```

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

EFFECT OF THE PRESIDENT'S FY 2013 BUDGET AND LEGISLATIVE PROPOSALS FOR 
THE BUREAU OF LAND MANAGEMENT AND THE U.S. FOREST SERVICE'S ENERGY AND 
MINERALS PROGRAMS ON PRIVATE SECTOR JOB CREATION, DOMESTIC ENERGY AND 
               MINERALS PRODUCTION AND DEFICIT REDUCTION

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

                           OVERSIGHT HEARING

                               before the

                       SUBCOMMITTEE ON ENERGY AND
                           MINERAL RESOURCES

                                 of the

                     COMMITTEE ON NATURAL RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                        Tuesday, March 20, 2012

                               __________

                           Serial No. 112-101

                               __________

       Printed for the use of the Committee on Natural Resources

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

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

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                     COMMITTEE ON NATURAL RESOURCES

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

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

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

              SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES

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

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

                                CONTENTS

                              ----------                              
                                                                   Page

Hearing held on Tuesday, March 20, 2012..........................     1

Statement of Members:
    Holt, Hon. Rush D., a Representative in Congress from the 
      State of New Jersey........................................     4
        Prepared statement of....................................     6
    Lamborn, Hon. Doug, a Representative in Congress from the 
      State of Colorado..........................................     1
        Prepared statement of....................................     3

Statement of Witnesses:
    Abbey, Hon. Robert V., Director, Bureau of Land Management, 
      U.S. Department of the Interior............................     7
        Prepared statement of....................................     8
        Response to questions submitted for the record...........    12
    Fosburgh, Whit, President and CEO, Theodore Roosevelt 
      Conservation Partnership...................................    68
        Prepared statement of....................................    70
    McKee, Michael J., Uintah County Commissioner, Uintah County, 
      Utah.......................................................    50
        Prepared statement of....................................    52
    Milito, Erik, Group Director, Upstream and Industry 
      Operations, American Petroleum Institute...................    53
        Prepared statement of....................................    55
    Skaer, Laura, Executive Director, Northwest Mining 
      Association................................................    58
        Prepared statement of....................................    60
    Tidwell, Hon. Tom, Chief, U.S. Forest Service, U.S. 
      Department of Agriculture..................................    18
        Prepared statement of....................................    20

Additional materials supplied:
    List of documents retained in the Committee's official files.    26
                                     

 
OVERSIGHT HEARING ON THE ``EFFECT OF THE PRESIDENT'S FY 2013 BUDGET AND 
 LEGISLATIVE PROPOSALS FOR THE BUREAU OF LAND MANAGEMENT AND THE U.S. 
  FOREST SERVICE'S ENERGY AND MINERALS PROGRAMS ON PRIVATE SECTOR JOB 
     CREATION, DOMESTIC ENERGY AND MINERALS PRODUCTION AND DEFICIT 
                              REDUCTION.''

                              ----------                              

                        Tuesday, March 20, 2012

                     U.S. House of Representatives

              Subcommittee on Energy and Mineral Resources

                     Committee on Natural Resources

                            Washington, D.C.

                              ----------                              

    The Subcommittee met, pursuant to notice, at 10:06 a.m., in 
Room 1300, Longworth House Office Building, Hon. Doug Lamborn 
[Chairman of the Subcommittee] presiding.
    Present: Representatives Lamborn, Gohmert, Thompson, Duncan 
of South Carolina, Gosar, Amodei; Holt, Tonko, and Markey.
    Mr. Lamborn. The Committee will come to order. The Chairman 
notes the presence of a quorum, which under Committee Rule 3(e) 
is two Members.
    The Subcommittee on Energy and Mineral Resources is meeting 
today to hear testimony on an oversight hearing on the effect 
of the President's Fiscal Year 2013 budget and legislative 
proposals for the Bureau of Land Management and the U.S. Forest 
Service's energy and mineral programs on private sector job 
creation, domestic energy and minerals production, and deficit 
reduction.
    Under Committee Rule 4(f), opening statements are limited 
to the Chairman and Ranking Member of the Subcommittee.
    I ask unanimous consent to include any other Members' 
opening statements in the hearing record, if submitted to the 
Clerk by close of business today. Hearing no objection, so 
ordered.
    Mr. Lamborn. I now recognize myself for five minutes.

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

    Mr. Lamborn. During today's hearing, we will hear the 
Administration's justification for their Bureau of Land 
Management and U.S. Forest Service budgets, and legislative 
proposals for the Federal onshore energy and mineral programs 
in Fiscal Year 2013.
    The energy and minerals programs under the jurisdiction of 
this Subcommittee bring in the most revenue to the Federal 
Treasury behind the IRS.
    In addition, Federal lands are a key contributor to job 
creation. According to the Administration's own report, more 
than half the jobs created by the Departments' activities are 
related to energy and mineral production.
    This equates to more than 726,000 American jobs that are 
dependent on the actions of this Administration.
    The opportunities for new job creation are endless. 
However, without policies in place that encourage energy and 
mineral development, these job opportunities are nonexistent.
    Today we will hear weighty claims of actions that this 
Administration is supposedly taking to promote domestic energy 
and create American jobs.
    Unfortunately, since the Administration took office, the 
Department of the Interior has taken steps to reduce access to 
domestic energy and mineral resources on Federal lands, 
including renewable resources, like wind and solar.
    Today we might hear from the Administration that the 
agencies are working to lower gas prices for American 
consumers. We might also hear President Obama's claim that high 
gas prices are not the President's fault.
    However, a careful review of President Obama's actual 
actions paint a very different story.
    In 2009, shortly after President Obama took office, 77 
leases issued in Utah were withdrawn. This cost American 
taxpayers millions of dollars in lost lease bids, production 
royalties, and the opportunity to produce American energy to 
offset rising imports of oil and natural gas.
    According to an Uintah County Commissioner in Utah, this 
prevented the creation of approximately 3,000 jobs.
    Who made the decision to withdraw these leases, thereby 
stopping energy production and job creation? President Obama.
    The Administration often touts their record of encouraging 
oil and natural gas development on Federal lands, but since the 
President took office, the last three years have seen the 
fewest acres leased for oil and natural gas in over 30 years.
    Who makes the decision to lease or not lease land for 
energy development? President Obama.
    The last three years have seen the fewest new leases sold 
by BLM since 1984. Who makes the decision to sell leases? 
President Obama.
    Since the Administration took office, a moratorium on outer 
continental shelf production reduced production on the OCS by 
500,000 barrels per day.
    In December 2009, EIA's annual energy outlook for 2010 
forecast Gulf of Mexico crude oil production to average 1.76 
million barrels per day.
    Today, EIA's estimate for the second quarter of 2012 is 
1.26 million barrels per day, half a million barrels less.
    Who makes the decision to approve, delay and deny permits 
for energy production in the Gulf of Mexico? President Obama.
    Who made the decision to entirely halt all production in 
the Gulf of Mexico while thousands of Americans sat unemployed 
for nearly a year? President Obama.
    Who stood idly by as rigs left the Gulf of Mexico bound for 
the shores of other countries while thousands of American jobs 
went with them? President Obama.
    A robust energy and mineral industry in this country 
contributes billions of dollars to our economy and provides raw 
materials for countless products that Americans depend on every 
day.
    The economic security of our country is directly dependent 
on developing our own domestic resources that we are fortunate 
enough to have within our borders.
    An effective energy and mineral program within the BLM and 
Forest Service is imperative for the creation of American jobs, 
increasing national security through our domestic energy and 
critical and strategic mineral resources, and increasing 
revenue into Federal, state and local treasuries.
    Unfortunately, the policies of the current Administration 
will not create jobs or produce American energy. In fact, 
President Obama's solution to rising gas prices is OPEC.
    Just last week, President Obama asked Saudi Arabia to 
increase oil production to mitigate gasoline prices.
    Rather than facilitating our own energy production and 
creating jobs for Americans, President Obama would rather send 
American dollars to the Middle East and create jobs for the 
citizens of Saudi Arabia.
    The Administration's policies instead have and will lead to 
American job loss, further dependence on foreign sources for 
our country's energy and mineral needs, and severely limit the 
revenue stream from the development of Federal mineral 
resources.
    I look forward to hearing from all of our witnesses today 
on this important topic.
    [The prepared statement of Mr. Lamborn follows:]

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

    During today's hearing we will hear the Administration's 
justification for their Bureau of Land Management and U.S. Forest 
Service budget and legislative proposals for the federal onshore energy 
and minerals programs in Fiscal Year 2013. The energy and mineral 
programs under the jurisdiction of this subcommittee bring in the most 
revenue to the federal treasury behind the IRS. In addition, federal 
lands are a key contributor to job creation. According to the 
Administration's own report, more than half the jobs created by the 
Department's activities are related to energy and mineral production. 
This equates to more than 726, 000 American jobs that are dependent on 
the actions of this Administration. The opportunities for new job 
creation are endless; however, without policies in place that encourage 
energy and mineral development, these job opportunities are non-
existent.
    Today, we will hear weighty claims of actions that this 
Administration is supposedly taking to promote domestic energy and 
create American jobs. Unfortunately, since the Administration took 
office the Department of the Interior has taken steps to reduce access 
to domestic energy and mineral resources on federal lands including 
renewable resources like wind and solar.
    Today we will likely hear from the Administration that the Agencies 
are working to lower gas prices for American consumers. We might also 
hear President Obama's claim that high gas prices are not the 
President's fault. However, a careful review of the President Obama's 
actual actions paint a very different story.
PRESIDENT'S ACTIONS
    In 2009, shortly after President Obama took office, 77 leases 
issued in Utah were withdrawn. This cost American taxpayers millions of 
dollars in lost lease bids, production royalties, and the opportunity 
to produce American energy to offset rising imports of oil and natural 
gas. According to a Uintah County commissioner, this prevented the 
creation of approximately 3,000 jobs. Who made the decision to withdraw 
these leases--thereby stopping energy production and job creation? 
President Obama.
    The Administration often touts their record of encouraging oil and 
natural gas development on federal lands. But since the President took 
office, the last 3 years have seen the fewest acres leased for oil and 
natural gas in over 30 years. Who makes the decision to lease, or not 
lease, land for energy development? President Obama.
    The last three years have seen the fewest new leases sold by BLM 
since 1984. Who makes the decision to sell leases? President Obama.
    Since the Administration took office, a moratorium on Outer 
Continental Shelf (OCS) production reduced production on the OCS by 
500,000 barrels per day. In December 2009, EIA's Annual Energy Outlook 
for 2010 (AEO2010), forecast Gulf of Mexico crude oil production to 
average 1.76 million barrels per day. Today EIA's estimate for the 2nd 
quarter of 2012 is 1.26 million barrels per day. Who makes the decision 
to approve, delay and deny permits for energy production in the Gulf of 
Mexico? President Obama.
    Who made the decision to entirely halt all production in the Gulf 
of Mexico while thousands of Americans sat, unemployed, for nearly a 
year? President Obama.
    And who stood idly by as rigs left the Gulf of Mexico, bound for 
the shores of other countries while thousands of American jobs went 
with them? President Obama.
    A robust energy and mineral industry in this country contributes 
billions of dollars to our economy and provides raw materials for 
countless products that Americans depend on every day. The economic 
security of our nation is directly dependent on developing our own 
domestic resources that we are lucky enough to have within our borders.
    An effective energy and mineral program within the BLM and Forest 
Service is imperative for the creation of American jobs, increasing 
national security through our domestic energy and critical and 
strategic mineral resources, and increasing revenue into federal, state 
and local treasuries.
    Unfortunately, the policies of the current Administration will not 
create jobs or produce American energy. In fact, President Obama's 
solution to rising gas prices is OPEC. Just last week President Obama 
asked Saudi Arabia to increase oil production to mitigate gasoline 
prices. Rather than facilitating our own energy production and creating 
jobs for Americans, President Obama would rather send American dollars 
to the Middle East and create jobs for the citizens of Saudi Arabia. 
The Administration's policies instead have and will lead to American 
job loss, further dependence on foreign sources for our country's 
energy and mineral needs and severely limit the revenue stream from the 
development of federal mineral resources.
    I look forward to hearing from our all of today's witnesses on this 
important topic.
                                 ______
                                 
    Mr. Lamborn. I now recognize the Ranking Member, the 
gentleman from New Jersey, Mr. Holt, for his opening statement.

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

    Mr. Holt. Thank you, Mr. Chairman.
    There are many good and important things that the BLM does 
and the Forest Service. We maybe should talk about those, but 
given the onslaught here trying to blame the Obama 
Administration for gasoline prices, I think we really need to 
address some of these issues with the facts.
    In 2011, American crude oil production reached the highest 
level in nearly a decade. Natural gas production was once again 
at an all time high.
    Some have claimed that this is in spite of actions by the 
Obama Administration. The Obama Administration has increased 
domestic oil and gas production on Federal land as well.
    Over the first three years of the Obama Administration, oil 
production from all offshore and onshore Federal land has been 
13 percent higher than during the last three years of the 
previous Administration.
    Some have claimed that oil production on Federal lands is 
down because of the Obama Administration. Well, oil production 
in 2011 was slightly lower than 2010. Remember, this is in the 
aftermath of the Deepwater Horizon disaster when oil and gas 
companies could not demonstrate that they had the capability 
actually to respond to and contain blowouts.
    Even with that slight dip in offshore production, overall 
Federal oil production in 2011 under President Obama was higher 
than in each of the last three years of the Bush 
Administration.
    According to a recent Department of Energy report that 
examined production during the period 2003 to 2011, onshore oil 
production from Federal land in 2011 was higher than at any 
point during the Bush Administration over the first three years 
of the Obama Administration.
    Natural gas production onshore was six percent higher than 
during the last three years of the Bush Administration.
    The Department of the Interior has approved more permits to 
drill and industry has begun drilling more wells in the first 
three years of the Obama Administration than in the first three 
years of the Bush Administration.
    Yet, these companies are sitting on more than 7,200 
approved drilling permits, on which they have not begun 
drilling.
    Oil and gas companies hold more than 25 million acres of 
public land onshore on which they are not producing oil and 
gas. The Obama Administration is not holding up production on 
these leases. The oil and gas companies who hold the permits 
are holding up production.
    Ranking Member Markey and I have introduced legislation to 
establish an escalating fee on oil and gas leases, which would 
provide strong incentives for oil companies to either start 
drilling or relinquish the land.
    If the Majority is interested in increasing oil production 
on Federal lands, they should support this legislation, get the 
companies to stop sitting and start drilling, if that is what 
they want.
    Last year, there was a 50 percent increase in industry 
nominations to lease Federal land onshore for oil and gas 
drilling.
    The oil and gas industry would not be expanding the areas 
it wanted to drill in if it thought the Obama Administration 
was not allowing development to go forward.
    There are plenty more facts like that that we can lay out 
that show these claims that we have been hearing just do not 
hold up.
    I would like to briefly, however, talk about another aspect 
of energy policy on public lands.
    As part of the ``all of the above'' energy strategy, the 
Administration is also developing renewable energy on public 
lands, with the goal of permitting 11,000 megawatts, 11 
gigawatts, by the end of next year. This would be more than 
five times the amount of renewable energy permitted by all 
previous Administrations combined.
    Yet, the Republican Majority is threatening to raise taxes 
on the wind industry this year, which would jeopardize those 
projects and many others, and could kill 37,000 clean energy 
jobs.
    I look forward to the testimony of the witnesses. As I say, 
there are many other aspects of your important work that we may 
want to talk about, but I am pleased to have the opportunity to 
set these matters straight.
    [The prepared statement of Mr. Holt follows:]

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

    In 2011, American crude oil production reached the highest level in 
nearly a decade. Natural gas production was once again at an all-time 
high. Some have claimed that this is in spite of, not because of, the 
Obama Administration.
    Yet, the Obama Administration has continued to increase domestic 
oil and gas production on federal land. Over the first three years of 
the Obama Administration, oil production from all offshore and onshore 
federal land has been 13 percent higher than during the last three 
years of the Bush administration.
    Some have claimed that oil production on federal lands is down this 
year because of the Obama Administration. Well, oil production in 2011 
was slightly lower than 2010 as a result of the aftermath of the BP 
Deepwater Horizon disaster when oil and gas companies were not able to 
demonstrate that they had the capability to actually respond to and 
contain a deepwater blowout. And even with that slight dip in offshore 
production, overall federal oil production in 2011 under President 
Obama was still higher than each of the last three years of the Bush 
Administration.
    According to a recent Department of Energy report that examined 
energy production between 2003 and 2011, onshore, oil production from 
federal land in 2011 was higher than at any point under the Bush 
Administration.. Over the first three years of the Obama 
Administration, natural gas production onshore was 6 percent higher 
than during the last three years of the Bush Administration.
    The Department of the Interior has approved more permits to drill, 
and industry has begun drilling more wells in the first three years of 
the Obama Administration than in the first three years of the Bush 
Administration. Yet these companies are sitting on more than 7,200 
approved drilling permits on which they have not begun drilling. Oil 
and gas companies hold more than 25 million acres of public land 
onshore on which they are not producing oil and gas. The Obama 
administration isn't holding up production on these leases, the oil and 
gas companies who hold these permits are holding up production.
    The Administration has once again proposed establishing a fee on 
these nonproducing leases. Ranking Member Markey and I have introduced 
legislation to establish an escalating fee on oil and gas leases, 
providing a strong incentive for oil companies to either start drilling 
in a timely fashion or relinquish this land so that another company can 
develop it. If the majority is interested in increasing production on 
federal lands they should support this legislation to get these 
companies to stop just sitting on the thousands of approved permits to 
drill and the tens of millions of acres of public lands they already 
hold.
    And last year there was a 50 percent increase in industry 
nominations to lease federal land onshore for oil and gas drilling. The 
oil and gas industry wouldn't be expanding the areas it wanted to drill 
in if it thought the Obama Administration was not allowing oil and gas 
development to go forward.
    And as part of its real ``all of the above'' energy strategy, the 
Obama Administration is also developing renewable energy on public 
lands, with the goal of permitting 11,000 megawatts by the end of 2013. 
This would be more than 5 times the amount of renewable energy 
permitted by all previous administrations combined. Yet the Republican 
Majority is threatening to raise taxes on the wind industry at the end 
of this year, which would jeopardize those projects and could kill 
37,000 permanent and existing clean energy jobs.
    I look forward to the testimony of our witnesses today and I yield 
back.
                                 ______
                                 
    Mr. Lamborn. I now invite forward our first panel 
consisting of The Honorable Bob Abbey, Director of the Bureau 
of Land Management, and The Honorable Tom Tidwell, Chief of the 
U.S. Forest Service.
    Your written testimony will appear in full in the hearing 
record, so I ask that you keep your oral statements to five 
minutes, as outlined in our letter and under Committee Rule 
4(a).
    Our microphones are not automatic, so you need to turn them 
on when we begin.
    After four minutes, the yellow light will come on, and then 
after five minutes, the red light comes on.
    Director Abbey, thank you for being here, and you may 
begin.

             STATEMENT OF ROBERT ABBEY, DIRECTOR, 
                   BUREAU OF LAND MANAGEMENT

    Mr. Abbey. Good morning, Mr. Chairman, members of the 
Subcommittee. It is my pleasure to be here and talk about the 
President's Fiscal Year 2013 energy and minerals budget 
requests for the Bureau of Land Management.
    The BLM is responsible for managing over 245 million acres 
of public lands, primarily in the 12 Western States, as well as 
approximately 700 million acres of onshore, subsurface mineral 
estate nationwide.
    The BLM's unique multiple use management of public lands 
includes activities as varied as livestock grazing, outdoor 
recreation, and conservation of natural, historical, cultural 
and other important resources.
    America's public lands also provide resources that are 
critical to the nation's energy security. These resources will 
continue to play an important role in the domestic energy 
production and mineral development for decades to come.
    The BLM is one of a handful of Federal agencies that 
generate more revenue than it spends. Our management of public 
land resources and protection of public land values results in 
extraordinary economic benefits to local communities and to 
this nation.
    It is estimated that in 2011, the BLM's management of 
public lands contributed more than $120 billion to the national 
economy and supported more than 550,000 American jobs.
    BLM's total Fiscal Year 2013 budget request is $1.1 billion 
or about $500,000 below the 2012 enacted budget.
    The budget proposal reflects the Administration's efforts 
to maximize public benefits while recognizing the reality of 
the current fiscal situation.
    Our proposed budget makes strategic investments in support 
of important Administration and Secretarial initiatives which 
will reap benefits for years to come.
    The New Energy Frontier initiative recognizes the value of 
environmentally sound and scientifically grounded development 
of both conventional and renewable energy resources on public 
lands.
    Conventional energy resources on these public lands 
continue to play a critical role in meeting the nation's energy 
needs, producing 41 percent of the nation's coal, 13 percent of 
natural gas, and five percent of the domestically produced oil.
