wells are not going to produce, if you get the up-front 
bonuses from that, get the use of that money in the meantime, 
as we have done far exceeding what the estimates were, then you 
get money which you would not get for nine out of 10 of those 
wells.
    Secondly, and this is very important, you reduce the 
threshold of the reserve size necessary to support production. 
The size of the field necessary to support production 
statistically has been shown to be at about the median size of 
discovered fields in the gulf. That median size is 143 million 
barrels of oil or oil equivalent.
    So that means that for a field that is 143 million barrels 
of oil and found in the Gulf of Mexico, the chances are 50-50 
that it won't be produced. Or in other words, you can have 
fields of 100 million barrels that it is too expensive to 
produce.
    Now, when you have royalty relief, you reduce that size 
because, first of all, you put your investment up front and 
that which is already sunk is not taken into consideration by a 
company as to its expense of developing that well. And to the 
extent that they can forego payment of royalties, then it makes 
it possible to develop a smaller field.
    Mr. Chairman, that has been our experience. We have proven 
that this is so. I mean, MMS says, you know, incredibly 
successful program.
    The third thing the royalty relief does, Mr. Chairman, is 
it helps keeps the independents and the small majors in the 
business.
    In 1985, 45 percent of the 1.14 billion barrels of oil or 
oil equivalent in the gulf were produced by independents. By 
1998, this had increased from 45 percent to 55 percent. 
Independents now account for 80 percent of the acreage under 
lease, 90 percent of the dollars bid in the last two lease 
sales.
    Now, Mr. Chairman, it is much more difficult for 
independents and the small majors to invest in these deep water 
drilling programs. So this program of royalty relief is 
particularly important for them.
    In the very deep water, your bill provides, as the 
administration does, over 800 feet, it is 9 million barrels of 
relief. In 1,600 meters, it is 12 million. That is really not 
enough in the very deep water to account for very much 
incentive.
    In the shallower depths, where the independents play, 
between 200 and 400 meters where you provide 17.5 million 
barrels, and between 400 and 800 meters where you provide 52.5 
million barrels of relief, this is important.
    Mr. Chairman, it is not a giveaway. Look, you get it on the 
front end. I mean, to say that this is a giveaway is to suggest 
that oil companies don't recognize the value of that which they 
are bidding on. They are going to bid in a competitive market 
what they think it is worth. And if there is royalty relief in 
it, their bid is going to reflect that. That is what experience 
has shown.
    Mr. Chairman, your study I think is a good thing. I am not 
sure that the National Academy of Sciences is the one to do it 
because it is largely a question of statistics, to go analyze 
what has happened. It is largely a question of economics, to 
examine the prospect in the Gulf of Mexico as opposed to 
Nigeria, Angola, Kazakhstan, other places around the world that 
have different kinds of risks, political risks and others.
    I might say that there political risk in the United States 
in drilling as well.
    But it is not a giveaway. To the contrary, what it will do 
is spur drilling by the independents in those shallower, still 
used to be very deep water, but shallower, up to 800-meter 
proposals.
    Mr. Chairman, I don't know what this Congress is going to 
do on ANWR. I support it strongly. Always have, although I know 
you have an uphill fight.
    But if you look at what this Congress and other Congresses 
have done, not very encouraging on ANWR or on the Destin Dome. 
They want to take that out.
    Lease Sale 181 worked out by Governor Lawton Chiles and 
Governor Fob James with Bruce Babbitt, and that has been 
declared off-limits.
    One hundred percent of the East Coast is off-limits. One 
hundred percent of the West Coast is off-limits. I think now 
the Great Lakes is off-limits. Forty percent of the Rocky 
Mountains is off-limits.
    I mean, most of it is off-limits. Now, we have a program 
that has succeeded, Mr. Chairman. We can prove it. We have 
shown it.
    And for goodness sake, Mr. Chairman, keep the faith on what 
you are doing in your bill, because it has proved to be 
successful. It will work, and it should be allowed to continue.
    The Chairman. Thank you, Senator.
    Questions for the Senator?
    Mr. Young?
    Mr. Young. No questions. Thank you, Senator. And we did 
work on that bill.
    And unfortunately, as you know, it has worked greatly, but 
a lot of the people--not everybody--on that side of the aisle 
still look upon it as a giveaway, it won't work, there is no 
need for it.
    But I saw what it did in the gulf. I will continue to 
support that concept, but I wish they had been here to listen. 
We have one Democrat and two Republicans left in this hearing, 
and it is unfortunate that they are not here to listen to the 
facts. But sometimes facts are not part of their ball game.
    But you bring up a good point, and I think we ought to take 
into consideration your recommendation about the study. Maybe 
if you have a recommendation about who should do it, it would 
be helpful.
    And secondly, if you have any suggestions on how to use 
this royalty incentive onshore as well offshore, I think that 
should be encouraged, because my goal is try to get us back 
down to maybe 50 percent. I don't think we will ever solely 
self-sufficient, but we shouldn't be so dependent on foreign 
countries.
    And thank you for your testimony, Senator.
    Mr. Johnston. Thank you, Chairman Young.
    The Chairman. The gentleman from Oklahoma, Mr. Carson.
    Mr. Carson. No questions.
    The Chairman. The gentleman from Tennessee.
    Mr. Duncan. Thank you, Mr. Chairman.
    I won't ask any questions. I will just say, I was here when 
Senator Johnston testified originally on this royalty relief 
bill, and I am very pleased at the results you just mentioned, 
especially about the independents. It seems that everything we 
do up here runs out the small businesses first and then it 
starts getting the medium-sized ones.
    And just for example, I have been told we have 157 small 
coal companies in east Tennessee in 1978; now we have none, 
because we opened up a office of surface mining and the 
environmental groups came in. And I am sure they think it is 
good that there is no coal production in east Tennessee, but 
that destroyed a lot of jobs.
    And some of these young people wonder why they can't find 
good jobs with just bachelor degrees now and why they are 
forced to go to graduate school, but we send our best jobs to 
other countries.
    But I thank you for the good work that you did on that 
legislation, and I am very pleased that you have come here 
today to testify and tell us these good results.
    Thank you.
    Mr. Johnston. Thank you very much.
    The Chairman. The gentlelady from Wyoming.
    Mrs. Cubin. Thank you, Mr. Chairman.
    And thank you for being here, too.
    I just have a couple of brief questions.
    The 1995 Deep Water Royalty Relief Act was clearly 
successful because the lessees, as you pointed out, had a 
better reason to pay more in bonuses to the government. And so, 
whether or not the mineral was produced, the bonus was paid 
anyway.
    I have never personally seen a spreadsheet, if you will, 
balancing out the effect of the royalty relief and bonus versus 
what the royalty would have been. Do you have any information 
like that, that we could, in a simplified way, present to our 
colleagues to try to help sell this deal?
    Mr. Johnston. Well, the information is available because we 
know the precise number of barrels that have been foregone.
    What you have is, the fields that have been discovered and 
are producing, in those situations, it is a very good deal for 
the company that is producing the field. But what you have to 
do, is you have to balance that where they find the field and 
they find enough oil to produce it and to put in--
    Mrs. Cubin. So the intangibles also play into it? In other 
words, there are discoveries that otherwise probably wouldn't 
have been discovered. Is that what you are saying?
    Mr. Johnston. Yes, that is right. I mean, nine out of 10 of 
those wells out there are economic dry holes.
    Mrs. Cubin. Right. Right.
    Mr. Johnston. Two-thirds are really dry holes. And of those 
that hit, two-thirds are economic dry holes because they are 
too expensive to produce.
    So if you have royalty relief, you can deduct that amount 
out of what it would cost you to develop the field.
    Mrs. Cubin. Right.
    Another thing that is important to me and why I wanted to 
have deep water royalty relief in the energy bill is that we 
are, on our side of the aisle, constantly being criticized as, 
you know, the water boys for Big Oil.
    So would you explain--I know you covered it in your 
testimony--but would you explain just very precisely how this 
helps independents stay in the market and stay competitive 
instead of, you know, just having to go up against the big 
money of Big Oil.
    I far and away represent more people making their living 
because of independent operators than I do the majors. And so, 
you know, you are criticized on the one hand because you do 
what you can to support Big Oil. And then on the other hand, 
you are criticized when you try to help independents and 
smaller operators get involved in something like this.
    Could you just spell that out?
    Mr. Johnston. Yes, I would be glad to.
    This really doesn't help the majors, the big majors, very 
much, because over 8,000 meters, it is only 9 million barrels, 
and 1,600 meters, it is only 12 million barrels. I mean, that 
compares to 87.5 million barrels in the previous bill in excess 
of 800 meters. So it is down to a tenth of what it was.
    And this really doesn't help the majors very much.
    It is a very important thing for the independents, who now 
are drilling most of the wells. It is still a very high-risk 
and still very expensive, in relative terms, in the shallower 
water.
    The Miocene trend, for example, out there is red hot for 
independents but highly risky.
    And, look, let me say this. You know, I understand the 
politics, having been in the politics of energy and the 
substance of energy now for 30 years. I understand Big Oil and 
how unpopular we are.
    But if you think that it is such a good deal, I would tell 
these people who think they are making a killing to go invest 
in the stock. It is available to be purchased.
    But do you know that Chevron, for example, on whose board I 
serve, has a price-earning ratio of about 10. In other words, 
the market thinks that is what they are worth. The average 
stock on the New York Stock Exchange has a price-earning ratio 
in excess of 20. The dot-coms, who have been going broke 
everywhere, a lot of those still have--I think Microsoft is 
still in excess of 30.
    So if it is such a good deal, then go buy the stock.
    By the way, I think it is a good stock.
    [Laughter.]
    And we are making a lot of money right now.
    Mrs. Cubin. Thank you very much, Mr. Johnston.
    Mr. Young. [Presiding.] Thank you gentlelady. The time is 
up.
    And, Senator, I do appreciate your insight. You have been 
around a long time. You know this business.
    I would suggest that you go talk to some of your allies on 
that side of the aisle and explain the facts of life to them, 
because right now you are really talking to the choir.
    And I do thank you for being here, though--
    Mr. Johnston. Yes.
    Mr. Young. --and explaining the bill. I do appreciate it.
    Mr. Johnston. Let me just say one final comment for you, 
Mr. Acting Chairman.
    I took four trips up to ANWR with members of the Energy 
Committee and I well recall one trip. I had one particular 
Senator who looked around and said, ``This is all there is?'' 
He said, ``If I refuse to allow drilling here, and I went back 
and tried to explain that to people in the bar rooms in my 
state, why they would throw me out of the Senate.''
    And guess what? A few weeks later that Senator voted no on 
ANWR.
    Mr. Young. I understand.
    Mr. Johnston. So that is what you are facing. And that is 
why I say it is an uphill fight.
    Mr. Young. Well, I hope that we will win it this year. If 
we don't, it will be because of those that don't have the 
vision, as you had in that royalty provision. And secondly, if 
they don't do it, I hope they all freeze in the dark big time.
    And I said this all along, they continue to oppose this for 
no scientific reasons, for no facts, and it deeply disturbs me. 
But that is going to be their bed that they have to sleep in.
    Thank you, Senator.
    Mr. Faleomavaega. Will the Chairman yield? Will the 
Chairman yield?
    Mr. Young. Oh, yes, I am sorry. You just walked in. I am 
sorry.
    Mr. Faleomavaega. Yes, I did. And I wanted to express my 
apologies. Something took me out, but I wanted to pay my 
personal respects to the gentleman from Louisiana, who for 
years had done the tremendous jobs who come from those small 
insular areas. I just wanted to let Senator Johnston know how 
much we appreciate the work he has done to help our people. And 
I appreciate also his presence here.
    Mr. Johnston. Well, thank you very much, Mr. Faleomavaega. 
We have in fact worked for many years for the good of your 
people. And you have done, if I may be permitted to say, an 
excellent job for Samoa.
    The Chairman. [Presiding.] Thank you, Senator. I appreciate 
you being here.
    Our last panel is Mr. Roger Herrera, of Arctic Power, 
Washington, DC; Mr. Richard Glenn, Arctic Slope Regional 
Corporation, of Barrow, Alaska; Mr. Jerry Hood, International 
Brotherhood of Teamsters, from Washington, DC; Mr. Adam Michael 
Kolton, Alaska Wilderness League, Washington, DC; and Ms. Linda 
Lance, the Wilderness Society, Washington, DC.
    Mr. Young. Mr. Chairman?
    The Chairman. The gentleman from Alaska.
    Mr. Young. Unfortunately, again, the other side of the 
aisle, Mr. Inslee and the rest of them are not here.
    Mr. Glenn is one of those people that lives in the area, 
represents those people in the area, is an Alaska native. And 
unfortunately, they are not being listened to. They are 
listening to the Gwich'in, which is my group, which I belong 
to, which is 450 miles away from where we are going to drill.
    And by the way, Richard Glenn brought his wife. Arlene is 
in the audience. Been sitting there very patiently, I 
understand, and his daughter. And I thank both of them for 
being patient.
    This congressional duty we have is sometimes very tiring 
and very slow. But it deeply pleases me to have also Mr. Hood, 
and of course everyone knows Roger Herrera.
    And Mr. Hood is with International Brotherhood of 
Teamsters, who happen to support this. I hope those people on 
that side of the aisle remember that.
    But welcome, for the Committee.
    The Chairman. We appreciate you being here. And above all, 
we sure appreciate your patience.
    But as you noticed, the Secretary brought a lot of 
attention to this issue. And it is a very important issue, and 
one we are very concerned about. So, therefore, we wanted to 
take the time and let all the members have it.
    But believe me, the testimony you are about to give, we 
will pour over every inch of it. So we do appreciate you being 
here.
    I would like to take you in the order that I called you to 
the panel: Mr. Herrera, Mr. Glenn, Mr. Hood, Mr. Kolton, and 
Ms. Lance.
    Mr. Herrera, I don't know what they have told you before, 
but we try to keep it within 5 minutes. I am sure most of you 
have worked your testimony out for about that time, so we 
appreciate it.
    Mr. Herrera, the time is yours, sir.

  STATEMENT OF ROGER C. HERRERA, ARCTIC POWER, WASHINGTON, DC

    Mr. Herrera. Thank you, Mr. Chairman.
    My name is Roger Herrera. And today I am representing 
Arctic Power, which is a citizens's grassroots organization 
mainly composed of Alaskans that support careful development of 
the Coastal Plain.
    I personally have spent most of my career working in the 
Arctic as a geologist. I have literally lived way over a year 
in a tent on the North Slope of Alaska and spent two summers 
and one cold winter in the Arctic islands of Canada, much 
closer to the North Pole than Alaska is.
    So I have seen the Arctic in its worst moments and its most 
beautiful moments. And they have certainly indelibly changed my 
whole attitude to the area.
    With regard to your legislation, Mr. Chairman, because in 
past times I have played a role looking for oil in the North 
Slope for one of the big oil companies, and also being 
responsible for environmental protection of the oil operations, 
I looked at the bill in the light of that experience. And one 
thing that is very important with regard to legislation 
covering activities in the Arctic is that it mustn't be too 
confining to prevent the ability for technology to expand 
beyond the regulatory control.
    What has happened in the last 25 years in the Arctic is 
just that. Technology has transformed the whole way of 
operating there for the better, to improve environmental 
protection and improve the efficiency of the operations.
    I think in this bill you have reached a nice balance in 
that regard. You have used all the technological improvements 
which have been generated over the last 25 years, you have used 
all the environmental protection which state of the art and 
experience has shown to be necessary.
    But I think there is enough wiggle room for new technology 
even better than the existing ones to evolve as time goes on. 
And that is exactly what you should try to achieve when you are 
controlling large oil operations on the Coastal Plain.
    If I may, Mr. Chairman, I will just digress a little bit 
from my written testimony to address the water problem which 
Mr. Holt talked about earlier.
    I spent a year of my life looking oil in the middle of the 
Sahara Desert in southern Libya. And the Sahara Desert is a 
desert, as we all know, just as the North Slope of Alaska is a 
desert. It doesn't have much rainfall in either area.
    It is quite easy and routine to drill wells in the middle 
of the Sahara Desert where no fresh water exists. And in fact, 
the same techniques that we use there will be used and have 
been used on the North Slope of Alaska. One does not need to 
tap running fresh water, especially in the wintertime, on the 
North Slope of Alaska in order to drill oil wells.
    First of all, one can use seawater and distill it quite 
comfortably. In fact, most of the oil fields that are presently 
producing oil on the North Slope of Alaska don't use any 
freshwater at all. They all distill seawater.
    If you are some distance away from the sea and it is to 
difficult in the middle of winter to pipe the seawater to your 
location, you simply drill a shallow hole beneath the 
permafrost 2,000 deep and there in the geological formations is 
more saltwater than you have ever seen in your life.
    So once again, you use that water, distill it, and you have 
all the freshwater you need.
    With regard to making ice roads; first of all, you drive 
preferentially across the sea ice until you get the area where 
you want to operate inland, and then you make an ice road over 
the tundra.
    People seem to forget that in the wintertime, the North 
Slope of Alaska is covered with snow. Snow is freshwater 
waiting to be melted. And so all you do is put up a snow fence. 
Within 24 hours, you have more snow than you have ever seen in 
your life because of the winds that constantly blow there. You 
melt that and you make your ice roads without disturbing the 
rivers and the fish and all that sort of stuff. So it is not a 
practical concern.
    I would just like to make one point further beyond my 
written testimony, and that is only once today have we heard 
the term OPEC. Mr. Young mentioned OPEC.
    OPEC is controlling the world price of oil. And we are 
suffering because of that control. If we don't take advantage 
of the oil resources which we believe underlies the Coastal 
Plain to moderate that OPEC control, we deserve the 
consequences of such control. OPEC is looking after its own 
interests; it is not looking after the interests of North 
America.
    What Alaskans know and what Alaskans want you to know, Mr. 
Chairman, is that the vast majority of us, 75 percent plus, 
support careful development on the Coastal Plain. We have 
recognized for the last 25 years that we have changed the 
history of the United States of America because of the oil that 
has come out of Prudhoe Bay and has benefited the whole nation.
    If Prudhoe Bay had not been discovered or the pipeline had 
not been built, our whole history would have changed for the 
worse, no doubt.
    We think we can prolong that history in the future by 
careful development of the new oil beneath the Coastal Plain.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Herrera follows:]