    During 2011, the BLM held 32 onshore oil and gas lease 
sales covering over four million acres which generated about 
$256 million in revenue. Total onshore mineral revenues are 
estimated to be $4.4 billion in 2013 from leasing and 
production activities.
    The Department's balanced approach to responsible 
conventional energy development combines oil and gas policy 
reforms with effective budgeting to provide appropriate support 
for conventional energy development.
    The 2013 budget strengthens the BLM's oil and gas 
inspection capability through a proposed fee on oil and gas 
producers, similar to the fee now charged for offshore 
inspections.
    Collections of these fees is consistent with the principle 
that users of the public lands pay to cover oversight 
activities. This will generate an estimated $48 million in 
funds to improve safety and production inspections for oil and 
gas operations.
    In addition, the budget also proposes $13 million in 
increased funding to continue to implement leasing reform 
efforts.
    President Obama, Secretary Salazar, and this Congress have 
stressed the importance of renewable energy to the nation's 
energy security and long term economic development, and the 
protection of the environment.
    The development of renewable energy creates American jobs 
while reducing the country's reliance on fossil fuels.
    To date, Secretary Salazar has approved 29 commercial scale 
renewable energy projects on public lands, including 16 solar, 
five wind, and eight geothermal projects that represent more 
than 6,500 megawatts and 12,500 jobs.
    The BLM intends to reach its goal of permitting 11,000 
megawatts in 2013. Our 2013 budget proposes a $5 million 
increase for these efforts.
    Finally, the budget proposes legislative initiatives to 
reform hard rock mining, remediate abandoned mines, and 
encourage diligent development of nonproducing oil and gas 
leases.
    The BLM's 2013 budget request provides funding for the 
Agency's highest priority energy and minerals initiatives, and 
reflects the Administration's commitment to encourage 
responsible energy development on the public lands.
    Again, Mr. Chairman, thank you for the opportunity to 
testify.
    [The prepared statement of Mr. Abbey follows:]

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

    Mr. Chairman and Members of the Subcommittee, thank you for the 
opportunity to appear here today to discuss the President's Fiscal Year 
(FY) 2013 energy and minerals budget request for the Bureau of Land 
Management (BLM).
    The BLM, an agency of the U.S. Department of the Interior (DOI), is 
responsible for managing our National System of Public Lands, which are 
located primarily in 12 western States, including Alaska. The BLM 
administers over 245 million surface acres, more than any other Federal 
agency. The BLM also manages approximately 700 million acres of onshore 
subsurface mineral estate throughout the Nation. The BLM's unique 
multiple-use management of public lands includes activities as varied 
as energy production, mineral development, livestock grazing, outdoor 
recreation, and the conservation of natural, historical, cultural, and 
other important resources. The BLM is one of a handful of Federal 
agencies that generates more revenue than it spends.
Meeting Our Nation's Needs
    The BLM's management of public land resources and protection of 
public land values results in extraordinary economic benefits to local 
communities and to the Nation, helping to contribute more than $120 
billion annually to the national economy and supporting more than 
550,000 American full and part-time jobs according to the Department of 
the Interior Economic Contributions report of June 21, 2011. Energy and 
mineral resources generate the highest revenue values of any uses of 
the public lands from royalties, rents, bonuses, sales and fees.
    These benefits are not only economic, but also contribute 
substantially to America's energy security. During calendar year 2011, 
the BLM held 32 onshore oil and gas lease sales--covering nearly 4.4 
million acres--which generated about $256 million in revenue for 
American taxpayers. Onshore mineral leasing revenues are estimated to 
be $4.4 billion in 2013. The 2011 lease sale revenues are 20 percent 
higher than those in calendar year 2010. There are currently over 38 
million acres of Federal mineral estate under oil and gas lease, and 
since only about 32 percent of that acreage is currently in production, 
the BLM is working to provide greater incentives for lessees to make 
production a priority. In FY 2011, the Department of the Interior 
collected royalties on more than 97 million barrels of oil produced 
from onshore Federal minerals. Moreover, the production of nearly 3 
trillion cubic feet of natural gas made it one of the most productive 
years on record.
    Meanwhile, the coal produced from more than 300 Federal coal 
leases, on nearly a half million acres of federal mineral estate, 
generated over $780 million in royalties. This coal is used to generate 
electricity in at least 40 states, accounting for more than one-fifth 
of all electricity generated across the country. The BLM held four coal 
leases sales in 2011. The BLM accepted bonus bids of more than $700 
million for these four lease sales, underscoring the Administration's 
commitment to the goals of energy security and job creation.
    The BLM also is leading the Nation on the new energy frontier, 
actively promoting solar, wind, and geothermal energy development. 
Under Secretary Salazar, BLM has approved permits for 29 commercial-
scale renewable energy projects on public lands or the transmission 
associated with them since 2009. This includes 16 solar, five wind, and 
eight geothermal projects. Together, these projects represent more than 
6,500 megawatts (MW) and 12,500 jobs, and when built will power about 
1.3 million homes. In addition, the Department has identified more than 
3,000 miles of transmission lines for expedited review. Enhanced 
development of wind power is a key component of our Nation's energy 
strategy for the future. There are currently 437 MW of installed wind 
power capacity on BLM-managed public lands, but there are 20 million 
acres of public lands with wind potential. Additionally, nearly half of 
U.S. geothermal energy production capacity is from Federal leases. The 
2013 budget reflects a goal of permitting a total of 11,000 MW of clean 
renewable energy by the end of 2013.
FY 2013 Budget Overview
    The BLM's FY 2013 energy and minerals budget makes significant 
investments in America's economy, while making difficult choices to 
offset priority funding increases. Investments in this budget will 
promote America's energy production at home and grow America's economy. 
The proposed budget for the BLM makes a strategic investment in support 
of the New Energy Frontier, an important Secretarial Initiative. 
Investment in this program today will reap benefits for years to come.
    The total FY 2013 BLM budget request is $1.1 billion in current 
authority, which is essentially the same as the 2012 enacted level. The 
budget proposes $952.0 million for the Management of Lands and 
Resources appropriation and $112.0 million for the Oregon and 
California Grant Lands appropriation, the BLM's two main operating 
accounts. The budget makes strategic funding shifts to target high-
priority initiatives, scales back on lower-priority programs, and 
sustains and expands energy program activities. The budget also 
includes several important legislative proposals linked to the uses of 
lands and resources, including proposals to fund the remediation of 
abandoned hardrock mines; to provide a fair return to the taxpayer from 
the production of several hardrock minerals on Federal lands; to 
encourage diligent development of oil and gas leases; to repeal a 
prohibition on charging oil and gas permitting fees along with 
associated mandatory funds; and to reauthorize the Federal Land 
Transaction Facilitation Act. This testimony focuses on the BLM's 
energy and mineral resources programs.
Promoting American Energy Production at Home
    The 2013 budget continues the Department's New Energy Frontier 
initiative to create jobs, reduce the Nation's dependence on fossil 
fuels and oil imports, and reduce carbon impacts. The Secretary's New 
Energy Frontier Initiative emphasizes the value of scientifically-
based, environmentally-sound development of both renewable and 
conventional energy resources on the Nation's public lands. 
Facilitating renewable energy development is a major component of this 
strategy along with effective management of conventional energy 
programs. The BLM's proposed FY 2013 budget advances the goals of the 
initiative by including priority funding for both renewable and 
conventional energy development on public lands.
    Renewable Energy--President Obama, Secretary Salazar, and the 
Congress have stressed the critical importance of renewable energy to 
the future of the United States. Success in attaining the Nation's 
goals to reduce greenhouse gas emissions, mitigate climate change, and 
protect the global environment relies on sustained efforts to develop 
renewable energy resources. Renewable energy production is vital to our 
Nation's long-term economic development and energy security. The 
development of renewable energy creates American jobs and promotes 
innovation in the United States while reducing the country's reliance 
on fossil fuels.
    The BLM continues to make significant progress in promoting 
renewable energy development on the public lands in 2012, including 
working to approve additional large-scale solar energy projects and 
complete a draft Solar Programmatic Environmental Impact Statement to 
provide for landscape-scale siting of solar energy projects on public 
lands. The agency is working on wind development mitigation strategies 
with wind energy applicants and other Federal agencies, and is 
currently reviewing over 45 wind energy applications. Additionally, the 
transmission infrastructure required to deliver renewable energy from 
production facilities to major markets relies on corridors across BLM-
managed lands.
    The 2013 budget request includes a total program increase of $7.0 
million in the Renewable Energy Management program, including $5.0 
million in new funding. This will support additional environmental 
studies to accelerate the identification of prime areas for utility-
scale renewable energy project development. It will also enable the BLM 
to continue ongoing program management responsibilities associated with 
geothermal energy development by replacing mandatory funding previously 
provided by the Geothermal Steam Act Implementation Fund, for which new 
deposits have ceased. The remaining $2.0 million increase is a transfer 
of geothermal funds from the oil and gas management program to the 
BLM's renewable energy program.
    Conventional Energy--While we work to develop renewable energy 
sources, domestic oil and gas production remain critical to our 
nation's energy supply and to reducing our dependence on foreign oil. 
Secretary Salazar has emphasized that conventional energy resources on 
BLM-managed lands continue to play a critical role in meeting the 
Nation's energy needs. Conventional energy development from public 
lands produces 41 percent of the Nation's coal, 13 percent of the 
natural gas, and 5 percent of the domestically-produced oil. The 
Department's balanced approach to responsible conventional energy 
development combines onshore oil and gas policy reforms with effective 
budgeting to provide appropriate planning and support for conventional 
energy development.
    The FY 2013 budget proposes an increase of $2.4 million in 
appropriated funding to be utilized for inspection and enforcement of 
coal production on Federal and Indian lands. The requested increase 
will fund the program at roughly the 2011 enacted level. BLM will 
continue efforts to institute cost recovery fees within this program, 
but recognizes these fees may not be in place by the start of 2013.
    The President's FY 2013 budget proposes $13.0 million in oil and 
gas program increases to provide industry with timely access to Federal 
oil and gas resources, backed by the certainty of defensible 
environmental analysis. Of that increase, a $5.0 million program 
increase will restore the BLM's leasing and oversight capacity to the 
2011 enacted level. An additional $3.0 million will be used for large, 
regional-scale studies and environmental impact statements for oil and 
gas leasing and development issues. Finally, an additional $5.0 million 
programmatic increase will allow the BLM to fully implement its leasing 
reform strategy without sacrificing other important program goals.
    The BLM is committed to ensuring oil and gas production is carried 
out responsibly. To accomplish this, the BLM performs inspections to 
ensure that lessees meet environmental, safety, and production 
reporting requirements. The BLM recently initiated a program using a 
risk-based inspection protocol for production inspections, based on 
production levels and histories. Success realized in this program will 
support expansion of this risk-based strategy to the other types of 
inspections the BLM performs. The risk-based strategy will maximize the 
use of inspection staff to better meet BLM inspection goals and 
requirements in the future.
    The 2013 budget proposes to expand and strengthen the BLM's oil and 
gas inspection capability through new fee collections from industry, 
similar to the fees now charged for offshore inspections. Collection of 
these fees is consistent with the principle that users of the public 
lands should pay for the costs of use authorizations and the costs 
associated with the oversight of authorized activities. The inspection 
fee schedule included in the budget is estimated to generate $48.0 
million in collections, which would offset a proposed reduction of 
$38.0 million in BLM's appropriated funds, while providing for a net 
increase of $10.0 million in funds available for this critical BLM 
management responsibility. The increased funding is aimed at correcting 
deficiencies identified by the Government Accountability Office in its 
February 2011 report, which designated Federal management of oil and 
gas resources including production and revenue collection as high risk. 
The $10.0 million increase will help BLM achieve the high priority goal 
of increasing the completion of inspections of Federal and Indian high 
risk oil and gas cases by nine percent over 2011 levels. The BLM will 
also complete more environmental inspections to ensure environmental 
requirements are being followed in all phases of development. Fee 
levels will be based on the number of oil and gas wells per lease so 
that costs are shared equitably across the industry.
    To encourage diligent development of new oil and gas leases, the 
Administration is proposing a per-acre fee on each nonproducing lease 
issued after enactment of the proposal. The $4-per-acre fee on non-
producing Federal leases (onshore and offshore) would provide a 
financial incentive for oil and gas companies to either put their 
leases into production or relinquish them so that tracts can be re-
leased and developed by new parties.
    The Administration believes that American taxpayers should get a 
fair return on the development of energy resources on their public 
lands. A 2008 Government Accountability Office (GAO) report suggests 
that taxpayers could be getting a better return from Federal oil and 
gas resources in some areas. To this end, the Administration is 
developing a proposed rule to address onshore royalty rates.
Abandoned Mine Lands & Hardrock Mining Reform Proposals
    The budget includes legislative proposals to address abandoned mine 
land (AML) hazards on both public and private lands and to provide a 
fair return to the taxpayer from hardrock production on Federal lands. 
The first component addresses abandoned hardrock mines across the 
country through a new AML fee on hardrock production. Just as the coal 
industry is held responsible for abandoned coal sites, the 
Administration proposes to hold the hardrock mining industry 
responsible for abandoned hardrock mines. The proposal will levy an AML 
fee on all uranium and metallic mines on both public and private lands 
that will be charged on the volume of material displaced after January 
1, 2013. The receipts will be distributed by BLM through a competitive 
grant program to restore the Nation's most hazardous hardrock AML sites 
on both public and private lands using an advisory council comprising 
of representatives of Federal agencies, States, Tribes, and non-
government organizations. The advisory council will recommend objective 
criteria to rank AML projects to allocate funds for remediation to the 
sites with the most urgent environmental and safety hazards. The 
proposed hardrock AML fee and reclamation program would operate in 
parallel to the coal AML reclamation program, as two parts of a larger 
effort to ensure that the Nation's most dangerous coal and hardrock AML 
sites are addressed by the industries that created the problems.
    The budget also includes a legislative proposal to institute a 
leasing process under the Mineral Leasing Act of 1920 for certain 
minerals (gold, silver, lead, zinc, copper, uranium, and molybdenum) 
currently covered by the General Mining Law of 1872. After enactment, 
mining for these metals on Federal lands would be governed by a leasing 
process and subject to annual rental payments and a royalty of not less 
than five percent of gross proceeds. Half of the royalty receipts would 
be distributed to the states in which the leases are located and the 
remaining half would be deposited in the Treasury. Pre-existing mining 
claims would be exempt from the change to a leasing system, but would 
be subject to increases in the annual maintenance fees under the 
General Mining Law of 1872. However, holders of pre-existing mining 
claims for these minerals could voluntarily convert their claims to 
leases. The Office of Natural Resources Revenue in the Department of 
the Interior will collect, account for, and disburse the hardrock 
royalty receipts.
Reductions & Efficiencies
    The BLM's FY 2013 budget proposal reflects many difficult choices 
in order to support priority initiatives and needs while supporting the 
President's commitment to fiscal discipline and spending restraint. In 
2013, the BLM is requesting a decrease of $2.0 million for its 
abandoned mine lands program. The BLM will continue to fund the highest 
priority sites, as determined through its ongoing ranking process. Red 
Devil Mine reclamation activities remain a high priority.
Conclusion
    The BLM's Fiscal Year 2013 budget request for energy and minerals 
programs provides funding for the agency's highest priority energy and 
minerals initiatives, while making difficult but responsible choices 
for reductions to offset some of these funding priorities. Our public 
lands and resources play an important role in American lives, 
economies, and communities and include some of our Nation's greatest 
assets. This budget request reflects the Administration's commitment to 
encourage responsible energy development on the public lands, as well 
as to ensure the American people receive a fair return for the public's 
resources. Mr. Chairman, thank you for the opportunity to testify on 
the BLM energy and mineral budget request for Fiscal Year 2013. I will 
be pleased to answer any questions you may have.
                                 ______
                                 

Response to questions submitted for the record by Bob Abbey, Director, 
                       Bureau of Land Management

Questions from Chairman Doug Lamborn:
1.  At the House Natural Resources hearing on February 15, Secretary 
        Salazar implied that the industry was supportive of federal 
        hydraulic fracking regulations and has often said that in 
        developing the regulations the Department worked closely with 
        industry in crafting these regulations. Can you please describe 
        to the committee the companies, Indian tribes, and state 
        government officials you or the Department has consulted with 
        in crafting the federal hydrofracking regulations and what 
        feedback or statements of support were given specifically 
        regarding federal hydrofracking regulations?
    Response: As stewards of the public lands and their resources, the 
BLM evaluated the increased use of well stimulation practices over the 
last decade and determined that the existing rules for well stimulation 
on public lands require updating. Over the past few years, in response 
to strong public interest, several states--including Colorado, Wyoming, 
Arkansas, and Texas--have substantially revised their state regulations 
related to hydraulic fracturing. One of the BLM's key goals in updating 
its regulations on hydraulic fracturing is to complement these state 
efforts by providing a consistent standard across all public and Indian 
lands. The BLM is actively working to minimize any duplication between 
the proposed rule and the reporting required in state regulations. The 
rule will create a consistent framework for fracturing across BLM lands 
in numerous states, consistent with BLM's statutory stewardship 
responsibilities, unlike the patchwork of state standards among those 
states.
    In April 2011, the BLM hosted a series of regional public meetings 
in North Dakota, Arkansas, and Colorado--states that have experienced 
significant increases in oil and natural gas development on federal and 
Indian lands--to discuss the use of hydraulic fracturing on lands 
administered by the BLM and on Indian lands. At these meetings, many 
oil and gas industry representatives, as well as organizations and 
businesses that support this sector, supported only state regulation of 
hydraulic fracturing; some indicated support for disclosure of 
fracturing fluids to the public. The BLM explained that the rules 
governing drilling practices on lands that it has a responsibility to 
oversee included obsolete, outdated references to hydraulic fracturing 
and that the agency reviewed hydraulic fracturing regulations from 
several states and used valuable information from these state 
regulations in developing the proposed rule. Further, BLM stressed that 
the agency was committed to working with individual states on the 
implementation of the proposed regulation, as it does currently in 
implementing other drilling-related requirements on our public lands, 
to encourage efficiency in data collection and reporting.
    The BLM's proposed hydraulic fracturing rule is consistent with the 
American Petroleum Institute's (API) guidelines for well construction 
and well integrity (see, API Guidance Document HF 1, Hydraulic 
Fracturing Operations--Well Construction and Integrity Guidelines, 
First Edition, October 2009).
    With respect to tribal lands, the BLM has offered government-to-
government consultation with tribes on this proposal and offered 
follow-up meetings as part of the consultation process with individual 
tribes. In January 2012, the BLM held four informational regional 
meetings as a starting point of the consultation process, to which over 
175 tribal entities were invited. These initial consultations were held 
in Tulsa, Oklahoma; Billings, Montana; Salt Lake City, Utah; and 
Farmington, New Mexico. Eighty-four tribal members representing 24 
tribes attended the meetings. Senior policy leaders from the Washington 
Office as well as local line officers who have built relationships with 
the tribes in the field participated in the regional meetings. The four 
meetings ended with a commitment to continue the dialogue using the 
established local relations with the BLM field office managers.
    In these meetings, BLM discussed the proposed rule with tribal 
representatives; these discussions resulted in substantive dialogue 
about the hydraulic fracturing rulemaking process. A variety of issues 
were discussed, including applicability of tribal laws, validating 
water sources, inspection and enforcement, wellbore integrity, and 
water management. One of the outcomes of these meetings is the 
requirement in the proposed rule that operators certify that operations 
on tribal lands comply with tribal laws.
    Additional individual meetings with tribal representatives have 
taken place since January as the consultation process continues. The 
BLM has met with the United South and Eastern Tribes, an organization 
representing 25 assembled member tribes, the Coalition of Large Tribes 
and the Mandan, Hidatsa and Arikara Nation. In the near future the BLM 
expects to meet with tribal representatives from Montana including the 
Blackfeet, Chippewa Cree, Fort Belknap, and Flathead tribes. As part of 
the BLM's commitment to exchange information and provide opportunities 
for continued government-to-government consultation, the BLM held four 
regional meetings in June 2012, which took place in Salt Lake City, 
Utah; Farmington, New Mexico; Tulsa, Oklahoma; and Billings, Montana. 
The BLM also participated in the National Congress of American Indian 
summer meeting in Lincoln, Nebraska. On July 13, 2012 the BLM conducted 
another regional session in New Town, North Dakota which was attended 
by 15 tribal members representing 5 tribes including the Three 
Affiliated Tribes of the Mandan, Hidatsa and Arikara Nation, Standing 
Rock, Turtle Mountain, Fort Peck and the Alabama-Conshatta Tribes of 
Texas.
    The BLM will incorporate information gathered from tribal 
consultation in developing the final hydraulic fracturing rule. Through 
ongoing tribal consultation, BLM will continue to seek tribal views 
regarding the potential impacts of hydraulic fracturing on trust assets 
and traditional tribal activities.