        Statement of Roger C. Herrera, on behalf of Arctic Power

    Mr. Chairman, My name is Roger Herrera. I am an Alaskan citizen and 
I have been asked to represent Arctic Power today. Arctic Power is a 
grassroots, citizen's organization whose sole objective is to persuade 
Congress to open the Coastal Plain of the Arctic National Wildlife 
Refuge (ANWR) to responsible oil and gas leasing. Arctic Power has 
approximately 10,000 individual members, mostly Alaskans, and 
represents all segments of Alaska people, of all political persuasions. 
It is funded by individual contributions, plus generous grants from the 
State of Alaska approved by the state legislature and governor. I, 
personally have lived in Alaska for almost 30 years and have been 
involved with its geology and the search for oil and gas since 1960. I 
have spent many summers and several winters working on the North Slope 
of Alaska and in the Canadian Arctic Islands with British Petroleum, 
where, at different times, I was responsible for the exploration and 
environmental programs of the company. Because of that experience, I 
have accompanied scores of members of Congress on their visits to the 
North Slope and the Coastal Plain, including members of your committee. 
I retired from BP in 1993 and am now a consultant to Arctic Power.
    My long association with oil and gas exploration in the Arctic and 
my past responsibility for environmental protection in the region has 
allowed me to review, with interest, the text of the Arctic Coastal 
Plain Domestic Energy Security Act of 2001. It is a document which is a 
result of an evolution over the past 14 years during which time many 
similar documents have been prepared and debated in the House and 
Senate. Interestingly, none of the previous bills has been found 
wanting to the extent that not one has suffered defeat in the committee 
or on the floor. However, the fact that the issue has not been resolved 
indicates a certain resistance in the minds of some people, probably 
based on their lack of intimate knowledge of the arctic.
    My point is that the present bill is the product of many decades of 
experience, not only of the preparation of legislative documents, but 
also, knowledge and practical know how of arctic operations and ways of 
protecting the arctic environment.
    It is worth repeating that much of the technological change that 
can be recognized in the oil industry's operations over the past 30 
years has resulted from ideas initiated on the North Slope of Alaska. 
These ideas, exemplified by treatment of waste materials, long step-out 
horizontal wells, coiled tubing drilling, use of ice pads and ice 
roads, new light-weight drilling rigs, etc., inevitably achieved the 
multiple objectives of more efficient, safer operations and more 
protection of the environment. They incorporate technological 
improvements that make it easier to operate in the harsh, dangerous, 
arctic winter and it has been the incentive supplied by the difficult 
climate coupled with the environmental responsibility of all Alaskans--
especially the residents of the North Slope Borough--that has triggered 
that remarkable evolutionary improvement. It has made the North Slope 
oil operations the cleanest and most advanced in the world.
    The language of H.R. -- does nothing to diminish those benefits. It 
mandates that best technology should continue to be used, but it 
resists the bureaucratic tendency to stifle innovation by excessive 
rules. The bill gives great authority to the Secretary of Interior to 
formulate appropriate regulations. One has to hope that that authority 
will be used by staff with firsthand knowledge of the arctic that 
liaise closely with the Eskimos and State of Alaska experts to achieve 
a win-win balance.
    Such a balance can readily be established as exemplified by the 
Audubon Society in its Rainey Sanctuary in Louisiana and its Baker 
Preserve in Michigan, where careful oil and gas production has been 
quite compatible with nesting cranes and other wildlife for many 
decades.
    The arguments often voiced by more extreme environmental 
organizations that the Coastal Plain cannot be developed in an 
environmentally acceptable way is opposed 75% of Alaskans (Dittman, 
2001), to say nothing of the villagers of Kaktovik (www.kaktovik.com) 
who are the only inhabitants of the Coastal Plain. It is remarkable 
that the Coastal Plain area, despite the rhetorical superlatives used 
inaccurately to describe it, is one of the few federal land areas where 
the NIMBY syndrome does not apply. If the local viewpoint is so 
important in making decisions against drilling beneath the Great Lakes 
or offshore Florida, surely it should be the dominant consideration in 
opening the Coastal Plain!
    Unfortunately the rules of engagement on this issue are more often 
emotional rather than factual. Caribou are a case in point. One hears 
concerns that Coastal Plain oil development might adversely affect the 
caribou of the Porcupine Herd. It is worth recording that the herd has 
declined in numbers for 189,000 in 1989 to 128,000 today. This decline 
occurred in a period when the herd has been actively managed and 
protected by a US/Canadian Caribou Commission and by the US Fish and 
Wildlife Service. It has been subject to harvesting by the Gwich'in 
Indians of Arctic Village and Canada, and some drilling has occurred 
within its range on the Canadian side, but, by and large, the herd has 
apparently declined due to natural causes.
    The recent history of other Alaskan Caribou herds is a warning of 
what might happen to the Porcupine herd in the future. The Forty-mile 
Caribou herd in east central Alaska was once over 500,000 animals. By 
the 1960's the herd had declined to 6,000 animals, but it slowly 
recovered over the next 30 years to about 22,000 caribou--a shadow of 
its historical size. Similar fluctuations have been recorded in the 
Western Arctic Herd. In the 1970s, this herd crashed from 240,000 
animals to only 75,000. The point about these huge statistical 
variations in caribou numbers is that neither oil development nor 
wildlife management has much influenced them. It is quite relevant, 
therefore, to worry about the Porcupine Caribou Herd decline, but it is 
probably quite irrelevant to suggest that a Coastal Plain oil field 
will in any way affect the population trends. The trend is clearly down 
for this herd, as it is clearly up for the adjacent Arctic Herds. 
Bearing in mind that there are almost twice as many caribou in Alaska 
as people, it is difficult to justify jeopardizing the nation's energy 
balance by excessive worry about the Porcupine Herd.
    A decision to open the Coastal Plain as contemplated in H.R. -- is 
all about careful development of its oil and gas resources. Therefore a 
brief discussion of how much oil might underlie the Coastal Plain is 
appropriate, especially in the light of the distortions that have been 
applied to the US Geological Service estimates by environmental 
organizations. In its 1998 assessment the USGS concluded that, at $25/
barrel oil and with an oil recovery factor of 37-38%, there was a 95% 
chance that the Coastal Plain could produce 5.7 billion barrels of oil 
over a period of 25+ years, and a 5% chance that almost 16 billion 
barrels could be produced. The relevance of these estimates is not in 
the geological assessment of how much oil might be present, but rather 
in the economic and technical parameters which impact the figures. I 
believe that the price of oil demanded by the USGS for optimum 
production is much too high. It does not take into account the huge 
cost efficiencies of the new arctic drilling technology already 
discussed. However, even more important, is the USGS estimate of how 
much oil can be taken out of a given geological reservoir. The 
expectation that only 37-38% of the oil present can be extracted is too 
low. The Prudhoe Bay field is now calculated to have 60-65% of its oil 
eventually produced. The Endicott field producing from a different, 
more difficult, geological horizon, will give up more than 55% of is 
oil, and the Alpine Field, which is the beneficiary of state of the 
art, 2001 technology, and which taps a ``tight'' reservoir, will 
produce over 50% of its oil. These examples justify the assertion that 
37-38% recovery is much too low. Consequently the USGS resource figures 
are extraordinarily conservative and can be considered minimal and 
pessimistic.
    I would prefer to await the results of exploratory drilling before 
being dogmatic about the amount of oil present, but because we already 
know that significant amounts of oil are present in the Soundough 
Field, which partially underlies the western edge of the Coastal Plain, 
and because of the conservative nature of the USGS figures, it is easy 
to believe that 10 billion or more barrels might be producible from the 
area. Such an amount would represent the largest new oil province found 
in the world in the past 30 years. The Caspian Sea area might prove the 
single exception to that, but it remains to be fully proven.
    This testimony has argued that there is a lot of oil beneath the 
Coastal Plain and that it can be produced, with the law established by 
H.R. --, in a manner which will not sacrifice the environment and 
wildlife. Despite those conclusions, it is necessary to establish why 
we need the oil. The answer has a lot to do with peace of mind, a 
viable economy and OPEC. It goes without saying that America should 
continue to use innovation, energy efficiencies and other conservation 
measures to reduce the level of concern we presently and realistically 
have for our energy future. In particular, it is hard not to embrace 
more efficient automobiles, just as we embrace more efficient jet 
airplanes. Jets are safer, faster and cheaper to operate than they were 
20 years ago, and other forms or transportation should strive to mirror 
that improvement. Having wished that, it is nevertheless difficult to 
forecast a significant reduction in our use of petroleum energy in the 
next generation or two, if only because of population growth. If that 
proves to be the case, America will inevitably become more and more 
dependent on oil imports from OPEC countries, specifically Middle 
Eastern producers.
    This is a situation, which has faced advanced countries such as 
France, Japan and Britain for many decades. Britain's reliance on 
Middle Eastern oil was neutralized by its discoveries of the North Sea 
Oil. France and Japan both coped by embracing nuclear energy and by 
foreign policy decisions, with regard to Arab nations, quite different 
than those of the U.S. Unfortunately, OPEC nations now have effective 
control of the world price of oil. This is exemplified by the fact that 
in 1999 when OPEC increased world oil production by 1.75 million 
barrels of oil per day, the price of oil immediately slumped from 
$25.00/barrel to $10.00/barrel. Conversely an OPEC tightening of supply 
is solely responsible (coupled with world demand) for the present 
levels of $25-30/barrel. OPEC nations have every reason not to get too 
greedy in increasing the price of oil to levels where alternative or 
unconventional oils become competitive, but likewise the United States 
has every reason to reduce OPEC control by using ANWR oil to moderate 
the world price (any new oil in the world market will moderate price), 
and to reduce our reliance on OPEC production. The U.S. is the world's 
largest energy market so a clear indication to OPEC that we are willing 
to manage our energy use and production in a manner that lessens the 
cartel's influence is a very strong message indeed.
    The alternative to more domestic production of oil is inevitably 
more U.S. troops in the Middle East to ``protect'' OPEC oil, and a 
sustained higher price. The alternative would also demand a radical 
change in our foreign policy in the region with the inevitable problems 
associated with such changes.
    These are heavy issues that the energy legislation tries to address 
in a reasoned manner. Unfortunately, the opponents to ANWR oil and gas 
production whose mantra is environmental protection, wish to disregard 
the NIMBY syndrome by offering millions of acres of wind farms and tens 
of millions of acres of solar panels across the nation--all in an 
effort to prevent 2000 acres of ANWR Coastal Plain from being 
developed. Perhaps we should embrace windmills, solar, hydro, and 
nuclear, etc., but we still need oil and gas, and our own oil is better 
than anyone else's.
    Production of oil from the Coastal Plain has been bitterly 
criticized on the basis that it only represents six months supply of 
oil to the nation. To some extent I have already addressed this 
misrepresentation in the above discussion on reserve estimates, but it 
is worth amplifying the practical reality of ANWR production. The 
Coastal Plain is different from many isolated oil and gas basins (such 
as the Canadian Beaufort Sea) because it is already within 25 miles of 
an existing pipeline and has the benefit of the Prudhoe Bay 
infrastructure, 60 miles to the west. I mentioned that part of the 
Sourdough Field underlies the western edge of the Coastal Plain. It is 
possible that that known deposit would be developed very quickly after 
the first lease sale. Consequently, because only a feeder pipeline 25 
miles long would be necessary to link to the Trans Alaska Pipeline, 
first production from the Coastal Plain could be expected as quickly as 
2 or 3 years after leasing took place. Litigation used as a delaying 
tactic could increase that time and unfortunately such legal strategy 
has been used routinely in Alaska, nevertheless, all the physical plant 
for production could be built very quickly. Moderate sized oil fields 
in the arctic would have a 20-25 year lifespan. Giant fields (>1billion 
barrels) will inevitably continue to produce for a much longer period 
of time, so the coastal plain could easily be producing oil from 2005 
for 50 years. The two certainties of such a long time frame is that 
more oil will be produced than originally estimated, due to continuous 
technological breakthroughs, and, second, that oil will still be a 
valuable world commodity as a source of petrochemicals if not of 
energy.
    It is difficult to be sanguine about our energy situation in the 
near term and while we in America have taken cheap, reliable energy for 
granted all our lives, we have also exhibited a quick irritability when 
it becomes too expensive or not available.
    The tendency of opposition groups to impose nuisance delays on oil 
development projects should be of concern in the future. The public 
process must always be rigorously followed to ensure responsible 
decisions on new developments, but deliberate litigious delay for the 
sake of delay should be strongly discouraged. I am not sure that H.R. 
-- achieves that necessary protection.
    In conclusion Arctic Power--representing the vast majority of 
Alaskans--is fully supportive of passage H.R. --. We are proud of 
Alaska's contribution to America's energy portfolio over the last 45 
years. We think we have long proven the compatibility of responsible 
oil development and healthy wild life populations better than anyone 
else. The Lower 49 states supply Alaska with all its goods and services 
because we have no manufacturing base, so our oil development generates 
hundreds of thousands of jobs for those states. The Coastal Plain 
belongs to all of us, but first it belongs to the Inupiats of Kaktovik, 
then it is Alaskans' responsibility and finally it belongs to any 
American who cares to think about it or visit it. This bill will 
realize its true riches and sacrifice nothing by so doing.
                                 ______
                                 
    The Chairman. Thank you, sir.
    Mr. Glenn?

STATEMENT OF RICHARD GLENN, ARCTIC SLOPE REGIONAL CORPORATION, 
                         BARROW, ALASKA

    Mr. Glenn. Thank you, Mr. Chairman. It is an honor for me 
to come before the Committee this afternoon.
    My name is Richard Glenn. I am the vice president of lands 
for Arctic Slope Regional Corporation, which is the native-
owned regional corporation of Alaska North Slope comprised of a 
membership of more than 8,000 Inupiat Eskimos.
    And it is an honor again for me to represent them.
    I would like to request that my written testimony be 
adopted for the record, and I will not belabor the Committee 
with going over the testimony verbatim.
    The Chairman. Without objection, all of your testimony will 
be put in the record.
    Mr. Glenn. In addition, Mr. Chairman, I would to provide a 
little digression. It is a double honor for me to speak here.
    Chairman Young hails from my home state. My mother is 
Inupiat Eskimo born and raised on Alaska's Arctic Coastal 
Plain.
    And in addition to that, it is a double honor because my 
father is a son of the great State of Nebraska. And to be here 
among the membership of this Committee with the great Tom 
Osborne is just going to elevate my testimony to near heroic 
status when I go home and tell my family about it.
    [Laughter.]
    But I have a job to do here, and that is to represent the 
views of our Inupiat Eskimos, who join with the majority of 
Alaskans in support of safe, responsible exploration of the 
Coastal Plain.
    We live in the Coastal Plain of the Arctic. We are the only 
group of native Alaskans who live in the Arctic National 
Wildlife Refuge.
    Our communities are scattered across the Coastal Plain from 
the Canadian border to the western North Slope. We are 
subsistence-oriented people. We value the resources of the land 
and the sea. We depend on them for food. And so it is in our 
interest to see that these resources are protected. And it is 
in the interests of all Alaskans and all Americans.
    The priorities that bring me here are threefold.
    First is the protection of our culture, the well-being of 
our people, and the natural resources that we depend on.
    Second is the economic self-determination and the 
opportunity to develop our lands, some of which exist inside 
the Coastal Plain of ANWR, for the betterment of our people. We 
live there, and we view this as a very important issue.
    Third, we believe in and support the responsible 
exploration and development of the public lands of the Coastal 
Plain. We know that it can be done. We have seen it over the 
last 30 years of active exploration and development on the 
North Slope.
    So as a people, we support passage of Title V of the Energy 
Security Act, and we want to make that message clear.
    There has been, Mr. Chairman, almost a century of 
exploration on the North Slope, and our people have borne 
witness to that exploration for minerals, for coal. We have 
assisted them, advised them.
    Natural gas seeps located around the North Slope where 
methane is percolating to the surface. Oil seeps located by our 
people furnished to explorationists. Mineral exposures, coal, 
all of these have been accessed by the outside world, with 
access provided by our people.
    In addition to that, we have viewed the history of 
development, beginning with Prudhoe Bay and coming up to the 
present, in several lights.
    At first, we feared exploration and development. We fought 
against it. But we learned, along with industry. We commented, 
we harangued, we fought, but in the end, industry listened. And 
they listened to our views.
    And as a result, the oil industry of the past is a lot 
different from the oil industry of the present. The oil fields 
of Alaska's North Slope are among the cleanest oil fields 
producing in the world.
    And to those who want to compare an unspoiled wilderness 
with an area of active exploration and development, I would 
urge an additional comparison: that between the Alaska oil 
fields on the North Slope and those areas around the world 
where oil production is going on today. Look in places like the 
Russian Far East or in Colombia or in parts of the Middle East, 
where they don't have the environmental safeguards that we hold 
dear. This is the kind of exploration and development that will 
continue is we are prevented from this responsible development 
of Alaska's North Slope.
    Mr. Chairman, there are professional views that I also 
hold, as a geologist, a professional geologist, that support 
the development of the Coastal Plain of the refuge.
    The 800-mile long pipeline that supplies our country with 
oil needs to be running at capacity, or, according to the law, 
when the pipeline is not flowing, it will be shut down.
    It is not like areas of the Canadian foothills or in areas 
of West Texas where there are many ways to move our oil to 
market. While that pipeline is there, Mr. Chairman, it needs to 
be efficiently producing oil.
    Our people are a sharing people. We have shared among each 
other. We share food. We share resources. We share our time and 
our effort.
    And it is this attitude of sharing, Mr. Chairman, that I 
would like to bring to this Committee. In return, I would 
expect and hope that this attitude of sharing can be foisted 
back upon us by the United States Government.
    We have shared our lands with the Federal Government. Huge 
enclaves of our area have been given to the petroleum reserve, 
the wildlife refuge and to the national park, areas that were 
part of our aboriginal claim. It was later settled by the 
Native Claims Settlement Act, but we received a much smaller 
acreage.
    In this attitude of sharing, Mr. Chairman, we ask that we 
have access to our own lands, our traditional homeland within 
the Coastal Plain of the wildlife refuge.
    And, Mr. Chairman, that we have this avenue of economic 
self-determination for the betterment of our people, jobs for 
our people, jobs for native Alaskans, jobs for Alaskans in 
general.
    For these reasons, we urge passage of the energy act and 
specific support for Title V of this act. Thank you.
    [The prepared statement of Mr. Glenn follows:]

   Statement of Richard Glenn, Vice President, Arctic Slope Regional 
                              Corporation

    My name is Richard Glenn. I am the Vice President of Lands for 
Arctic Slope Regional Corporation (ASRC). I am here to offer testimony 
in support of the passage of the Energy Security Act (or, the ``Act''), 
and wish to give specific support to Title V of the Act, which is 
titled, ``The Arctic Coastal Plain Energy Security Act of 2001''.
    ASRC is the Alaska Native-owned regional corporation representing 
the Inupiat Eskimos of Alaska's North Slope. ASRC owns surface and 
subsurface title to certain Alaskan North Slope lands. This ownership 
stems from an earlier claim of aboriginal title--covering the entire 
Alaskan North Slope--that was eventually settled in part by the Alaska 
Native Claims Settlement Act of 1971 (ANCSA). Under the terms of ANCSA, 
ASRC's land selection rights, which amounted to a small fraction of 
what was originally claimed as aboriginal title, were further limited 
by what at that time were pre-existing state and federal withdrawals. 
ASRC's corporate mission is to enhance the cultural and economic 
freedoms of it shareholders.
    With title to approximately 4.6 million acres of surface and 
subsurface estate, our regional corporation represents the biggest 
North Slope landowner outside of the federal government. ASRC lands 
include the subsurface estate to 92,160 acres of land within the Arctic 
National Wildlife Refuge (ANWR) Coastal Plain. The ASRC-owned ANWR 
subsurface estate lies under and adjacent to the Inupiaq village of 
Kaktovik. The Kaktovik Native village corporation, KIC, holds the 
surface title to these same lands.
    More than eight thousand Inupiat comprise the membership of ASRC, 
seventy-five percent of whom live in Arctic Slope communities scattered 
from the Canadian border in the east to the Chukchi Sea in the west, 
covering an area about the size of the state of Minnesota. We live 
close to the land and sea and depend on the resources they provide, 
including caribou, fish, seabirds and marine mammals. In addition, we 
also depend on jobs, because today's subsistence lifestyle demands a 
mix of financial resources and traditional resources. As a result, the 
values of our people and of our regional corporation reflect our 
recognition of the benefits of careful stewardship of the land and the 
need for gainful employment for our people. This blend of development 
and stewardship is reflected in a core value statement of our 
corporation, which states that we ``shall develop our lands and 
resources by means that respect Inupiat subsistence values and ensure 
proper care of the environment, habitat and wildlife.''
    As owners of lands which we view as our traditional homeland, as 
subsistence hunters who have close ties to the land and sea and the 
resources they provide, and as village and North Slope community 
residents who have witnessed firsthand the exploration and development 
of Alaskan North Slope by the oil industry, we offer our support of the 
Arctic Coastal Plain Energy Security Act of 2001. In doing so, we have 
three main priorities: First, the protection of our subsistence way of 
life and the resources upon which we depend. Second, the opportunity 
for economic self-determination by allowing environmentally responsible 
exploration and development of Native-owned lands within ANWR. Third, 
the opening of the public lands of the Coastal Plain to responsible oil 
and gas exploration and development.
A BALANCE OF STEWARDSHIP AND RESPONSIBLE DEVELOPMENT
    In our region we constantly balance the protection of the land with 
the need for environmentally sound exploration and development of 
natural resources. In our view, the Act provides this kind of balance, 
and it obligates the Secretary of Interior to follow a method of 
careful stewardship regarding oil and gas exploration and development 
in the ANWR Coastal Plain. The method has proved itself with successful 
exploration and development of other federal North Slope lands--most 
recently in the National Petroleum Reserve in Alaska (NPR-A).
    The Inupiat people have contributed to responsible North Slope oil 
and gas development. Thirty years ago, our people were strongly opposed 
to all forms of oil and gas development in our region. We feared it. 
With our regard for the environment in mind, we created strong 
permitting and zoning policies within our local borough government. We 
were not complacent with oil development, we were--and still remain--
vigilant. In the face of strong local development ordinances, oil 
industry exploration and development methods have improved over the 
last twenty-five years. We have fought, argued, commented and 
complained, an on occasion we have said, ``No''; and the industry has 
listened. As a result, today's oil industry on the North Slope is a far 
cry from the industry of the past. In fact, we believe that the North 
Slope oil and gas practices of today are the best examples of 
environmentally responsible development. Industry practices still are 
not perfect, and we remain vigilant, in an effort to continually 
improve industry's performance in our environment. We are confident 
that with the appropriate level of local consultation and control, the 
Coastal Plain of ANWR can be explored and developed in a way that 
protects natural resources for everyone.
    The oil industry of today follows a strict local permitting and 
zoning process that protects areas warranting special designation. Our 
Inupiat people have a part in this process at all governmental levels. 
Today's drill rigs explore in the winter season, when a snow and ice 
cover has formed a protective layer between exploration equipment and 
the underlying tundra. Seismic acquisition is now conducted by 
vibrating vehicles rather than the shothole/dynamite methods of the 
past. Drilling practices are strongly regulated by state and federal 
agencies, and no drilling wastes or equipment are left onsite after an 
exploratory well is completed. Finally, production facilities are 
located only in acceptable areas, and occupy a small fraction of their 
former area. The advent of directional drilling and the streamlining of 
production methodology has allowed for the smaller footprint of 
infrastructure in Alaska's oil fields. Once in place, production 
facilities have little or no impact on local fish and wildlife 
resources of the area.
ECONOMIC SELF-DETERMINATION FOR ALASKA'S INUPIAT PEOPLE
    In northern and northwestern Alaska, there is no industry except 
for resource extraction. The land is too cold for agriculture, and too 
remote for refined manufactured products. In addition, the way of life 
in our rural communities has with time become a combination of 
subsistence and cash economies. As a result, our people are needful of 
both a healthy natural environment and access to gainful employment. 
With the exception of a small amount of tourism and government service 
positions, our people can look only to resource development for jobs 
within our region. Hence, we have assisted with the development of the 
North Slope oil and gas resources through our own Native-owned oil 
field service company subsidiaries, which has employed and developed 
the skills of our people. In addition, we have made efforts to seek 
title to subsurface and surface lands, including the KIC lands acreage, 
that hold natural resource potential, that we might benefit from the 
oil and gas industry as a resource owner of lands that have been 
traditionally used by our people. As it now stands, we are prevented 
from developing our Kaktovik-area lands due to Section 1003 of ANILCA. 
The exploration and development of the Coastal Plain of ANWR, including 
the KIC lands, then represents an issue of economic self-determination 
for our people.
    In addition, our local government and village residents realize 
great benefit from the sustained presence of the oil and gas industry 
on the North Slope. Because of the practices developed over time on 
Alaska's North Slope, the residents of the North Slope Borough live in 
a land with few environmental hazards, and have begun to build in their 
communities what is often taken for granted in the rest of this 
country. Facilities for education, health care, police and fire 
protection, reliable power generation, and sanitation all have been 
initiated by the North Slope Borough, thanks to a revenue stream 
generated by the taxation of property including oilfield 
infrastructure. In the absence of new development such as the potential 
development of the Coastal Plain, the North Slope Borough revenues 
would see a sharp decline, due to the depreciation of the older Prudhoe 
Bay infrastructure. Our communities are cleaner and safer, our people 
are living longer, and our children no longer have to travel a thousand 
miles or more to get a primary and secondary education.
    With Borough operating revenue as well as programs initiated by our 
Native organizations, we are building training programs to give our 
local workforce skills to participate anywhere in today's economy. For 
example, we have established an education foundation at ASRC that 
provides financial assistance to Inupiat members interested in 
obtaining a college degree or technical training. Finally, ASRC 
continues to incorporate into its business the Inupiat value of 
respecting and taking care of our elders. ASRC has established an 
elders benefit trust that provides elderly Inupiat members with a 
monthly stipend to offset the high cost of living in the region. Many 
of our elders do not have retirement funds as many did not work prior 
to the introduction of the oil industry within our region. The reason 
for this is simply because prior to the oil industry we did not have an 
economy, and thus no jobs for our elders to work at to save for a 
retirement fund.
IN THE NATIONAL INTEREST
    Finally, we view the exploration and development of the ANWR 
Coastal Plain as in the nation's interest. This ANWR Coastal Plain 
marks the most significant onshore area for potentially large 
accumulations of oil and gas in the nation. Even with conservation and 
assuming that the United States oil demand remains static, there needs 
to be new production to replace production from older declining fields. 
The supergiant Prudhoe Bay oil field, which once produced twenty 
percent of the nation's crude supply, has declined to less than half of 
its peak production. America needs a continuing source of domestically 
produced oil. The alternative, importing oil from countries of 
political instability, or from countries with less than acceptable 
environmental practices, will surely do more harm than good.
COMMENTS ON SPECIFIC PROVISIONS WITHIN TITLE V OF THE ACT
    Section 503 (d)--Relationship to State and Local Authority--ASRC 
strongly supports this provision, and the desire of the North Slope 
Borough to retain its broad governmental powers regarding development 
in the Coastal Plain. These powers, including planning, permitting, 
zoning, right-of-way determination, and taxation are the tools by which 
the residents of the North Slope become stakeholders in the development 
of Coastal Plain lands.
    Section 503 (e)--Special Areas--ASRC strongly supports the 
provision that mandates the participation of Kaktovik and the North 
Slope Borough in the selection of lands, if any, for designation of 
special areas worthy of special management or protection. The local 
residents have the most to offer in determining the special status of 
any lands, and should be consulted.
    Section 506 (a) (7)--ASRC strongly supports the provision that 
mandates lessees, agents and contractors of Coastal Plain exploration 
and development follow the terms of section 29 of the 1974 Federal 
Agreement and Grant of Right of Way for the Operation of the Trans-
Alaska Pipeline, of employment and contracting for Alaska Natives and 
Alaska Native Corporations from throughout the State.
    Section 507 Coastal Plain Environmental Protection--ASRC Strongly 
encourages local consultation for all the terms of Section 507 Parts a- 
through f. In light of the successful process adopted by the Department 
of Interior for the exploration and development of the northeastern 
part of the National Petroleum Reserve in Alaska, ASRC suggests that 
Interior adopt a similar framework to incorporate consideration of 
local input from the village of Kaktovik and from the North Slope 
Borough for environmental protection measures regarding the Coastal 
Plain of ANWR. Such input would include strong recommendations for 
siting of consolidated facilities where the local population desires, 
so that village residents can benefit from jobs, and the proposed 
facilities can benefit from existing infrastructure.
    Section 507 (d)- ASRC recommends strengthening this section to 
mandate that subsistence access is ensured.
    Section 510 Conveyance--ASRC strongly supports the entirety of 
Section 510, which addresses the completion of conveyance of the 
surface title of the KIC lands to the Village Corporation and 
conveyance of the subsurface title of the same lands to ASRC, in the 
interest of removing any clouds on title.
    Section 511 Impact Fund Assistance--ASRC strongly supports Section 
511 of the Act, which provides for Impact Fund Assistance, following 
the model of the NPR-A impact fund assistance program. Although the 
positive impacts of development may often outweigh any negative ones, 
the negative impacts still do exist. The villages closest to the 
effects of oil and gas development are always in the most need of 
impact fund assistance to address some of the direct negative effects 
of development.
                                 ______
                                 