    The comment period for the hydraulic fracturing rule closes on 
September 10, 2012. The BLM welcomes comments from any interested 
parties. The BLM will fully consider all comments received during the 
comment period.
2.  Your BLM field offices continue to struggle to meet the demands of 
        several new requirements connected with oil and gas exploration 
        and drilling on public lands; requirements connected to APD's, 
        sundry notices and even on leases that have been awarded, paid 
        for and issued but challenged by the environmental litigation 
        industry.
a.  The President said in the State of the Union that he wants to see 
        more leasing. How do you propose to accomplish this goal?
    Response: As of November 2011, the BLM has more than 49,000 leases 
on more than 38 million acres. Of these, however, fewer than 23,000 
leases, totaling fewer than 12.5 million acres, are in production. The 
BLM continues to implement the Secretary's 2010 oil and gas leasing 
reforms, which established a more orderly, open, consistent, and 
environmentally sound process for developing oil and gas resources on 
public lands. These reforms are helping to reduce potential conflicts 
that can lead to costly and time-consuming protests and litigation of 
leases. The BLM will continue to make appropriate public lands 
available for oil and gas leasing and will do so in a thoughtful and 
responsible manner consistent with our leasing reforms.
    The BLM held 32 onshore oil and gas lease sales during calendar 
year 2011, offering 1,755 parcels of land covering nearly 4.4 million 
acres. In total, 1,296 parcels of land were leased generating 
approximately $256 million in revenue for American taxpayers--a nearly 
20 percent increase in lease sale revenue over 2010 levels. The BLM has 
scheduled 31 oil and gas lease sales for calendar year 2012.
b.  As you impose new rules such as HF disclosure requirements, how 
        will that speed up the process of producing more oil and gas 
        domestically?
    Response: BLM developed its proposed hydraulic fracturing rule`s 
disclosure requirements and other proposals based on best practices in 
industry, and it will be fine-tuning its final regulations based on 
additional input from industry. With regard to disclosure requirements, 
the proposal does not impact the speed of drilling, since disclosure is 
proposed to be made after the drilling has occurred. More generally, 
the BLM understands the time sensitive nature of oil and gas drilling 
and well completion activities, and it intends to promptly review 
requests to conduct well stimulation activities. It is not anticipated 
that a proposed requirement to submit additional well stimulation-
related information with APD applications will impact the timing of the 
approval of drilling permits. The additional information that would be 
required by the proposed rule would be reviewed in conjunction with the 
APD and within the regular time frame for APD processing.
c.  Many of your rules (such as rules for Master Leasing Plans) frankly 
        hurt development on public lands, hamper exploration and 
        production on tribal lands and deny states and the federal 
        treasury important royalty income. Have you worked with OMB to 
        stream line your requirements to increase incomes which trickle 
        down to schools, police departments and other state, county and 
        municipal governments?
    Response: The BLM does not believe that oil and gas leasing reforms 
have slowed development on public lands. To the contrary, prior to the 
implementation of the Secretary's leasing reforms in 2010, 49 percent 
of lease parcels were protested resulting in a backlog of pending 
parcels awaiting adjudication. To respond to these protests, BLM 
implemented leasing reform which provided more certainty to industry. 
Leasing reform front-loaded more analysis and improved the BLM's 
ability to adjudicate lease sale protests prior to the lease sale. 
After implementation of leasing reform, lease sale protests dropped to 
approximately 35% of the parcels offered in 2011.
    The BLM has analyzed the costs and the benefits of the proposed 
hydraulic fracturing rule in a Regulatory Impact Analysis, available in 
the rulemaking docket. This Analysis assumed that the proposed rule 
would mitigate risks associated with wellbore integrity and unlined 
pits, and reduce costs related to surface and subsurface remediation. 
These estimated benefits range from $12 million to $50 million per 
year, and estimated costs of imposing the proposed rule range from $37 
million to $44 million per year. Given the conservative assumptions 
made about the costs of remediating contamination and the fact that 
certain benefits were not quantified, the BLM believes that the 
quantified range could underestimate actual net benefits.
3.  States with disclosure requirements--including two with some of the 
        more stringent requirements, Wyoming, and my home state of 
        Colorado--provide detailed approaches to protection of trade 
        secrets relating to the fracture stimulation fluid 
        formulations. The states do so in a way that achieves a balance 
        between the public interest in information about what has been 
        discharged into subsurface strata, and the valid interest of 
        business entities in a process or formulation that presents 
        them with a legitimate competitive advantage. The draft BLM 
        regulations do not seem to provide equivalent assurances to 
        suppliers that have a commercial interest in formulations that 
        is of the sort given protection in the Uniform Trade Secrets 
        Act that has been ratified by 46 states. Please describe how 
        BLM would plan to recognize the property interest in trade 
        secrets that has been acknowledged by the states that are 
        regulating hydraulic fracturing.
    Response: In addition to the water and sand that are the major 
constituents of fracturing fluids, chemical additives are also 
frequently used. These chemicals can serve many functions, including 
limiting the growth of bacteria and preventing corrosion of the well 
casing. The exact formulation of the chemicals used in fracturing fluid 
varies depending on the rock formations, the well, and the requirements 
of the operator.
    In order to protect proprietary formulations, the proposed rule 
would require oil and gas operators using hydraulic fracturing 
techniques to identify the chemicals used in fracturing fluids by trade 
name, purpose, Chemical Abstracts Service Registry Number, and the 
percent mass of each ingredient used. The information would be required 
in a format that does not link additives to the chemical composition of 
fluids, which will allow operators to provide information to the public 
while still protecting information that may be considered proprietary. 
This design of the disclosure mechanism in the proposed rule will 
inhibit reverse-engineering of specific additives. The information is 
needed in order for the BLM to maintain a record of the stimulation 
operation as performed. The proposed rule, would allow an operator to 
identify specific information that it believes is protected from 
disclosure by federal law, and to substantiate those claims of 
exemption. This approach is similar to the one that the State of 
Colorado adopted in 2011 (Colorado Oil and Gas Conservation Commission 
Rule 205.A.b2.ix-xii).
a.  In looking at the BLM draft regulations--it seems that in general 
        they go significantly above and beyond what any state has in 
        place right now. Why did BLM make such drastic changes as 
        opposed to what the states have been doing in regulating 
        fracking for years?
    Response: The BLM recognizes that some, but not all, states have 
recently taken action to address hydraulic fracturing in their own 
regulations. The BLM's proposed rulemaking is designed to complement 
ongoing state efforts by providing a consistent standard across all 
public and tribal lands and ensuring consistent protection of the 
important federal and Indian resource values that may be affected by 
the use of hydraulic fracturing. Moreover, BLM's regulations are now 30 
years old and need to be updated to keep pace with the many changes in 
technology and current best management practices.
    The BLM is also actively working to minimize duplication between 
reporting required by state regulations and reporting required for this 
rule. The BLM has a long history of working cooperatively with state 
regulators and is applying the same approach to this effort.
4.  The draft BLM regulations refer to a separate proposal for well 
        stimulation operations that an operator must submit on a 
        separate sundry notice application form--a process entirely 
        separate from the review and approval process for the 
        application for permit to drill (APD). This apparent two-track 
        permit process sets up the possibility that an operator could 
        receive approval of its application for permit to drill, and 
        have approval withheld on its sundry notice for well 
        stimulation--in other words, be approved to drill, but not to 
        compete, its well. How does BLM intend to reconcile this 
        potential permitting dilemma?
    Response: Under the well stimulation rule, the operator has the 
option to submit a sundry notice with an APD, or submit a separate 
sundry notice for approval for hydraulic fracturing activity. If an 
operator submits a sundry notice with an APD for well stimulation on a 
new well, prior approval would be required as part of the APD approval 
process that already is in place. If an operator submits a separate 
sundry notice for well stimulation (in the case of a well permitted 
prior to the effective date of the rule), the operator would submit a 
well stimulation proposal for the BLM's approval before the operator 
begins the stimulation activity.
5.  Unlike the more stringent state disclosure requirements, the draft 
        BLM regulations require pre-approval of fracture stimulation 
        formulations.
a.  What is the technical basis on which such approval will be given or 
        withheld by the agency?
    Response: The proposed hydraulic fracturing rule does not call for 
BLM involvement in determining or approving the chemical composition of 
the hydraulic fracturing fluid. The proposed rule requires the 
operators to report the chemical composition of their fracturing fluid 
within 30 days after they have completed the fracturing activity. The 
draft rule proposes that prior approval would be required for well 
stimulation activities, generally in connection with the prior approval 
process that already is in place for general well drilling activities 
through the Application for Permit to Drill (APD) process.
    Information collected by the BLM and used for pre-approval of well 
stimulation activities would be used by the BLM to determine the 
parameters of the well stimulation operation; verify that the operator 
has taken the necessary precautions to prevent migration of fluids into 
usable water horizons; ensure that the facilities needed to process or 
contain the estimated volume of fluid will be available on location; 
and ensure the methods used will adequately protect public health, 
safety and the environment.
b.  Can the Secretary describe the staff expertise that will be 
        required to make such determinations, and whether BLM plans to 
        consult with the state agencies that will also be enforcing 
        regulations that pertain to well drilling or completion?
    Response: The BLM technical staff includes petroleum engineers, 
petroleum engineering technicians, geologists, and hydrologists, among 
others. These BLM specialists have a level of expertise commensurate to 
that of technical staff employed by industry and the state agencies. 
BLM technical specialists routinely consult with their state 
counterparts for operational issues and will continue to do so. One of 
the BLM's key goals in updating its regulations on hydraulic fracturing 
is to complement these state efforts by providing a consistent standard 
across all public and Indian lands.
c.  How will BLM archive the data it receives?
    Response: Federal oil and gas operations lease and well files are 
maintained in accordance with laws, regulations, and BLM policy that 
restrict release of records containing proprietary information. The BLM 
General Records schedule provides guidance on life cycle maintenance of 
all records, including a retention and disposal schedule for records 
that contain proprietary information or information protected by the 
Freedom of Information Act (FOIA). Oil and gas operations and wells 
files contain proprietary information that is protected from release by 
the FOIA and maintained in secure locations with restricted access. 
These files are transferred to the Federal Records Center (FRC) 10 
years after the lease terminates, the bond is released and appeal 
rights are exhausted.
d.  How will this data be compiled, reported and analyzed?
    Response: The proposed rule would require that disclosure of the 
chemicals used in the fracturing process be provided to the BLM after 
the fracturing operation is completed. This information is intended to 
be posted on a public Web site, while protecting trade secrets and 
confidential business information.
    BLM engineers will analyze the information and data presented. The 
results of the analysis would be used to ensure that appropriate 
protection for other subsurface resources has been achieved; human 
health and safety measures are considered in the design and execution 
of the hydraulic fracturing operation; and there is appropriate 
protection for surface resources. Information collected by the BLM will 
be used to verify that the operator has taken the necessary precautions 
to prevent migration of fluids in to the usable water horizons; ensure 
that the facilities needed to process or contain the estimated volume 
of fluid will be available on location; and ensure the methods used 
will adequately protect public health, safety, and the environment.
6.  Director Abbey, could you please describe the BLM's familiarity 
        with the operational practice in the drilling industry of 
        making adjustments to well stimulation fluid formulations on a 
        relatively continuous manner during the process of drilling and 
        completing a well--including making adjustments to such 
        formulations while hydraulic fracturing operations are underway 
        as a result of many factors including the pH levels of the 
        water used and the temperature of the air during the job?
    Response: The proposed hydraulic fracturing rule does not call for 
BLM involvement in determining or approving the chemical composition of 
the hydraulic fracturing fluid. The proposed rule requires the 
operators to report the chemical composition of their fracturing fluid 
within 30 days after they have completed the fracturing activity.
a.  Please describe how BLM would expect to administer these 
        regulations if adopted in light of that practice, given the 30 
        day pre-approval submittal requirement?
    Response: The BLM is not proposing regulations that require 30-day 
pre-approval submittal requirement for hydraulic fracturing operations. 
Prior approval would be required for well stimulation activities, 
generally in connection with the prior approval process that already is 
in place for general well drilling activities through the Application 
for Permit to Drill (APD) process.
b.  Do you agree that because of the level of detail and specificity 
        required by BLM's regulations as drafted (e.g. ``complete 
        chemical makeup of all materials used'') that an operator that 
        changes its fluid formulation could be forced into a situation 
        where it must stop and resubmit to the agency?
    Response: No, the proposed rule does not work that way. The 
proposed rule requires the operators to report the chemical composition 
of their fracturing fluid within 30 days after they have completed the 
hydraulic fracturing operations, not during operations.
7.  Recent numbers released by the Energy Information Administration 
        show that since 2000, oil production on private and state lands 
        has risen by 11 percent and natural gas production has risen by 
        40 percent. Fossil fuel production has dropped by 7 percent 
        since President Obama took office and 13 percent since 2003. 
        From 2010 to 2011, total federal onshore oil and natural gas 
        production is down 13 percent and 10 percent, respectively. 
        What is the reason for the sharp decline in oil and natural gas 
        production on federal lands, when production is increasing 
        rapidly on state and private lands?
    Response: The aggressive development of shale gas and shale oil 
resources has led to a shift to private lands in the east and south, 
where new technologies have made production more economically 
attractive and where there are far fewer public lands. Currently, 
nearly 37 million acres of federal mineral estate are under oil and gas 
lease, although less than one-third of that acreage, (about 12 million 
acres) is currently in production. And the BLM typically processes 
between 4,000 and 5,000 drilling permits per year. As of the end of FY 
2011, nearly 7,100 drilling permits have been approved and yet remain 
undrilled by industry on federal and Indian lands. In FY 2011, the 
Department of the Interior collected royalties on more than 97 million 
barrels of oil produced from onshore Federal minerals. Also in 2011, 
the production of nearly 3 trillion cubic feet of natural gas made it 
one of the most productive years on record. Combined onshore oil 
production from public and Indian lands has increased every year since 
2008. Conventional oil and gas development from public and Indian lands 
produces 14 percent of the nation's natural gas, and 6 percent of our 
domestically produced oil.
Questions from Representative Paul A. Gosar, D.D.S.
1.  Environmental groups have recently ratcheted up an effort to have 
        their members urge the Obama Administration to designate the 
        approximately 1,006,545 acres of public and National Forest 
        System lands, withdrawn from location and entry under the 
        Mining Law of 1872, 30 U.S.C. Sec. Sec. 22-54 subject to valid 
        existing rights for a period of 20 years, under Public Land 
        Order No. 7787, as a National Monument. Does the President 
        intend to designate the 1 million withdrawn acres in question 
        as a National Monument in response to this pressure from the 
        environmental groups (Sierra Club, Grand Canyon Trust, Center 
        for Biological Diversity & others)?
    Response: Any new special management designations work best when 
they build on local efforts to better manage places that are important 
to nearby communities, and this Administration is committed to working 
closely with the public, the Congress, and local officials. We 
recognize and respect the importance of public and congressional input 
in considering protections for our natural, historic, and cultural 
treasures and constantly strive to take into account the interests of a 
wide range of stakeholders.
2.  Since Interior Secretary Salazar signed the Record of Decision in 
        January on Public Land Order No. 7787, he has continually 
        alluded to a study or review that he intends to conduct during 
        the 20-year withdrawal period to determine whether uranium 
        mining can be conducted in a way which is compatible with the 
        protection of the Colorado River Watershed and the Grand Canyon 
        National Park itself. Please characterize the Administration's 
        intentions for what will occur during the 20 year withdrawal? 
        Is there such a study underway? Will there be such a study or 
        review conducted? Will the industry, the states and local 
        communities have any role in it? Will Congress? Will such a 
        review include economic impacts as well as environmental 
        impacts? When will it be conducted, over what duration? Which 
        agencies inside the DOI (or outside DOI) will be responsible 
        for such a review? Will the review or study be shared with 
        Congress?
    Response: The BLM is currently working with the U.S. Geological 
Survey (USGS), U.S. Forest Service (FS), U.S. Fish and Wildlife Service 
(FWS), and the National Park Service (NPS) to determine the number and 
scope of studies that will be conducted over the near and long term 
during the withdrawal to better understand potential effects of uranium 
mining on water and biological resources in the region. Once priorities 
for the studies are set, this interagency team will issue a report on 
its plans. These studies would add to our scientific knowledge and 
reduce the uncertainty of potential effects.
    In addition, at the conclusion of the withdrawal process the USGS 
had underway several water-related studies that are expected to 
continue for several years. These are surface water monitoring and run-
off sampling in the north and south parcels and water chemistry 
monitoring on the Colorado River. The agencies are working to provide 
funding to continue some or all of these tasks within current agency 
budgets.
    USGS has also identified a number of new studies that could be 
initiated to better understand groundwater flow paths, travel times, 
biological toxicity pathways, and radionuclide migration. The agencies 
are currently working on the development of a study proposal for 
vetting by each agency and the Department of the Interior and the 
Department of Agriculture. The proposal will outline a multi-year work 
program, costs, and priorities for specific tasks.
    Regarding economic and environmental impacts, a future decision on 
whether to continue or to terminate the withdrawal would be made 
through the withdrawal review process, including the appropriate level 
of environmental review and analysis.

3.  Since only one uranium mine is currently in operation within the 
withdrawal area and only a few others contemplated, how will the DOI 
determine the full scope and impacts from these mines on the Grand 
Canyon and Colorado River Watershed? Will it be confirmed data or 
hypothesis? If actual data, will DOI be in contact with those operating 
the Arizona mine and other proposed mines to determine how data 
gathering will occur? If the affected mining company is not included, 
how will the impacts of mining be determined? Will naturally occurring 
impacts to the Grand Canyon and the watershed be included in any review 
or study? If a study is conducted in coordination and cooperation with 
industry, would the Administration outline steps that industry could 
take to mitigate any impacts to the environment so that mining could 
continue to occur (after the end of the withdrawal) in an 
environmentally acceptable way?

    Response: There are four authorized uranium mines in the withdrawal 
area (three on the Arizona Strip and one on National Forest land south 
of the Grand Canyon), all owned by Denison Mines Corp. Currently, the 
Arizona 1 Mine is in production, but scheduled to close and go into 
reclamation later this year. The Pinenut Mine is being prepared to go 
into production later this year. Denison is in the process of closing 
and reclaiming the Kanab North Mine, and opening the Canyon Mine, which 
is on National Forest land.
    Denison has also submitted a Plan of Operations (POO) for a new 
mine (the EZ Mine) on the Arizona Strip. This will require a validity 
determination and preparation of an Environmental Impact Statement 
(EIS) before the POO can be approved.
    The presence of the existing mines and potential new mines offer 
additional opportunities to monitor the potential effects of mining on 
water and biological resources. The BLM and FS will continue working 
with the USGS, NPS, FWS, and Denison to design and carry out these 
studies in a manner that takes advantage of these opportunities.
    Regarding natural vs. human-caused impacts, the USGS has proposed 
additional studies that would help better determine these factors, 
including evaluating and refining the isotopic Uranium Activity Ratio 
(UAR) analysis that is already in progress. This process seeks to 
determine the sources of elevated water or soil samples.
4.  Section 204 of FLPMA required that a 12-part justification for the 
        withdrawal be submitted to Congress as part of the January 9, 
        2012, actions taken by the Secretary of the Interior. Could the 
        relevant agencies please share those required responses which 
        were used to justify the withdrawal with this committee?
    Response: The 12-part justification was delivered on January 9, 
2012, to Chairman Hastings and Ranking Member Markey of the House 
Committee on Natural Resources, as well as to Chairman Bingaman and 
Ranking Member Murkowski of the Senate Committee on Energy and Natural 
Resources.
                                 ______
                                 
    Mr. Lamborn. Thank you for your testimony.
    Mr. Tidwell?

               STATEMENT OF TOM TIDWELL, CHIEF, 
                      U.S. FOREST SERVICE

    Mr. Tidwell. Mr. Chairman, members of the Subcommittee, I 
am pleased to be here today to discuss the President's Fiscal 
Year 2013 budget request for the Forest Service's energy and 
minerals program.
    This budget request will support our goal to meet the needs 
and desires of the American people while reflecting our 
commitment to fiscal restraint and efficiency.
    The Forest Service is committed to effectively managing the 
mineral resources to facilitate energy transformation and to 
sound development of both renewable and nonrenewable energy.
    We play a vital role in providing job opportunities through 
both mineral operations and renewable energy production, 
including solar, wind, hydroelectric, geothermal, and 
bioenergy.
    Over five million acres of the National Forest System lands 
are currently leased for oil, gas and coal.
    The Forest Service administers operations on approximately 
160,000 mining claims and manages approximately 2,600 mineral 
sale contracts.
    In Fiscal Year 2010, we produced 16 million barrels of oil, 
one trillion cubic feet of natural gas off these lands. This 
does not include the production from over 15,000 wells that 
overlie private minerals.
    In addition, 20 percent of the nation's coal was produced 
off the National Forest System lands, and this is some of the 
cleanest coal produced in America.
    The value of the energy and minerals production from these 
operations exceeds $6.5 billion every year.
    The Federal royalties from oil and gas from the National 
Forest lands was about $136 million in Fiscal Year 2009, with a 
total return to the Treasury from oil, gas, coal and minerals 
ranging around $650 million to $850 million each year.
    In addition to the royalties and receipts, mineral and 
energy development support over 110,000 jobs every year.
    The Fiscal Year 2013 budget request of $73.4 million for 
our minerals and geology management program is a $10 million 
decrease from the Fiscal Year 2012 enacted.
    With this budget request, the Forest Service will need to 
focus more on our nondiscretionary activities to ensure we are 
processing the mining claims and surface use plans on leased 
areas, will focus our efforts on using the appropriated money 
to process energy related mineral proposals, and focus on 
increasing opportunities to develop and supply oil, gas, and 
geothermal resources from Federal lands.
    We are going to do this through our continued focus on 
increasing our efficiency, especially where we work so close 
with the BLM.
    We are going to continue to work on processing our drill 
applications in a more timely fashion through our pilot 
offices. We are going to proceed and pursue more opportunities 
through service first, and I want to thank you for granting us 
that authority.
    We are also using one environmental analysis to cover the 
leasing decisions for both the BLM and the Forest Service, and 
we will continue to use our categorical exclusions wherever 
possible to facilitate the timely decisions.
    We are also going to be focused on reviewing environmental 
analysis for leases prior to when those leases expire, so we 
can assure that if there has been any changed conditions, we 
address that before these leases expire.
    This budget request will cover processing about 7,000 
mineral and energy applications, and we expect close to between 
180 to 200 permits for drilling. It will also fund the 
Administration of over 10,000 active mineral operations and 
over 19,000 operating oil and gas wells.
    In addition to that, there is currently increasing interest 
in developing solar and wind energy on the National Forest 
System lands, along with hydropower, which will probably 
continue to be the primary source for renewable energy, but we 
also see a lot more interest in geothermal, and of course, with 
the opportunities to use woody biomass, but these are probably 
going to be the areas where we see the highest potential for 
renewable in the future.
    Minerals management on the National forests and grasslands 
is essential for the American people, for energy, for minerals, 
and for the jobs that are produced.
    Again, I want to thank you for the opportunity to address 
the Subcommittee today, and I look forward to discussing our 
request for this important program, and will be pleased to 
answer any of your questions.
    Thank you.
    [The prepared statement of Mr. Tidwell follows:]

         Statement of Tom Tidwell, Chief, U.S. Forest Service, 
                     U.S. Department of Agriculture

    Mr. Chairman and members of the subcommittee, I am pleased to be 
here today to discuss the President's Budget request for the Forest 
Service in fiscal year (FY) 2013, specifically as it relates to the 
energy and minerals programs administered by the Forest Service. I 
appreciate the support this subcommittee has shown the Forest Service 
in the past, and I look forward to working together in the future to 
ensure that stewardship of our nation's forests and grasslands 
continues to meet the desires and expectations of the American people. 
This budget will allow the Forest Service to support that goal, while 
also reflecting our commitment to fiscal restraint and efficiency.
    The Forest Service is committed to effectively managing mineral 
resources, to facilitating energy transmission in a responsible manner, 
and to the sound development of both renewable and non-renewable 
energy. The Forest Service oversees surface use impacts from energy and 
minerals activities, administers special use authorizations, and 
facilitates renewable energy development. We play a vital role in 
providing job opportunities through renewable energy production 
including solar, wind, hydroelectric, geothermal and bioenergy.
Energy and Minerals Management
    The FY 2013 President's Budget requests $73.4 million for the 
Minerals and Geology Management Program, a $10.1 million decrease from 
the FY 2012 enacted appropriations bill. Given this budget decrease, 
the Forest Service will focus on non-discretionary activities such as 
processing mining plans and surface use plans on leased areas. We will 
continue to identify and pursue opportunities that increase our 
efficiency, such as enhancing an already-close working relationship 
with the Bureau of Land Management (BLM).
    The Forest Service Minerals and Geology Management Program supports 
the provision of jobs, minerals, and energy for the American people, 
while ensuring that watersheds are protected, threats to human safety 
are minimized, and contaminated sites--especially abandoned mines--are 
restored. Our funding request emphasizes the environmental review of 
proposed operations. Funds will be used to process energy-related 
mineral proposals with a focus on increasing opportunities to develop 
and supply oil, gas, and geothermal resources from Federal lands in 
support of the Energy Policy Act of 2005 (EPAct 2005). Other priorities 
include inspecting and monitoring ongoing minerals operations; 
providing expertise to ensure watershed health and public safety; 
managing significant geologic resources and hazards; cleaning up 
contaminated sites; mitigating safety hazards at abandoned mines; and 
ensuring our operations are managed to standard.
    In addition to leasable energy resources, we manage many other 
types of operations. We manage more than four thousand mineral material 
permits and sale contracts, for example, which provide over 3.5 million 
tons of sand and gravel and other materials critical for maintaining 
roads in rural communities. We are also involved in operations that 
minimize environmental and water quality impacts of mines--such as 
those mines producing gold and copper.
    The Forest Service works closely with BLM in managing energy and 
mineral development on National Forest System (NFS) lands. In general, 
the Forest Service is responsible for managing impacts on the surface 
estate, while BLM manages the Federal subsurface estate. BLM issues 
leases for exploration and development of energy minerals after 
receiving consent from the Forest Service for those leases overlaying 
NFS lands where the sub-surface is federally held. When BLM receives an 
oil and gas drilling permit applications on NFS lands, the Forest 
Service processes the surface use authorization. BLM processes the 
drilling portion of the application and approves the drilling permit 
after consolidating the surface and sub-surface portions. The 
Department of the Interior's Office of Natural Resources Revenue is 
responsible for the efficient, timely, and accurate collection and 
disbursement of all royalty payments and other revenues from the 
leasing and production of natural resources from federal lands.
    Over five million acres of NFS lands are currently leased for oil, 
gas, coal, and phosphate mining operations. At any given time, the 
Forest Service administers operations on approximately 160,000 mining 
claims and manages approximately 2,600 mineral material sale contracts. 
The value of energy and minerals production from these operations on 
NFS lands typically exceeds $6.5 billion per year, as calculated by the 
Forest Service and the Department of the Interior's Office of Natural 
Resources Revenue.
    Mineral receipts are derived from annual lease rentals, royalties 
on production, bonus bids for competitive leases, and mineral material 
sales. Of the total revenues received, between 25 and 50 percent--
depending on whether production is from acquired lands or lands 
reserved from the public domain--is returned to the State or county of 
production. Federal royalties from oil and gas leases on NFS lands were 
$136 million in calendar year 2009. Returns to the Treasury each year 
from lease rentals, royalties on production, bonus bids, and mineral 
material sales on NFS lands typically range from $650 million to $850 
million. The Forest Service is analyzing additional lands across the 
country which could be made available for leasing.
    The Minerals and Geology Management Program works to mitigate 
potential threats to the environment and human safety associated with 
thousands of abandoned mines and other contaminated sites located on 
NFS lands. The program works to preserve valuable geologic resources 
and minimize the impacts of pollution on NFS lands to protect and 
enhance our nation's water resources. Roughly 66 million Americans rely 
on drinking water that originates from NFS lands. Energy and mineral 
development can go hand-in-hand with conserving resources and it is the 
Forest Service's aim to do so.
Mineral Applications Processing
    The Budget requests $19.0 million to fund the processing of an 
estimated 7,260 mineral and energy mineral applications in FY 2013, 
depending on market demand for mineral resources from NFS lands. Last 
year we processed approximately 200 permits for drilling or master 
development plans across the nation. The energy component of this 
applications processing activity will continue to focus on increasing 
opportunities to develop and offer oil and gas, coal, and geothermal 
resources from Federal lands. Also, approximately twenty percent of all 
U.S. coal is produced from NFS lands with an annual market value in 
excess of $3 billion.
Mineral Operations Administration
    The Budget requests $26.8 million to fund the administration of an 
estimated 10,824 active mineral operations in FY 2013. The program will 
emphasize meeting necessary administrative demands to ensure compliance 
with operating plan requirements and specific environmental standards 
for protecting resources. This program provides for the inspection, 
oversight, and monitoring of approved mineral operations on NFS lands. 
This funding will allow the Forest Service to administer surface 
occupancy for a significant amount of oil, natural gas, coal and 
geothermal operations. In addition to receipts from lease rentals, 
royalties, bonus bids, and mineral material sales returned to the 
Treasury, States, and counties, mineral and energy development on NFS 
lands support on average over 110,000 jobs (Eichman 2011, IMPLAN 
Model), often in areas or communities where employment opportunities 
are limited.
    This Administration believes natural gas development is an 
important component of the nation's energy portfolio, with potential to 
advance our nation's energy security, improve air quality, and create 
jobs. The responsibility of the Forest Service and the rest of the 
Administration is to safely and responsibly develop these resources in 
a way that ensures the well-being of surrounding communities and 
protects our landscapes and watersheds.
    Across the country, National Forests and Grasslands currently host 
over 19,700 operating oil and gas wells. Approximately 4,200 of those 
19,700 wells overlay Federal minerals where the subsurface is federally 
held, not privately owned. As mentioned, the Forest Service works 
closely with BLM. Coordination between the two agencies is outlined in 
a national memorandum of understanding (MOU) where BLM has primary 
responsibility for sub-surface impacts and the Forest Service has 
primary responsibility for surface impacts. In 2010, wells on NFS lands 
overlying federally owned minerals produced approximately 16 million 
barrels of oil and one trillion cubic feet of natural gas. The 
remaining oil and gas wells--about 15,500--overlie privately held 
minerals. Where the subsurface mineral estate is privately held, the 
Forest Service works closely with the operator, along with state and 
local governments, to coordinate appropriate protection of surface 
resources.
    Pilot offices authorized under the EPAct of 2005 will continue to 
help the agency efficiently process energy leasing and permit 
applications, particularly with respect to processing oil and gas lease 
nominations and surface use plan of operations relative to applications 
for permits to drill. This program provides for the review and approval 
of plans for proposed mineral activities. These activities include the 
exploration and development of locatable minerals under the authority 
of the General Mining Law of 1872; exploration for coal, oil, gas, and 
geothermal; production under the various mineral and geothermal leasing 
acts; and finally, contracts for the extraction of materials like sand 
and gravel by the public and local, State, and Federal agencies under 
the Materials Act of 1947 and other statutory authorities.
Geologic Resources and Hazards Management
    The Budget requests $5.6 million to fund the identification and 
management of an estimated 790 geologic resources and hazards. Managing 
geologic resources encompasses the management and administrative 
activities for paleontologic resources and caves, both of which have 
statutory direction for management and conservation. It also 
encompasses unique landscapes and groundwater. Our management 
activities inform land management decisions, project design, and 
protect sites that have scientific or educational value and use.
    We provide for the safety of the public by identifying and managing 
geologic hazards such as floods, landslides, avalanches, earthquakes, 
volcanoes, and naturally occurring hazardous minerals like asbestos and 
radon gas. We take action to minimize the consequences of conditions 
and events that would affect human health and safety, and we protect 
infrastructure, soil, groundwater, and other natural resources. The 
geologic resources and hazards program area provides assessments of 
geologic settings and active geomorphic processes for land management 
planning, environmental protection and restoration, as well as for the 
cost effective management of roads, recreation sites and other 
infrastructure.
Abandoned Mine Lands (AML) Safety Risk Features Mitigation
    The Budget requests $6.9 million to fund the mitigation of an 
estimated 489 abandoned mine sites. The AML Program focuses on 
mitigating safety risk features and associated activities for abandoned 
mines in high-priority watersheds. This program provides for the 
inventory, assessment, and mitigation of abandoned mine safety hazards 
and environmental damage. This work includes closing underground mine 
openings and vertical shafts; re-contouring open pits, trenches and 
associated roads; and removing or stabilizing abandoned buildings, 
equipment, and hazardous materials. Wherever feasible, AML work 
minimizes or mitigates adverse effects on AML-dependent wildlife and 
AML-associated cultural and historic resources.
Environmental Compliance Management
    The Budget requests $1.6 million to fund 21 environmental 
compliance audits, assuring the protection of employee and public 
health and safety. This program funds a national audit process which 
assesses Forest Service compliance with environmental statutes and 
trains field personnel on compliance and pollution prevention.
Environmental Restoration Management
    The Budget requests $13.5 million to fund restoration activities on 
50 known hazardous material sites on NFS lands. Cleanup of contaminated 
sites is critical for the long-term protection of surface and 
groundwater quality, and it contributes to overall ecological health. 
This program provides for the inventory, assessment, and cleanup of 
sites where there is a release--or threat of release--of a hazardous 
substance, pollutant, or contaminant. Restoration mainly occurs at AML 
sites, though non-AML sites may also be restored. Cleanup projects are 
typically initiated under requirements of the Comprehensive 
Environmental Response, Compensation, and Liability Act, the Resource 
Conservation and Recovery Act, or the Clean Water Act. Restoration 
helps minimize or eliminate threats to human health, safety and the 
environment.
    We will continue to utilize pilot offices, authorized under the 
EPAct of 2005, as they eliminate duplication between agencies. These 
offices help the Forest Service efficiently process energy leasing and 
permit applications, particularly with respect to eliminating the 
backlog of oil and gas lease nominations and surface use plan of 
operations relative to applications for permits to drill. We plan to 
continue to use legislated- and agency-established categorical 
exclusions where appropriate. We will work to update Environmental 
Impact Statements that are ten or more years old to ensure leasing 
decisions for high potential areas are more defensible and protective 
of the environment. This will facilitate the offering of new leases. We 
are working more closely than ever with BLM to improve efficiencies.
Authorizations for Energy Facilities and Other Land Uses
    One of the priorities of the Forest Service in FY 2013 will be 
processing applications for land use authorizations that contribute in 
various ways to meeting the nation's energy needs. Special use 
authorizations for energy are managed by the Forest Service Lands 
Staff. Forest Service authorization of wind, solar, and hydroelectric 
energy facilities, as well as electric transmission facilities, will 
contribute to reducing our dependence on fossil fuels.
    The Forest Service's FY 2013 budget request includes $10.3 million 
for processing land use proposals and applications. This request will 
fund issuance of approximately 3,875 new land use authorizations and 
administration of approximately 14,850 land use authorizations, with a 
primary focus on those associated with statutory rights and energy-
related uses. Priority will continue to be placed on energy and 
communications projects.
    A priority for the Forest Service is improving America's ability to 
deliver electricity and transport oil, gas, and hydrogen, as well as 
broadband deployment. These land use projects increase the capacity of 
the power grid for renewable energy, improve both energy reliability 
and access to energy generation, and finally, advance broadband service 
for thousands of communities across the United States. The Forest 
Service will continue to work with other federal agencies, tribal 
governments, and states to refine the location of energy corridors and 
enhance energy production and transmission and broadband deployment. 
For example, the Forest Service is a signatory to the 2009 interagency 
memorandum of understanding (MOU) for expediting evaluation and 
authorization of high-voltage and other significant electric 
transmission projects that cross lands managed by more than one federal 
agency.
    The Agency's FY 2013 budget also includes an estimated $7 million 
to fund the Administration of Rights-of-Way and the Other Land Uses 
Programs. Both of these non-discretionary programs operate with cost 
recovery funds. The Forest Service is seeking permanent cost recovery 
authority for Administration of Rights-of-Way before the current 
authority expires on September 30, 2012. This authority enables the 
Agency to improve customer service and reduce the backlog of expired 
authorizations. Processing applications for reauthorization of these 
uses facilitates the development and transmission of affordable, 
reliable energy, supports economic development, and promotes public 
health and safety.
    Expediting evaluation and authorization of these projects improves 
reliability of the electrical grid and supports transmission of 
renewable energy. Twenty-seven of these projects involve NFS lands. The 
Forest Service has issued national directives implementing the 2009 
interagency MOU to (1) ensure better cooperation and coordination with 
other federal agencies in evaluating and authorizing electric 
transmission projects; (2) optimize siting of rights-of-way for energy 
transmission corridors; and (3) expedite applications for electric 
transmission projects on NFS lands. In implementing the MOU, the agency 
works closely with the U.S. Department of Energy (DOE), the Western 
Electricity Coordinating Council, and the Council on Environmental 
Quality's Rapid Response Team. As directed by the Energy Policy Act of 
2005, the Forest Service, working with DOE and the U.S. Department of 
the Interior, submitted a report to Congress on assessment of electric 
transmission in the eastern United States. Approximately 13,500 miles 
of electric transmission lines and 6,000 miles of pipelines are 
authorized on NFS lands under a land use authorization.
Renewable Energy Development
    Renewable energy resources are critical for satisfying America's 
energy demands and will create energy-related jobs in the future. The 
Forest Service will continue to help increase the supply of renewable 
energy by promoting wind and solar energy, engaging in hydropower 
licensing, development and geothermal operations, and encouraging use 
of woody biomass from NFS lands.
Solar and Wind
    In August 2011, the Forest Service issued final agency directives 
for evaluating applications and issuing authorizations for wind energy 
facilities on NFS lands. The directives promote consistent evaluation 
and authorization of proposed wind energy facilities and increase the 
agency's efficiency in processing proposals and applications for those 
facilities. Equally important, the directives foster early project 
collaboration among affected government agencies. The directives also 
address consideration of factors that are unique to wind energy 
development, such as visual impacts from ridge top development and 
potential impacts on migratory birds and bats.
    The Forest Service administers nearly a dozen land use 
authorizations for wind energy site testing and feasibility. In 
addition, the agency has approved the environmental analysis for first 
wind energy facility on NFS lands in the Green Mountain National Forest 
in Vermont. The Deerfield Wind Energy Project would involve 
installation of 15 wind turbines and would generate 30 megawatts of 
electricity. Three million acres of NFS lands have been identified as a 
possible location for utility-scale solar development. The Forest 
Service has issued one study authorization and has received several 
inquiries regarding construction of a solar facility on NFS lands.
Hydropower
    Because most of the viable utility-scale hydropower sites in the 
United States have already been developed, new production likely will 
come from increasing the efficiency of existing dams and smaller in-
stream facilities that do not interfere with fish passage. Proposals 
for small-scale hydropower facilities are anticipated to increase. 
Streams on NFS lands are most likely to support low-flow hydroelectric 
operations with a potential production capacity of approximately 5 
megawatts, which is enough to power approximately 3,750 homes. The 
agency also participates in hydropower licensing proceedings 
administered by the Federal Energy Regulatory Commission (FERC) by 
developing terms and conditions for inclusion in FERC licenses to 
ensure adequate protection and use of NFS lands. The Forest Service is 
striving to reduce the time and resources needed to establish 
appropriate terms and conditions for FERC hydropower licenses.
Geothermal
    Two geothermal power plants are located on NFS lands at present, 
providing the equivalent of a 60 megawatt power plant with capacity to 
meet the electricity demand for 60,000 homes. There is significant 
potential for increased geothermal production from NFS lands. In 2008, 
the Forest Service and BLM completed a joint programmatic environmental 
impact statement (PEIS) evaluating geothermal development on federal 
lands in the western United States to enhance efficiency in processing 
applications for geothermal leasing on NFS lands.
    Leasing of NFS lands for geothermal development is similar to the 
leasing of NFS lands for oil and gas development. In both cases, the 
Secretary of the Interior issues leases for NFS lands, subject to 
conditions imposed by the Secretary of Agriculture to protect NFS 
lands. In 2011, BLM issued ten geothermal leases encompassing 16,550 
acres of NFS lands. An additional 700,000 acres of NFS lands are under 
NEPA analysis for geothermal leasing.
Woody Biomass and Bioenergy
    Forest Service biomass and bioenergy activities provide numerous 
benefits, including improved forest health and productivity, and 
reduced fire risk to communities. In FY 2013, the Forest Service 
proposes $38.2 million for woody biomass and bioenergy programs, 
including $13 million for bioenergy and biobased products research. The 
FY 2013 request also includes $5 million for Woody Biomass Utilization. 
This grant program has created or maintained approximately 1,700 jobs 
over the past seven years.
    Right now, national forests supply 1.4 million dry tons of biomass 
per year, equivalent to the output of a 159 megawatt power plant or 
enough to supply the electricity for 159,000 homes. Through additional 
targeted small-diameter thinning, but without increasing the annual 
timber harvest, national forests could provide 5.4 million dry tons per 
year or enough to supply electricity for 616,000 homes. The Forest 
Service is working closely with other mission areas in the U.S. 
Department of Agriculture to pursue additional wood-to-energy 
opportunities. Similarly, we are working with DOE in converting Forest 
Service facilities to the use of wood energy.
    Using national forest biomass byproducts from ecological 
restoration activities as a source of renewable energy can enhance 
economic opportunity and forest sustainability by providing raw 
material for renewable bioenergy and biobased products. The Forest 
Service intends to promote increased use of woody biomass by working 
with other agencies to encourage market development for the product. 