    The Chairman. Thank you.
    Mr. Young, you have a motion?
    Mr. Young. Mr. Chairman, I ask unanimous consent to have 
the testimony of the mayor of the North Slope Borough submitted 
for the record at this time.
    The Chairman. Without objection, so ordered.
    [The statement of Mr. Ahmaogak, Mayor, North Slope Borough, 
follows:]

  Statement of The Honorable George Ahmaogak, Sr., Mayor, North Slope 
                                Borough

    Mr. Chairman and Members of the House Committee on Resources, my 
name is George Ahmaogak, Sr., and I am the Mayor of the North Slope 
Borough (Borough). I greatly appreciate the opportunity to submit 
written testimony to you regarding H.R. 2436, the Energy Security Act, 
which was introduced yesterday, July 10, 2001, by Chairman Hansen. My 
specific purpose is to provide testimony regarding the Borough's 
support for oil and gas exploration and development on the Coastal 
Plain of the Arctic National Wildlife Refuge (ANWR).
    ANWR's Coastal Plain is this Nation's best prospect for major new 
oil discoveries. The ANWR Coastal Plain is located within the 
boundaries of the Borough. The only community within the Coastal Plain 
is the Village of Kaktovik. The residents of both the Borough and 
Kaktovik strongly support exploration and development of the Coastal 
Plain. These activities, however, must be subject to appropriate 
measures to protect subsistence uses, the environment, the caribou, and 
other fish and wildlife.
1. Introduction
    The Coastal Plain portion of the 19 million acre ANWR is very 
important to the nation's economic well-being and to its energy 
security. This 1.5 million acre area is also of critical importance to 
the Inupiat Eskimos and residents of the Borough. We are the full-time 
residents of the North Slope. Our ancestors have lived in the Arctic 
for thousands of years. They have been the stewards of its land, 
environment and wildlife. We have an Eskimo Village with 240 residents 
located in the heart of the Coastal Plain.
2. National Interest in the Coastal Plain
    Mr. Chairman, Members of this Committee have made a compelling case 
for opening the Coastal Plain to oil and gas exploration and 
development. With gasoline prices approaching--and in some states 
exceeding--$2.00 a gallon, the American people are looking for action. 
Citizens are concerned about rising energy prices and about who 
controls oil supplies. This is a complex issue. But one thing is very 
clear. Opening the Coastal Plain now is the right thing to do. The 
Coastal Plain area:
     Lhas the potential for major new oil reserves, estimated 
at 9 to 16 billion barrels of economically recoverable oil;
     Lcould slow or reduce our growing oil import dependence, 
currently at over 56%;
     Lcould be developed with minimal impact on the environment 
and wildlife;
     Lcould generate billions of dollars in new Federal revenue 
from bonus bids, royalty and corporate taxes; and
     Lcould address the need for increased national energy 
security.
3. The Borough's Interest in the Coastal Plain
    The interests of the residents and the Inupiat people in the 
Coastal Plain are both economic and cultural. Congressional action on 
legislation to open the Coastal Plain will determine whether or not my 
constituents will have a long-term tax base from which to provide 
essential public services. It will determine whether there will be jobs 
and economic activity for our young people and our children. It will 
also determine whether the Inupiat people, who once held aboriginal 
title to all of the North Slope's 56 million acres, will be permitted 
to develop the economic potential of the 92,160 acres of private lands 
that they own in the Coastal Plain at the Village of Kaktovik, pursuant 
to an act of Congress.
    Let me summarize my constituents' specific interests in the Coastal 
Plain.
a. Tax Base, Public Services and Local Government
    Prior to the discovery of Prudhoe Bay in 1968, there was no tax 
base on the North Slope and no effective means to provide essential 
public services to the Inupiat people. Sewage service was by ``honey 
bucket.'' Ice was hauled by dog sled from lakes for household water. 
Children were sent to Bureau of Indian Affairs (BIA) high schools 
thousands of miles away. There was little to no medical care. Fire and 
police protection did not exist. Electrical services were unreliable. 
Communication with persons and communities outside of the Borough was 
sporadic. Housing conditions were very poor. The cost of food and many 
other essentials was significant. Our people only managed to survive by 
their wits, by barter, by subsistence hunting, and by continuing the 
Inupiat tradition of ``sharing.''
    Prudhoe Bay's discovery brought major changes. These changes 
included, for the first time, jobs, economic activity, a tax base, and 
an opportunity to establish a local government. We established the 
``North Slope Borough'' in 1972 to address our need for vital public 
services
b. Uncertain Economic Future
    Oil development in the Arctic has improved the quality of life of 
the people of the North Slope in many ways. But our future is still 
very uncertain. Prudhoe Bay's oil production began in 1977. Oil 
production peaked at over 2.1 million barrels per day in 1988, but is 
now in decline and down to about 1.2 million barrels per day.
    Already, we are seeing job opportunities disappear as oil 
production declines and many oil industry activities are down-sized, 
consolidated and reduced to ``maintenance'' level operations.
    New oil prospects need to be opened to attract exploration capital 
and extend the economic life of the Trans Alaska pipeline for 30 years 
or more. If discoveries are not made soon, we will see our tax base 
further eroded. This means the minimal public services that the Eskimo 
people enjoy today will have to be cut back.
    Without Congressional action, the economic opportunities for the 
people of the North Slope will decline, and our nation's dependence on 
high cost OPEC oil will grow.
4. Nation's Best Oil and Gas Prospect
    If Congress adopts a National Energy Policy that opens the Coastal 
Plain to oil and gas exploration and development--we see a brighter 
future for all of Alaska's Native people, for the State of Alaska, and 
for the nation. This future could mean as many as 250,000 to 735,000 
new jobs in all fifty states; an increase in our gross national product 
of $50 billion; a major reduction in the $100 billion annually we now 
spend for imported oil; and a significant source of new revenue to 
reduce the Federal deficit.
    No one disputes that the Coastal Plain is the nation's best 
prospect for major new oil and gas reserves. Government and private 
geologists are in agreement here. They have identified 26 separate 
major oil and gas prospects in the Coastal Plain. This does not 
necessarily mean Prudhoe Bay's 10 billion barrel discovery will be 
repeated. But it does mean that the potential is there for both another 
giant oil discovery and for many smaller oil fields.
    Domestic oil companies are willing to commit additional resources 
and capital to areas on the North Slope with high potential. But, 
absent authorization for leasing in prime areas such as the Coastal 
Plain, these resources and jobs will be allocated to major prospects in 
other countries.
5. Precedent for Development
    Opening the Coastal Plain to leasing does not set new a precedent. 
Prudhoe Bay and other fields next to the Coastal Plain were leased 
forty years ago. They have produced as much as 25 percent of the 
nation's oil production since 1977. This production has been occurred 
safely, with no harm to the environment, the land, the wildlife, or to 
Native subsistence users.
    The Department of the Interior and the Mineral Management Service 
has had an aggressive Beaufort Sea OCS leasing policy in offshore 
waters adjacent to the Coastal Plain for more than two decades. The 
State of Alaska has been leasing lands within the three mile limit--
some areas touching the shore of the Coastal Plain--for years. Wells 
are being drilled in these waters and discoveries are being made. Yet, 
the environmental dangers presented by development in these icy, 
turbulent, wind-driven waters far exceed any conceivable risk of 
development in the flat onshore Coastal Plain.
6. Support for Specific Legislative Provisions and Regulations
a. Impact Aid for North Slope Communities
    The Borough supports the provisions of the Energy Security Act of 
2001, that recognize the need for ``impact aid'' for Kaktovik Village 
and the North Slope Borough to provide essential infrastructure and 
necessary social services. A decision to open this area will greatly 
increase visitor traffic and other social pressures on this small 
Village. The people who live there support oil development, but they 
want to retain their privacy, their culture and their character as a 
traditional subsistence Eskimo community. With advance planning and 
impact aid, both the Borough and Kaktovik can play an important role in 
meeting the legitimate needs of the industry and government in 
connection with Coastal Plain exploration and development. The impact 
aid provision should also be made available for any other community 
that might be affected by leasing and development.
Land Use and Environmental Provisions
    I have carefully watched oil development on the North Slope. In the 
1960's, like many of my people, I had concerns, about the social and 
cultural impact of development. Thirty years of experience demonstrate 
that our initial fears were unfounded. A quality environment and 
healthy stocks of fish and wildlife are compatible with responsible oil 
development. Our lands remain pristine. Our subsistence lifestyle has 
not been adversely impacted. The Central Arctic caribou herd at Prudhoe 
Bay is larger than ever--3,000 in 1972 and as high as 24,000 in recent 
years--and thriving.
    The footprint of oil development is constantly decreasing in size. 
Technology has made major gains. Horizontal drilling means more wells 
are able to reach out much farther from small drilling pads. Better 
land use planning consolidates common facilities. Gravel roads are 
being replaced by winter ice roads and drill pads which melt without 
leaving a trace of man's activity.
    These gains did not happen by chance. They are the product of 
regulation and hard work by an industry that is constantly being pushed 
by the Borough, by the State of Alaska and by the Federal government. 
The regulatory objective is to produce the oil we need more efficiently 
with fewer and fewer impacts on the land, the environment, fish and 
wildlife and the subsistence activities of the people of the North 
Slope.
    The Borough recommends that Coastal Plain leases incorporate the 
state- of-the-art lease provisions approved by the Department of the 
Interior in the recent National Petroleum Reserve-Alaska (NPR-A) lease 
sale.
7. Wildlife in the Coastal Plain
    Mr. Chairman, there are those who oppose leasing and advocate 
designation of the Coastal Plain as Wilderness. They have advanced a 
wide range of shifting arguments over the years. In recent times, they 
have turned their arguments on the need to protect the Porcupine 
Caribou herd.
    My people are subsistence hunters. We live on the North Slope. We 
give priority to the need to protect all forms of fish and wildlife. 
This includes caribou. Fortunately, we know how to do this. Prudhoe Bay 
demonstrates compatibility with the Central Arctic Herd. It also 
demonstrates years of caribou-friendly planning and operational 
experience.
    The caribou is a very adaptive animal. The Canadians showed us this 
when they drilled fifty or more oil wells just east of the Coastal 
Plain over the past twenty-five years. They also demonstrated this when 
they constructed the Dempster Highway through the heart of the range of 
the Porcupine Caribou herd.
    There are many known and proven ways to explore for and develop oil 
fields in ways that are compatible with caribou. These included raised 
pipelines and covered ramps to assist pipeline crossing; seasonal 
closing of exploration during the short calving season; and 
concentrating year round activities such as maintenance facilities in 
areas least used by caribou and other wildlife.
8. Alaska Federation of Natives' Support
    The Alaska Federation of Natives (AFN), the state-wide organization 
of Alaska's Native institutions, is on the record in support of leasing 
the Coastal Plain. AFN supports leasing in the Coastal Plain for 
reasons that are very important to Alaska's Native Americans. Over 80 
percent of our State's revenues for education, medical care, public 
sanitation and other programs come from taxes and royalty on North 
Slope oil. North Slope oil provides many of the jobs for Native people 
and much of the economic activity that is essential to Native-owned 
businesses and our State economy.
    Many of Alaska's rural native villages lag behind urban areas in 
employment, public services and opportunity. Closing this gap requires 
the resources that North Slope oil and gas and the Coastal Plain can 
provide.
9. Local Opposition
    In recent years The Gwich'in Steering Committee has been vocal in 
opposition to Coastal Plain development. I want to make a couple of 
points about this opposition.
    First, I do not believe the Steering Committee represents the views 
of the majority of the Athabascan Indians who live in the interior of 
Alaska or of Doyon, Ltd., their Regional Corporation. A major Doyon 
business enterprise owns and operates the rigs used in drilling North 
Slope oil wells.
    Second, in 1980 the Gwich'in tribe leased all of their 1.8 million 
acres of land on the Venetie Indian Reservation. This oil and gas lease 
was sold to the Rouget Oil Company for $1.8 million.
    Third, this oil and gas lease, which was recorded as a matter of 
public record, did not contain any provisions to protect the Porcupine 
Caribou herd that often passes through the reservation during its 
annual migration.
    Fourth, after the expiration of the original oil and gas lease, the 
tribal government for the 350 residents of the two Villages on the 
Venetie Reservation again advertised and offered to lease all of their 
1.8 million acres of land to any other oil company.
    Fifth, a number of the present members of today's Gwich'in Steering 
Committee were among the officials who signed the oil and gas leases as 
well as the subsequent offer to lease.
    The Inupiat people want what the Gwich'in people have already had. 
We want the opportunity to have the economic benefit of developing our 
private lands at Kaktovik Village. We also believe that the public land 
area of the Coastal Plain should be developed for its highest and best 
use--oil and gas. This will benefit the American public and all 
residents and Native people in Alaska.
10. The NPR-A Precedent
    The Clinton Administration prepared a comprehensive EIS and 
conducted an in-depth review of all issues associated with the 1998 
decision to lease 5 million Northeast portion of the (NPR-A). As a part 
of this review, then-Secretary of the Interior Babbitt personally 
visited the North Slope. He camped out, ran rivers and toured NPR-A. He 
also visited the new Alpine oil field near our Village of Nuiqsut, west 
of the Kuparuk field. The former Secretary Babbitt reviewed the latest 
in land use plans, saw the newest oil field technology, and weighed the 
benefits of development against the environmental impacts within NPR-A.
    The former Secretary also visited subsistence hunting and fishing 
camps and dined on Native food in a subsistence camp site. He learned a 
good deal about Native culture, the subsistence life style, and Native 
knowledge about our land and wildlife resources. According to press 
reports, the former Secretary Babbitt enjoyed his time at the camp.
    Subsequently, former Secretary Babbitt approved the lease sales and 
exploration and development in the Northeast NPR-A. This approval 
reflected scientific judgments in the Department about the 
compatibility of oil development in NPR-A with wildlife, environmental, 
and subsistence values. The Secretary personally weighed the evidence. 
We believe he made the right decision. And the Nation will benefit.
    It is important to recognize that the same careful land use 
planning and new technology used at Alpine, in partnership with the 
State of Alaska and Native Corporations, and at other new fields and in 
the NPR-A, would also be used in the Coastal Plain. The differences are 
that:
     LThe Coastal Plain's wildlife, environmental and scenic 
values are not as significant as the Northeast NPR-A's values;
     LThe oil and gas potential of the smaller Coastal Plain 
area are, according to geologic studies, greater than the potential of 
the Northeast NPR-A; and
     LMost land-based subsistence activities of the Inupiat 
people on the North Slope occur within the NPR-A, where the majority of 
our people live.
    I urge the Bush Administration, this Committee, and Congress to 
look at the Coastal Plain on the merits. If they apply the same 
standards that were applied in opening Northeast NPR-A, they should 
support legislation to open the Coastal Plain.
11. CONCLUSION
    Mr. Chairman, I appreciate the opportunity to present the North 
Slope Borough's views. Development of the Coastal Plain is of critical 
importance to our children's future and maintaining our culture.
    We strongly urge the Committee to adopt energy legislation to open 
the Coastal Plain to a carefully regulated, environmentally sensitive 
program of leasing, exploration and development. Thank you.
                                 ______
                                 
    The Chairman. Mr. Hood?

     STATEMENT OF JERRY HOOD, INTERNATIONAL BROTHERHOOD OF 
                   TEAMSTERS, WASHINGTON, DC

    Mr. Hood. Mr. Chairman, I am Jerry Hood. I serve as special 
assistant to the general president for the International 
Brotherhood of Teamsters on energy. I am also the principal 
officer of local union servicing the entire State of Alaska.
    I am here today in both my roles on a local level and an 
international level to convey our support and general president 
Hoffa's support for the Energy Security Act that you have 
introduced today.
    I am going go abbreviate my comments due to the length of 
the hearing today. I would ask that my written statement be 
entered in the record.
    Mr. Young. Without objection.
    Mr. Hood. I would like to clarify some misconceptions 
Congressman Markey brought forward with regard to the red dot. 
The drillers didn't submit that mousepad to the Members of 
Congress. It was not Arctic Power that submitted the mousepad 
to the Members of Congress with the red dot. It was the 
Teamsters.
    And we take umbrage, as well as Mr. Markey did, to some of 
the distortions that take place when discussions of development 
of the Coastal Plain of ANWR take place.
    Everywhere I go, I see pictures of beautiful mountains and 
caribou on those mountains and saying that we are going to 
drill there. That is not true. We are not going to drill in 
those mountains.
    We are going to drill on the Coastal Plain section 1002 
that was designated by Congress for that purpose because of its 
potential for oil and gas contribution to America's energy 
independence.
    Alaskans have a 30-year history of prudent, safe, sound, 
environmentally responsible oil development in our state. We 
think that the same attitude can be accomplished in the Coastal 
Plain of ANWR as well with the technology that exists today.
    There is a group of people in Alaska that were 
environmentalists long before there were bullet faxes, mail 
solicitations, and phone banks. They have cared for that land 
for centuries. They are the Inupiat Eskimos.
    They live off that land. They don't have 7-11 stores. They 
don't have Safeway stores to go buy groceries. That land is 
their grocery store.
    And I submit to you, Mr. Chairman, that if there was a 
chance that this land would be destroyed, it would decimate 
their subsistence lifestyle, and they would not be here today 
supporting this issue.
    So I think it is a native rights issue. They own 92,000 
acres of land within the Coastal Plain. That is private land 
that they cannot touch unless Congress says they can. And I 
think that is an important consideration for this Committee and 
this Congress as well.
    OPEC has been mentioned, the importation of foreign oil. Up 
until recently, we imported 700,000 barrels of oil a day from 
Iraq. At the same time, our military forces have put their 
lives on the line defending the no-fly zone for what purpose? 
To protect that foreign source of oil for this country.
    The money we spend in Iraq goes to build missiles and 
chemical weapons that are aimed at our allies, Israel. That 
doesn't make a whole lot of sense to me or the members that we 
represent.
    We represent 600,000 truckers across this country that 
deliver 80 percent of the freight. They depend on a reliable 
and dependable and affordable source of fuel for their trucks.
    It was mentioned in earlier testimony that some of those 
truckers have gone out of business because they couldn't 
compete in the marketplace. We are messing with an 
infrastructure in our country, the delivery of freight, that is 
going to have severe ramifications on each and every American, 
not just those of us in Alaska that support this issue.
    So while many may consider a vote for this bill as a vote 
for the big, bad oil industry, I see it as something else. I 
see it as a vote for increasing the United States energy 
independence. I see it as a vote for national security. I see 
it as a vote to support oil production where it is done using 
the most environmentally sensitive methodology in the entire 
world. I see it as a vote for American rights. I see it as a 
vote to keep the power on in 12,000 low-income Maryland homes 
that was just reported Sunday that they may lose their 
utilities because they can't afford to pay their bills.
    But most importantly, I see it as an opportunity to put 
Americans, and specifically Teamsters, to work. When we have 
lost 400,000 jobs since the first of the year in this country--
good-paying jobs, not service sector jobs but high-tech, high-
skilled and well-paying jobs--we have lost 500,000 jobs in the 
oil industry over the last decade, many of whom were Teamster 
members and many of whom were the members that I represent in 
the State of Alaska.
    So I urge the support this legislation. Thank you.
    [The prepared statement of Mr. Hood follows:]

Statement of Jerry Hood, Special Assistant to the General President for 
             Energy, International Brotherhood of Teamsters

    Mr. Chairman and Members of the Committee:
    My name is Jerry Hood, Special Assistant to the General President 
for Energy at the International Brotherhood of Teamsters and Principal 
Officer of Teamsters Local 959 in Alaska. In my roles as a Teamster 
official at the local and international levels, I am here today to 
convey the support of my union, its 1.5 million members, and our 
General President James P. Hoffa, for the House ``Energy Security 
Act.''
    However, my support of this legislation does not end with my union 
affiliation. As a consumer, as an Alaskan, and as a father, I urge you 
to vote for the ``Energy Security Act.''
    As a consumer, I support this bill. While some opponents of 
increasing energy supply would like you to believe that there is no 
energy crisis, the evidence is incontrovertible. This past winter, 
working families from central and northeast states were faced with 
record high home heating bills. Rolling blackouts have plagued 
California for two straight summers. Gasoline prices continue to put 
the squeeze on low and middle income Americans, forcing many to cancel 
summer vacations.
    And, just this past Sunday, the Baltimore Sun ran a story on 12,000 
low-income Maryland families who face the very real possibility of 
having their utilities cut off. According to the article, these 
families are still trying to find a way to pay for their winter heating 
bills, due to the fact that the cost of fuel has doubled and tripled 
over the previous year.
    While the article focuses on metropolitan Baltimore, it also paints 
the picture of a growing national crisis. More than four million 
households in 19 states face a similar fate--having their power cut off 
during the hottest days of summer. The article also notes that low-
income families are hit especially hard by skyrocketing energy costs, 
as they tend to spend three times more of their income on energy costs 
than medium-income families.
    For these consumers--the 12,000 in Maryland and the 4.3 million 
nationwide--the energy crisis is more than a subject to be debated on 
Sunday mornings. It is a reality that hit them this winter, continues 
to haunt them today, and threatens to permanently harm their ability to 
provide for their families.
    As an Alaskan, I support this bill. For decades, we have been 
proving that the need to provide energy for Americans can be balanced 
with the need to protect the environment. Since the opening of Prudhoe 
Bay in the early 1970's, the State of Alaska played a critical role in 
increasing the United States' energy independence--providing, at its 
peak, more than 2 million barrels a day. Even with the recent decline 
in oil production, Alaska still supplies the country with one fifth of 
its domestic oil. And we have accomplished this with minimal impact to 
the environment, which is one of the reasons why 75% of Alaskans 
support the opening of ANWR.
    Alaskan oil is produced using the cleanest, most technologically 
advanced, environmentally sensitive methods in the world. We--
Alaskans--set the standard for the industry. This is due, in no small 
part, to a group of environmentalists who have played a critical role 
in ensuring that we produce oil in Alaska in the most responsible 
manner possible. Unlike most environmental groups, this one does not 
have an office in Washington, D.C. That is because this group has, for 
generations, lived in Alaska, in ANWR, in Section 1002, in the village 
of Kaktovik.
    This group is the Inupiat--a community indigenous to the North 
Slope of Alaska. Long before there were phone banks, blast faxes, or 
direct mail solicitations, the Inupiat cared for the land in and around 
ANWR. For centuries, the Inupiat have balanced their need to use the 
land and its resources with a desire to ensure that those resources 
would remain for future generations. With the introduction of oil 
production in the 1970's, the Inupiat continued their role as stewards 
of the land.
    In light of this history, I find it unconscionable that Congress 
would prohibit the people of Kaktovik from utilizing the petroleum 
resources that lie beneath their own, private lands. However, that is 
the reality today. If any member of Congress considers himself or 
herself to be an advocate for the native peoples of this country, then 
there is only one option--give the Inupiat people the right to use 
their lands to provide for their families. I ask you--Who in this room 
could possibly believe that he or she is more qualified than the 
Inupiat on the issue of protecting the North Slope of Alaska?
    As a father, I support this bill. The United States is increasingly 
dependent on foreign nations for its energy needs. Our dependence on 
foreign oil, in particular, leaves us vulnerable to the whims and 
machinations of unscrupulous foreign nations.
    Earlier this year, Iraq was supplying 700,000 barrels of oil to our 
country every day and using the revenues to buy chemicals, missiles, 
and other weapons of mass destruction that are designed for use against 
our allies--particularly Israel. At the same time, United States 
military personnel put their lives on the line every day to enforce the 
no fly zone, all because of our need to protect the oil supply in the 
region. This makes no sense.
    Even nations that are not preparing for war against our allies do 
not hold paramount the effect of oil pricing on our national security. 
Their chief concern, of course, is profit. OPEC unabashedly holds back 
supply in order to keep prices high; as our domestic energy supplies 
decrease, so does our ability to respond to this price fixing.
    Today, we are dependent on foreign nations for more than 50% of our 
oil supply. While this may not seem that dire under current 
circumstances, it will become a real problem in a time of crisis or 
international conflict. We should set, as a minimum, the goal of 
decreasing our dependence on foreign oil to less than 50%. While 
conservation and efficiency measures can help us in meeting that goal, 
it cannot be done without increasing domestic supply. It cannot be done 
without the efforts set forth in this bill.
    Finally, as a Teamster, I support this bill. Every day, more than 
600,000 Teamsters start their day by turning a key to an 18-wheeler, a 
bus, a cab, or a delivery van. Two hundred thousand Teamsters work in 
industries or for companies that would directly benefit from the 
opening of ANWR. For these men and women, a reliable and affordable 
source of petroleum isn't just important--it is critical to their 
livelihood.
    In addition, the Wharton Econometrics Institute estimates that 
opening ANWR will create 735,000 jobs throughout the United States. 
Many of these jobs will be in the energy industry, which is among the 
most unionized industries in the country. We estimate that over 25,000 
of those jobs will go to Teamsters--in direct oil production related 
jobs alone. The potential to create jobs--good paying, secure jobs with 
decent benefits--is overwhelming.
    However, this is not just about job creation; it is about job 
preservation. In the last decade, more that 500,000 jobs have been lost 
in the domestic oil and gas industries. Many of those were Teamsters 
jobs. Many of those were members of my local. In every industry, the 
jobs losses are mounting. Already this year, 400,000 jobs have 
disappeared from the American economic landscape. If we do not act now 
to reinvigorate the economy, particularly the domestic energy industry, 
this trend will continue. Congress must act now to reverse it.
    In other words, while many of you may consider a vote for this bill 
as a vote for the big, bad oil industry, I see it as something else.
    I see it as a vote for increasing the United States' energy 
independence. I see it as a vote for national security. I see it as a 
vote to support oil production where it is done using the most 
environmentally sensitive methods in the world. I see it as a vote for 
Native American rights. I see it as a vote to keep the power on for 
12,000 low income Marylanders.
    Most importantly, I see it as a vote to put Americans, including 
Teamsters, to work.
    For these reasons, I urge you to vote for the ``Energy Security 
Act.''
                                 ______
                                 
    The Chairman. I thank you, Mr. Hood.
    Mr. Kolton?

  STATEMENT OF ADAM MICHAEL KOLTON, ALASKA WILDERNESS LEAGUE, 
                         WASHINGTON, DC

    Mr. Kolton. Mr. Chairman and members of the Committee, 
thank you for the opportunity to testify on the Energy Security 
Act, H.R. 2436.
    My name is Adam Kolton, and I am the Arctic campaign 
director for the Alaska Wilderness League, a nonprofit 
organization based here in Washington, D.C., that serves as a 
voice for Alaska's wilderness.
    I am pleased to be accompanied today by Ken Whitten, who 
was a chief caribou research biologist for Alaska's Department 
of Fish and Game for two decades before retiring last year. Ken 
will be happy to answer any questions members of the Committee 
might have.
    Mr. Chairman, we strongly oppose Title V of H.R. 2436 as it 
would change the law to mandate oil and gas leasing, 
exploration and development in the Arctic National Wildlife 
Refuge Coastal Plain, the area that the United States Fish and 
Wildlife Service considers the biological heart of the Arctic 
refuge.
    If enacted, Title V would reverse more than four decades of 
environmental progress begun under President Eisenhower, who 
had the vision and foresight to protect the northeast corner of 
Alaska in 1960. Drilling would drive a stake in the heart of 
the wildest place left in America.
    Far from a mere footprint, drilling would require hundreds 
of miles of roads, pipelines, and other industrial facilities 
scattered all across the Delaware-size Coastal Plain.
    Critical habitat for vast free-roaming herds of caribou, 
denning polar bears, grazing musk oxen, and nesting migratory 
birds would be destroyed, and the wilderness values of the last 
5 percent of Alaska's North Slope still off-limits for oil 
exploration and development would be lost forever.
    What is the payoff? Ten years from now, after exploratory 
wells and drill pads and airstrips and roads invade this 
landscape that William O. Douglas once called ``the most 
wondrous on God's Earth,'' we might just tap enough oil to meet 
1 percent of our daily demand. Not enough to lower electricity, 
home heating oil or gasoline prices for consumers anywhere in 
America, and certainly not enough to lessen our dependence on 
imported oil.
    Of course, drilling proponents argue the opposite. But the 
facts are inescapable. With less than 3 percent of the world's 
oil reserves, we cannot drill our way to energy independence.
    Recall that when Alaska's Prudhoe Bay oil field came online 
in 1977, average United States gasoline prices nearly doubled 
within 4 years. And if one looks at realistic estimates from 
the United States Geological Survey, the Arctic refuge is 
unlikely to produce anything close to that giant field.
    Mr. Chairman, with your permission, I would like to submit 
for the record a new report by an Alaskan economist that puts 
in better perspective the USGS numbers in terms of what is 
economically recoverable from the refuge.
    The Chairman. Without objection.

    [The report has been retained in the Committee's official 
files.]

    Mr. Kolton. Thank you.
    If the Energy Information Agency is right about oil prices 
in 2010, roughly 3.2 billion barrels of oil will be 
economically recoverable from the refuge.
    Far from the only option for increasing Alaska oil 
production, even the industry projects having enough oil from 
lands already open to development to keep the Trans-Alaska 
pipeline flowing with oil for at least another three decades.
    What about creating jobs or helping to address California's 
needs? We do not oppose a new natural gas pipeline, provided it 
complies with environmental laws and stays within existing 
right-of-way corridor, such as the Alaska and Alcan Highways.
    But let's be clear: Government estimates demonstrate that 
there is five times the amount of natural gas outside the 
refuge, elsewhere in the North Slope, than might exist in it.
    Of course, before any major new projects are undertaken, we 
would like to see the industry clean up the mess it has already 
made. More than 55 contaminated waste sites and 250 reserve 
pits litter the North Slope; 400 spills of diesel crude oil, 
acid seawater, and other substances have been occurring each 
year.
    Like the more than 500 scientists who recently wrote 
President Bush to oppose drilling in the Arctic refuge, we do 
not believe it is possible to explore, drill and produce oil 
from the Coastal Plain without undermining its incomparable 
wildlife and wilderness values.
    Still, with this being the goal to Title V, it is 
remarkable how little its specific provisions would do to limit 
the damage to the Coastal Plain. Among other things, the bill 
eviscerates National Environmental Policy Act, gives the 
Secretary the discretion to allow drilling during critical 
wildlife cycles, allows the industry to drain the Coastal 
Plain's scarce supplies of freshwater, places no limitations on 
intrusive seismic exploration, and fails to ban gravel mining 
or even permanent road construction.
    We respectively urge the Committee to reject Title V of the 
Energy Security Act. History, our children, and our 
grandchildren will judge us well if we have the courage and 
foresight to leave this incomparable national treasure alone.
    Thank you for the opportunity to testify.
    [The prepared statement of Mr. Kolton follows:]

 Statement of Adam Kolton, Arctic Campaign Director, Alaska Wilderness 
                                 League