The Forest Service's woody biomass program is ensuring a sustainable 
and reliable supply of raw materials and fostering effective business 
models to promote growth in this emerging sector. Stewardship contracts 
remain an important tool in meeting this objective. Stewardship 
contracts provide a more dependable wood supply, thereby encouraging 
investment in private sector facilities.
Conclusion
    This President's budget request for FY 2013 takes a comprehensive 
approach to conservation that addresses the challenges faced by federal 
land managers, while considering the need to reduce spending and 
enhance efficiency. The Forest Service's vision includes not only 
creating healthy ecosystems, but also thriving communities in the 
vicinity of national forests and grasslands and providing jobs in rural 
areas. Our energy and minerals programs contribute to sustainable 
domestic energy production and support many jobs and socioeconomic 
benefits to the American people, while protecting healthy ecosystems.
    Thank you for the opportunity to discuss the President's budget 
request as it relates to the Forest Service's energy and minerals 
programs. I look forward to sharing more information about these 
programs and working with you to develop the proposals included in the 
FY 2013 budget. I would be happy to answer any questions you may have.
                                 ______
                                 
    Mr. Lamborn. Thank you, Chief Tidwell. We will now begin 
questioning. Members are limited to five minutes for their 
questions, but we may have additional rounds. I now recognize 
myself for five minutes.
    Director Abbey, one of the Administration's proposals is to 
increase the royalty rate for production on Federal lands by 50 
percent more than what it is today.
    Do you believe that a 50 percent increase in the royalty 
rate as proposed by Secretary Salazar will make production on 
Federal lands more or less economically feasible?
    Mr. Abbey. Mr. Chairman, we have not reached that 
conclusion as far as what increase, if any increase, we might 
impose relating to royalties.
    Our budget request does assume an 18.75 percent royalty 
rate for onshore minerals similar to what is being charged or 
exactly what is being charged for offshore oil and natural gas.
    We are completing our analysis and continuing to assess the 
options that are before us, but let me assure the members of 
this committee that there has been no final decision to 
increase royalty rates on onshore oil and gas.
    Mr. Lamborn. Would you agree with me that increasing 
onshore production costs, which are already on shaky ground as 
the IHS CERA Report said last November, that my State of 
Colorado and others onshore will have even less exploration and 
development?
    Mr. Abbey. No. There are a lot of factors that will come 
into play. Certainly, the market will be a factor. The cost of 
developing and producing from Federal lands or private lands 
continues to be a factor.
    Just the fact that there may be an increase in royalty for 
oil and gas on public lands is just one of many factors that 
the industry would have to consider relative to where they want 
to develop and where they will likely have an opportunity to 
produce.
    Mr. Lamborn. You are right, it is one of many factors, but 
it seems to me it would be a cost factor that will either get 
passed onto the ultimate consumers, like people who are buying 
gasoline at the pump, or if they cannot pass it on, they will 
be less competitive, and they will do less of it as a result.
    Either way, it sounds kind of negative to me.
    Mr. Abbey. Well, certainly the industry has been very good 
about passing on those costs to the American consumer. Having 
said that, as we go forward, we take all these factors into 
account as we conduct our analysis.
    The one thing that we want to assure is that the American 
taxpayers get a fair return from the assets that are being 
produced from their lands and minerals.
    Mr. Lamborn. I would certainly agree with that. We want a 
fair return. I am concerned about the price at the pump.
    Also, Director Abbey, the BLM has announced its intention 
to release a rule regulating hydrofracking on Federal lands. 
Can you tell me what kind of feedback you are getting just in 
general?
    Mr. Abbey. Well, we have spent the last several months 
consulting with states who have passed their own fracking 
disclosure rules.
    We also have met with the members of the conservation 
community. We have met with members of the industry.
    We have circulated a rough draft, a working draft, with 
Native American Tribes that we consulted with. That information 
has been shared. We have received quite a bit of feedback 
relative to what the industry, the conservation groups, and 
even the states would like to see us adjust from the working 
draft.
    We have taken those comments to heart. We are continuing to 
finalize our proposed rule. We anticipate to be able to release 
a draft rule as early as April.
    Mr. Lamborn. Thank you. I do have here a packet of letters 
from the Governor of North Dakota, a letter from several Indian 
Tribes, and from industry. At this point, I would ask unanimous 
consent to introduce this into the record. Seeing no objection, 
so ordered.
    The documents listed below were submitted for the record 
and have been retained in the Committee's official files.

Submitted by The Honorable Doug Lamborn:

  Letter from Governor Jack Dalrymple, State of North 
Dakota, Letter to Secretary of the Interior Ken Salazar, dated 
February 8, 2012, submitted for the record
  Letter from The Honorable Don Young, Chairman, and 
The Honorable Dan Boren, Ranking Member, Subcommittee on Indian 
and Alaska Native Affairs, to Secretary of the Interior Ken 
Salazar, dated February 8, 2012, submitted for the record
  Letter from Irene C. Cuch, Chairwoman, Ute Tribal 
Business Committee, Ute Indian Tribe, to Secretary of the 
Interior Ken Salazar, dated February 9, 2012, submitted for the 
record
  Letter from Tex ``Red Tipped Arrow'' Hall, Chairman, 
TAT-MHA Nation, to Secretary of the Interior Ken Salazar, dated 
March 9, 2012, submitted for the record
  Letter from Jimmy R. Newton, Chairman, Southern Ute 
Indian Tribal Council, to Jim Stockbridge, Trust Liaison 
Officer, Bureau of Land Management, dated January 18, 2012, 
submitted for the record
  Letter from IPAA, API, AXPC, USOGA and ANGA to 
Chairman Doc Hastings, dated February 15, 2012, submitted for 
the record

Submitted by Erik Milito:

  Environmental Protection for Onshore Oil and Gas 
Production Operations and Leases, API RECOMMENDED PRACTICE 51R, 
FIRST EDITION, JULY 2009
  Hydraulic Fracturing Operations--Well Construction 
and Integrity Guidelines, API GUIDANCE DOCUMENT HF1, FIRST 
EDITION, OCTOBER 2009
  EMPLOYMENT, GOVERNMENT REVENUE, AND ENERGY SECURITY 
IMPACTS OF CURRENT FEDERAL LANDS POLICY IN THE WESTERN U.S., 
Prepared by API January 2012
  Energy Security Handout, January 2012 API
  Letter from Governor Dalrymple (ND) to Sec. Salazar 
(DOI)
  Letter from Governor Herbert (UT) to Sec. Salazar 
(DOI)
  Water Management Associated with Hydraulic 
Fracturing, API GUIDANCE DOCUMENT HF2, FIRST EDITION, JUNE 2010
  Practices for Mitigating Surface Impacts Associated 
with Hydraulic Fracturing, API GUIDANCE DOCUMENT HF3, FIRST 
EDITION, JANUARY 2011
  Assessment of the Impacts of Increased Access versus 
Higher Taxes on U.S. Oil and Natural Gas Production, Government 
Revenue, and Employment, Released January 4, 2011, Revised June 
24, 2011, Prepared by Wood Mackenzie Energy Consulting
  Isolating Potential Flow Zones During Well 
Construction, API STANDARD 65, PART 2, SECOND EDITION, DECEMBER 
2010
  Economic Impacts of Oil and Gas Development on BLM 
Lands in Wyoming, May 2011, Prepared by SWCA Environmental 
Consultants
  White Paper on Oil and Gas in Obama Administration
  U.S. Supply Forecast and Potential Jobs and Economic 
Impacts (2012-2030) Released September 7, 2011, Prepared by 
Wood Mackenzie Energy Consultants

Submitted by Laura Skaer:

  2012 RANKING OF COUNTRIES FOR MINING INVESTMENT: 
``WHERE NOT TO INVEST,'' Prepared by Behre Dolbear Group Inc.
  World Exploration Trends 2012: A Special Report from 
Metals Economics Group for the PDAC International Convention
                                ------                                

    Mr. Lamborn. I am concerned because as the letter from the 
Ute Tribe, for instance, concludes ``For these reasons, the Ute 
Indian Tribe requests that BLM not move forward at this time 
with development of regulations for hydraulic fracking on 
public lands, and more specifically, reservation lands.''
    Why is BLM moving forward with something that the 
stakeholders I am hearing from are very opposed to?
    Mr. Abbey. The Ute Tribe, they are one of just many 
stakeholders that have a say relative to how these public lands 
and mineral resources should be managed.
    Let me say that our proposed rule on fracking takes into 
account also the information that has been shared with us from 
the Department of Energy's Task Force on Fracturing Technology, 
where they said it makes a lot of sense to move forward, 
requiring disclosure of chemicals, to ensure integrity of the 
well bores, and also to----
    Mr. Lamborn. Mr. Abbey, are not states already doing all of 
these things through their regulation, and do they not know 
their own territory better than we know it here from 
Washington?
    Mr. Abbey. Our rules will be applied on the ground by field 
people who are working in those offices in these Western States 
and where we have responsibility for the Federal mineral 
estate.
    As it relates to the states, some states have disclosure 
rules, not all states do. In fact, most states do not have 
disclosure rules at this point in time.
    Again, the rules that we will be proposing will require 
disclosure of chemicals, unless there is proprietary reasons 
not to.
    We will be sharing that information publicly, along with 
the requirements to ensure integrity of the well bores and also 
for wastewater management.
    Mr. Lamborn. I am extremely troubled by what you are 
proposing there.
    I would now like to recognize the gentleman from New Jersey 
for five minutes.
    Mr. Holt. Thank you, Mr. Chairman.
    Director Abbey, the BLM has proposed collecting $48 million 
in new inspection fees for oil and gas operations, similar to 
the fees charged for offshore inspections.
    Is that correct?
    Mr. Abbey. That is correct.
    Mr. Holt. This revenue would be used to fund increased 
inspections?
    Mr. Abbey. Yes.
    Mr. Holt. If you are not able to collect these fees, would 
it be likely that the oil and gas operations would be less 
safe, or at least you would be able to do less to ensure they 
are safe? Is that correct?
    Mr. Abbey. It is correct. If we were not able to collect 
the fees that we are proposing, then it would have to come out 
of the appropriated funds, and we did not request inspection 
and enforcement funds in our budget request.
    Just to comment, I would think the taxpayers would want to 
get a proper return on the oil and gas resources.
    Mr. Holt. Director Abbey, you note in your testimony that 
only slightly less than a third of the 38 million acres of 
public lands that oil companies currently hold onshore are 
under production. Is that correct? Less than a third are 
currently under production?
    Mr. Abbey. About a third, yes.
    Mr. Holt. The industry has more than 7,000, as I understand 
it, approved permits to drill that they are not using. Is that 
correct?
    Mr. Abbey. That is correct.
    Mr. Holt. What is the BLM doing to encourage the industry 
to begin developing these millions of acres, and would it be 
appropriate to add incentives of one sort or another for them 
to either use or abandon their permits?
    Mr. Abbey. I do think there should be some encouragement 
and incentives for the industry to move forward and produce 
some on the lands they have already leased, and also to use the 
permits that have been approved.
    Those incentives can be positive types of incentives or 
negative types of incentives. For example, in our budget 
request for 2013, we have proposed applying a $4 per acre fee 
for lands that have been leased to the oil and gas industry but 
are not being explored, produced or developed.
    At the same time, as we go forward, this past year, we 
approved a little over 4,200 applications for permits to drill. 
That was about 100 plus more than the number of applications 
that we had received from the industry.
    We are staying abreast of the applications that are coming 
in relative to reviewing the applications and then making 
decisions relative to the appropriateness of those 
applications, and then issuing decisions.
    At the end of last fiscal year, there were around 7,200 
applications that we have approved, that would allow the 
industry to move forward and develop on those permits.
    Mr. Holt. Thank you. I would like to turn to renewables. 
The amount of wind, solar, geothermal capacity permitted for 
development on public lands has increased by more than 
tripling, more than 350 percent.
    As I am sure you are aware, taxes would increase at the end 
of this year if the Republicans continue to block the extension 
of the production tax credit.
    If the tax credit for the wind industry, looking at wind 
specifically here, is allowed to expire, what would that mean 
for the wind energy projects that you have permitted?
    Do you have any estimate?
    Mr. Abbey. I do not think it would have much of an effect 
on the projects that we have already permitted, because they 
can go forward and construct those projects.
    It certainly would diminish the interest in using public 
lands or any lands for that matter to develop alternative 
energy sources like wind, if such subsidies are to be lost.
    Mr. Holt. I began my statement earlier to try to correct 
some of the misinformation about energy production on public 
lands in general.
    As I said in my opening statement, the Department of Energy 
report shows that production on public lands between 2003 and 
2011, onshore oil production on Federal lands in 2011 was 
higher than at any point under the Bush Administration.
    Did I characterize that correctly in my opening statement?
    Mr. Abbey. You did. As you pointed out, the facts are 
clear. The oil production overall is the highest it has been in 
eight years. Natural gas production is at an all time high. 
There is no disputing those facts. I do not think any member of 
this committee would dispute that.
    Also, as you pointed out, despite a slight dip in 2010, oil 
production and gas production from public lands and waters are 
still higher in the first three years of the Obama 
Administration than they were in the last three years of the 
previous Administration.
    Mr. Holt. Thank you, Director Abbey. Thank you, Mr. 
Chairman.
    Mr. Lamborn. All right. Representative Gohmert?
    Mr. Gohmert. Thank you, Mr. Chairman. Appreciate you both 
being here.
    I am curious, Director Abbey, as you take credit for the 
highest production in the last eight years, has it ever crossed 
your mind to send a thank you note to President George W. Bush 
for getting all those leases done that allows you to take 
credit for the highest production in the last eight years?
    Mr. Abbey. No, it never has, but we would also be sending 
thank you notes to President Clinton as well.
    Mr. Gohmert. That is right. This is a long process. When 
did you become Director?
    Mr. Abbey. 2009.
    Mr. Gohmert. Thank you. Was that in January?
    Mr. Abbey. It was in July, I believe.
    Mr. Gohmert. You were not on board in January of 2009. 
Because of your history, you are probably aware that one of the 
first acts of Secretary Salazar was to send back the checks for 
the leases in Utah. I believe there were 77 of them. Secretary 
Salazar announced, you may recall, that he was not going to 
allow these leases to go forward that were let at the midnight 
hour.
    Do you recall that?
    Mr. Abbey. I do.
    Mr. Gohmert. I was always curious how in the world checks 
that were issued and given to the Federal Government in 
November and December of 2008 were sat on for that length of 
time, so that a new Secretary could come in and send them back.
    I was gratified to Secretary Salazar at one of our prior 
hearings, he did accurately admit that he knew that there had 
been a seven-year process to let those leases go.
    As you are well aware, an oil company cannot come in at the 
midnight hour and just throw out a bid for a lease. There has 
to be a lot of homework that goes in, there has to be all kinds 
of environmental analyses to determine whether a lease can be 
let.
    After a seven-year process, that was thwarted. I was just 
curious, since we hear so much about jobs and trying to achieve 
lower gas prices, do you have any estimate as to how many jobs 
were created when those lease checks, after that seven-year 
process, were returned to the bidders?
    Any idea how many jobs were created when the Interior 
Department refused to allow that seven-year process to go 
further at all?
    Mr. Abbey. You know, I do not have specific numbers of 
jobs. Let me share with you as I did with the members of the 
Senate that I appeared before last week, when we came into our 
roles in 2009, we had inherited an oil and gas program that was 
on the verge of collapse.
    Congressman, it was not serving anyone well.
    Mr. Gohmert. OK. Thank you, sir. My time is so limited, I 
cannot let you go on with a speech like that, and I appreciate 
it, and glad to hear anything you have to submit in writing 
from here.
    Do you have any estimate as to how much gas prices were 
reduced after that seven-year process when those checks were 
returned and people were not allowed to drill on that Federal 
land? Any idea? Any estimate?
    Mr. Abbey. I do not.
    Mr. Gohmert. All right. Now, I have had different groups 
come and talk to me. We have information through the Committee 
that there is this hard rock shale in Utah, and maybe in 
Northwestern Colorado.
    There is a company that is producing oil from that very 
type of shale in Estonia, and they have some private leases. 
They say they can make money at $60 a barrel, and yet we have 
kept so much of that land off limits.
    We have heard estimates from one trillion to three trillion 
barrels of oil could be produced from that hard rock shale. It 
does require heat out of the presence of oxygen.
    Have you seen or heard any estimates just as to how much 
oil could be produced and money made at under $100 a barrel in 
that area of Utah?
    Mr. Abbey. I have read a lot of statements regarding what 
potential exists, but let me share with you that there is no 
proven technology to do what some members of that----
    Mr. Gohmert. Thank you. Obviously, you are ignorant of what 
they are doing in Estonia, Director, and I would encourage you 
to take a look at that.
    Mr. Abbey. Congressman, we have looked at what they are 
doing in Estonia. They are burning the shale, just like coal.
    Mr. Gohmert. You are aware they are producing oil and doing 
so, making money at $60 a barrel?
    You are going to continue to refuse to allow those leases 
in that area of Utah, is that correct?
    Mr. Abbey. No.
    Mr. Gohmert. You are reopening those for bid?
    Mr. Abbey. We have issued six RD&D leases for oil shale 
development.
    Mr. Gohmert. Are those part of the 77 that you canceled?
    Mr. Abbey. Seventy-seven leases for oil and gas, not oil 
shale.
    Mr. Gohmert. All right. My time has expired. I look forward 
to hearing anything else you may wish to submit to us in 
writing.
    Mr. Lamborn. Thank you. Representative Tonko?
    Mr. Tonko. Thank you, Mr. Chair. Gentlemen, thank you for 
appearing before the Subcommittee today. I appreciate the 
thoughtfulness that you are attempting to address questions by.
    If I could hear a little more about the collapse that you 
were going to address with the oil and gas situation, and I 
would hope we could learn from some information here as we 
exchange thoughtful dialogue.
    Mr. Abbey. I really appreciate that opportunity. The truth 
of the matter is our program managed by the Bureau of Land 
Management was on the verge of collapse. Over 50 percent or 
almost 50 percent of all the parcels that we were offering for 
leases were being protested or litigated.
    We had issued literally hundreds of leases that had been 
sold, but we could not actually issue those leases to the 
companies for potential development because of protests and 
litigation.
    Until that litigation was resolved, the monies that we had 
already collected from the industry were placed in suspense 
accounts, not doing anyone any good.
    We had rules in place to govern oil and gas leasing and 
operations on public lands that were over 20 years old. 
Technology had changed significantly in that 20-year period, 
yet our rules governing operations on public lands had not been 
adjusted or modified.
    We had several Office of Inspector General reports and GAO 
audits that had identified significant deficiencies in the oil 
and gas program that were not being addressed in a timely 
manner, if addressed at all.
    We had EPA and other Federal agencies that were routinely 
and publicly criticizing the BLM's NEPA documents and our 
analysis, primarily as it related to air quality.
    We had sportsmen and other public land stakeholders that 
were voicing concerns about the way we were operating, leasing 
anywhere and everywhere, without any regard at all to the 
environmental consequences of these actions.
    Rather than ignore the issues and challenges that we faced 
when we came into these roles, we decided to take them head on.
    We decided to do something about them, so we could give 
assurance to the industry, if they were going to be leasing 
parcels of land, that they were assured of getting the parcels 
that had the greatest chance of being developed, instead of 
tied up in court for 10 to 15 years.
    We initiated leasing reforms, again, for the goal of 
meeting the goal of making sure the parcels that were going to 
be offered for leasing were the right ones and had the greatest 
chance for success of being developed in a timely manner.
    Again, in 2009, the oil and gas industry had absolutely no 
assurance or certainty that the parcels they had done a lot of 
work on and research, and that they were willing to apply a lot 
of money in securing leases, were ever going to be developed.
    The program that we have in place right now is intended to 
address those challenges and make sure again the parcels that 
we are offering up are the right ones and have the greatest 
chance of being developed.
    Today, the protests have dropped from almost 50 percent to 
around 36 percent in the first year of implementing our leasing 
reforms. We are making significant progress along those lines.
    Mr. Tonko. Thank you very much for finishing that answer. 
You mentioned that the Agency has instituted a new risk based 
inspection protocol for oil and gas production activities.
    Can you elaborate on that, please?
    Mr. Abbey. Again, we have had to prioritize where we are 
going to do inspections. We completed over 33,000 inspections 
on oil and gas operations last year on Federal minerals.
    In order to prioritize where those inspections were to 
occur and where we are going to give the highest priority, we 
did develop a risk based program, and it was based upon the 
number of violations that had occurred on a particular 
production operation. It also had to do with the volumes of 
natural gas or oil that was being produced from those areas.
    Mr. Tonko. Is this underway currently or when will it be 
implemented?
    Mr. Abbey. No. We implemented it two years ago. We are 
continuing to fine tune the criteria that we are using to 
identify the highest risk, and then again, devoting our 
energies toward making sure those drilling operations are being 
inspected routinely.
    Mr. Tonko. According to a report issued by our Ranking 
Member Markey and Representative Holt, there were over 2,000 
violations issued between 1998 and 2011, involving some 300 
companies, that resulted in over $270,000 worth of penalties.