    Mr. Chairman, Congressman Rahall, and members of the committee, 
thank you for the opportunity to testify on the ``The National Energy 
Security Act (NESA) of 2001.'' My comments focus on Title V of the 
legislation, which would authorize exploration and development of the 
Coastal Plain of the Arctic National Wildlife Refuge in Alaska.
    My testimony has been endorsed by the Alaska Center for the 
Environment, the Alaska Conservation Alliance, the Alaska Chapter of 
Sierra Club, and Trustees for Alaska. It has also been endorsed by the 
Alaska Coalition, which is made up of more than 500 conservation, 
sporting, religious and other public interest groups representing 
millions of Americans.
                                SUMMARY
    We oppose Title V of NESA as it would change the law to allow oil 
and gas exploration and development in the Arctic National Wildlife 
Refuge. The Arctic Refuge is America's greatest wilderness, protecting 
more abundant and diverse wildlife than any area in the circumpolar 
north. The U.S. Fish and Wildlife Service considers the 1.5 million-
acre Coastal Plain, the area now targeted for prospective oil and gas 
development, to be the ``biological heart'' of the entire refuge and 
its ``center of wildlife activity.'' The Coastal Plain also represents 
the only five percent of Alaska's North Slope that is protected, by 
law, from oil and gas exploration or development. In short, we firmly 
believe the Arctic National Wildlife Refuge is unique, not only to 
Alaska, but to the world, and should remain as it has since President 
Dwight Eisenhower first protected the northeast corner of Alaska in 
1960, free of industrialization.
      I. POLITICAL HISTORY OF THE ARCTIC NATIONAL WILDLIFE REFUGE
    Some have argued that the Coastal Plain--the so-called ``1002 
Area''--was expressly set aside for its oil and gas potential. This 
claim relies primarily on the fact that Congress failed to designate 
the area as Wilderness in ANILCA and, in the same law, authorized 
limited, one-time seismic studies of the area's energy potential. 
1 This argument ignores the purposes for which the area was 
originally protected and the real history of ANILCA.
---------------------------------------------------------------------------
    \1\ Alaska National Interest Lands Conservation Act, Section 1002, 
16 USC 3143
---------------------------------------------------------------------------
    Research and field studies by government and independent scientists 
in the 1930's, 40's and 50's led the Department of the Interior to 
recommend that the Northeast corner of Alaska be protected as part of a 
new conservation area. In response, in 1960 President Dwight Eisenhower 
urged Congress to pass legislation preserving this ``priceless'' 
wilderness of the Arctic. 2
---------------------------------------------------------------------------
    \2\ Special Message to the Congress on the Legislative Program, May 
3, 1960.
---------------------------------------------------------------------------
    Eisenhower's Arctic Wilderness Bill. In sending Eisenhower's Arctic 
Wildlife Range legislation to the Congress, Secretary of the Interior 
Fred A. Seaton singled out this 9-million-acre area as ``biologically 
irreplaceable land,'' explaining that it ``offers the only opportunity 
for this Nation to preserve an undisturbed portion of the Arctic large 
enough to be biologically self-sufficient.'' 3
---------------------------------------------------------------------------
    \3\ ``Secretary Seaton Sends Arctic Wildlife Range Bill to 
Congress,'' U.S. Department of the Interior press release, May 1, 1959.
---------------------------------------------------------------------------
    Eisenhower's Arctic wilderness legislation proposed to establish 
the area ``in order to preserve, in the public interest, a magnificent 
wildlife and wilderness area.'' 4 Thus, as a matter of 
conservation history, Eisenhower's Arctic Wildlife Range bill was the 
first legislation ever proposed by a president explicitly linking 
preservation of wilderness habitat to the achievement of wildlife 
refuge goals--an ecologically-enlightened concept now accepted as 
fundamental to preserving complex communities of wildlife species 
which, as Seaton said, ``require a sizeable unrestricted range''.
---------------------------------------------------------------------------
    \4\ Section 1 of draft legislation to authorize the establishment 
of the Arctic Wildlife Range, Alaska, as transmitted with a covering 
letter from Fred. A. Seaton to Hon. Sam Rayburn, April 30, 1959 
(emphasis added).
---------------------------------------------------------------------------
    Stressing that the purpose of the Range would be the preservation 
of ``wildlife and wilderness values,'' Seaton stressed that use of the 
area for other purposes would be ``permitted in a manner that would not 
impair the intent of this legislation.'' With extraordinary foresight, 
Seaton told Congress ``
    Looking ahead 50 years to the unfolding story of Alaska's 
development, it is clear that the only economically feasible 
opportunity for maintaining a wilderness frontier large enough for the 
preservation of the caribou, the grizzly, the Dall sheep, the 
wolverine, and the polar bear, all of which require a sizeable 
unrestricted range, lies in this northeastern Arctic region of the 
State''.
    For the wilderness explorer, whether primarily a fisherman, hunter, 
photographer, or mountain climber, certain portions of the Arctic coast 
and the north slope river valleys, such as the Canning, Hulahula, 
Okpilak, Aichilik, Kongakut, and Firth, and their great background of 
lofty mountains, offer a wilderness experience not duplicated elsewhere 
in our country. 5
---------------------------------------------------------------------------
    \5\ Fred A. Seaton to Hon. Sam Rayburn, April 30, 1959, 
transmitting draft legislation to authorize the establishment of the 
Arctic Wildlife Range, Alaska.
---------------------------------------------------------------------------
    Senate Failed to Act, So Eisenhower Used Executive Authority to 
establish the Arctic Wildlife Range
    In one of its proudest achievements for conservation, the House of 
Representatives passed Eisenhower's bill to establish the Arctic 
Wildlife Range in February 1960. However, opposition from Alaska's 
senators blocked any Senate action on the bill. In response, Eisenhower 
instructed Secretary Seaton to use executive authority to protect the 
area.
    Eisenhower's Public Land Order Establishes the Wilderness Refuge. 
On December 6, 1960, as instructed by Eisenhower, Secretary Seaton 
issued a Public Land Order establishing the Arctic National Wildlife 
Range ``by virtue of the authority vested in the President'' ``for the 
purpose of preserving unique wildlife, wilderness and recreational 
values.'' 6 In a press release, Secretary Seaton explained: 
``In these circumstances I felt it my duty, in the public interest, to 
move as promptly as possible to take the steps administratively which 
would assure protection and preservation of the priceless resource 
values contained in the proposed Arctic National Wildlife Range.'' 
7
---------------------------------------------------------------------------
    \6\ Public Land Order 2214, December 6, 1960, 25 Fed. Reg. 12598 
(emphasis added). The Secretarial Order was based on an application 
from the Bureau of Sports Fisheries and Wildlife, November 18, 1957. A 
notice of this application was published in January 1958, explaining 
that ``The applicant desires the land for an Arctic Wildlife Range for 
the preservation of the wildlife and wilderness of northeastern 
Alaska.'' 23 Fed. Reg. 364.
    \7\ ``Secretary Seaton Establishes New Arctic National Wildlife 
Range,'' U.S. Department of the Interior press release, December 7, 
1960.
---------------------------------------------------------------------------
    Quid Pro Quo Opens Other Federal Lands to Oil Development. At the 
same time, Seaton lifted withdrawals on approximately 20 million acres 
of North Slope federal lands to the west of the new Arctic Wildlife 
Range. An assistant to Secretary Seaton acknowledged that the opening 
of the federal lands to the West for state selection and potential oil 
development was a quid pro quo for leaving the new Arctic Wildlife 
Range undeveloped. 8 Large portions of those lands were soon 
selected by the State of Alaska under its statehood grant and became 
the site of the extensive petroleum operations in the Prudhoe Bay area.
---------------------------------------------------------------------------
    \8\ ``Some of the very interests [conservation groups in Alaska and 
nationally] which are pressing for the establishment of this area [the 
Arctic Wildlife Range] have withstood or resisted the attempts to 
restore this Public Land Order 82 area [west of the Range] to public 
domain previously. We think that this [establishment of the Wildlife 
Range] is a confidence-building factor as we move step by step to 
demonstrate to these people who are so interested in the preservation 
of some conservation lands in Alaska.'' U.S. Congress, Senate, Arctic 
Wildlife Range--Alaska, Hearings before the Merchant Marine and 
Fisheries Subcommittee of the Committee on Interstate and Foreign 
Commerce on S. 1899, a bill to authorize the establishment of the 
Arctic National Wildlife Range, Alaska, and for other purposes, 86th 
Congress, 1st Session, 1959.
---------------------------------------------------------------------------
Expanding the Arctic Refuge and Further Protecting the Arctic Coastal 
        Plain
    As was common at the time, the original Wildlife Range was viewed 
as a multiple purpose area, but other uses--such as mineral leasing--
were secondary to ``a primary purpose of providing permanent habitat 
for Arctic wildlife.'' Since 1960 we have learned much more about the 
complex and fragile wilderness ecosystem, and ever greater value has 
been placed on the preservation of the totally unmarred wilderness of 
the Arctic Refuge.
    In what was to become a pattern, the Alaska congressional 
delegation strongly opposed the Eisenhower Administration's 
establishment of the Arctic National Wildlife Range. In a statement 
that was to prove prophetic, Secretary Seaton noted that while Congress 
could override his Public Land Order, ``I cannot believe that such 
action would be taken in view of the unparalleled wildlife, wilderness 
and scenic values involved in the new range.'' 9 Indeed, in 
subsequent decades, Congress--led by the House of Representatives--has 
repeatedly strengthened the protection of the Arctic Range.
---------------------------------------------------------------------------
    \9\ ``Secretary Seaton Establishes New Arctic National Wildlife 
Range,'' U.S. Department of the Interior press release, December 7, 
1960.
---------------------------------------------------------------------------
    Alaska National Interest Lands Conservation Act of 1980 (ANILCA). 
In 1971, President Richard Nixon signed the Alaska Native Claims 
Settlement Act (ANCSA), which also set in motion comprehensive studies 
of federal lands in Alaska that might be given stronger conservation 
protection. As a result of these studies, developed during the 
administrations of Presidents Nixon and Gerald Ford by Secretary Rogers 
C.B. Morton, in 1980 the Congress and President Jimmy Carter doubled 
the size of the Range through ANILCA. Most of the core Refuge area 
originally set aside by President Eisenhower in 1960 was further 
protected as an 8-million-acre statutory wilderness pursuant to the 
1964 Wilderness Act. Thus, as the heritage of great bipartisan effort 
over more than four decades, with particular leadership from the House 
of Representatives, today we have the 19-million-acre Arctic National 
Wildlife Refuge.
    The Arctic Coastal Plain. In the 1980 law, a portion of the Coastal 
Plain of the original Eisenhower wildlife range was not designated as 
Wilderness, but the wildlife and wilderness values--having been so 
strongly supported in the House passed version of the bill, were given 
the next best thing: a prohibition on commercial oil leasing, 
exploration, development and production that could only be reversed by 
a future Act of Congress. 10 Furthermore, the Coastal Plain 
area was withdrawn from mining and mineral leasing laws. 11 
This is the area that continues under debate today.
---------------------------------------------------------------------------
    \10\ ANILCA, Section 1003.
    \11\ ANILCA, Section 1002(i).
---------------------------------------------------------------------------
    It is worth noting that the House of Representatives overwhelmingly 
passed full statutory wilderness protection for the Coastal Plain in 
1978 and again in 1979. The Senate had been poised to do the same, but 
negotiations led to the compromise language that expressly prohibited 
oil development on the Coastal Plain. While authorizing further study 
of the area's oil potential, the legislation also required an 
assessment of its wildlife and wilderness values--oil was certainly 
given no preference. In neither the proclamation establishing the 
Arctic Wildlife Range nor in ANILCA were the purposes of the Coastal 
Plain defined to include oil exploration and development. Given that 
the Coastal Plain was part of Eisenhower's original Range and that 
ANILCA only strengthened statutory protections for the area, it is not 
reasonable to conclude, as some have, that the Coastal Plain was set 
aside for its energy resources.
         II. WHY THE COASTAL PLAIN MERITS PERMANENT PROTECTION
    Nowhere else in Alaska's Arctic are the mountains and glaciers of 
the Brooks Range as dramatically close to the coastline as in the 
Arctic Refuge. Looking back across the Coastal Plain from the shoreline 
of the Beaufort Sea, the mountains lie only ten to forty miles away. 
Farther west, near the oil fields at Prudhoe Bay and the National 
Petroleum Reserve, the mountains are between 100 and 200 miles in the 
distance. Those who surveyed Alaska's Arctic in the last century 
determined that the Northeast corner of the state provided the best 
opportunity to protect a complete range of arctic and sub-arctic 
ecosystems. It was the only place where, in one conservation system 
unit, America's northernmost forest, the highest peaks and glaciers of 
the Brooks Range, and the barrier islands, lagoons, braided rivers, and 
rolling tundra of the Coastal Plain could be protected.
    Some have sought to belittle the wilderness values of this area, 
noting that it is ``flat'' and ``treeless.'' Yet, the Reagan 
Administration's 1987 Arctic National Wildlife Refuge Coastal Plain 
Resource Assessment Report concluded that the area ``has outstanding 
wilderness qualities: scenic vistas, varied wildlife, excellent 
opportunities for solitude, recreational challenges, and scientific and 
historic values.'' The Reagan report also determined that, with the 
exception of two abandoned DEW (Defense Early Warning) line sites along 
the coast, the entire Coastal Plain meets the criteria under the 1964 
Wilderness Act. During the summer of 2000 the buildings and 
infrastructure from these sites was removed.
    Wilderness designation of the Coastal Plain will ensure that at 
least one portion of Alaska's North Slope will forever remain free from 
industrialization. Because of the primary ecological value of the 
Coastal Plain to the remainder of the Refuge as well as the adjacent 
lands in Canada (some of which are protected as National Parks), it is 
imperative that the strongest protection be given to this very special 
area.
    Wilderness designation of the Coastal Plain will also afford 
permanent protection to the greatest abundance and diversity of 
wildlife along Alaska's arctic coast. More than 200 species call the 
Coastal Plain home, including musk oxen, polar bears and grizzlies, 
wolves and wolverines, and migratory birds that fly to or through four 
continents and nearly every state.
    Most notably, the Coastal Plain is the site of one of our 
continent's most awe-inspiring wildlife spectacles: the annual 
gathering of nearly 130,000 caribou. Each year, the Porcupine (River) 
Caribou Herd migrates 1,400 miles across Alaska and Canada, typically 
arriving on the Coastal Plain in late May where the females give birth 
to as many as 50,000 calves. Even in the rare years when the Porcupine 
Herd has calved in Canada because of snow conditions, the herd has 
always moved west to the Arctic Refuge Coastal Plain for the post-
calving season. The desirable coastal habitat has served as a 
birthplace and a nursery ground for these caribou for centuries.
    While there are larger herds of caribou in Alaska, none calve in so 
restricted an area as the Porcupine Herd. The relatively narrow Coastal 
Plain has fewer predators and far better foraging opportunities than 
the adjacent Brooks Range and provides extremely favorable insect 
relief habitat due to its close proximity to the Beaufort Sea and 
lagoons.
    No other caribou herd in North America is subject to international 
treaty obligations, and no other herd is as heavily relied upon by 
native people for sustenance and as a central part of their culture. 
The Gwich'in people of Alaska and Canada have settled in 15 villages 
along the migratory route of the herd. In some of their communities, up 
to 80 percent of their diet comes from caribou and other wild meat.
    The United States is also party to an agreement on the conservation 
of polar bears. That treaty obligates our nation to protect polar bear 
ecosystems with special attention given to denning and feeding sites. 
The Coastal Plain has the highest density of land-denning polar bears 
on Alaska's North Slope.
BIPARTISAN SUPPORT FOR WILDERNESS DESIGNATION
    Several years after passage of the 1980 Alaska Lands Act, 
Representative Morris K. Udall (D-AZ) introduced legislation to 
designate the Coastal Plain as Wilderness. Senator William Roth (R-DE) 
introduced a companion measure in the Senate. This year, 
Representatives Ed Markey (D-MA) and Nancy Johnson (R-CT) are 
sponsoring that same legislation, now named the Morris K. Udall 
Wilderness Act (H.R. 770). Together with its Senate companion measure 
sponsored by Senator Joseph Lieberman (D-CT), H.R. 770 has more 
bipartisan cosponsors than any other wilderness proposal before this 
Congress.
    In simple fairness, we urge the Committee to hold hearings on this 
legislation and provide an opportunity for its consideration when the 
House debates the fate of the Arctic National Wildlife Refuge in the 
coming weeks.
    The American people want to see the Arctic Refuge protected for 
future generations, not exploited for a short-term supply of oil. In a 
recent bipartisan poll conducted by Greenberg Quinlan Research and the 
Tarrance Group, 62% of Americans opposed drilling in the Arctic Refuge 
while only 34% supported development. Similarly, a new Gallup poll 
released last week demonstrated that proposed Arctic Refuge drilling is 
the least popular part of President George W. Bush's proposed 
``National Energy Strategy.''
    III. ARCTIC REFUGE OIL POTENTIAL: A DROP IN THE NATIONAL BUCKET
    Policy-makers and the press have used a wide range of numbers to 
characterize the potential oil and gas resources of the Coastal Plain. 
Although no one can say for sure how much oil and natural gas--if any--
the area may hold, a great deal of information is available from the 
U.S. Geological Survey's 1998 report which summarized a three year 
analysis of geologic information, re-processed seismic data, results 
from nearby test wells, and economic modeling to come up with a range 
of projections of the area's oil and gas resources.
    As the attached new report, ``Understanding the U.S. Geological 
Survey Analysis of Estimated Oil Beneath the Coastal Plain of the 
Arctic National Wildlife Refuge,'' prepared for the Alaska Wilderness 
League by Dr. Richard Fineberg, 12 makes clear, drilling 
proponents have significantly exaggerated the area's energy potential. 
For example, some have claimed that the Coastal Plain is likely to hold 
up to 16 billion barrels of oil. This figure comes from the USGS's 5% 
probability-estimate (1-in-20 chance) of finding technically 
recoverable oil from an area larger than the actual Coastal Plain (1002 
study-area) that includes the adjacent State offshore and Native lands. 
The correct 5% (low probability) estimate for technically recoverable 
oil from the actual 1002 area is 11.8 billion barrels of oil and the 
mean estimate is 7.7 billion barrels. It is important to note, however, 
that these estimates do not take into account the costs associated with 
producing that oil, or the effects of oil prices on commercial 
viability.
---------------------------------------------------------------------------
    \12\ The author, Dr. Richard A. Fineberg of Ester (Fairbanks), 
Alaska, is an independent analyst who specializes in economic and 
environmental issues related to North Slope development and the Trans-
Alaska Pipeline System. A copy of the report may be obtained by 
contacting the Alaska Wilderness League.
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    Large oil fields that demonstrate the importance of the distinction 
between a technically recoverable resource and an economically 
recoverable resource have already been discovered on the North Slope. 
One example is the West Sak field near Prudhoe Bay. That field is 
estimated to hold approximately 20 billion barrels of heavy oil. Much 
of that oil is technically recoverable, but the economics are not 
favorable--it would cost too much to produce. To deal with problems of 
this nature, it is customary to apply economic analysis to geological 
information. USGS followed this customary practice.
    The USGS projected that oil prices would have to be sustained at 
above $15.30 per barrel (in 1996 dollars) for any oil from the Arctic 
Refuge to be commercially viable . Adjusting for inflation, this 
translates to $16.53 per barrel in current dollars. While lower than 
today's average prices, the Alaska Department of Revenue projects that 
average prices in 2010, when Arctic Refuge oil might first be available 
(if leasing were approved and oil were discovered), would average 
$17.30 per barrel. Adjusting for inflation, this figure equates to 
$14.19 per barrel in today's dollars. If the State of Alaska's forecast 
is correct, then it's possible that no oil from the Coastal Plain will 
be economic to produce.
    According to the USGS, at a price of $20 per barrel (in 1996 
dollars) the Coastal Plain would likely yield 3.2 billion barrels of 
oil or the equivalent of what the U.S. consumes in less than 6 months. 
Adjusting for inflation, the price necessary to sustain production at 
this level would be $21.60 in 2001 dollars. The Energy Information 
Agency forecasts that prices will average $22.12 in 2010, slightly 
above the price necessary to yield this amount of oil.
    To be sure, oil prices are higher than that today. But the sudden, 
unpredicted and precipitous price swings that have characterized world 
oil prices for the past three decades have taught the industry the 
perils of basing tomorrow's forecast on today's oil prices. 
13 Oil executives will tell you that their investment 
decisions are not made on today's prices, but on their assessment of 
future conditions.
---------------------------------------------------------------------------
    \13\ The Future of Oil Prices: The Perils of Prophecy (Cambridge, 
MA and Chicago: Cambridge Energy Research Associates and Arthur 
Andersen & Co., 1984), p. iii.
---------------------------------------------------------------------------
    One of the most important conclusions of the USGS report is that 
the geology of the Arctic Refuge Coastal Plain does not favor discovery 
of oil in one super-giant field like Prudhoe Bay. In contrast to 
previous analyses, USGS now believes that production from the Coastal 
Plain is likely to come from approximately five smaller accumulations 
that might be discovered among 33 discrete pockets spread out across 
the entire Delaware-sized area. In other words, production of mean 
estimate volumes would require development of multiple fields across a 
wide area, not a mere ``footprint the size of Dulles Airport,'' as some 
have suggested.
    Proponents of Arctic Refuge oil drilling have not only 
mischaracterized the amount of oil that might lie beneath the Coastal 
Plain, but the impact this oil might have on energy costs paid by 
American consumers and our nation's energy security.
    Oil prices are determined principally by global supply and demand, 
not the presence or absence of an individual field. Consider the case 
of Prudhoe Bay. In 1976--the year before the nation's largest oil field 
ever discovered entered production--a barrel of West Texas Intermediate 
(WTI) crude oil sold for $12.65 and standard gasoline averaged $0.59 
per gallon. Two years later, with Prudhoe Bay adding more than a 
million barrels per day to domestic supply, WTI had increased by more 
than 15% (to $14.85 per barrel) and gasoline averaged $0.63 per gallon. 
During the next two years, as Prudhoe production increased, oil prices 
skyrocketed to $37.37, while gasoline nearly doubled, to $1.19 per 
gallon. In 1985, with Prudhoe Bay and Kuparuk both operating at full 
throttle, a barrel of WTI sold for more than $28 and gasoline averaged 
$1.12. 14
---------------------------------------------------------------------------
    \14\ ``Price history, crude oil, natural gas and motor gasoline,'' 
International Petroleum Encyclopedia, 1989 (Tulsa: Pennwell, 1989), 
p.337.
---------------------------------------------------------------------------
    Similarly, Arctic Refuge oil would do nothing to reduce the price 
that consumers pay for gasoline, home heating oil, or electricity. When 
Congress lifted a two-decade-old ban on the export of Alaska oil in 
1995, the oil companies vociferously argued that there is no connection 
between Alaska oil production and prices paid by U.S. consumers. Last 
year, British Petroleum made the same argument in its filings with the 
Federal Trade Commission during that agency's consideration of its 
proposed takeover of Arco.
    More egregiously, some have tried to use the current electricity 
crisis in California to make the case for oil drilling in the Arctic 
Refuge. With less than 1% of its electricity derived from oil, 
California would realize no benefit from Arctic Refuge oil. Some have 
suggested that natural gas could be produced from the Coastal Plain and 
be used for electricity and other purposes. This assertion ignores two 
basic facts. First, tapping any natural gas from any part of Alaska 
will require the construction of a new pipeline costing $10-15 billion 
to which the industry has yet to commit. Secondly, there are between 
26-35 TCF of gas already discovered in the immediate vicinity of 
Prudhoe Bay compared to the 7 TCF of technically recoverable natural 
gas the USGS says might lie beneath the Coastal Plain. 15
---------------------------------------------------------------------------
    \15\ John H. Schuenemeyer, ``Assessment Results,'' U.S. Geological 
Survey, The Oil and Gas Resource Potential of the Arctic National 
Wildlife Refuge 1002 Area, Alaska (Open File Report 98-34, 1999), 
Chapter RS, Table RS14.
---------------------------------------------------------------------------
    With respect to arguments that drilling the Coastal Plain would 
somehow enhance our nation's energy security, I would simply point out 
that using any of the realistic USGS estimates of economically 
recoverable oil, which range from 0 to 5.2 billion barrels of oil, 
Arctic Refuge oil drilling will not curb our nation's dependence on 
imports. Since the U.S. has less than 3% of the world's oil reserves 
and no prospective provinces that rival the much larger fields of the 
Middle East and the former Soviet Union, it is simply not possible for 
us to drill our way to energy independence.
    By contrast, increasing the average fuel economy of our nation's 
cars and sport utility vehicles to 39 miles per gallon would save 15 
times the amount of oil that the Coastal Plain might yield. This far 
more rational investment would dramatically lower prices for American 
consumers and greatly reduce our tab for, and dependence on, imported 
oil. Simply requiring that replacement tires on American automobiles be 
just as good as those outfitted on new cars would also save more oil 
than the Arctic Refuge might hold.
       IV. NORTH SLOPE: SIGNIFICANT OIL RESOURCES OUTSIDE REFUGE
    As recently as 1995, drilling proponents asserted that the Trans-
Alaska Pipeline System (TAPS) would run dry shortly after the turn of 
the century without oil from the Arctic National Wildlife Refuge. 
16 These claims looked specious and misleading at the time; 
it is now clear how wrong they were. Enhanced oil recovery from 
existing fields and discoveries of new ones have prompted the TAPS 
owners to predict at least another three decades of Alaska oil 
production without drilling the Arctic Refuge or even the National 
Petroleum Reserve-Alaska (NPR-A). In the oil companies' application to 
renew their State lease and Federal right-of-way grant to operate TAPS, 
submitted May 2, 2001, they assume that North Slope production declines 
until 2020 but then levels out at 490,000 barrels per day (bpd) through 
2034, the end of the proposed lease renewal period. 17
---------------------------------------------------------------------------
    \16\ For example, in the forward to the 1995 edition of a booklet 
advocating drilling in the Arctic Refuge, Alaska Governor Tony Knowles 
wrote, ``According to a 1991 report by the U.S. Dept. of Energy, the 
North Slope fields currently using the Trans-Alaska Pipeline are 
expected to produce so little oil by the year 2009 that the pipeline 
could be abandoned'' (The Arctic National Wildlife Refuge: Its People, 
Wildlife Potential, and Oil and Gas Resources [State of Alaska, Arctic 
Slope Regional Corporation and North Slope Borough, June 1995]). At the 
time the estimate used by the Governor was widely recognized as being 
out of date and probably wrong. In a letter to all employees dated Oct. 
6, 1994, Alyeska Pipeline Service Co. President David Pritchard told 
Alyeska employees that expected investment in existing fields would 
keep the Trans-Alaska Pipeline operating until at least 2030. (See: 
Alaska Wilderness League, Litany of Lies Nov. 28, 1995, Attachment 1A.)
    \17\ L.D. Maxim, ``Trans Alaska Pipeline System Throughput 
Analysis,'' Feb. 15, 2001 (draft), in Trans Alaska Pipeline System 
Owners, Environmental Report for Trans Alaska Pipeline System Right-of-
Way Renewal [draft], Vol. 2, Appendix A, pp. A-1--A-4 (May 2, 2001).
---------------------------------------------------------------------------
    Still, the TAPS owners' report suggests that even these production 
levels may be too low. For example, the report notes that rapid 
technological progress could result in a higher production level from 
existing fields in 2020 of 660,000 bpd; in this case, total production 
and production in 2034 could be higher than their baseline level.
    The State of Alaska's own estimates confirm these optimistic 
projections. The Alaska Department of Revenue forecasts higher 
production levels for this decade than the TAPS owners baseline 
scenario, declining to 302,000 bpd in 2034. 18 According to 
the TAPS owners' report, the State's projections ``have consistently 
proven to be reliable over the near term ... [but] have proven to be 
conservative over the long term,'' and ``successive projections have 
generally resulted in upward revisions ... as well as postponement of 
the year at which production is expected to fall below a certain 
benchmark.'' 19
---------------------------------------------------------------------------
    \18\ Alaska Department of Revenue, ``Spring 2001 ANS Production 
Forecast--Total Liquids'' (forecast through 2034), provided by Alaska 
Dept. of Revenue (calendar year = average of [state fiscal year + 
following state fiscal year]); for forecast through 2010 see: Alaska 
Department of Revenue Tax Division, ``Historical and Projected ANS 
Production,'' Fall 2000 Revenue Sources Book, p. 90 (on-line at State 
of Alaska, Dept. of Revenue, Tax Division).
    \19\ Trans-Alaska Pipeline System Throughput Analysis, p. A-1. In 
this regard, it is interesting to note that the State's current 
forecast exceeds its 1996 long-term production estimates by 
approximately 18 per cent (author's calculation).
---------------------------------------------------------------------------
    Both the State of Alaska and the industry's forecasts indicate that 
the North Slope can be expected to produce over seven (7.0) billion 
barrels of oil between 2002 and 2034--an average of more than 600,000 
barrels per day. The TAPS owners' assumptions result in total 
production ranging from 7.1 billion barrels (declining scenario) to 7.8 
billion barrels (baseline). With production from known fields and no 
production from the Arctic Refuge or NPR-A, the State of Alaska's 
production forecast for the same period is 7.7 billion barrels--more 
than double what USGS estimates might be produced from the Arctic 
Refuge Coastal Plain at oil prices of $21.60 in 2001 dollars.
    Recent discoveries in NPR-A and more aggressive development of the 
heavy oil deposits near Prudhoe Bay are likely to increase forecast 
production and further extend the life expectancy of TAPS.
    Last winter, the National Petroleum Reserve-Alaska (NPR-A), to the 
west of Prudhoe Bay was the focus of intensive exploration by both 
Phillips Petroleum and BP. In May Phillips Petroleum announced the 
discovery of what the company believes to be three separate hydrocarbon 
deposits in NPR-A. Further evaluation of those discoveries is Phillips' 
top priority for next winter's drilling, while the company also plans 
additional NPR-A exploration. 20 News reports from the North 
Slope hint at the potential of the region to the west of the Prudhoe 
Bay complex, while the largest discovery in that region to enter 
production--Alpine--began producing in November. Said to be one of the 
ten largest fields in the United States, Alpine presently accounts for 
nearly ten per cent of the North Slope's oil. 21 As noted 
above, the Alaska Department of Revenue production totals do not 
include production from NPR-A.
---------------------------------------------------------------------------
    \20\ ``Evaluation of Three NPR-A Discoveries Phillips' Top 
Priority,'' Petroleum News Alaska, June 2001, p. A13.
    \21\ See: ``Spring 2001 ANS Production Forecast--Total Liquids'' 
and Petroleum News Alaska, Feb. 2001, p. A24.
---------------------------------------------------------------------------
    Another source of potential future production is the large deposits 
of heavy oil in the West Sak and Schrader Bluff formations in the 
existing Prudhoe Bay complex. These deposits contain an estimated 20 
billion barrels of heavy oil. The Alaska Department of Revenue's long-
range forecast includes approximately 740 million barrels of West Sak 
and Schrader Bluffs oil--less than four per cent of the total 
accumulation. 22 The oil in these formations is comparable 
in quality to heavy crude oil in production in California; with 
production and transportation infrastructure in place, it is possible 
that the industry will find a way to bring greater quantities of this 
commodity to market. 23
---------------------------------------------------------------------------
    \22\ ``Spring 2001 ANS Production Forecast--Total Liquids.''
    \23\ Earlier this year, BP Exploration (Alaska) Inc. President 
Richard Campbell noted the potential of the West Sak and Schrader Bluff 
deposits, which he said contain an estimated 15 billion barrels of 
heavy oil that he described as ``cold, viscous and very difficult to 
produce.'' According to Campbell, ``our heavy oil production technology 
is improving, and some of our recent wells have been very promising.'' 
He added that recovery of just 10 per cent of that heavy oil ``would be 
like finding another Kuparuk,'' the nation's second largest producing 
field, just west of Prudhoe Bay (Richard Campbell, ``BP's future in a 
word: Growth,'' Petroleum News Alaska, January 2001, p. A1 [guest 
editorial]).
---------------------------------------------------------------------------
    The oil and gas industry companies that earned record-breaking 
profits for the year 2000 include the three major North Slope 
producers: BP, Exxon and Phillips Petroleum. An indication of the 
strength of these companies can be gleaned from recent Argus Research 
Company reports. This independent research company recommends the stock 
of all three companies and anticipates that the share price of each 
will increase significantly during the next 12 months. 24 
Argus is particularly enthusiastic about BP, citing the company's 
Alaska trade as a major reason for its optimism.
---------------------------------------------------------------------------
    \24\ For a brief rundown of Phillips Petroleum's stellar results 
since its acquisition of ARCO's Alaska properties in March 2000, see 
section III. of my February 8, 2000 memorandum, ``Alaska North Slope 
Development Prospects.'' Argus Company Reports on the major North Slope 
companies were issued May 9 (BP Amoco PLC; rated ``buy'' with a 12-
month target price of $72 per share, approximately 44% above present 
levels), June 1 (Phillips Petroleum; rated ``buy'' with a 12-month 
target price of $72 per share, approximately 30% above present levels) 
and June 12 (Exxon Mobil; rated ``buy'' with a 12-month target price of 
$100 per share, approximately 15% above present levels).
---------------------------------------------------------------------------
    While government agencies do not publish reckonings of North Slope 
profits, a preliminary estimate indicates that during 2000 the North 
Slope producers earned more than $9.50 per barrel after taxes on every 
barrel of North Slope oil they produced and delivered to refineries, 
resulting in total annualized profits of approximately $3.5 billion. 
25 The lion's share of those hefty profits are shared by 
three major oil companies that control more than 90 per cent of both 
North Slope production and TAPS. 26
---------------------------------------------------------------------------
    \25\ This preliminary estimate of Alaska production and pipeline is 
based on the model developed in the author's report, How Much Is 
Enough? Estimated Industry Profits from Alaska North Slope Production 
and Associated Pipeline Operations, 1993--1998 (Anchorage: Oilwatch 
Alaska, 1998, Ch. 2), with revisions to 1998 data for changes in 
production, price, pipeline tariff and tanker costs. (Note: This 
estimate is limited to Alaska operations and therefore does not include 
profits on tanker, refining and marketing activities.)
    \26\ British Petroleum (BP), Exxon Corporation and Phillips 
Petroleum produce more than 90 per cent of the North Slope's crude oil 
and own more than 90 per cent of TAPS (see: Richard A. Fineberg, The 
Big Squeeze: TAPS and the Departure of Major Oil Companies Who Found 
Oil on Alaska's North Slope (Anchorage: Oilwatch Alaska, 1997).
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   V. PROVISIONS OF NESA INADEQUATE TO PROTECT UNIQUE ENVIRONMENT OF 
                      ARCTIC REFUGE COASTAL PLAIN
    The National Energy Security Act (NESA) of 2000 asserts up front 
that a Coastal Plain leasing program will be ``environmentally sound'' 
and ``will result in no significant adverse effect on fish and 
wildlife, their habitat, subsistence resources and the environment.'' 
Yet NESA's specific provisions fail to ensure that these lofty goals be 
met. Simply put, NESA fails to safeguard the extraordinary wildlife and 
wilderness resources of the Arctic National Wildlife Refuge Coastal 
Plain.
    As an initial matter, NESA is remarkable for what it does not do to 
protect the Refuge. For example, the U.S. Fish and Wildlife Service 
states that the Coastal Plain does not have an adequate supply of fresh 
water to support both fish and wildlife and winter ice road 
construction or oil field operations. Yet the bill fails to ban the use 
of water from the braided rivers, ponds, and lakes of the Coastal 
Plain.
    Similarly, the legislation does not prohibit the construction of 
permanent roads, either within individual fields or to connect separate 
ones. As a result, millions of cubic feet of gravel could be dredged 
from riverbeds to build these roads. This also belies the ``small 
footprint'' argument, as the failure to prohibit permanent roads make 
it more likely that the impact of development would spread throughout 
the Coastal Plain in all seasons.
    NESA also exempts leasing regulations from analysis under the 
landmark precautionary environmental law of our nation--the National 
Environmental Policy Act. The bill declares that a 14-year-old analysis 
is sufficient for NEPA purposes. The fallacy of this provision is 
revealed by other provisions of the proposed legislation, which 
require, for example, that the Secretary ``prescribe such regulations 
as may be necessary'' to protect fish and wildlife, their habitat, 
subsistence resources, and the environment of the Coastal Plain. See 
Section 503(g)(1).
    Moreover, the proposed legislation artificially restricts NEPA 
review of lease sales themselves by providing that only leasing 
alternatives can be considered and that only a preferred and a single 
leasing alternative be analyzed. The alternatives analysis is 
considered the ``heart of NEPA'' because it allows decision makers to 
evaluate the environmental impacts of the proposal as compared with the 
impacts of a number of possible alternatives to the proposal. This type 
of comparative analysis is critical to clearly defining the 
environmental issues at stake and to providing ``a clear basis for 
choice among options.'' (40 CFR 1502.14). By artificially restricting 
the alternatives to be evaluated, the legislation ensures that decision 
makers and the public will be ill-informed about the environmental 
consequences of any lease sale proposal and will be forced to make 
decisions in a vacuum.
    Additionally, the bill only allows the Secretary of the Interior to 
designate 45,000 acres of ``Special Areas'' in the Coastal Plain, an 
insignificant amount given the important calving, denning, and nesting 
habitat found throughout the 1.5 million acre area. Furthermore, NESA 
does not prohibit intrusive seismic exploration of Special Areas.
    NESA also gives the Secretary the discretion to allow year round 
drilling of the Coastal Plain, rather than simply directing the 
Secretary to ban exploratory and development activities during critical 
denning, calving, and nesting periods for migratory or resident 
wildlife populations.
    Further, NESA merely requires the use of the ``best commercially 
available technology'' for oil and gas operations. A more protective 
standard, used in clean water and other applications, would require 
that companies exploring, drilling, and producing oil from the Coastal 
Plain use the ``best available technology,'' regardless of economic 
considerations. The proposed standard is thus not the most protective 
of the environment, as the Coastal Plain's status should compel. The 
bill does include a range of other environmental stipulations and 
mitigation measures, however all give the Secretary broad discretion in 
their interpretation and application.
    Additionally, through both limitations on public comment under NEPA 
and limitations on judicial review NESA restricts the public's ability 
to participate in crafting a leasing program on the Coastal Plain.
    Finally, NESA also fails to reinstate the ban on the export of 
Alaska North Slope crude oil that had been in effect prior to 1995. As 
a result, any oil discovered and produced from the Arctic Refuge under 
this Act could be exported to foreign countries, undercutting the 
purported ``national security'' justification for this bill. The bill 
moreover grants an enormous 90% of the royalties from lease sales to 
the State of Alaska, rather than the traditional 50% royalty. The bill 
does include ``project-labor agreement'' language, but only applies 
this to the Arctic Refuge and to no other federal lands on the North 
Slope or to the construction of a new natural gas pipeline in the 
State, which would necessitate many times more jobs than refuge 
drilling.
    In summary, while NESA states that ``oil and gas exploration, 
development, and production activities on the Coastal Plain will result 
in no significant adverse impact on fish and wildlife, their habitat 
and the environment,'' provisions included and not included in the bill 
ensure that this standard will not be met.
                               CONCLUSION
    We respectfully urge the committee to reject Title V of the 
National Energy Security Act of 2001. This section of the bill would 
mandate oil exploration and drilling in the wildest place left in 
America for a speculative short-term supply of oil that would do 
nothing to lower prices for American consumers or enhance U.S. energy 
security. The bill would rollback decades of environmental progress, 
originally initiated by President Dwight Eisenhower, effectively 
allowing oil exploration or development to occur along America's entire 
Arctic coastline. Despite language in Title V that attempts to limit 
and mitigate the environmental consequences of leasing the Coastal 
Plain, its provisions are inadequate to protect its irreplaceable 
wildlife and wilderness values. The American people do not support 
drilling in the Arctic Refuge nor is drilling in the Arctic Refuge 
necessary to maintain robust oil and gas activity in Alaska for decades 
to come.
    Thank you for the opportunity to testify. I'm happy to answer any 
questions the committee might have.
                                 ______
                                 
    The Chairman. I thank the gentleman.
    Linda Lance?

 STATEMENT OF LINDA LANCE, THE WILDERNESS SOCIETY, WASHINGTON, 
                               DC

    Ms. Lance. Thank you, Mr. Chairman.
    I am Linda Lance. I am the vice president for policy at the 
Wilderness Society, and I very much appreciate the opportunity 
to testify on this important issue today.
    I did want to introduce the Committee to two people who are 
with me today and who will also be available for questions, 
should the Committee wish to ask them.
    Jim Waltman is our program director for wildlife refuges at 
the Wilderness Society, and Luci Beach is the executive 
director of the Gwich'in Steering Committee and represents the 
7,000-member Gwich'in nation. And as the Committee is aware 
based on the earlier discussion, the Gwich'in nation is opposed 
to drilling in the Arctic Refuge.
    Mr. Chairman, we also are strenuously opposed to this bill, 
and our concern is generally stated that this bill, rather than 
providing an abundant and affordable energy supply for the 
country, which is a goal that we very much share with the 
Committee, this bill will put our most precious lands not only 
at risk, but in a situation in which they are irreplaceably 
lost. We don't think that that is a price that country needs to 
pay for an affordable, abundant energy supply.
    Some of these places are well-known. The Arctic National 
Wildlife Refuge has been discussed at considerable length 
today, and I won't spend a lot of time on that in my statement.
    But there are other places as well in the lower 48 that are 
not nearly as well-known, but they currently have protection 
from oil and gas drilling that are put in risk in this bill. 
There are also incredible resources for this country that will 
be irreplaceably lost if oil and gas production proceeds on 
those places.
    The concern that we have in particular about this bill is 
it seems to be based on the premise that there is an enormous 
amount of oil and gas resources that exist on public lands and 
that are locked up somehow and put off limits from production. 
We simply don't see any evidence that that is the case.
    In fact, what really seems to be happening as the price of 
natural gas, for example, increases, is that we have what is 
reasonably viewed as a boom in gas production in particular on 
public lands, particularly in the lower 48.
    Some numbers I thought would be useful for comparison:
    The acres of public lands that have been leased for oil and 
gas development since 1993: 64 million.
    The acres in the Rocky Mountain states that are available 
for oil and gas leasing: 110 million. This is of course larger 
than the State of California.
    The number of operating oil and gas wells on public lands: 
57,000.
    The number of drilling permits issued on the public lands 
in 1990: 2,617.
    The number of drilling permits on public lands that were 
issued in 2000: 3,496.
    And I thought the Chairman might be interest in, and is 
probably well-aware, in the increase in activity that is going 
on in his own state. The number of drilling permits on public 
lands in Utah that have been issued so far this year: 438. And 
that is 146 percent of the number of drill permits issued all 
of last year.
    The percentage of United States oil and gas production that 
comes from the Federal lands has increased considerably over 
the last decade. Thirteen percent of our oil and gas, domestic 
oil and gas production, came from public lands in 1992. Twenty-
five percent of our domestic oil and gas production came from 
public lands in 1999.
    And as Senator Johnston so eloquently described, offshore 
oil production is up 65 percent since 1993, and Gulf of Mexico 
gas production is up 80 percent in just the last 2 years.
    So there are some very special places in this country that 
have been put off-limits, typically by Congress, from oil and 
gas drilling because of their unique and special qualities. But 
the vast majority of public lands and offshore areas that are 
productive in this country are very much available, are being 
produced, and are increasingly being produced as the price 
signals send the industry into those places.
    For example, the acres of public lands that have been 
protected as national monuments increase 1993: 5,568,000. But 
in many of those monuments, there are existing oil and gas 
leases and those valid existing rights have been protected.
    The point here is that there is a myth, we believe, driving 
this push to drill in the public lands, and that myth is that 
the significant resources on the public lands are somehow 
locked up. They simply are not.
    A moment on the Arctic refuge. It has been discussed at 
some length, and I won't spend a lot of time.
    If I might have one more minute, Mr. Chairman?
    The Chairman. Go ahead.
    Ms. Lance. I do think that it is important that the views 
of the Gwich'in nation be recognized by the Committee. Some of 
the other witnesses have made the point that there is obviously 
a difference of opinion among Alaskan natives about whether it 
is appropriate to drill in the Arctic refuge. The Gwich'in 
nation makes their living off of the Porcupine caribou herd in 
the refuge and is very much opposed drilling.
    And just in closing, Mr. Chairman, as this Committee is 
well-aware, its responsibilities here are enormous. The stakes 
are very, very high. But unlike with some legislation where if 
mistakes are made, they are reversible, in this case, some of 
the mistakes that could be made and that would be made by this 
bill are irreversible. Once there is drilling in the Arctic 
refuge, once there is drilling in some of the other places in 
the lower 48 that are protected today, you can't go back.
    So we would urge this Committee not to act to do that, and 
to look at the facts, and rely on what the facts are as opposed 
to some mythical desire to drill all over our public lands.
    Thank you, Mr. Chairman.
    [The prepared statement of Ms. Lance follows:]

Statement of Linda Lance, Vice President, Public Policy, The Wilderness 
                                Society

    Mr. Chairman and Members of the Committee, thank you for the 
opportunity to testify on the H.R. --, ``Energy Security Act,'' on 
behalf of the Wilderness Society. The Wilderness Society is an 
organization of 200,000 members nationwide. Since its founding in 1935, 
it has been dedicated, to ensuring that future generations will enjoy 
the clean air and water, wildlife, beauty and opportunities for 
recreation and renewal that pristine forests, rivers, deserts and 
mountains provide.
    We also understand clearly the vital importance to our country of a 
reliable, affordable energy supply. However, we believe that 
achievement of our energy goals without appropriate protection of the 
natural environment does the nation permanent, irreversible damage. We 
can meet our energy needs without sacrificing our most precious lands. 
Both goals should guide the formulation of an energy policy, and that 
policy should be balanced, well-informed, and carefully crafted.
    We appreciate the Committee's expeditious attention to the energy 
issue through preparation of this draft legislation. We are concerned, 
however, that the draft bill takes too narrow a view of the energy 
issue and focuses only on maximizing energy resources from the public 
lands owned by all Americans. We believe the bill as currently drafted 
will sacrifice the lands Americans hold most dear--including the Arctic 
National Wildlife Refuge--and will do so without any appreciable effect 
on our energy supply. For that reason, we are strenuously opposed to 
this bill.
    This statement will first set out some factual background that we 
believe provides important context for any consideration of this issue. 
It then will address specific concerns about the bill as drafted.
I. Background on Energy Supply and Production on Federal Lands
A. Most Public Lands Are Open to Production
    Much of the discussion of energy production from federal lands 
appears to be driven by the perception that abundant resources have 
been ``locked-up'' or put off limits, to the detriment of the country's 
energy future. This is a myth that should not drive the energy policy 
debate. The facts show that the vast majority of federal lands are open 
to energy production. Significant efforts were made in the last few 
years to enhance, where appropriate, oil and gas production on these 
lands even in the face of falling prices. Important new areas were 
opened and are being leased.
    Domestic oil production declining for several decades after peaking 
in 1970 at 9.6 million barrels per day. During the prior Bush 
Administration, domestic oil production decreased by an average of 
250,000 barrels per day each year. During 1992 alone domestic gas and 
oil drilling activity decreased by nearly 17% and was at its lowest 
level since 1942.
    The causes for these declines were varied, but included plentiful 
global supplies and correspondingly depressed prices. Despite these 
price pressures, overall oil and gas production on federal lands and 
offshore have continued to increase throughout the past decade. 
According to Department of the Interior data, the contribution of oil 
and gas production from federal lands, as a percentage of overall 
domestic oil and gas production, increased from 13% in 1992 to 25% in 
1999. See Attachment I.
    From 1992 to 2000, 7091 new leases were issued on the Outer 
Continental shelf, covering approximately 38 million acres. Nearly four 
million acres of the National Petroleum Reserve in Alaska, adjacent to 
the existing Prudhoe Bay fields, were opened for oil and gas 
exploration and production in 1998. Exploration is underway following 
an initial lease sale that netted more than $100 million for the U.S. 
treasury.
    As of September 30, 2000, oil and gas leases were issued on more 
than 35 million acres of public lands. See, BLM, ``Public Land 
Statistics 2000,'' Tables 3-13 and 3-14. There are nearly 60,000 
producing oil and gas wells on the public lands. See BLM, ``Public 
Rewards for Public Lands 2000,'' Attachment II. Thousands of new 
drilling permits have been issued during the past eight years--3400 by 
the Bureau of Land Management in fiscal year 2000 alone. See BLM, 
``Public Land Statistics 2000,'' Table 3-16. According to BLM data, 
over 95% of BLM lands in the Overthrust Belt states of Colorado, 
Montana, New Mexico, Utah and Wyoming (the areas believed to have the 
largest oil and gas resources) are available for oil and gas leasing. 
See Attachment III. Over one third of our nation's yearly coal 
production is derived from federal land. See Attachment II.
    Some in industry have claimed that they lack access to these lands. 
Upon closer examination, these claims deal with two very different 
categories: lands that are entirely off limits to development; and 
lands that are open subject to ``stipulations'' or provisions in the 
leases requiring that the operations take particular precautions to 
protect the environment or other resources.
    The former areas include, for example, designated wilderness areas, 
offshore moratorium areas, portions of national monuments, and areas 
where other mineral activities are taking place. These are places where 
oil and gas activities could pose extreme environmental or safety 
hazards, or be incompatible with other values. Currently, such areas 
comprise roughly five percent of BLM-managed land in the five states of 
the Overthrust Belt. See Attachment III.
    Many of these areas have been off-limits to development for many 
years, in a shared public recognition that they are simply 
inappropriate for such use. For example, Congress placed the Arctic 
National Wildlife Refuge off-limits in 1980, following executive action 
in 1960. There have been longstanding moratoria on offshore oil and gas 
production off certain areas of the east, west and Gulf Coasts, and the 
House recently passed a moratorium on Lease Sale 181 off the Florida 
Coast. We have a long history of restricting oil and gas drilling in 
our national parks, thereby voluntarily losing the potential geothermal 
resources in Yellowstone National park or the hydropower in the Grand 
Canyon. Finally, national monuments generally prohibit new oil and gas 
drilling, and the House recently acted in the Interior Appropriations 
bill to reinforce that limitation for existing monuments.
    The latter ``stipulations``category is designed by agency land 
managers to protect multiple resources while allowing for oil and gas 
production. They protect such values as water quality, critical 
seasonal habitat for elk, antelope and other wildlife, archaeological 
sites, and recreational sites. BLM may require that operations only 
occur at certain times of the year, when such areas are not in use by 
wildlife species. In other cases, BLM imposes ``No Surface Occupancy'' 
requirements in which the lessee is required to access the oil and gas 
from off-site. This restriction is usually done to protect some other 
resource that may be in conflict with oil and gas production such as 
underground mining operations, archaeological sites, campsites, or 
important wildlife habitat. These leases may be accessed from another 
location via directional drilling.
    These stipulations do not put oil and gas off limits, but merely 
balance the need for oil and gas with the BLM's responsibility to 
manage other resources on these public lands. Industry often touts the 
benign nature of advanced exploration and development technology. 
However, many of their complaints about lack of access are over areas 
with ``No Surface Occupancy'' limitations that merely require the use 
of this advanced technology for directional drilling.
    These stipulations are often misunderstood or used to overstate the 
extent to which oil and gas resources are off limits. An example is a 
report issued on June 6, 2001 by the Department of Energy, ``Federal 
Lands Analysis , Natural Gas Assessment, Southern Wyoming and 
Northwestern Colorado.'' As pointed out in a review of this report by 
Dr. Peter Morton, Resource Economist for the Wilderness Society, 
(Attachment IV) this report uses flawed methodology to overstate the 
effect on the availability of oil and gas. It includes ``No Surface 
Occupancy'' stipulations in the category of those areas that are off 
limits; focuses only on ``technically'' as opposed to ``economically'' 
recoverable gas, vastly overstating the gas resources involved; and 
focuses only on undiscovered gas resources as opposed to the extensive 
development of known reserves already underway in the area.
B. Oil and Gas Resources in Protected Areas Are Not Significant
    Those special places--such as national monuments or national forest 
roadless areas--that are off-limits contain at most very small amounts 
of oil or gas. The Arctic National Wildlife Refuge contains no more 
than six months' worth of U.S. oil consumption. Its destruction for oil 
production would have negligible impact on the country's energy 
security and no impact on the price of gasoline at the pump. The same 
is true for the other special areas now off limits.
    All national forests currently supply only 0.4% of total U.S. oil 
and gas production, half of which occurs on Little Missouri Grasslands 
(Forest Service Roadless Area Conservation EIS, 2000, pages 3-312 and 
3-316). The vast majority of national forest lands subject to roadless 
area protection have been open to leasing for decades, and there has 
been little interest in exploiting potential resources.
    This is likely because there are only small amounts of undeveloped, 
resources in these areas. A recent Wilderness Society assessment of the 
energy potential of national forest roadless areas in six Rocky 
Mountain States shows that these areas contain only 0.4% of the total 
U.S. oil resources (on and off shore), and only 0.6% of total U.S. gas 
resources. See Attachment V.
    Similarly, in the fifteen recently created national monuments in 
the West managed by BLM there are only about 15 days worth of total 
U.S. consumption of oil, and about 7 days worth of the total U.S. 
consumption of gas. See Attachment VI. The U.S. Geological Survey 
recently confirmed that only five out of the 21 new national monuments 
had a moderate to high possibility for the occurrence of any oil and 
gas. As attachment VI shows, even those five taken together have a very 
small amount of potential energy. Four of the five currently allow for 
continued development under existing leases (Canyon of the Ancients, 
Carrizo Plain, Hanford Reach, Upper Missouri Breaks.) The fifth, 
California Coastal, is surrounded by waters covered by the existing 
moratorium against off-shore drilling.
II. Specific Concerns About Draft Legislation
    The Federal Land Policy and Management Act (FLPMA) and the National 
Forest legislation provide a useful context for consideration of oil 
and gas production on public lands. According to FLPMA, in addition to 
providing for the development of minerals, the public lands under the 
jurisdiction of the Secretary of the Interior are to be managed:
    ``...in a manner that will protect the quality of scientific, 
scenic, historical, ecological, environmental, air and atmospheric, 
water resource, and archaeological values; that, where appropriate, 
will preserve and protect certain public lands in their natural 
condition; that will provide food and habitat for fish and wildlife and 
domestic animals; and that will provide for outdoor recreation and 
human occupancy and use...'' (43 U.S.C. 1701(a)(8))
    See also Forest and Rangeland Renewable Resources Planning Act of 
1974, 16 U.S.C. 1600.
    Unfortunately, the ``Energy Security Act'' appears to be focused 
solely on ``expediting'' energy development proposals, surmounting 
``impediments'' to energy development and ``streamlining'' 
environmental review procedures, while ignoring the other resources 
that exist on the public lands and national forests. This is an 
unprecedented and extremely narrow perspective on the values of our 
public lands that is not reflected in existing land management laws, 
and causes serious concern about the bill in its entirety. The 
following sections are of particular concern.
    Title I -- Section 102 of the bill requires the Secretary to 
inventory all ``federal public lands'' except for national parks and 
designated wilderness areas for their potential to produce wind, solar, 
coal, and geothermal energy. All national monuments, national wildlife 
refuges, Bureau of Land Management Wilderness Study Areas, National 
Conservation Areas, national forest roadless areas, Wild and Scenic 
River corridors, National Recreation Areas, units of the National 
Trails System, and BLM Areas of Critical Environmental Concern 
apparently are eligible for future energy production sites. If so, this 
evidences a serious disregard for the special qualities of these areas, 
which also should be exempted from inventory proposals.
    We do believe, however, that additional reporting and analysis in 
the area of the public lands and energy production would be useful and 
that this section should be revised to ensure such reporting. For 
example, a comprehensive report, regularly updated, could provide the 
acreage of public lands and national forests available for energy 
activities, with descriptions of any special safeguards imposed on such 
lands to protect other resources. In addition, the BLM currently 
reports on drilling activity long after it has taken place. It would be 
very useful to have a system that makes publicly available the status 
of applications for permits to drill (APDs) and drilling activities on 
the public lands on a periodic basis, perhaps monthly or quarterly.
    Such information could directly address what we believe to be the 
myth discussed above--that vast areas of resources are off limits. In 
addition, a cumulative analysis of the overall impacts of energy 
production on the other values to be protected by the BLM and the 
Forest Service has never been done and is vital, certainly before 
consideration of any major expansion of energy production on these 
lands. As stated, there are now almost 60,000 producing oil and gas 
wells on the public lands; thousands of well sites have been abandoned, 
and not reclaimed; millions of acres of the public lands are now 
devoted to oil and gas activities; thousands of miles of rights-of-way 
are devoted to various energy development infrastructure requirements; 
and there are increasing demands for more of this. Analysis that 
describes the current situation not only for the energy resources but 
for all of the resources on these public lands is clearly warranted.
    In addition, Congress should review and upgrade the BLM's 
reclamation bonding program before it is allowed to lease millions more 
acres and permit thousands more wells. It is our understanding that the 
BLM has not increased the amount of its reclamation bonds since 1960. 
Moreover, the BLM has no program and no money to reclaim thousands of 
abandoned wells. Addressing this situation should take precedence over 
additional financial relief for the industry as provided in later 
titles of the bill.
    Titles II and III -- Section 202 requires suspension of royalties 
for certain sales in federal waters in the Outer Continental Shelf. As 
we understand it, the rationale for the existing law, which gives the 
Secretary of the Interior the discretion to suspend these royalties, 
was unusually low world oil prices. With oil prices more robust, and 
deepwater drilling increased, it is unclear why this royalty relief 
must now be mandated. The taxpayers deserve to receive fair market 
value for the commodities extracted from the public lands. As stated, 
the Secretary currently has the authority to suspend these royalties if 
necessary (43 U.S.C.1337 (3). Under the provisions of this section oil 
and gas companies could produce quantities of oil worth $1.4 billion 
before paying any royalties to the taxpayer--a loss of hundreds of 
millions of dollars to the taxpayer.
    Section 222 requires the Department of the Interior and the 
Department of Agriculture to perform a study of ``impediments to 
efficient oil and gas leasing and operations on Federal onshore lands 
in order to identify means by which unnecessary impediments to the 
expeditious exploration and production of oil and natural gas on such 
lands can be removed.'' Moreover, Section 223 limits the ability of the 
BLM and Forest Service to require environmental safeguards for oil and 
gas activities on the public lands and national forests that are more 
stringent than those imposed by state oil and gas conservation 
commissions. The obvious intent is to discourage the federal land 
managers from providing the environmental safeguards and balanced 
management they believe to be necessary in a particular area. This is a 
totally unwarranted bias toward energy production above all other 
resource values.
    Sections 225 and 303 remove the requirement in existing law that 
the Secretary of Agriculture must consent to any oil, gas or geothermal 
leasing on the national forests. This is an apparent reaction to 
decisions advanced in recent years by the Forest Service through its 
land use planning program and with vast public support, to restrict 
certain areas of the national forests from oil and gas development. It 
is completely inappropriate to remove the decision making authority of 
the agency with the greatest expertise on, and responsibility for, 
protection of all the resources of our national forests.
    Title V--Title V of the bill would mandate opening the coastal 
plain of the Arctic National Wildlife Refuge to oil and gas drilling. 
It is hard to imagine a more inappropriate and unnecessary action. Any 
legislation directed to this purpose should be summarily rejected. 
Protecting this special place has been the unyielding commitment of 
many thousands of conservationists, scientists, sportsmen and women, 
religious and human rights leaders, and countless other Americans 
throughout the 50 states.
    At The Wilderness Society, we say that the Arctic Refuge is in our 
blood. The Wilderness Society founder, Bob Marshall traveled 
extensively in the Brooks Range. He was among the first to suggest that 
large tracts of Alaska be preserved. Longtime Wilderness Society 
leaders Olaus and Mardie Murie are described by the U.S. Fish and 
Wildlife Service as ``founders'' of the Arctic Refuge. They and others 
waged a campaign to protect the area that led to the establishment of 
the Arctic National Wildlife Range in 1960 by executive authority under 
President Eisenhower.
Resource Values in the Refuge
    The 19.6 million-acre Arctic National Wildlife Refuge is a 
spectacular wilderness of boreal forests, rugged mountains, undulating 
tundra, coastal lagoons, and barrier islands. Located in the 
northeastern corner of Alaska, the Arctic Refuge is the only 
conservation area in America that protects a complete range of arctic 
and sub-arctic ecosystems.
    The refuge has been called ``America's last great wilderness'' 
since the 1950s when a concerted effort was made to protect the area as 
a wildlife refuge. In fact, the Arctic Refuge is unique to the National 
Wildlife Refuge System in that it was established specifically to 
preserve wilderness. Public Land Order 2214, issued by President 
Eisenhower's Interior Secretary Fred Seaton in 1960, created the refuge 
``for the purpose of preserving unique wildlife, wilderness, and 
recreational values.'' Seaton explained that the refuge was ``the only 
economically feasible opportunity for maintaining a wilderness frontier 
large enough for the preservation of the caribou, the grizzly, the Dall 
sheep, the wolverine, and the polar bear, all of which require a 
sizeable unrestricted range.''
    At the heart of the Arctic Refuge stands the 1.5 million acre 
coastal plain-the very portion of the refuge that the legislation 
before the committee would open to oil and gas drilling. The U.S. Fish 
and Wildlife Service has called the coastal plain ``the center for 
wildlife activity'' for the entire refuge.
    Polar and grizzly bears, wolves, and muskoxen, are just a few of 
the more than 200 animal species that use the coastal plain of the 
refuge. Millions of birds, representing some 125 species, migrate from 
as far away as the Southeastern United States, South America, and Asia 
to nest, rear their young, molt, and feed on the Coastal Plain--
preparing themselves for their long return migrations. Many of these 
birds grace local parks and refuges across the coterminous U.S. during 
their migrations and during the winter months. According to the Fish 
and Wildlife Service, the coastal plain is also the most significant 
on-shore polar bear denning habitat in the U.S.
    The Arctic Refuge is perhaps most famous for the 129,000-member 
Porcupine River Caribou herd that has used the coastal plain as a 
calving area for millennia, traveling hundreds of miles from wintering 
grounds in Canada and the U.S. There is no alternative to this 
sensitive habitat for the caribou herd. The gathering of the herd 
following calving is a spectacle reminiscent of Africa's Serengeti and 
of the enormous herds of buffalo that once thundered across the Great 
Plains.
    The Gwich'n (Athabaskan) people depend on the Porcupine Caribou 
Herd for their subsistence and culture, a relationship that has existed 
for thousands of years. The close association of the Gwich'in people 
and the Porcupine caribou herd have prompted opposition to oil drilling 
schemes in the refuge from a diverse array of organizations: the 
Canadian government, National Congress of American Indians, National 
Council of Churches, Native American Rights Fund, Episcopal Church, 
United Methodist Church among many others.
    Oil drilling on the coastal plain would irrevocably destroy the 
unparalleled wilderness character of the area, pollute air and water, 
and threaten fish and wildlife populations and subsistence hunting that 
relies on them. And for what? In 1998, the U.S. Geological Survey has 
estimated that the most likely amount of oil that could be recovered 
economically would be 3.2 billion barrels-less than what the U.S. 
consumes in six months. At no time would oil from the refuge be 
expected to supply more than two percent of America's demand. The U.S. 
Geological Survey's' mean estimate for technically recoverable natural 
gas from the refuge is 7 trillion cubic feet-about what the U.S. 
consumes in four months (none of this gas was projected to be 
economically recoverable at the time of the report). Using updated 
projections for future oil prices, the Congressional Budget Office 
estimated this February that the mean estimate for economically 
recoverable oil from the refuge would be 2.4 billion barrels-about what 
the U.S. consumes in four months.
Effects of Drilling
    The oil industry claims it can develop the Arctic Refuge in an 
``environmentally sensitive'' manner and points to its history in 
Prudhoe Bay. Nothing could be further from the truth. Oil drilling in 
the Arctic Refuge would introduce a major industrial facility in the 
heart of this magnificent wilderness. This activity is fundamentally 
incompatible with the purposes for which the Arctic National Wildlife 
Refuge was established. Development would bring the following to this 
pristine area:
    * LHundreds of miles of roads and pipelines leading to dozens of 
oil fields;
    * LChronic spills of oil and other toxic substances onto the 
fragile tundra;
    * LRivers and streambeds--key habitat for wildlife--stripped of 
millions of cubic yards of gravel for road, airstrip, and drillpad 
construction;
    * LEnormous water diversions to support drilling at the expense of 
pristine rivers and wetlands;
    * LLiving quarters, sewage treatment, and other infrastructure for 
several thousand workers;
    * LHelicopters, cargo planes, dump trucks and bulldozers; the 
sights and sounds of heavy equipment would be almost constant for long 
periods. See also, ``Oil in America's Arctic,'' prepared by Trustees 
for Alaska, Attachment VII.
Spills
    Spills of oil and various other toxic substances are a chronic 
problem on the North Slope and the Trans-Alaska Pipeline. According to 
the Alaska Department of Environmental Conservation, oil companies emit 
more than a spill and day of oil and other toxic substances-over 1.3 
million gallons between 1996 and 1999.
    One would think that, with their desire to gain access to the 
Arctic Refuge in the public eye, oil companies would be particularly 
careful this year. But on April 15, Phillips Petroleum spilled more 
than 92,000 gallons of saltwater and crude oil on Alaska's North Slope. 
Between January 16 and March 3 of this year, BP had three spills of oil 
and drilling fluids on the North Slope of between 3,000 and 18,000 
gallons. In 2000, BP Amoco and its subcontractor pled guilty to 
illegally dumping hazardous waste at the supposedly benign Endicott oil 
field near Prudhoe Bay and were fined $22 million.
    The number of spills and the high proportion with unknown causes 
suggest faulty spill prevention systems, sloppy practices, and 
inadequate government oversight and enforcement. Between 10 and 30 
percent of safety shut-off valves in BP Amoco's drilling operations on 
Alaska's Prudhoe Bay failed to pass state safety tests during the first 
quarter of 2001. The failures were reported by the Wall Street Journal 
in April, 2001 which described the safety shut-off valves as ``the main 
line of defense against pipeline ruptures that could spew thousands of 
barrels of hot underground crude oil across the Arctic tundra.'' The 
Journal also reported that ``secondary valves, which connect the 
platforms with nearby processing plants, often fail to close properly 
as well, according to employees of BP Amoco PLC's Prudhoe Bay 
operations. In other words, they say, the valves can't be relied upon 
to shut in an emergency, creating the potential for a natural 
catastrophe.''
Air Pollution
    Prudhoe Bay oilfields emit large quantities of nitrogen oxides, 
carbon monoxide, sulfur dioxide, volatile organic compounds, 
particulate matter, and other pollutants. The quantity of emissions is 
so great that it may endanger the health of the workers and contribute 
to global warming.
Water Diversions
    Over 400 pollution control and discharge permits issued by both 
state and federal governments govern wastewater discharges from oil 
field operations at Prudhoe Bay. From 1991 through 1997, approximately 
25 billion gallons of contaminants were discharged into surface waters 
under such permits. Permitted wastes include discharges from water 
flood and sewage treatment plants, drilling muds and cuttings, and 
gravel pit de-watering discharges.
Industrial ``Footprint''
    Arctic drilling proponents claim that this activity can be done 
with a minimal ``footprint,'' which may impact as little as a few 
thousand acres. These same people have made the same arguments about 
Prudhoe Bay-that oil field development has only impacted some 10,000 
acres. In reality, oil field development in America's Arctic includes a 
vast network of seismic exploration trails, gravel mines, roads, drill 
pads, pipelines, processing facilities, operating and housing 
facilities, and waste and sewer treatment plants that stretches across 
1,000 square miles of tundra and has changed forever the Arctic 
ecosystem. It is one of the largest industrial complexes in the world.
    Besides the huge volume of industrial wastes produced by any other 
large industrial complex, oil drilling operations also generate tens of 
thousands of cubic yards per day of drilling muds and cuttings, oil 
contaminated wastes and sludges, and produced water from drill sites. 
Drilling wastes typically contain a variety of toxic metals as well as 
petroleum hydrocarbons and other harmful substances. Over 325 million 
gallons of wastes have been injected into Class I waste disposal 
injection wells and 40 billion gallons have been injected into Class II 
wells. Between 2 and 6 billion gallons of drilling wastes were dumped 
into 450 reserve pits before this practice was banned.
    In addition, the oil industry on the North Slope uses immense 
amounts of water for drilling activities. Twenty-seven billion gallons 
of water are used per year for oil exploration and development on the 
North Slope. Removing water and building drilling facilities have 
severely damaged the Arctic ecosystem.
    Finally, a layer of gravel at least five feet thick is needed as an 
insulating foundation under production wells, permanent roads, 
causeways, offshore man-made islands, airstrips, pump stations, and all 
other oil field facilities. ARCO needed over 1.3 million cubic yards of 
gravel to fill 115 acres of wetlands tundra at its supposedly 
environmentally benign Alpine oil development.
    Some have suggested that work in the Refuge can be done solely on 
``ice roads'' that have no permanent impact and disappear in the 
summers. Again, this is a myth. First, ice roads require enormous 
amounts of water to produce. Unlike Prudhoe Bay, for example, the 
Refuge has a relatively limited water supply that could not support 
such roads without damage to the ecosystem. Also, this argument ignores 
the infrastructure necessary to support construction of the ice roads 
and the serious impact these roads would have on polar bear denning 
activity. Finally, this argument focuses only on exploratory drilling 
and has no application to production, which would require significantly 
more permanent infrastructure.
Oil Industry Exemptions From Environmental Regulations
    Congress and the Alaska legislature already have granted the oil 
industry lowered standards and exemptions from basic environmental 
regulations, resulting in high profits for oil companies at the expense 
of a healthy, sustainable environment. This bill would grant the 
industry even more special treatment under environmental laws. Existing 
exemptions include:
    * LClean Air Act. Sulfur content in motor vehicle fuels is strictly 
regulated under the Clean Air Act. However, Alaska is exempt from this 
regulation.
    * LResource Conservation and Recovery Act (RCRA). Disposal of 
hazardous and ``general'' solid waste is regulated under the Resources 
Conservation and Recovery Act. However, certain oil and gas extraction 
wastes are exempted from regulation as hazardous wastes. Exempted 
materials include drilling muds and cuttings, rig wastes, produced 
water, tank bottoms, pit sludges and workover wastes produced during 
oil industry operations.
    * LEmergency Planning and Community Right to Know Act. This law 
requires polluters to report their toxic releases annually to the 
public. The oil industry was granted an exemption from this Act for 
most of their exploration and production facilities in 1996. No North 
Slope facilities are required to report their toxic releases.
    Proponents of oil drilling in the Arctic Refuge have claimed that 
such activity could be done in an environmentally benign way. If so, 
one would expect that the oil companies would have no trouble complying 
with U.S. environmental laws. But the ``Energy Security Act'' provides 
the following new exemptions:
    * LNational Wildlife Refuge System Administration Act. Under this 
act, activities can only be permitted on a national wildlife refuge if 
the Fish and Wildlife Service can demonstrate that such uses are 
``compatible'' with the wildlife conservation purposes of the refuge 
and the mission of the National Wildlife Refuge System. The draft 
energy legislation just simply declares that oil drilling in the refuge 
is a compatible activity when it clearly was not.
    * LNational Environmental Policy Act. Under this Act, federal 
agencies are required to analyze the environmental consequence of their 
proposed actions and a range of alternative actions prior to 
proceeding. That Act requires that the analysis use up-to-date 
information. The draft energy legislation declares that an 
Environmental Impact Statement prepared by the Reagan Administration in 
1987 is sufficient.
    * LAlaska National Interest Lands Conservation Act (ANILCA). Title 
XI of ANILCA established a process and strict standards for sighting 
roads, pipelines, and powerlines through national wildlife refuges and 
other federal conservation areas in Alaska. The draft energy 
legislation exempts any pipelines necessary to transport oil and gas 
across the refuge from this provision.
Arctic Refuge Jobs Myth
    Proponents of oil drilling in the Arctic Refuge have suggested that 
hundreds of thousands of jobs would be created from opening the refuge 
to drilling. What they don't tell you is that their job figures are 
based on a highly criticized 1990 report done for the American 
Petroleum Institute (API).
    Among its inaccuracies, the API report assumed that the price of 
crude oil would be nearly $58 per barrel in 2000 ($42.84 a barrel in 
1988 dollars). Oil prices, of course, are hovering in the middle to 
high twenties. The U.S. Geological Survey concluded that the mean 
estimate for oil that could be economically recovered from the refuge 
is 3.2 billion barrels--about a third of the API assumption and less 
than what the U.S. consumes in six months.
    Most of the jobs estimated in the API report were not directly 
related to drilling but were jobs assumed to occur if refuge drilling 
reduced oil prices and that such reductions would stimulate additional 
economic growth.
    Other reports have reached dramatically different conclusions than 
API's. A 1994 report by the Economic Policy Institute (EPI) concluded 
that the most realistic number of jobs that could be created from 
drilling the refuge would be less than 8 percent of the jobs projected 
by the American Petroleum Institute. The EPI report stated that the API 
study assumes a ``hypothetical oil strike deemed highly unlikely by 
government scientists'' in creating their employment projection.
    A report by the Congressional Research Service (1992) on the 
economic impact of refuge development concluded that, ``only a 
magnitude of oil production that would be associated with a very large 
discovery (in terms of present assessments) could produce conditions 
that could lead to readily apparent benefits to the economy.''
    A 1993 study by the Tellus Institute, prepared for The Wilderness 
Society, concluded that initiatives to increase vehicle and non-
transport energy efficiency would result in nearly ten times as many 
jobs as drilling in the refuge.
Conclusion
    This bill is inappropriately focused only on increasing energy 
production from federal lands. It contains no recognition of the 
importance of protecting other resources on federal land, or of viewing 
the issue in a balanced, comprehensive manner. We urge the Committee to 
reject this legislation and approach the issue in a way that protects 
both the energy supply and our most precious natural areas.
    Thank you for the opportunity to testify on this important issue.
                                 ______
                                 