    Given the value of the resources being extracted and the 
potential cost to the taxpayer for remediation, do the fines 
appear to provide a deterrence at all?
    Mr. Abbey. They certainly provide some deterrence. Again, 
our hope is that when we inspect these drilling operations and 
production operations, if we do find deficiencies and we 
highlight what those deficiencies are, that the industries 
themselves will take it upon themselves to correct those 
deficiencies based upon the notice that we give them.
    If they do not, then the assessments come into play. If 
they fail to take the actions that we are requiring them to 
take as part of our inspections, then there will be an 
assessment imposed against that company.
    Mr. Tonko. Thank you very much. Thank you, Mr. Chairman.
    Mr. Lamborn. Thank you. Representative Thompson?
    Mr. Thompson. Thank you, Chairman.
    Director and Chief, thank you for your testimony today and 
your leadership.
    Chief Tidwell, I want to start with you. In terms of the 
President's budget, do you believe there is adequate funding in 
the President's budget request for the Forest Service to 
perform environmental studies, particularly in NEPA?
    Mr. Tidwell. Yes. I believe our request does provide 
adequate resources, as long as we focus on dealing with the 
applications for both minerals and energy production, and 
realize that we will have to deemphasize some of the other 
parts of our minerals and geology program.
    The other key thing that I mentioned is, by having both the 
BLM and the Forest Service work together to do one 
environmental analysis to cover both of our decisions, this, 
too, will greatly help facilitate our efficiency.
    Mr. Thompson. Essentially, it sounds like in terms of 
addressing NEPA, there is maybe not enough money there, but 
there are other monies. You said deemphasizing other programs.
    Where is that decision made? Does it lie with the Forest 
Supervisor who may decide, ``Well, we are going to deemphasize 
moving ahead with NEPA analysis to move ahead with energy 
leases, oil and natural gas minerals,'' and in favor of 
supporting whatever you were alluding to, this other pot of 
money? I'm confident in your grasp of it, but where does that 
decision making fall? What are the guidelines?
    Mr. Tidwell. It will start with once we receive our budget 
for the next year. We will send out direction when we send the 
money out to the regions that provides where we are going to 
focus and emphasize on, and then also there is some discretion 
at the local level.
    There are parts of the program, there is just no 
discretion, that we have to address. That will always be the 
first priority.
    Some of the other parts dealing with some of the 
environmental concerns, dealing with abandoned mine 
reclamation, those are some areas we have some flexibility to 
be able to shift resources.
    It is a combination of the national direction plus the 
discretion that our local managers need to have.
    Mr. Thompson. If the President's budget comes up short in 
terms of clearing these hurdles to energy production and 
mineral production, I guess I have concerns.
    I have a question later regarding some specific National 
forests, where we have had forest supervisors, it seems like 
they have had their own agenda in shutting down energy 
production.
    I guess I just would go on record that I am concerned about 
how much discretion, and I know that is a fine line. We want to 
empower our forest supervisors to do a good job.
    But if they are anti-energy, it seems like there would be a 
potential if the President has underfunded clearing the 
environmental hurdles for energy production, we may run into 
some problems locally.
    In my District, a lot of local operators in the Allegheny 
National Forest are regularly frustrated by the often lengthy 
permitting process and delays.
    It is especially so in my area since the vast majority of 
the mineral rights and forests are privately owned. Allegheny 
is somewhat unique, 93 percent of the subsurface rights are 
privately held.
    Generally, the wells in the Allegheny are shallow, which 
means these companies need to have a steady flow of permits, as 
opposed to deep well drilling.
    Chief, what steps might we be able to take to help expedite 
permitting and the necessary reviews for energy production in 
the National forests?
    Mr. Tidwell. Well, specifically, there in the Allegheny, 
our process now is to meet with the proponents and quickly 
negotiate for some reasonable mitigating measures and then to 
issue a notice to proceed.
    In other areas outside of the Allegheny, our use of 
categorical exclusions has proven to be very effective. For 
instance, out in North Dakota, which is by far the most active 
area on the National Forest System right now, being able to 
work closely with the BLM to issue those permits in a very 
timely fashion, too.
    Those are the things we are really focused on. The other 
thing I wanted to also mention is this need for us to look to 
see if the analysis that was done eight, nine, sometimes ten 
years ago is still current, if there is any new information, 
and actually address those concerns before the leases expire.
    This is another area we want to focus some of our limited 
resources on, to ensure that those leases can continue, if they 
need to be extended, or be available to be re-leased.
    Mr. Thompson. Thank you for that. Any insight on how the 
pending forest planning rule is going to impact energy 
production in National forests?
    Mr. Tidwell. I believe our preferred alternative for the 
new planning rule will help facilitate everything we do on the 
National forests by reducing the time we spend on planning by 
at least 50 percent, cut down the costs, and also will allow 
the local communities to have much more of an engagement in 
that entire process.
    I believe it will facilitate not only minerals and energy 
production but also the need for us to restore our National 
forests.
    Mr. Thompson. I would just publicly thank you for as a part 
of that planning rule establishing that advisory committee, 
which gives that local voice. That was a nice addition.
    Mr. Lamborn. Thank you. Representative Gosar?
    Dr. Gosar. Thank you very much.
    Director Abbey, has Congress appropriated too much money to 
the Bureau of Land Management?
    Mr. Abbey. No.
    Dr. Gosar. Do you believe the BLM has been appropriated 
enough money to do its job sufficiently?
    Mr. Abbey. I think we have sufficient funds to meet the 
highest priority needs.
    Dr. Gosar. We could process all the new permits, 
eliminating the current backlog?
    Mr. Abbey. We have requested sufficient funds to move 
forward to address the backlog, yes.
    Dr. Gosar. That is a stretch, we are right at that edge, 
right?
    Mr. Abbey. We are right at that edge.
    Dr. Gosar. On February 16, Secretary Salazar advanced his 
blueprint for renewable energy development in Arizona.
    The Department then announced it will be examining all 
lands in Arizona, not just lands that fall within the purview 
of the Department or solely just the Federal Government.
    I am all for the increased development of renewable energy 
in our state's vast public lands. In fact, I encourage it.
    My District alone is 70 percent public lands. Multiple use 
of these lands is good and critical to rural Arizona as well as 
our educational system.
    Is analyzing private lands a good use of scant Agency 
resources when you just stated you have just enough money to do 
your day to day duties you are currently authorized to do?
    Mr. Abbey. Congressman, the Bureau of Land Management was a 
partner in that statewide planning effort. Other partners 
included the State of Arizona, county governments, and other 
stakeholders.
    I think it was prudent. I think it was a responsible action 
for everybody working together to identify the best lands for 
such development to occur, whether they were on private lands 
or state lands or even Federally managed lands.
    Again, as it relates to private lands, it is up to the 
private land owner what they want to do with their lands.
    Dr. Gosar. It seems to me like when we start looking at 
that private versus public, most of the solar programs do not 
really worry about private lands because it is easily done. If 
they can be put to a test and economically viable, it will get 
done.
    It seems to me like we need to concentrate on the Federal 
jurisdiction because most of them do not even approach using 
the Federal lands because of the bureaucracy and the red tape.
    Mr. Abbey. I think we are making significant progress in 
moving forward and analyzing the project proposals that are 
before us. As I mentioned in my opening remarks, we have 
already approved 6,500 megawatts of renewable energy on public 
lands that are managed by the Bureau of Land Management.
    We anticipate approving upwards of 11,000 megawatts in 
2013. That is two years ahead of the congressional time line 
that was provided to us in previous legislation, where they 
identified 2015 as being the time line for approving in the 
neighborhood of 10,000 megawatts from public lands.
    Dr. Gosar. Looking at this blueprint, the Agency claims it 
is analyzing items like transmission, but many of the solar 
zones currently identified are not on a grid.
    Is the Administration planning on using some of the excess 
funds that it has been using to analyze private lands to invest 
in transmission infrastructure?
    Mr. Abbey. We are working very closely with the states and 
Western Governors. We are also working very closely with the 
Department of Energy, with the Department of Agriculture, with 
the Department of Transportation to move forward, to align 
transmission corridors, to where the developments are likely to 
occur.
    Dr. Gosar. OK. Finally, I would like to talk about the 
actual analysis of BLM land. The Agency is taking into account 
environmental conflicts while examining these zones.
    I would simply like to ask in making the determination that 
a parcel of land has too much environmental conflicts for the 
development, is the Agency developing a proposal for additional 
wilderness designation in my state?
    Mr. Abbey. None that I am aware of.
    Dr. Gosar. In my district, we have lots of problems with 
the government bureaucrats administering land like the 
wilderness. After analysis like this, regardless of the actual 
land designation, will the Agency promise us they will ensure 
local bureaucrats administer lands appropriately for the actual 
land designation?
    Mr. Abbey. These lands will be managed consistent with the 
land use plans that are in place governing that type of use.
    Dr. Gosar. Last, Chief Tidwell, I know we talked earlier. 
We have a big deadline coming up. We would sure like to keep 
those time lines appropriately. We have fire season coming up 
on us. I know there is a lot riding on it, but we have a lot of 
itchy people back there.
    I would like to also thank you very, very much for your 
cooperation and help in mitigating issues with Tony Ferguson 
over at the Stone Quarry, where we had a rogue geologist by the 
name of Jessica Lopez-Pierce, who decided to take issues into 
her own hands, and I think the mitigation with Mike Williams 
showed us we can actually solve a problem and get to the bottom 
of it cooperatively. Thank you.
    Mr. Tidwell. Thank you, Congressman.
    Mr. Lamborn. Thank you. Representative Duncan?
    Mr. Duncan of South Carolina. Thank you, Mr. Chairman. I 
thank the gentlemen for being here today.
    Just a quick comment. I cannot think of a single example 
where an increase in a tax or a fee ever reduces the price for 
the consumer. It generally has the adverse effect. Taxes or 
fees go up, the manufacturer or the producer passes that on to 
the consumer or as a direct fee or tax that is assessed at the 
pump or on a product directly, and we see a price increase.
    You propose in your budget an increase of onshore royalties 
from 12.5 percent to 18.75 percent, an increase on the cost 
that the consumer will pay, because that will be passed on.
    You also propose a $4 per acre fee for nonproducing Federal 
leases. I heard your comments earlier, but there is no way you 
can guarantee that every square inch of every leased acre is 
going to be a producing area.
    The oil and natural gas companies, they invest their own 
dollars in these leases. This is not a gift from the 
Government. They are investing their dollars in the opportunity 
to go out, whether it is offshore or onshore, on Federal lands, 
to take the risk of exploring for and hopefully producing oil 
and natural gas resources that will yield them a profit at the 
end of the day. Total recovery of their investment costs and 
ultimately yield them a profit.
    I just want us to chew on that going forward.
    Director Abbey, I have some questions for you. The 
Administration frequently touts an impressive record of 
increasing energy development on Federal lands. What type of 
energy development are they touting, primarily?
    Mr. Abbey. All of the above. As renewable increases, 
renewable development, as well as conventional energy.
    Mr. Duncan of South Carolina. All of the above. Let's use 
the President's words from the White House statement on the 
Keystone Pipeline.
    The President said this, he wants to ``Increase American 
energy production while lessening our dependence on oil.'' 
Period. Not foreign oil, not Middle Eastern oil. The White 
House statements says ``lessening our dependence on oil.''
    That tells me he wants to increase American energy 
production, wind, solar, hydro, and other things on Federal 
lands, and not necessarily pursue oil and natural gas, because 
he wants to lessen our dependence on oil.
    Let me just go to the question. These are Yes or No 
questions for you, so if you will limit it to that--in 2009, 
when the Administration withdrew 77 leases issued in Utah from 
development, do you believe this created American jobs and 
increased domestic energy development? Yes or no?
    Mr. Abbey. I do not believe it increased jobs, no.
    Mr. Duncan of South Carolina. Since the Administration has 
been in office, the last three years have seen the fewest acres 
leased for oil and gas development in the last 30 years, 
according to the BLM 2009, 2010, and 2011 acreage leased for 
oil and gas development, was the lowest recorded since 1984.
    Do you believe this helps create American jobs and 
increases oil and natural gas development? Yes or no.
    Mr. Abbey. Congressman, there are no yes or no answers to 
the questions that you are raising. I will say this, the leases 
we are now issuing have the greatest chance of being developed. 
That was not the case in 2009 when we came into our positions.
    Mr. Duncan of South Carolina. The last three years, we have 
seen the fewest new leases sold by BLM since 1994.
    I will agree with you to some degree that we are focusing 
on targeted leases that are producing in geological productive 
areas. I get that.
    When I look at North Dakota, wildcat energy driven economy, 
unemployment less than three percent. It is the Bakken Oil 
Reserve there, Bakken formation. It is going gangbusters.
    I look over in Montana, and Elm Creek was an original 
Bakken production, I get that, but I see a lot of Federal land 
that has the Bakken formation under it, and I do not see the 
oil and natural gas production happening there that I see in 
North Dakota.
    I ask myself why because, in North Dakota, the oil and 
natural gas production is happening on state land and private 
land. It is not on Federal land.
    If we were to open up these areas, and these are the 
questions I get from my constituents back home, America is 
blessed with the abundance of oil and natural gas resources, 
why in the world, in this economic climate that we have, when 
prices have gone up 108 percent since the day of inauguration 
of President Obama until today, 108 percent, I did the math 
this morning, why in the world are we not harvesting our 
natural resources? Why are we not expediting lease sales?
    I was on the MMS Five Year Planning Subcommittee. I know 
the convoluted long process for offshore lease sale in the Gulf 
of Mexico. It takes a while.
    We should have started this process a while back. I 
understand that as well. My constituents are asking me, and I 
am asking you today, why in the world we are not expediting oil 
and natural gas leases on Federal lands to meet our energy 
needs?
    Oil and natural gas is what drives this economy right now. 
Why are we not expediting those lease sales?
    Mr. Abbey. Congressman, let me just say that the most 
successful lease sale we have ever had in the Bureau of Land 
Management was in Eastern Montana last year. We are leasing 
lands where there is an interest in development those leases.
    We are doing so in a responsible manner. We are making sure 
we are looking at these lands and doing the analysis prior to 
committing those lands through the leasing process.
    That way, it provides greater certainty to the industry 
that the lands they will be leasing will have the greatest 
chance of being developed and in a more timely manner, and not 
be tied up in protests and litigation for years.
    What good is that doing to the American public? We already 
have over 24 million acres that have already been leased that 
are not even being explored or developed.
    Why do we want to continue to add to that inventory, if we 
have 24 million acres already leased that is not being 
developed?
    We are doing 32 lease sales this year alone. Last year, we 
offered 4.4 million acres.
    Mr. Duncan of South Carolina. Based on some of the comments 
that Mr. Gohmert from Texas made earlier, that kind of 
contradicts some of the things you are saying.
    I am out of time. Mr. Chairman, I will yield back.
    Mr. Lamborn. Thank you. I would like to now yield five 
minutes to the Ranking Member of the Full Committee for either 
questions or an opening statement.
    Mr. Markey. Thank you, Mr. Chairman, very much.
    Director Abbey, last month Representative Holt and I sent 
you a report prepared by the Committee staff that analyzed 
drilling, safety and environmental regulations that occurred on 
Federal lands over the last decade.
    There were a total of 2,025 violations that occurred over a 
13-year period in 17 states. Of these, 20 percent had to do 
with problems with the blowout preventer and other well control 
equipment.
    In at least a dozen cases, operators were found to be 
drilling without any blowout preventer installed at all. There 
was one case where a well experienced a blowout and the 
operator did not even notify the BLM, and another case, where 
an operator was found to be dumping drilling fluids directly 
into a river in Oklahoma.
    Furthermore, there were more than 50 instances where an 
operator began drilling on Federal lands without an approved 
permit from BLM.
    Yet, for the 2,025 violations we examined over that 13-year 
period, oil and gas companies were only fined a total of 
$273,000. That is an average of $135 per violation for an 
industry where the top five companies made $137 billion last 
year.
    That is not a real deterrent for these companies. The fines 
that BLM can levy on oil and gas companies who violate 
regulations are set by a 30-year-old law that has not been 
updated.
    Do you think Congress should raise the fines that BLM can 
issue so that there are meaningful financial deterrents for 
these companies?
    Mr. Abbey. Congressman, I think fines and assessments 
certainly are a tool that we need and if we are going to have 
such a tool, then they need to be sufficient to meet the goals 
of such assessments.
    Having said that, of the drilling inspections that we have 
done over the past ten years, we found fewer than ten percent 
of those operations actually committing any kind of violation, 
and most of these violations were corrected after the first 
notice.
    Mr. Markey. Do you think that an average of $135 per 
incident is adequate to serve as a deterrent or do you believe 
the fines should be higher and that the statute should reflect 
that?
    Mr. Abbey. I do believe the statute should reflect a higher 
assessment, yes.
    Mr. Markey. For example, currently, the maximum fine that 
BLM can issue for a major violation, for something like 
drilling without a blowout preventer or drilling without a 
permit is only $5,000.
    Do you think that a maximum penalty of $5,000 is an 
adequate deterrent to keep a company from drilling without a 
blowout preventer? Is $5,000 enough to deter that?
    Mr. Abbey. No.
    Mr. Markey. It is not? Thank you.
    Last year after the Deepwater Horizon oil spill, Director 
Bromwich testified in front of this committee that the current 
civil penalties of $40,000 per incident per day that can be 
issued for offshore drilling violations are not even close to 
being a sufficient deterrent and needed to be increased 
substantially.
    BOEM Director Beaudreau recently agreed that the civil 
penalties offshore are inadequate.
    If a fine of $40,000 per day is not a sufficient financial 
deterrent, it is clear, and I agree with you, that a fine of 
$5,000 for a serious violation like not having a blowout 
preventer would not be a sufficient deterrent.
    In the Department's budget request, BLM expresses plans to 
implement an expanded oil and gas onshore inspection program to 
increase safety and environmental protection.
    Our report found that there were 13 companies that were 
chronic violators, meaning that they had more than 30 
violations. Of these, four of the companies were not fined 
anything.
    Will BLM's new inspection strategy focus on the high risk 
operators such as these repeat offenders and ensure that 
enforcement actions are more consistently applied, and that BLM 
inspectors are more consistently exercising their enforcement 
authority by issuing even the minimum allowable fines?
    Mr. Abbey. Congressman, our inspection program that is in 
place today is intended to serve that same purpose. If we have 
repeat offenders, we are going to be out there on the ground 
more often.
    Again, our desire is to make sure that people comply with 
any deficiencies that we find upon our inspections. If they 
fail to comply with those deficiencies, we will take the 
necessary actions to ensure compliance.
    Mr. Markey. I just think the fine structure, the monetary 
penalties are woefully out of date. BLM's current policy for 
enforcement, unfortunately, allows even the most egregious 
violators to keep taking the test over and over again until 
they pass.
    I just think we need to look at this area in the same way 
that we should have in retrospect looked at what the safety 
precautions were against the blowout in the Gulf. We should 
just take this as an opportunity to do so.
    I thank you, Mr. Chairman.
    Mr. Lamborn. Thank you. Representative Amodei?
    Mr. Amodei. Thank you, Mr. Chairman.
    Chief Tidwell, I had the opportunity last week to have a 
field hearing under Mr. Bishop's Subcommittee of this Full 
Committee in Elko to talk about the Humboldt-Toiyabe and also 
meet with your regional forester, Harv Forsgren.
    I want to first of all say through you to them, thank you. 
It was a good meeting. We had a good exchange, met with your 
regional forester afterwards to discuss some issues.
    Appreciate the participation and the attitude to which your 
folks came, and I would also represent to you that the people 
of Elko treated them with respect and dignity, which sometimes 
people were concerned about. I was proud of the people who 
attended the meeting, too.
    As you know, in Nevada, we are dealing with as well as some 
other Western States some issues about potential listing of 
what I refer to as the ``sage hen,'' because I say ``Nevada'' 
and not ``Neh-vah-da.'' The Nevada people refer to it as the 
``sage grouse.'' Anyhow, same thing either way for purposes of 
this.
    In speaking with Director Abbey next to you, there were 
some specific provisions put in the BLM budget to deal with 
sage hen issues. Are there any specific issues with respect to 
Forest Service lands in those Western States?
    Obviously specifically I am talking about the Humboldt-
Toiyabe National Forest to deal with sage hen issues in your 
coming budget.
    Mr. Tidwell. We provided funds in our current budget to 
work together with the BLM and the states to address the need 
for sage grouse habitat, sage hen habitat.
    I feel very optimistic with what I have seen come out of 
the State of Wyoming and the efforts that are starting in 
Idaho, Utah, and I think now in Nevada, to be able to find 
those local solutions, to be able to address that issue, but at 
the same time, be able to allow us to go forward with our 
multiple use activities.