    The Chairman. I thank you.
    The gentleman from American Samoa?
    Mr. Faleomavaega. Thank you, Mr. Chairman.
    And I want to thank the members of the panel for their fine 
testimony. And I certainly apologize for the long, arduous 
hours that we have had in going in through the hearing process. 
However, it is a necessary process.
    I would like to ask Mr. Glenn, I plead ignorance with 
understanding the situation with the native Alaskan regional 
corporations. That was part, I think, of the congressional 
enactment of the Alaska Native Claims Settlement Act.
    How many regional corporations are there in existence among 
the native Alaskans?
    Mr. Glenn. Thank you.
    Mr. Chairman, I would like to answer the question.
    There are 12 native regional corporations in Alaska. In 
addition to that, there is a thirteenth regional corporation 
that represents natives who are abroad and was created in an 
effort to answer the claims for those who had scattered before 
the passage of the Native Claims Settlement Act.
    In addition, there are more than 200 federally recognized 
tribes in Alaska. So the tribal organizations coalesced into 
these 12 major groups.
    It doesn't mean that the regional corporations speak for 
the tribes, for example, but that, in large part, in my region, 
for example, our regional corporation contains eight different 
tribal organizations.
    Mr. Faleomavaega. Okay, that is what I wanted to ask.
    Among the eight different tribes in your regional 
corporation, is the Inupiat the largest number?
    Mr. Glenn. They are all Inupiat. It is just village subsets 
of the Inupiat people.
    Mr. Faleomavaega. I see. So among the Inupiat generally, 
the Gwich'in is part of your tribal--
    Mr. Glenn. No. The Gwich'in--and we have a representative 
from the Gwich'in Steering Committee here.
    We are neighbors. The Gwich'in people are Athabaskans and 
they number within about 10 villages, spanning the Canadian 
border between Alaska and Canada, with several villages on each 
side of the border.
    Mr. Faleomavaega. I see. And they number about, what, 450, 
compared to 8,000 Inupiats?
    Mr. Glenn. I imagine there is a lot more Gwich'in than 450.
    Ms. Lance. Seven thousand.
    Mr. Faleomavaega. I see. I just kind of want to get a 
better sense.
    Mr. Glenn. There are 7,000 Gwich'in.
    Ms. Lance. There are 7,000.
    Mr. Faleomavaega. There are 7,000 Gwich'in.
    Mr. Glenn. Some in Canada, some in the United States.
    Mr. Faleomavaega. Okay. Is this also true with the Inupiat 
tribe?
    Mr. Glenn. The Inupiat people stretch from northwestern 
Alaska in kind of a spectrum all the way over to Greenland.
    Mr. Faleomavaega. I don't want to make this kind of like a 
majority rules, in terms of the number of native Alaska tribes 
which support and which do not support, but I can just tell you 
quite seriously that my vote is going to come heavily in terms 
of how the native Alaska tribes look at this issue in terms of 
their needs and the question of development. And I just wanted 
to share that with you, Mr. Glenn.
    Mr. Glenn. Excuse me, I would not want to mislead you 
either, that there would 100 percent unanimity among the Alaska 
natives regarding this issue.
    In addition, it is in our interest to see that if 
development comes to the Coastal Plain, we want it to be done 
right. We want the Gwich'in Athabaskan people to be by our side 
to make sure that it happens.
    It is not an issue where we see division. There are more 
things that we have in common than separate us by difference.
    Mr. Faleomavaega. Basically, the land area involved for 
drilling, if there would be drilling, is the land belonging to 
the Inupiat people?
    Mr. Glenn. The Coastal Plain of ANWR lies within the area 
that we claimed as aboriginal title, a portion of which we 
received actual legal title in the Alaska Native Claims 
Settlement Act. It is our lands that lie within the Coastal 
Plain of ANWR.
    Mr. Faleomavaega. Thank you.
    Mr. Hood, I am being very tribal, too, because I am a 
member of the Samoan tribe, and if I don't do this, my cousin 
is going to kill me.
    Mr. Leo Reed wanted to be absolutely certain that I would 
attend the hearing and make sure that I give my courtesy to Mr. 
Hood when he attends today's hearing this afternoon. And I want 
to convey best regards from Mr. Reed.
    Mr. Hood. I will report dutifully back to him.
    Mr. Faleomavaega. All right, please. I appreciate that.
    Ms. Lance, you mentioned the strong opposition of the 
Wilderness Society to this proposed legislation, especially 
dealing with ANWR. You mentioned that there really is not a 
sense of supporting of the native Alaska tribes on this 
proposed project. You are pretty firm on that, in terms of the 
numbers?
    Ms. Lance. As I said, the Gwich'in nation--and there are 
7,000 members of the Gwich'in nation--have been consistently 
opposed to drilling in the Arctic refuge.
    Mr. Faleomavaega. I see.
    Ms. Lance. And Ms. Beach, who is here today, can speak much 
more eloquently than I about the reasons for that opposition.
    Mr. Faleomavaega. And, Mr. Hood, on the labor-management 
aspects, I think, of the legislation, is the Teamsters union 
the only union that is supporting this? Are there other unions 
that are supporting--
    Mr. Hood. No, sir. The Operating Engineers, the Laborers 
International Union, the Building Trades, the maritime union, 
and many others are totally supportive of the environmentally 
responsible opening of ANWR.
    Again, primarily for the craft unions, it is a job issue.
    Mr. Faleomavaega. Of course, as I have mentioned the job 
issue, what will this entail, as far as jobs for the working 
people in the ANWR, if this project ever should--
    Mr. Hood. Wharton business school did a study some years 
ago and estimated that the successful opening of ANWR would 
create somewhere in the neighborhood of 735,000 jobs throughout 
the country. Some of the information that this is developed 
from was actual vendor invoices that the producers on the North 
Slope spent with vendor companies in various states.
    And so it does show that the job impact--and it varies by 
degree.
    Some states will benefit more, and others will benefit a 
little bit less, but that each state is impacted by job 
creation by North Slope production in ANWR.
    Mr. Faleomavaega. I am little confused--I am sorry, Mr. 
Chairman, I think my time is up, but just one more minute?
    I keep hearing this figure that ANWR is only going to 
supply about 3 percent of the oil. And I hear from Ms. Lance 
there is a tremendous amount of production in other drilling 
activities going on in the lower 48 states.
    Has there been any real accurate assessment in terms of 
what would be the total production level? How much are we 
really going to be getting out of ANWR if and when they should 
ever get off--
    Mr. Hood. Well, there was a 1995 USGS study that said that 
there was a 95 percent chance that we would find 5.7 billion 
barrels of oil, and there was a 5 percent chance that we would 
discover 16 billion barrels of oil. And the Secretary testified 
earlier today that they did a study and they were talking about 
7 billion barrels of oil.
    If you want analogize it Prudhoe Bay, when we started there 
almost 30 years ago, they predicted that we would find 9 
billion barrels of oil. To date, we have already pumped 13 
billion barrels of oil.
    And I guess if you look at the opposition's analogy, that 
it is only 180 days' supply, that is of course given the fact 
that we could fact that we could pump all of that oil out of 
there that fast, which is not possible. But it would fuel 
everything in America for 6 months. That's a lot of oil.
    But in reality, we could replace Iraqi oil for 58 years. We 
could fuel every car in America with what is in ANWR for 8 
years.
    But the reality of the situation is it will contribute to 
America's domestic supply of oil for 30 years or more. So it is 
probably the largest single domestic find that we will 
experience in North America as we have in the last 30 years.
    So it is a tremendous amount of oil.
    As long as we are talking about domestic supplies and you 
have raised the issue, you know, it was testified earlier that 
we import today 58 percent of our petroleum. By 2010, that is 
going to be 70 percent.
    We ought to set as a goal as a country to reduce our 
dependence on foreign oil to below 50 percent. I think that is 
realistic. With crises that may face us in the future, energy 
independence is going to be crucial to the success of our 
endeavors.
    So I think that is a realistic figure that could be 
achieved as we increase our domestic supplies. And Alaska can 
contribute greatly. We currently contribute one-fifth of the 
supply of domestic oil.
    Mr. Faleomavaega. Mr. Chairman, thank you.
    Thank you, gentlemen and Ms. Lance.
    The Chairman. I thank the gentleman.
    The gentlelady from Wyoming.
    Mrs. Cubin. Thank you, Mr. Chairman.
    I would like to address a couple of questions to Ms. Lance.
    You referred in your testimony to the myth that is out 
there, that the Federal lands really are available for 
exploration for energy. But I want to talk about the real myth 
or several real myths that I see in your testimony.
    In your statement you said that based on a 1995 report from 
the BLM, that 95 percent of the lands in the Rocky Mountains 
are available for oil and gas leasing. Well, I want to talk 
about what you mean by oil and gas leasing.
    A direct result of the section 604 amendment on the 
inventory of oil and gas that was in last year's energy bill, a 
report came out last month called, ``Federal Lands Analysis: 
Natural Gas Assessment, Southern Wyoming and Northwestern 
Colorado.''
    This analysis basically says that 21 percent of the lands 
are off-limits and an additional 32 percent of the lands in 
that area are restricted.
    So I wonder if you could explain to me, based on this new 
information versus 1995 information, how you can possibly sit 
there today and say that 95 percent is available? And if it 
really is available, is it economically feasible?
    Ms. Lance. Sure. And I am happy you raised that. I couldn't 
quite fit that into my 5 minutes, but I think it is a very 
important issue.
    And, Mr. Chairman, one of the documents submitted with my 
testimony, which I would ask to be made a part of the record, 
is a review of the report that you refer to on the Green River 
basin done by our resource economist in Denver, pointing out 
some of the concerns that we have about the methodology that 
was used there.
    So I was--
    Mrs. Cubin. I am aware that you some reservations about it. 
One of those was that no surface occupancy was considered in 
the report as a way that land is not available.
    But you think no surface occupancy says land still is 
available.
    Ms. Lance. Well, I--
    Mrs. Cubin. Even if it isn't geologically or 
technologically possible to do horizontal drilling or whatever, 
you still consider it all no surface occupancy available.
    Ms. Lance. I don't want to be so categorical. I think it is 
important to really--
    Mrs. Cubin. But your testimony is that categorical.
    Ms. Lance. No, I don't believe so. What our concern is, is 
that when you assume that no surface occupancy stipulation--and 
maybe I should just back up and, for the record, what we are 
talking about here is stipulations on leases. The area is 
available for leasing, but the leases contain certain 
stipulations and they vary from--
    Mrs. Cubin. Which make it economically unfeasible in most 
cases to be able to produce the energy.
    Ms. Lance. Well, here is the concern that we have. The no 
surface occupancy stipulation says that you cannot put your 
drill rig on that area--
    Mrs. Cubin. Right.
    Ms. Lance. --but you could--and the concern that we have is 
that industry very often says and has said here today, we use 
very advanced technology and that allows us to have a very 
small or no footprint in a sensitive area because we can drill, 
as you say, horizontally or directionally into an area.
    So if that is the case, then it just doesn't seem to be 
consistent to say--
    Mrs. Cubin. So what you are saying is quite a sweeping 
statement, when you say that no surface occupancy, that 
classification, that that means that it is still accessible.
    That makes no sense to me. Let's change subjects.
    The BLM proposed raising oil and gas lease bonding in its 
rewrite of the oil and gas regulations, which are now awaiting 
final publication. And you state in your testimony that 
thousands of well sites have been abandoned and not reclaimed.
    I take issue with that. But if it were the case, do you 
think that the Federal Government should take over those wells 
and pay for the reclamation?
    Ms. Lance. I think that this is a very difficult policy 
choice. And I haven't done enough research on it to give you a 
educated answer. So I--
    Mrs. Cubin. Well, just for your information, the BLM says 
that there are actually fewer than 200 orphan wells out of over 
60,000 wells that are capable of production. Not thousands, but 
fewer than 200.
    Ms. Lance. Well, the information that we had is from the 
public lands statistics that BLM has produced. So I would be 
interested in the additional BLM data. But I, too, would be 
guided by BLM's data, and that is what I have indicated.
    Mrs. Cubin. You state that the obvious purpose of section 
222 is to discourage Federal land managers from providing 
environmental safeguards to oil and gas operations. Do you 
believe that state oil and gas conservation commissions are not 
adequate in their requirements for environmental protection and 
for reclamation?
    Ms. Lance. Well, I think two things.
    One is that they are not required to apply Federal law, so 
if it devolves to state-level regulation, it is not clear then 
that the Federal law will be applicable.
    Second--
    Mrs. Cubin. Are you aware that most state regulations are 
at least as stringent as Federal regulations? In my own state, 
every regulation is at least environmentally as stringent as 
the Federal.
    So my question to you is really simple: Do you think that 
the state conservation commissions are not qualified or do not 
protect the environment as well as they should?
    Ms. Lance. Well, two points. One is that if in fact they 
apply the exactly the same rules as the Federal regulators, 
then certainly they do provide the same level of protection.
    But this provision would not be necessary in this bill if 
there weren't some differences between Federal and state law, 
because clearly it anticipates that there may situations in 
which the state and Federal regulators will differ.
    The second point, I thought it was interesting today when 
Secretary Norton testified about the Wall Street Journal story 
and the Alaska State regulation. She said something to the 
effect that: Well, that was about state regulation on state 
land. And I can assure you that if we go into the North Slope 
of the Arctic refuge, we will have Federal regulators applying 
Federal law.
    So--
    Mrs. Cubin. On Federal land.
    Ms. Lance. Exactly. But that is what the telling--
    Mrs. Cubin. And that is my point--
    Ms. Lance. --thing is as well.
    Mrs. Cubin. --that that is the status quo. Federal 
requirements are required on Federal land.
    Ms. Lance. But this bill tries to change that, is our 
concern.
    Mrs. Cubin. Well, it doesn't. But I have used up my time.
    Thank you, Mr. Chairman.
    The Chairman. Mr. Carson?
    Mr. Carson. Let me apologize for missing the last two 
witnesses' testimony. I was called out to a meeting.
    Let me direct my questions to Mr. Herrera, who in his 
written testimony--I apologize for--our view is blocked here--
but in your written testimony, you addressed an issue that I am 
interested in, that I brought up with the Secretary as well, 
and that is about the amount of recoverable oil in ANWR. And I 
specifically was thinking, it has obviously been a raging 
dispute about how much is there, under what conditions and what 
assumptions you have to have it be recoverable.
    There was a recent article in Foreign Affairs that talked 
about the so-called false promise of Alaskan oil that doesn't 
attack it from the environmental angle that is often done here, 
but really about the economics of oil recovery in ANWR.
    I was talking to Mr. Young a moment ago and he was saying 
he thinks there is going to be, you know, 30 billion barrels of 
oil recoverable out of the 1002 area before it is all said and 
done.
    I wonder if you could talk a bit--and in your testimony it 
does talk a bit about some of the assumptions on what you 
consider conservative and pessimistic assumption of the USGS. 
But what about, given what world oil conditions are speculated 
to be over the next 5 to 10 years, when leasing activity is 
going occur, what you think the amount of recoverable oil is 
and under what economic assumptions we should be operating.
    Mr. Herrera. Well, that is a big question to answer, but I 
will give it a try.
    Let me go to the back half of your question first, because 
it is something which is rarely considered, albeit there is 
lots of information in the record, and that is what is going to 
happen in 5 years' time or 10 years' time with world oil 
supply.
    The point I would make in commenting on that is there are 
about, let's say, 44--it might be 45 or 43, I have forgotten--
producing oil countries in the world. And of those 44, 39 of 
them have already reached their peak of production and 
production of oil in those countries is in decline, as it is in 
the United States of America.
    There are only five countries, all of which are around the 
Persian Gulf, which have not yet reached the peak of 
production. Now, they all happen to be OPEC producing 
countries.
    My point is that we become, as time goes on, we become more 
and more reliant on OPEC oil because that is where the world 
reserves are, those are the only countries that can increase 
production.
    And quite soon now, it is estimated that even those will 
reach their peak and start to decline within perhaps 3 to 5 
years from the present time.
    So we are looking forward, if we are looking in a decade 
timeframe in the future, into a brand new energy time zone that 
we have never encountered before, where there is still plenty 
of oil in the world--don't get me wrong.
    But the world does not have infinite capacity to increase 
production. It will have reached its peak of production and so 
presumably demand will start to impose its influence on price.
    That is one comment.
    The other comment, you asked about the USGS figures, and 
they are misused and sometimes misrepresented. In my testimony, 
I argued that there are three factors which any geologist or 
any organization uses to make resource estimates.
    One is, obviously, the geology. The geology doesn't change 
over time. It is there, it is static, it is not going to 
change. The technology of it might change, but it actually 
stays the same.
    The other thing that affects resource estimates are the 
price of oil because if oil is at $10 a barrel, there is 
probably very little oil in the Arctic which is economically 
viable. If, on the other hand, oil is at $20 or $25 a barrel, 
probably all of it is economically viable even today.
    So price is important. And obviously, therefore, one has to 
predict price in the future, which is difficult to do, but I 
just mention the likelihood that it is probably going to go up.
    The third factor, of course, is technical ability to 
recover oil out of the reservoir, and this is the factor where 
I disagree with the USGS because their figures assume that 37 
or 38 percent of the oil in the reservoir can be pulled out of 
the ground and sent to market.
    Now, that assumption is a good historical assumption. As a 
rule of thumb, over the last 40 years, most reservoirs gave up 
a third of their oil, more or less what the USGS is using for 
their assumed figures of extractability.
    However, in the last 10 or 15 years, with the huge 
technological changes which have been introduced largely in the 
Arctic, certainly in the existing Alaskan oil fields, the 
recoverability of oil from the existing fields varies from 50 
to 65 percent of the oil in the reservoir that can be brought 
out of the ground.
    That is significantly higher than the estimates that the 
USGS uses. And if you believe the reality of those figures 
which are being proven as we speak, on the North Slope of 
Alaska, and assume that the geology is quite similar beneath 
the Coastal Plain, which demonstrably it is, then clearly 37 
percent is wrong and probably 50 percent of extraction of the 
oil is closer to reality.
    Therefore, the USGS resource estimates are very low. They 
are very conservative, and probably too low and unrealistic.
    Mr. Carson. If oil is at the price of $25 a barrel and 
there is 55, 60 percent recovery of ANWR, do you have an 
estimate yourself, just back-of-the-envelop calculation or 
hunch, about the kind of reserves we would be looking at?
    Mr. Herrera. Yes. Then you would go from the high-end 
probability of 95 percent chance of the amount of oil being 
present reaches about 10 billion barrels, and the low end, 5 
percent chance goes up to about 27 billion barrels.
    Mr. Carson. Very good.
    Mr. Herrera. And as I mentioned, 10 billion barrels of new 
oil would be probably the largest oil resource found in the 
world in the last 30 years.
    Mr. Carson. Do either of the last two witnesses want to 
comment on that issue of the economics of oil recovery there?
    Mr. Kolton. Thanks, Congressman Carson, if I might just 
respond to some of the things that Mr. Herrera said.
    First, I think it is a very important point that the 
technology is allowing greater recovery from oil fields. And if 
you look back at the record of this debate of the years, in 
1995, for example, there were claims made to this Committee, to 
Congress, that the Trans-Alaska Pipeline would run dry by the 
turn of the century unless we drilled in the Arctic National 
Wildlife Refuge.
    The fact is, as I pointed out in my testimony, that even 
the industry now acknowledges in its own filings for renewal 
permits for the Trans-Alaska Pipeline that it has 30 years' 
more oil in the existing state lands. This doesn't even include 
the National Petroleum Reserve, an area about the size of 
Indiana where as recently as 1995 Mr. Herrera said there was no 
oil potential.
    You know, the fact is that Phillips and British Petroleum 
have been in aggressive exploration there. And they may have 
discovered what could amount to a billion-barrel field.
    So there is significant production on the North Slope 
outside of the refuge. And the new technological advances that 
are referred to are one of the reasons why we can leave the 
Coastal Plain alone.
    With respect to our dependence on OPEC, I think it is 
important to point out that as a percentage of our total 
petroleum use, a percentage of our total imports, we are 
actually less dependent on OPEC today than we were in the 
1970's. We get more oil from Canada than we do Saudi Arabia.
    So simply using the total foreign import figure is 
misleading.
    With respect to the USGS study and the comments made there, 
Mr. Herrera is willing to accept the geology somewhat but 
reject the economics. Parts of the report he likes, and other 
parts he doesn't.
    Yet we heard today about all kinds of things, new 
technology that is going to be deployed. We are going to 
distill the water to make the ice roads.
    A lot of the expense of some of this was not taken into 
account in the USGS report. They didn't calculate all the 
expenses of all these great new technologies and regulations 
that are being proposed.
    So I would submit that, if anything, the economic report of 
the USGS was off and the cost will be much greater.
    As I indicated in my testimony, according to the USGS, it 
is possible that there could be no economically recoverable oil 
in the refuge, depending on prices. There could be 3.2 billion. 
But not in one field like Prudhoe Bay, spread out in 33 
discrete pockets the all across Delaware-size Coastal Plain.
    Mr. Carson. I see my time is up.
    The Chairman. I thank the gentleman.
    I thank the Committee, those who have remained. And I thank 
all those who have been here. It has been a very long hearing, 
but extremely informative.
    And I would want to say to the folks from Interior, the 
Secretary did a fantastic job and thank you for her being here.
    And Senator Johnston and this panel, I appreciate your 
great input on this.
    I hope we don't get lost in the minutiae of this thing 
because the whole thing is predicated on dependence. And as Mr. 
Hood pointed out, the goal of many of us is to get below 50 
percent. It may be very difficult. We do have a heavy 
dependency on Saudi Arabia.
    I have been there, in Kuwait and those areas, and looked 
them over. We have talked to everyone who develops in those 
areas. We are becoming more and more dependent on those areas.
    What bothers a lot of us is we are becoming dependent on 
those we can least depend on.
    And as one of the senior, senior guys on the Armed Services 
Committee, I can tell you, it is of great, great concern to us. 
And you get down to the point of the realistic part of it.
    I think President Bush has put together a realistic piece 
of legislation, and the 105 points he has brought up, of which 
today we are talking about maybe 15 are going to be very 
important to America.
    As a past military man myself, and one of the guys on the 
Armed Services Committee, I can just tell you, it is nice to 
talk in theory on all of these things, but when it gets down to 
reality, those planes have to fly, those subs have to go, those 
carriers have to move, and we move on fossil fuels.
    Fortunately, in some of our big ships now, we do use 
nuclear, which you bring that up and you hear nothing but gasps 
from people, saying that is the worst thing in the world. I 
surely would hope that some people could understand how 
important that is.
    And we have gone from 12 percent to 20 percent on nuclear, 
just through efficiency and putting another plant in.
    The dependency is going to be a whole question. We are 
going to get caught in a bad situation if we don't do this. It 
is not only the workers of America, it is the security of 
America.
    And in my many years, I have never driven up to a gas 
station where there was pump that said ``alternative energy.'' 
I hope they do that. I hope we are able to develop a lot of 
those.
    But right now, we are depending on fossil fuels.
    So we will continue with this particular piece of 
legislation.
    I think back in September 1996 when President Clinton went 
to the South Rim of the Grand Canyon to declare the Grand 
Staircase-Escalante. The interesting thing was, he had never 
been there. And when he was asked where it was on the map, he 
put it in Nevada. It is Utah.
    And when he talked about the coal reserve--and for those 
folks who don't realize this, the Grand Staircase-Escalante has 
the highest amount of low-sulfur coal known in the world. I 
mean, we are talking billions of tons of coal.
    And I keep telling people, if you haven't been there, don't 
complain about it.
    I had John Leshy sitting in front of our Subcommittee years 
ago to tell me about this pristine area, and my dad had mines 
on that area. I have flown airplanes into that area. I have put 
down a Piper SuperCub less than 100 yards from where that thing 
is. I am very familiar with it.
    There is nothing there that Mr. Leshy described. There is 
no water. There is not cottonwood trees. There is no green 
glens. Nothing but sagebrush.
    And I would really appreciate it if most members of the 
Committee would do the very same thing when they go talk about 
ANWR, they go up there.
    But don't get it wrong, we do appreciate your testimony.
    One thing I have got to add is President Clinton made the 
statement in his proclamation on the Grand Staircase, he said, 
we can't have mines everywhere. The answer to that is, true, 
only where there is ore.
    And that is what we have here. I mean, we talk about public 
areas, we talk about areas that are off-limits. And believe me, 
a lot of America is off-limits right now.
    I have been on this Committee 21 years and I have been all 
over this country, and it is off-limits. And so you can only go 
where it is on-limits to get that small amount that is left.
    When it comes down to the security of America, I think of 
the guy who was chairing this Committee when I was sitting way 
down on the end there, 21 years ago, and he said, if it is 
necessary, we will go in the bottom of the Grand Canyon to get 
something, if it means the security of America.
    We would hope we would never get to that. I would hate to 
go into that pristine area.
    On the other side of the coin, keeping this country free 
and keeping the world free falls on the lot of Americans. We 
have to be very, very careful.
    I do want to thank each one of you. Your testimony has been 
good. A lot of controversy here today. It has kind of been fun 
to listen to it. I have enjoyed it.
    And believe me, we don't discount anything that anybody 
says. It is one thing nice about America; we can say what we 
think.
    So we thank each and every one of you for being here and 
for enduring this long testimony. I think we all learned a lot.
    And we stand adjourned.
    Whereupon, at 2:05 p.m., the Subcommittee was adjourned.]