    Mr. Amodei. I appreciate that. The only thing I would draw 
to your attention, because I am going to turn to the gentleman 
to your right who owns the larger portion of Federal lands in 
Nevada shortly, but in talking with the Fish and Wildlife 
Service, the state Department of Wildlife folks, your fire 
folks nationally and in the Humboldt-Toiyabe, as well as other 
agencies, I have a concern that a lot of those efforts are 
focused on after the fire starts.
    I have gone to fire now because there appears to be no 
dispute amongst those folks in my state that the number one 
predator for sage hen habitat is wildland fire.
    That is not a blame thing. That is just a fact that is on 
the ground.
    I am looking forward to continuing those discussions with 
your national fire folks which have made themselves very 
available at your level as well, thank you for that, to talk 
about what we can do before the fire starts, about addressing 
this issue in terms of the current budget process.
    Obviously, that involves things like fuels management, 
identification of where those critical habitat areas are, 
starting there, those sorts of things.
    My concern is that we will manage all those man based 
activities, energy exploration, minerals exploration, ATVs, all 
the stuff we can get our hands around, but to a factor of 
probably 80 percent or more, that habitat has disappeared to 
wildland fire. But as I look at all this, and this is not a 
blame thing, we Federally are doing very little to talk about 
what happens before the fire starts in terms of veg management, 
Pinyon juniper creep, all that sort of thing.
    I will look forward to meeting with your fire folks 
nationally and locally, if that is OK, if I can have your 
support in that, to make sure that we are looking at that as 
well as those other manmade activities that we have talked 
about before.
    Mr. Tidwell. Yes, and I agree with your understanding that 
we need to address the situation before the fires start. Of 
course, you will have my full support.
    It is one of the things we want to continue to work on. 
When we talk about restoring our national forests and 
grasslands, it is to make sure that we are addressing the fuels 
issue especially, and we are finding that because of the kind 
of fire we are having, in many cases, it is having more impact 
on wildlife than any other activity.
    Mr. Amodei. I appreciate that. My problem is while we are 
doing all this, if we ultimately, as the land owners, do 
nothing to address--``nothing'' is probably too strong a word--
but if our priorities are against activities to manage 
activities that account for the vast minority of the impact to 
the habitat, then we have failed in our policies.
    I appreciate that.
    Mr. Tidwell. It is going to take a combination of looking 
at everything we can do and working together across these large 
landscapes.
    Once again, I do believe especially after what we have seen 
come out of the State of Wyoming that there is a very workable 
solution if we can continue to work together.
    Mr. Amodei. I appreciate that. Mr. Chairman, I see my time 
has expired so I will yield back in hopes there will be another 
round.
    Mr. Lamborn. There will be. We will start that right now, 
in fact.
    Director Abbey, you mentioned several times before this 
committee and last week before the Senate that the oil and 
natural gas industry has 7,000 applications for permits to 
drill or APDs, and that these are not being drilled.
    Since you have used this number many times, is it possible 
to get the data behind how this number was calculated, the 
states in which these APDs are said to exist, and whether they 
are actually shovel ready or actually waiting on further 
environmental or wildlife clearances?
    Mr. Abbey. We would be happy to provide those materials to 
you, not only where those applications for permits to drill 
have been approved by state, but also by company, if you would 
like that information.
    Mr. Lamborn. Do you have that right now? Can I have that 
right now?
    Mr. Abbey. I do not have it with me right now, no.
    Mr. Lamborn. Is it possible to get it by the close of 
business today?
    Mr. Abbey. We can get you the states where the permits have 
been issued, but probably not by company by the end of today.
    Mr. Lamborn. You are using this number all the time. I 
thought you would have it at your fingertips.
    Mr. Abbey. We have the number. We can give that to you.
    Mr. Lamborn. Not the number. Anyone can throw out a number. 
I want the facts to evaluate the number.
    Mr. Abbey. Yes, we can get that to you.
    Mr. Lamborn. By close of business today? I appreciate that. 
Thank you so much.
    Mr. Abbey. You bet.
    Mr. Lamborn. We will count on that.
    Second, you stated that the previous Administration was 
leasing everywhere for oil and gas. What percentage of the 
entire Federal estate would you suppose is being leased for oil 
and gas right now?
    Mr. Abbey. Leasing for a number of years has been driven by 
where the interest of the industry is. They are the ones that 
nominate parcels they would like to see interest in, and they 
work with us to move forward with the necessary analysis and 
put those parcels up for lease.
    I mentioned we have 700 million acres that we manage 
relative to Federal mineral estate. We have over 38 million 
acres under lease as of the end of Fiscal Year 2011. We have a 
little under 16 million acres that are either being explored or 
being produced today.
    I do not have the number of acres----
    Mr. Lamborn. Out of 700, 38 plus 16, that is 54, that would 
be about eight percent or something like that. When I look at 
the entire Federal estate, because you only have jurisdiction 
over obviously part of the onshore areas, the actual number, I 
understand, is even lower, two to three percent.
    I just do not think it is an accurate characterization to 
say the previous Administration was leasing everywhere for oil 
and gas when what we are looking at is two to three percent.
    Mr. Abbey. There were certainly areas that were being 
leased that were inappropriate for leasing; yes.
    Mr. Lamborn. How can you say it is everywhere when it is 
actually two to three percent? I just do not understand that.
    My last question in my limited time, in the past, Director 
Abbey, you have praised the use of FracFocus, a voluntary 
program that states participate in, for disclosure of 
chemicals.
    Can you tell the Committee why the Administration would 
want to duplicate something that you have praised the states 
for doing successfully?
    To me, this is a new layer of bureaucracy and burdensome 
paperwork and possible other regulatory hurdles that are going 
to cripple energy production in this country.
    Mr. Abbey. We do not see it being duplicative in nature. In 
fact, our proposed rule identifies FracFocus as the likely 
system we would be using for disclosure of chemicals.
    Mr. Lamborn. That begs the question, why do something the 
states are already doing?
    Mr. Abbey. Not all states are doing it, Congressman.
    Mr. Lamborn. The states that are doing it, can they be 
exempt?
    Mr. Abbey. We would work with them based upon any comments 
they provided to us as part of the review of our draft rules 
and see what makes sense.
    Mr. Lamborn. Colorado, for instance, has an excellent 
program. Some people call it the best in the country.
    Mr. Abbey. We are benchmarking against Colorado, and we, 
too, are very complimentary of their program.
    Mr. Lamborn. Can Colorado be exempted?
    Mr. Abbey. We will look into that situation.
    Mr. Lamborn. OK. Along that line, when can we expect the 
regulations and what will be the time line period for comments 
and implementation of these regulations?
    Mr. Abbey. We would hope to be able to issue the draft 
regulations in April of this year. Then there will be a public 
comment period, we will determine what is the appropriate 
length of time for those comments, but the public will have an 
opportunity to comment on our proposal.
    Mr. Lamborn. OK. Thank you so much for being here today and 
for answering questions.
    Representative Holt?
    Mr. Holt. Thanks. I would like to continue the discussion 
of hydraulic fracturing. Director Abbey, it has been said the 
regulations that the Department is developing with respect to 
hydraulic fracturing would shut down natural gas development.
    Is that your intention? Do you think that would be the 
effect? Really, two questions there.
    Mr. Abbey. We do not believe it will be the effect. Over 90 
percent of the oil wells that are being drilled today that are 
on Federal lands and Federal minerals are using the fracking 
technology.
    Mr. Holt. Do you think that would be curtailed or shut down 
if these regulations go forward?
    Mr. Abbey. It will not.
    Mr. Holt. The draft regulations are likely to say that a 
company should have a basic plan of what they will do with the 
wastewater.
    A lot of the fluid, water and other ingredients, that are 
injected in the well, much of that comes back out after the 
high pressure fracturing, and it comes mixed with both what was 
put down there in the first place and what is mixed down in the 
depths.
    There have been reports of companies that have dumped the 
fluids into rivers or sent them to treatment plants that could 
not handle them.
    Is it important that the regulations include careful plans 
for what is done with the wastewater?
    Mr. Abbey. We certainly believe it is. There are two issues 
with water as it relates to fracking. One is the quantity of 
water. It is a very intensive use of water technology. The 
industry itself is doing a much better job of re-using water 
that they had in the past been disposing of.
    Certainly, I compliment the industry for taking actions to 
apply best management practices and re-use as much water as 
possible.
    The second issue is the disposal of wastewater. Again, our 
proposed rule will require that the wastewater will be subject 
to local and state law. When they apply for their permits to 
drill, we will ensure they provide us an operation plan of how 
they intend to dispose of any wastewater that would come from 
their drilling operations, and that they have certificates in 
hand
    Mr. Holt. As this water goes down and back out of the 
wells, the cementing procedures are critically important. It 
would be through faulty cement joints that maybe would be most 
likely for these fluids to get into the groundwater.
    Now that we are drilling at really enormous depths and 
subjecting the wells to enormous pressure, will the regulations 
include really comprehensive and strict requirements about the 
cementing process, the cementing testing, the cementing 
composition?
    This is a somewhat leading question. Do you agree this is a 
critical and maybe the most critical part of the regulatory 
process?
    Mr. Abbey. We certainly believe it is the most critical 
part of the drilling operations, even though the public is 
very, very concerned about the chemicals that are being used in 
fracking and they are demanding that such chemicals be 
disclosed, we certainly are well cognizant that the most 
critical stage of drilling is to ensure the integrity of the 
well bore.
    Our proposed rules will adopt API standards for the 
cementing, and again, that the actual operations are consistent 
with the engineering drawings that are presented to us as part 
of the applications for permits to drill.
    Again, we will be using the industry's own standards, best 
management practices, that we will be incorporating in our 
proposed rules.
    Mr. Holt. Thank you very much, Director.
    Mr. Lamborn. Thank you. Representative Thompson?
    Mr. Thompson. Thanks, Chairman.
    Chief, my last question when we were talking about the 
proposed alternative with the new forest planning rule, and 
specifically, some of the delays regarding permitting, I want 
to really zero in on something important in my state, and 
obviously present in the Allegheny National Forest, but also 
important nationally, the permitting related to natural gas 
production on our national forests.
    Do you see the proposed forest rule as assisting in having 
it done more efficiently, the permitting process? Will the new 
forest rule make that a better process? Not just in the 
Allegheny but nationally.
    Mr. Tidwell. Congressman, I do believe it will once again 
be a much more efficient process, especially during our forest 
planning process.
    That is when we make the determinations often of which 
areas should be available for leasing, areas that we consent 
for the BLM to go ahead and lease. That is our first decision.
    As far as the drilling permits, those decisions are not 
part of the national forest plan specifically, but by doing a 
good job to establish the standards and guides that are 
followed, it really facilitates being able to use our 
categorical exclusions for the drill site, and which really 
will expedite that. It does have a direct benefit.
    The other key thing is that by leaving up to the local unit 
the discretion for which standards and guides they need to 
address drilling operations, that allows them to basically 
customize to address the local issues instead of having 
something that we use nationally.
    Mr. Thompson. I want to follow up on that. The local 
discretion, I think it has positive's but I think it has some 
potential threats as well.
    As you both probably know, in the past year, the George 
Washington National Forest in Virginia proposed to ban 
horizontal drilling. Similarly, the Wayne National Forest in 
Ohio canceled a mineral lease auction citing potential shale 
gas drilling and hydraulic fracturing.
    Both techniques, of course, are critical in order to assess 
previously unconventional sources of shale gas, and obviously, 
for the record, they are not new. We have hydrofracked over a 
million wells in this country over a period of more than 60 
years.
    What are the Forest Service and the BLM doing to stop these 
unilateral decisions and allow for shale production to move 
forward on Federal lands, or in other words, what are you doing 
about this?
    Mr. Tidwell. Congressman, your point of finding that right 
balance between allowing the local managers some discretion, 
some decision making, but at the same time, to have consistent 
approaches where we need to.
    That is the role of my office here, to make sure we have 
that consistent approach.
    We, of course, believe fracking is proven to be a very safe 
technical approach without any question, as long as it is done 
correctly.
    Those two situations that you referenced, on the Wayne, we 
believed we needed to, because of some questions that were 
raised about a decision that was made in 2006, we had to stop 
and re-evaluate to make sure that there is not any new 
information that we had not factored into that decision, to 
make sure that lease can go forward after we made our decision, 
to ensure we just do not end up in court.
    On the George Washington, it is a forest plan revision 
process.
    In both cases, the concerns were raised by the public, 
local government officials, that questioned if we had done 
adequate analysis, so that is the reason we have had to take a 
step back and do some additional analysis, to address their 
concerns.
    One of the things with this hydraulic fracking, we have 
been using it for many, many decades in this country, and when 
it is done correctly, there are no problems with it.
    But the public has some concerns, especially in some parts 
of the country where the horizontal part of it is somewhat new.
    I think by reassuring the public about what chemicals are 
actually being used, to reassure that without any question, it 
is going to be done correctly, to make sure the well bore is 
properly sealed, and there is a plan to dispose of wastewater 
that is pulled out of these wells.
    I believe that will go a long way to resolve a lot of 
concerns that the public has, and by having that in place, I 
think it will also help our decisions.
    We will be relying on the BLM, their rulemaking, nor do we 
have the authority to deal with subsurface estate. That is the 
BLM's responsibility. It will come out of their rulemaking and 
we will use it.
    But I really do think it will help alleviate a lot of the 
public's concerns about this, so that we can actually move 
forward with more efficiency with our decision making.
    Mr. Thompson. With the patience of the Chairman, just one 
clarification. I think that is important for people to 
understand, where the American taxpayers own the subsurface 
rights, the BLM has jurisdiction.
    Am I correct in saying, for example, in the Allegheny 
National Forest, it really is private individuals and entities 
that own the subsurface rights, in terms of subsurface, the 
jurisdiction really falls with the state, and specifically in 
Pennsylvania, the Department of Environmental Protection.
    Mr. Tidwell. That is correct.
    Mr. Thompson. Thank you.
    Mr. Lamborn. Thank you. Representative Markey?
    Mr. Markey. Thank you, Mr. Chairman, very, very much.
    I know Mr. Holt already congratulated you on your great 
work, and I just wanted to join in the chorus, and to talk 
about the great work that is going on.
    Because of your great work, because of the Department of 
the Interior's great work, because of the work in the private 
sector, we are now down to importing only 45 percent of the oil 
which we consume in the United States, and we were importing 57 
percent of the oil that we consumed in the United States in 
George Bush's last year as President.
    Knocking it down from 57 percent down to 45 percent, what a 
great achievement for you, Mr. Abbey, and for the Obama 
Administration.
    Moreover, we are producing more now than we have in eight 
years in the United States, and very importantly, we are at a 
12-year low in our imports.
    All of this has occurred just in the last three and a half 
years. Tremendous work, really want to congratulate you.
    I know you are proposing to open up 70-75 percent of the 
OCS for more drilling, and that is very, very important.
    I would just like to give you a chance, if you would like, 
just to kind of lay out your vision going forward for how you 
see this story line unfolding. We all know it is in conjunction 
with the dramatic increase in the fuel economy standards.
    Finally, we got the auto industry to get out of their 
denial. We used to have an oil-auto axis that said they could 
not improve the fuel efficiency standards, and from 1975 all 
the way until we passed a bill in 2007, which I was proud to be 
the author of in the House, the fuel economy standards, they 
said they could not improve it.
    Now, there could be upwards of 25 new models, electric 
vehicles coming on the market next year. Something they all 
said was impossible.
    We have had a seven percent reduction in oil consumption 
just over the last year, and prices continue to spike, and you 
are out there reducing, no longer incrementally, but really 
substantially the amount of oil that we actually import.
    Could you just lay out for us where you think it could all 
go?
    Mr. Abbey. First, let me thank you for your kind words. It 
is rare I ever hear kind words from members of this Congress.
    Mr. Markey. It is St. Patrick's Day. I am feeling generous. 
By the way, St. Patrick's Day lasts one month in Boston. I am 
in the spirit for an extended period of time. Is ``Abbey'' an 
Irish name?
    Mr. Abbey. It is Scottish.
    Mr. Markey. Well, first cousins, if you will have us.
    Mr. Abbey. I think, as a nation, we should all take time to 
acknowledge the good work that is going on. This is not about 
who is to blame or who to praise. It is about what are we going 
to do as a nation to become less dependent upon foreign energy 
sources.
    I think we are making significant headway today by 
diversifying our energy portfolio.
    We understand the frustrations with high gasoline prices in 
this nation. We, too, pay for gasoline in our own vehicles, and 
we know what we are paying.
    We are doing everything that we can to be smart from the 
start, to make sure as I mentioned before, that the lands we 
are offering for leasing are the appropriate ones for leasing 
and that will have the greatest chance of being developed in a 
more timely manner, so that we can continue to increase 
domestic oil as well as natural gas from these Federal assets.
    At the same time, you know, as a nation, we do have oil and 
gas resources not only on the Federal mineral estate but also 
on private and state lands.
    The industry is going to move forward and develop based 
upon many factors, including the market conditions at the time. 
For example, that is why there is a lot of production at this 
point in time in North Dakota. There are a lot of drill rigs 
operating in North Dakota right now. There are a lot of 
subcontractors already in that part of the Nation that are in 
place.
    Therefore, if you are going to develop those resources up 
there, it does not take you weeks or months to find a drilling 
rig or subcontractor to do the work on the leases that you 
have.
    Decisions are being made every day by members of the oil 
and gas industry.
    Mr. Markey. I apologize. There is a long litany of saintly 
activities that you are taking on. I also wanted to compliment 
you on the 11,000 new megawatts of wind that you are going to 
permit on public lands.
    That is the beautiful combination, that 11,000 megawatts of 
electricity, wind, on public lands, then being plugged in with 
electric vehicles that then says to the OPEC sorry, we just do 
not need your oil at all.
    That is just going to continue to lead to a drop in the 
amount of oil that we have to import, and this combination of 
wind and solar with electric vehicles is the real threat that 
keeps oil sheiks sleepless at night, because they can see it 
all coming their way.
    I want to thank you because you are at the center of this 
incredible revolution. Thank you so much.
    Mr. Lamborn. Thank you. Representative Amodei?
    Mr. Amodei. Thanks, Mr. Chairman. Bob, in keeping with the 
sainthood of the Bureau of Land Management, I will be crisp. As 
someone who is of Irish ancestry, too, I guess I am a first 
cousin also.
    I have looked at the $15 million that is in your budget for 
sage grouse. I appreciate that. But as I looked through that, I 
see a lot of planning.
    I see a lot of stuff which I know is important in terms of 
the process, but I see very little in terms of Pinyon juniper 
encroachment, I see very little in terms of cheatgrass, I see 
very little in terms of fuels management, on the ground, in 
that budget for addressing things that are going to happen 
within 24 months, potentially. I am talking about the greater 
population, not the bi-States stuff.
    We have spoken with and interacted with your folks in 
Nevada as well as the Chief's folks in Nevada, and talked about 
that issue.
    I will tell you frankly what they said is ``Please do not 
try to redirect the planning money, but if you want to go after 
something, go after the WUI money,'' the urban, rural, 
whatever, to start doing stuff on the ground.
    What is your reaction to that statement? I understand you 
support the President's budget.
    Mr. Abbey. That would be good advice, the Wildland Urban 
Interface, WUI.
    As it relates to your earlier comments, Congressman, it is 
important that we acknowledge that the number one threat to 
sage grouse, at least in the Great Basin States, is from 
wildland fire.
    To that degree, I think there is a good story that we can 
tell about the actions that we are taking to prepare to protect 
those core sage grouse areas.
    For example, we are moving forward as expeditiously as we 
can with a fuels management agenda and pre-suppression 
activities out there to protect those core areas.
    Mr. Amodei. Let me stop you there. I know you are pre-
positioning fire equipment, too. I want to focus on before the 
fire starts.
    When you say you are moving forward as quickly as possible, 
I know the Department of Wildlife has identified where those 
critical areas are.
    Are there any present plans to go in and effect fuels 
management activities around those areas, in those areas, that 
you are aware of? I am asking you as the land owner.
    Mr. Abbey. Not in all those areas but certainly in priority 
areas. We are working in partnerships with many, many others to 
effect actions on the ground that will have the greatest good 
for sage grouse habitat.
    We have not only the $15 million that we requested but not 
all $15 million that we are requesting in 2013 is for planning. 
About $2.5 million is actually being dedicated to on the ground 
type management actions that would protect those core areas.
    Mr. Amodei. That is $2.5 million nationwide.
    Mr. Abbey. Nationwide. That is true.
    The one thing we are keeping in mind is what the Fish and 
Wildlife Service needs in order to be able to make a decision, 
and if that decision is to not list the sage grouse as an 
endangered species, they need regulatory assurance that we have 
actions in place consistent with our land use plans that will 
lead them to determine that there is appropriate mitigation in 
place based upon best management practices to not necessarily 
list the species.
    Mr. Amodei. I appreciate that. What I would like to avoid 
is the situation where you get two years down the road and we 
really have not done much on the ground, and we have suffered, 
and nobody's crystal ball is better than the other's.