    Statements of Members submitted for the record follow:
    [The prepared statement of Mr. Pallone follows:]

  Statement of The Honorable Frank Pallone, Jr., a Representative in 
                 Congress from the State of New Jersey

    Thank you, Mr. Chairman, for convening this hearing on the ``Energy 
Security Act''.
    I am very interested in hearing from our witnesses today and I 
think there are a lot of questions that need to be answered.
    In the 1970's we saw our Nation's energy security threatened by 
OPEC. The result was chaos in the marketplace. We quickly found out 
that our energy base was not diversified. We were not only dependent on 
oil, but we were dependent upon oil supplied by other countries whose 
behavior was beyond our control.
    Following our experiences with OPEC, we created policies that 
encouraged energy diversification and conservation. We made our 
Nation's energy security a priority and we managed that crisis.
    However, that dependence on oil has not changed. In fact, I believe 
it will never change. Our country will never be able to produce enough 
oil to supply the needs of Americans and we will never be able to 
economically recover enough oil to alter the world's oil prices and be 
free from foreign oil use.
    Today, we in Congress are managing a different energy condition. It 
is not the same as the critical shortages of thirty years ago but we 
are finding ourselves once again focusing on the nation's energy 
future. We find that demand, through our own growth, has placed a 
stress on the market's supply.
    But instead of looking at the outdated ``traditional'' means of 
meeting energy demands such as drilling hundreds of wells with towering 
rigs, constructing thousands of miles of new roads, transmission lines, 
waste pits, pipelines and pollution, I challenge us to create 
alternatives--alternatives that do not create such a negative impact on 
our country's natural resources.
    The answer to today's energy condition is not opening up the Arctic 
National Wildlife Preserve. It is not removing the environmental 
protection on public lands. It is not removing the Forest Service in 
leasing decisions--and it is not providing royalty relief to oil 
companies who in the last couple months have shown record profits.
    The answer to today's condition, to protecting our nation's energy 
security, must be tackling the demand side of this equation. We must 
decrease our need for oil--whether domestic or imported.
    As the largest user of oil, I would argue that the most effective 
thing we could do to protect our energy security it to strengthen our 
policies to encourage the development of transportation alternatives 
and better mass transit infrastructure. Secondly, we need to fund 
conservation projects that help us reduce our demand and finally we 
need to add even more alternative energy sources to our energy mix. We 
must provide encouragement for American ingenuity to create 
alternatives to oil consumption.
    Finally, I would like to touch on drilling in the Arctic National 
Wildlife Refuge--possibly the most controversial component of the 
Chairman's bill. Drilling in the Arctic refuge is not a benign activity 
and industrialization is inherently incompatible with wilderness.
    I have questioned what the Administration calls, ``environmentally 
friendly'' technology and have yet to have a satisfactory definition to 
this process. In fact, an April 13 Wall Street Journal article reported 
that the oil-rig technology supported by President Bush as 
environmentally friendly has malfunctioned at rising rates in the past 
five years on rigs in western Prudhoe Bay. It seems that 
environmentally friendly drilling technology is not exactly what it 
sounds like.
    I was also disturbed to read, just yesterday, that Alaska supports 
only 5 safety inspectors, five, to inspect the production of Alaska's 
400 million barrels of oil per year. The Wall Street Journal compared 
this to Indiana that produces 2.5 million barrels of oil per year and 
employs nine safety inspectors and California that produces 300 million 
barrels per year has 40 oil-field safety inspectors. Quite plainly, the 
5 percent of Alaska's protected wilderness could face devastating 
affects from oil and gas exploration.
    But, with this all said, I can't say that I'm surprised by the 
leadership's actions. The Administration has made it very clear to the 
American people that his term as President is a gift-giving season to 
the oil industry. This has trickled through to the members of this 
House. The legislation before us places the oil industry first by 
opening more land to exploration and profits and by providing royalty 
``relief''--and it places consumers and environmental protection last.
                                 ______
                                 
    [The prepared statement of Mr. Kind follows:]

Statement of The Honorable Ron Kind, Ranking Democrat, Subcommittee on 
                          Energy and Minerals

    Thank you Mr. Chairman. Two weeks ago, a bipartisan House and 
Senate Congressional delegation was invited by President Bush to the 
White House to discuss energy issues. At that meeting, the President 
expressed concern that he was unfairly being characterized as ``the Big 
Oil President'' and asked us to work in a bipartisan fashion to develop 
a balanced national energy policy. I'm sad to say, Mr. Chairman, that 
this bill does not get us there and did not heed the President's 
advice. H.R. 2436 is largely a license for the oil and gas industry to 
accelerate drilling activity while at the same time scaling back 
important environmental protections. Rather than developing a balanced 
energy policy, H.R. 2436 provides royalty holidays worth billions of 
dollars to the oil industry, allows industry to perform its own 
environmental impact analysis and requires that the federal government 
reimburse industry for these same analyses. The bill also usurps 
important federal environment protections by limiting environmental 
protection oriented lease stipulations to those allowed by state law. 
In addition, the bill strips the Forest Service of its authority to 
consent to proposed leases in National Forest lands, thus opening the 
way to drilling in roadless areas and other sensitive lands.
    We hear good words from the President and our Republican colleagues 
regarding renewable energy and conservation, but where the rubber meets 
the road, this legislation's answer to the country's energy crisis is 
to provide billion dollar royalty holidays to the oil companies, open 
national monuments to drilling, and scale back environmental 
protections. This bill is clearly out of touch with what the American 
people want and expect of us. I challenge our Republican colleagues to 
work with us to develop a bipartisan energy policy that is balanced and 
also focuses on renewable energy and advanced technology to increase 
energy efficiency and conservation to meet our energy needs.
    Over the short term, we need to increase domestic production of our 
traditional energy sources to meet our needs. However, this must be 
done in a manner that is sensitive to the equal need to protect our 
environment. We should not allow the current situation to be used as an 
excuse to rollback environmental protection. Over the long term, our 
economic and environmental future depends on us finding 21st century 
solutions to our 21st century energy challenges, which means using 
advanced technology to develop clean, renewable energy sources and 
becoming more energy efficient.
                                 ______
                                 
    [The prepared statement of Mr. Tom Udall follows:]

Statement of The Honorable Tom Udall, a Representative in Congress from 
                        the State of New Mexico

    Mr. Chairman, Mr. Ranking Member:
    The Energy Security Act, sponsored by Chairman Hansen, supports 
several recommendations of the National Energy Policy that was released 
by the National Energy Policy Group on May 17. Thus, the Energy 
Security Act promotes an increase in domestic oil, gas, coal, 
geothermal and solar production on federal public lands. This includes 
opening national monuments for coal and geothermal energy, which is 
contrary to the recent House Interior Appropriations bill vote. 
Moreover, the bill specifically repeals provisions of the Alaska 
National Interest Lands Act of 1980 and opens 1.5 million acres of the 
Arctic National Wildlife Refuge (ANWR) to oil and gas leasing and 
development.
    The U.S. Energy Information Administration projects that U.S. 
demand for refined petroleum products will grow over 35 percent by year 
2020, and natural gas is expected to rise in that same time by 45 
percent. Instead of reducing this escalating rate of consumption, this 
legislation suggests, among other things, that the answer to our energy 
crises is to increase our energy supplies, remove regulatory hurdles, 
and expedite the permit process for new projects.
    A key component of the Energy Security Act is to promote domestic 
energy security and reduce our reliance on foreign oil. I agree with 
that premise, but I cannot agree to pursuing that plan by opening the 
coastal plain of ANWR to oil and gas drilling. Focusing on drilling in 
ANWR is an unrealistic and misplaced priority because it does not 
exercise proper stewardship responsibility of our federally managed 
lands. Moreover, with small changes in vehicle fuel efficiency, we 
could save many times over the amount of energy at stake. After all, 
the oil and gas under the coastal plain isn't going anywhere and we may 
develop future technologies which are much less damaging to this 
magnificent resource.
    The coastal plain of ANWR is the most biologically productive part 
of the refuge and the heart of its wildlife activity. In the mid-
1980's, I rafted the Hula Hula River traveling over 100 miles from the 
mountains of the Brooks Range, through the coastal plain to the 
Beaufort Sea. I viewed first-hand the critical habitat for caribou, 
muskox, swans, snow geese as well as the Porcupine Caribou Herd which 
supports the subsistence lifestyle of over 7,000 Gwich'in (gwe-CHEEN') 
American and Canadian Indians who oppose the drilling in ANWR because 
of the potential disruption of the caribou herd. As such, I question 
whether this legislation the energy plan in general intends to protect 
federal lands appropriately and take into consideration the input of 
the general population and our nation's native and traditional 
communities who will be most affected by such an initiative.
    The Arctic Refuge is the only area on the North Slope of Alaska 
that has been set aside as off limits to oil and gas leasing. The 23 
million acre National Petroleum Reserve-Alaska (NPR-A) was set aside by 
Congress in 1923 for preservation as a future supply of oil, and was 
specifically opened for leasing in 1980. With recent discoveries of oil 
and gas reserves on the North Slope, it makes much more sense to 
explore for more production in NPR-A instead of squandering the time, 
energy, and resources on ANWR. Moreover, H.R. 2436 authorizes oil and 
gas leasing in the Arctic Refuge under broad exemptions from 
environmental laws. The potential environmental consequences of such 
legislation could be devastating to the fragile coastal ecosystem of 
the North Slope.
    (Gas Pipelines)
    The Energy Security Act would also establish an administrative 
interagency task force to develop an agreement to expedite and 
facilitate the environmental review and permitting of interstate 
natural gas pipelines. However, nowhere in this section does the bill 
discuss safety during the review and permitting of natural gas 
pipelines. This is not only important environmentally, but also of 
great importance to the many safety issues involved.
    Reflecting on the horrible pipeline explosion near Carlsbad, New 
Mexico last August that killed 12 people and on the Bellingham, 
Washington gas pipeline tragedy, I want to further ensure that our 
existing and future gas pipelines across the U.S. are safe. With that 
in mind, the Administration and Congress must strengthen our current 
oversight program for pipelines in order to enhance safety and 
reliability. The Secretary of the Interior should take the lead in the 
administration and work with Secretaries Abraham and Mineta to provide 
to Congress ideas on how to provide the maximum safety to our 
committees and to our workers in the industry.
    Efforts to expedite and facilitate the environmental review and 
permitting of interstate natural gas pipelines as outlined in this 
measure give me concern that an increase in production capacities will 
have serious environmental consequences. Since many of gas pipelines 
cross Bureau of Land Management lands, the Department of the Interior 
should make regulatory law compliance a priority, specifically in 
regards to environmental analysis and the permitting process.
    The projected growth in energy has called into question whether 
regulatory actions and permitting processes can keep pace with the 
necessary construction of new delivery facilities. The current staffing 
and budget levels at the BLM field offices for these efforts are 
inadequate. I look forward to hearing from Secretary Norton how the 
Department of the Interior intends to address this issue. Without 
focusing on this aspect, I do not see how the BLM can effectively 
implement its resource management program in the lower 48 states with 
the proposed President's budget. The President's BLM budget for fiscal 
year 2002 identifies an overall decrease of $2.1 billion from fiscal 
year 2001 to $1.8 billion for fiscal year 2002. Although the 
administration intends to increase the BLM's energy and mineral program 
by $15 million, a large portion of that will be going toward 
exploration on Alaska's North Slope and completion of the BLM's land 
management planning process. That doesn't leave much money for the BLM 
to manage its other programs, and the programs will suffer tremendously 
because of the budget cuts.
    In conclusion, let me say that the key elements for a balanced, 
long-term comprehensive energy strategy must be the reduction of our 
consumption levels and diversification of our energy base in an 
environmentally sound manner. Let me stress that last element--
environmentally sound. These basic goals can be accomplished through a 
variety of measures including improving energy efficiency, promoting 
the use of renewable energy sources, and enhancing the productive 
capacity of the domestic oil industry. Thus, a comprehensive strategy 
should ensure that energy and environmental policies are complementary, 
and work together to support long term energy goals as opposed to 
implementing a policy at either extreme. America has placed its trust 
in this Administration and in Congress to implement an energy policy 
that is balanced and that serves not only our present environmental and 
energy interest, but also those of future generations.
                                 ______
                                 

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