    We have suffered another season or two of catastrophic 
wildland fire and we have burned up more habitat, so we are 
going after the stuff we can control, which represents a small 
footprint.
    For the rest of my time, I want to ask just a couple of 
questions, to ask both of you folks to respond off line to, if 
you could.
    Chief, there were a couple of issues that came up in the 
Elko hearing that dealt with Code of Federal Regulations, the 
appeal procedure for your travel management plans and also the 
Intermountain Region's position on water rights.
    I would like you to make your Solicitor available to meet 
with me on those issues because your water rights' position, I 
would represent, is much different than the guy sitting next to 
you for his water rights' position, in terms of the need for 
ownership in the Federal Government or not.
    Also, I would like you both if you could to supply as a 
percentage what is the amount of land that you administer in 
Nevada, how much of it is covered by surface mining permits, 
and how much is covered by agricultural permits, compared with 
what the wildland fire history is for the last few years, just 
so I have solid numbers on that.
    The final one is I would like you both to let me know what 
kind of success in planning your respective agencies have in 
place for replacing retiring personnel in the energy and 
minerals program sector, since I know you have some folks in 
there that are getting a little long in the tooth. Good for 
them. I am jealous. Anyhow, to see how that succession stuff 
goes.
    I want to thank you both. Mr. Chairman, I yield back.
    Mr. Lamborn. Thank you. I want to thank you both for being 
here. We have asked some probing questions but only because 
these are such important issues.
    Mr. Abbey, if I could make a parting statement, I would 
just urge you as you are looking at possible fracking rules for 
the country, I personally do not think we need another layer of 
regulation at the Federal level when states are already to my 
knowledge doing an excellent job.
    If you go forward, I would hope that for states that are 
doing a similar or identical or substantially similar job of 
regulating, that you would give them a safe harbor from Federal 
regulation, so that we do not impose a second layer on top of 
something that is already being done well, for states like 
Colorado.
    Mr. Abbey. OK.
    Mr. Lamborn. Would you please consider that?
    Mr. Abbey. We will. Congressman, I will say this, I think 
it is important that we get our proposed rule out so that we 
can benefit from the comments that we will receive during that 
draft comment period.
    Mr. Lamborn. Thank you so much for being here, appreciate 
it.
    We will now go to our second panel, and I would like to 
invite forward Mr. Mike McKee, County Commissioner, Uintah 
County, Utah.
    Mr. Erik Milito, Group Director, Upstream & Industry 
Operations, the American Petroleum Institute.
    Ms. Laura Skaer, Executive Director, Northwest Mining 
Association.
    Mr. Whit Fosburgh, President and CEO, Theodore Roosevelt 
Conservation Partnership.
    Your written testimony will appear in full in the hearing 
record. I ask that you keep your oral statements to five 
minutes as outlined in our invitation letter to you.
    Our microphones are not automatic so you have to press the 
button to get them started. You have five minutes to speak. The 
yellow light comes on after four minutes and the red light 
after five minutes.
    I am going to temporarily hand the gavel over to my 
colleague, Representative Thompson. I will be back momentarily.
    Commissioner McKee, you may begin. Thank you for being 
here.

STATEMENT OF MICHAEL McKEE, COUNTY COMMISSIONER, UINTAH COUNTY, 
                              UTAH

    Mr. McKee. Thank you, Mr. Chairman, members of the 
Committee.
    Just real quickly, I would just like to mention out in 
Northeastern Utah, the area of the country where I am from 
holds significant resources of our natural resources with 
tremendous reserves of natural gas, oil, oil shale, Gilsonite, 
et cetera.
    There are 111 trillion cubic feet of natural gas that is 
found in this area. Also, the world's largest known oil shale 
reserves are found in the Green River formation, one of the few 
places in the world where Gilsonite is found.
    Next slide, please.
    Mr. McKee. When companies choose to drill in this area, 
there are many zones where this resource is found. It is not 
just in one zone, as that slide will show.
    Next slide, please.
    Mr. McKee. I would like to get right to the heart of what I 
would like to talk about here for a moment.
    Under the Bush Administration, you will see on the graph 
there the number of rigs out in the Uintah Basin. Of course, to 
get oil and gas out of the ground, you have to have drilling 
rigs. You can see when the new Administration came into office, 
also there was a recession, but between the two, the rig 
numbers dropped significantly.
    Next slide, please.
    Mr. McKee. I would like to demonstrate the difference 
between out in our area compared to--by the way, we are only 15 
percent privately held property, most of this being Federal 
land.
    And so compare this to private lands in other areas, again, 
the Uintah Basin is the upper left. If you go to the upper 
right, that is the Williston Basin up in North Dakota.
    Not only did they recover but now are doing about quadruple 
the number of rigs held before. You will see in the Uintah 
Basin, that has never recovered.
    If you look at the Permian Basin in Texas, again, not only 
have they recovered but many more rigs than what was before, 
the same thing in Colorado on the lower right.
    Let's look at oil and gas production on the next slide real 
quickly.
    Again, production follows what happens with your rigs. Up 
in North Dakota, you will see on private lands a tremendous 
amount of additional production. If you look at Federal lands 
compared to 2000, it has dropped by about 40 percent. This is 
onshore.
    Next slide, please.
    Mr. McKee. That is also showing the trend. If you look at 
the red line on state and private lands, the trend is moving 
up. If you look at oil production, the trend is going down.
    Next slide, please.
    Mr. McKee. This is sourced by the Department of the 
Interior. This is onshore. You will see the MCF of natural gas 
has been declining on the Federal lands.
    I would like to next go to the leasing. This is in Utah. 
You will see that since this Administration has come into 
office, if you look on the far right, there has been very few 
leases that have been issued by this Administration.
    I did hear the Director say protests have dropped by 50 
percent. Why have they dropped by 50 percent? It is amazing 
there is any protests with the number of leases that have been 
issued. It shows that something has not been very effective.
    Also, let's look on the next slide the value of canceled 
leases. Just a minute, back to this other slide. There is not 
going to be a lot of APDs coming out without leasing occurring.
    The value of the canceled leases. In 2009, it is referenced 
there were 77 canceled leases. That is really the pimple 
because they just have not allowed hardly any leasing to occur 
since that time.
    Six of those leases were recently reinstated. Those six 
parcels of about 6,000 acres, the value is $48.6 million just 
for the prospect to be able to lease.
    I'm going to have to move right along because my time is 
short. Let's go to the map, the next map. In this map, the area 
in color are areas found in the Resource Management Plan 
approved in October of 2008 as areas open for drilling.
    The areas outlined in red have been areas that this 
Administration is saying let's take another look at this again 
before we allow drilling to happen there.
    Finally, the last thing that I am going to be able to talk 
about because I am running out of time has to do with a huge 
issue that is moving forward as we are talking about it right 
now.
    That has to do with oil shale. There are two to three 
trillion barrels of oil shale in the region and where I live 
out there. There is an EIS out right now that would reduce by 
75 percent lands available for this oil shale.
    We deeply are concerned about that. In fact, when we look 
at the nation's energy security, it is vastly important that we 
not allow this to happen.
    I personally went to Estonia this Summer. There is a slide 
that I would have shown here. The seam there is only about 
three feet thick. Even with the two million acres they were 
looking at earlier, there was two million acres there.
    It is just amazing the amount of resource potential we 
have, and I apologize that I am out of time. Thank you.
    [The prepared statement of Mr. McKee follows:]

      Statement of Michael J. McKee, Uintah County Commissioner, 
                          Uintah County, Utah

    Uintah County in Eastern Utah holds vast reserves of natural 
resources. According to the Colorado School of Mines there are 
approximately 111 trillion cubic feet (TCF) of natural gas, in the 
Uintah Basin. This includes 50.8 (TCF) of conventional gas and 60.2 
(TCF) of shale gas making the Uintah Basin #1 in the Rockies in both 
categories.
    Over 50% of the oil sands in the United States are found in Eastern 
Utah. There is also a staggering amount of oil shale in the Uintah 
Basin with approximately 300 billion barrels of oil. Uintah County is 
one of the few places in the world where Gilsonite is found. Uintah 
County also has strong reserves of conventional oil.
    According to a University of Utah economic report, 60% of the 
economy and 50% of the jobs in the Uintah Basin come from the 
extraction industry. Obviously, the extraction industry is extremely 
important to our area.
    Only 15% of Uintah County is privately owned property. The majority 
of our county land is managed by the Federal Government. The management 
decisions made by the Federal Government deeply effect the economy of 
Uintah County and Eastern Utah.
    The BLM signed a new Resource Management Plan (RMP) in October of 
2008. The plan evaluated all components of land use including oil and 
gas activity, grazing, recreation, air quality, wilderness, wild and 
scenic rivers, visual resource, endangered species, etc. This planning 
effort took 7 \1/2\ years to complete. Uintah County has Cooperating 
Agency Status with the BLM and as such contributed significantly to the 
process.
    The Obama administration came into office in January of 2009. 
Within several weeks they had cancelled 77 previously approved oil and 
gas leases. The Mineral Leasing Act requires the BLM to conduct lease 
sales quarterly. Over the last 3+ years, this administration has 
approved very few leases in Utah. They have also implemented guidelines 
making it much more difficult to conduct business on the public lands.
    The Uintah County Commission is very concerned when we see years of 
work and hundreds and thousands of County dollars wasted as this 
administration systematically dismantles the RMP. The BLM itself spent 
millions of dollars in developing RMPs in the state of Utah.
    Even more disturbing, is the fact that we anticipated and were led 
to believe that the RMPs would be a planning guide for decisions to be 
made over the next 15 to 20 years. Approximately 600,000 acres of land 
in Uintah County have been shelved for oil and gas leasing under the 
guise of Master Leasing. Almost all of these acres were open for 
leasing in the RMP. The BLM now manages nearly three million acres 
under Master Leasing Areas in Eastern Utah which closes these lands for 
leasing, at least for now. This seems to us to be a blatant attempt to 
circumvent the RMPs. We also object to BLM managing to the Red Rock 
Proposal rather than the RMPs.
    Cumbersome processes have made it difficult and slow for the 
industry to get permits on Federal Lands. This has driven investment to 
other areas.
    Congress directed the BLM to develop a commercial oil shale leasing 
program. This has not happened. Rather, the BLM simply evaluated which 
lands it would make available. In 2008 the BLM signed a Record of 
Decision on oil shale and oil sands. This decision allocated over two 
million acres for these important resources. According to the Rand 
Report, the largest known oil shale reserves in the world are found in 
this formation. It is estimated that there are between 1.5 and 1.8 
trillion barrels of oil found here. It is estimated that 300 billion 
barrels are found in Eastern Utah. The BLM has just released a new 
planning document with their preferred alternative that would reduce by 
75% the lands available for oil shale leasing.
    In summary given the importance of energy to our national security 
we do not believe it wise to lock up our lands. The economy is 
struggling nationally. We have the opportunity to create thousands of 
high paying jobs and at the same time strengthen our national security 
with a strong domestic energy supply.
    Please review policies and procedures that will streamline the 
permitting process. Projects are now taking many years for approval. We 
also see access to the public lands as a important issue.
    Thanks you for time and consideration.
                                 ______
                                 
    Mr. Thompson [presiding]. Thank you, Commissioner.
    Mr. Milito, you may begin.

STATEMENT OF ERIK MILITO, GROUP DIRECTOR, UPSTREAM AND INDUSTRY 
            OPERATIONS, AMERICAN PETROLEUM INSTITUTE

    Mr. Milito. Thank you. Good morning, Congressman Thompson, 
Congressman Markey. Happy St. Patrick's Day. With a name like 
``Milito,'' I may not be Irish but I did graduate from Notre 
Dame, so go Irish.
    Mr. Markey. And go Boston College.
    [Laughter.]
    Mr. Milito. The rivalry will continue.
    My name is Erik Milito and I am the Upstream Director at 
the American Petroleum Institute. API has more than 500 member 
companies which represent all sectors of America's oil and 
natural gas industry.
    Our industry supports 9.2 million American jobs and 7.7 
percent of the U.S. economy, and is among America's leaders in 
job creation today.
    We also provide most of the energy for our economy and way 
of life, and deliver more than $86 million a day in revenue to 
the Federal Government.
    We are here to discuss the President's budget for Fiscal 
Year 2013, and one of the key and repeated elements of the 
President's budget proposal is to increase taxes on the oil and 
gas industry.
    I would first like to make it clear, these proposals would 
raise taxes on energy producers by eliminating tax deductions. 
These are not subsidies. These are tax deductions that are 
similar to or the same as those that many taxpayers, including 
companies like Apple Computer, the New York Times, and General 
Electric, avail themselves of.
    We do not suggest increasing taxes on any particular 
company or sector. We simply believe these proposals amount to 
discriminatory tax policies against the oil and gas industry, 
and would significantly hurt rather than help the U.S. economy.
    In fact, two recent studies by Wood Mackenzie conclude that 
it is through increased access to domestic oil and natural gas 
rather than increased taxes on the industry that provides the 
best strategy for increasing Government revenue, jobs, and 
energy production.
    These same studies concluded that raising taxes on the 
industry could reduce domestic production by 700,000 barrels of 
oil a day equivalent, sacrifice as many as 48,000 jobs, and 
reduce revenue to the Government by billions of dollars 
annually.
    Furthermore, the Congressional Research Service concluded 
in a March 2 report that the Administration's tax proposals 
would make oil and natural gas more expensive for U.S. 
consumers and likely increase foreign dependence.
    We have a proposal before us that will potentially destroy 
jobs, destroy domestic production, destroy Government revenues, 
and make oil and natural gas more expensive for U.S. consumers.
    The public understands this. API is releasing new polling 
results today that show that 76 percent of Americans agree that 
increasing energy taxes could increase consumer costs on a wide 
variety of products and services, including higher gasoline 
prices, and 81 percent agree that expanding access to U.S. oil 
and gas resources could help reduce the cost to consumers for 
items such as gasoline, home heating oil, and natural gas.
    The Administration should encourage a sensible energy 
strategy that promotes the safe and responsible development of 
U.S. oil and natural gas resources, but we have seen a status 
quo approach to Federal resource development characterized more 
by delay and restriction than by rising numbers of project 
approvals.
    Policy leadership for creating and overseeing a more robust 
program of safe and responsible development has been absent.
    We continue to hear about an ``all of the above'' energy 
approach. An ``all of the above'' approach certainly makes 
sense, but an ``all of the above'' approach necessarily 
includes oil and natural gas.
    The Administration's projections show that oil and natural 
gas will supply most of the nation's energy for decades to 
come, yet while the Administration claims to support an ``all 
of the above'' approach, we continue to see decisions that 
reduce opportunities for leasing and resource development, 
processes that string out permitting, and continued regulatory 
uncertainty.
    This has been particularly true for BLM managed lands where 
leasing and permitting are way down and where we have seen 
decision after decision that obstructs development or adds 
additional uncertainty into the process.
    Among other things, Interior has introduced a slew of new 
bureaucratic requirements to an already burdensome onshore 
leasing process.
    These policies add at least three additional layers to the 
existing five layers of regulation and analysis. Interior has 
also created a new category of wilderness called ``Wildlands.'' 
This runs counter to the Wilderness Act, which specifically 
provides Congress with the authority to designate wilderness 
areas, not Interior.
    Congress has effectively designated more than 100 million 
acres for protection of wilderness areas. However, the new 
wildlands policy has a potential to remove lands from multiple 
use to one use, contrary to the directive of the Federal Land 
Policy Management Act. There are many other decisions similar 
to this.
    U.S. oil and natural gas companies are a major force in our 
economy, and with the right policies in place, could drive even 
greater economic benefits.
    We need a change of course to ensure a strategy is truly in 
place to take advantage of this tremendous potential for the 
benefit of the American people.
    Thank you. This concludes my statement.
    [The prepared statement of Mr. Milito follows:]

               Statement of Erik Milito, Group Director, 
     Upstream and Industry Operations, American Petroleum Institute

    Good morning Chairman Lamborn, Ranking Member Holt, and members of 
the committee.
    I am Erik Milito, upstream director at the American Petroleum 
Institute. API has more than 500 member companies, which represent all 
sectors of America's oil and natural gas industry. Our industry 
supports 9.2 million American jobs and 7.7 percent of the U.S. economy. 
In fact, a recent report from the World Energy Forum concludes that 
from 2010 to 2011, oil and gas industry employment grew by 4 percent, 
adding approximately 150,000 total jobs to the economy, representing 9 
percent of all jobs created in the U.S. in 2011. The industry also 
provides most of the energy we need to power our economy and way of 
life and delivers more than $86 million a day in revenue to the federal 
government.
    Our nation can and should be producing here at home more of the oil 
and natural gas Americans need. At a time when the United States still 
must import half the oil it consumes, we should be adding to our 
supplies from our own ample domestic resources. This would strengthen 
our energy security and help put downward pressure on prices while also 
providing many thousands of new jobs for Americans and billions of 
dollars in additional revenue for our government.
    The administration should encourage this, but we've seen a status 
quo approach to federal lands oil and natural development characterized 
more by delay and restriction than by rising project approvals. Policy 
leadership for creating and overseeing a more robust program of safe 
and responsible development has been absent. We continue to hear about 
an ``all-of-the above'' energy approach. An ``all-of-the-above'' 
approach makes sense, but all-of-the-above necessarily includes oil and 
natural gas. The administration's projections show that oil and natural 
gas will supply most of the nation's energy for decades to come. Yet 
while the Administration claims to support an ``all-of-the-above'' 
approach, we continue to see proposals to increase taxes on the 
industry, decisions that reduce opportunities for leasing and resource 
development, processes that string out permitting, and continued 
regulatory uncertainty. We have provided a three-page summary for the 
subcommittee's consideration that outlines more than 20 key decisions 
that propose new taxes or otherwise prevent, delay or obstruct oil and 
natural gas development.
    This makes no sense. The United States has some of the largest 
reserves of oil and natural gas on the planet and we need a 
comprehensive energy policy that supports increased development--
something most of the public supports. The industry has the capital, 
technology, and commitment to safe and responsible development to make 
it happen the right way.
    The Administration continues to propose tax increases to the 
industry, which is completely contrary to its recent statements that 
suggest it supports U.S. oil and natural gas development. And we must 
be clear, these proposals would raise taxes on production by 
eliminating tax deductions--not subsidies--that are similar to or the 
same as those that many taxpayers--including companies like Apple 
Computer, the New York Times, and General Electric--avail themselves. 
We do not suggest increasing taxes on any particular company or sector; 
we simply believe these proposals amount to discriminatory tax policies 
against the oil and gas industry and would significantly hurt rather 
than help the U.S. economy. In fact, two recent studies by Wood 
Mackenzie conclude that it is through increased access to domestic oil 
and natural gas--rather than increased taxes on the U.S. oil and 
natural gas industry--that provides the best strategy for increasing 
government revenue, jobs and energy production.
    U.S. oil and natural gas companies are a major force in our economy 
and, with the right policies in place, could drive even greater 
economic benefits. These companies produce most of the nation's energy, 
put millions of people to work and deliver billions in taxes and 
royalties to our state and federal governments. The studies show 
increased access to areas currently off-limits would create jobs, grow 
the economy and dramatically increase revenues to the Treasury, at a 
time when the U.S. deficit is of national concern, while increased 
taxes would take us backwards.
    Increased access to American and Canadian supplies could (by 2020) 
create 1,100,000 jobs, deliver $127 billion more in revenue to the 
government, and boost domestic production by four million barrels of 
oil equivalent a day, according to the Wood Mackenzie study, ``U.S. 
Supply Forecast and Potential Jobs and Economic Impacts (2012-2030).'' 
A copy of this study is provided for consideration by the subcommittee. 
In an earlier Wood Mackenzie study, ``Energy Policy at a Crossroads: An 
Assessment of the Impacts of Increased Access versus Higher Taxes on 
U.S. Oil and Natural Gas Production, Government Revenue and 
Employment,'' they found that raising taxes on the industry with no 
increase in access could reduce domestic production by 700,000 barrels 
of oil equivalent a day (in 2020), sacrifice as many as 48,000 jobs, 
and reduce revenue to the government by billions of dollars annually. 
An additional 1.7 million barrels of oil equivalent a day in potential 
production that is currently of marginal economic feasibility would be 
at greater risk of not being developed under the modeled tax increase. 
A copy of this study is provided as well.
    Furthermore, the Congressional Research Service (CRS) recently 
concluded in a March 2, 2012 report entitled ``Oil and Natural Gas 
Industry Tax Issues in the FY2013 Budget Proposal'' that the 
Administration's tax proposals would ``make oil and natural gas more 
expensive for U.S. consumers and likely increase foreign dependence.'' 
On Saturday, the President stated that a vote for his tax proposal 
would show that you ``stand up for the American people.'' Yet it is 
this same tax proposal that would destroy domestic production, destroy 
jobs, destroy government revenue and, according to CRS, make oil and 
natural gas more expensive and make us more dependent on foreign 
energy. The American people get it, as poll after poll shows that the 
American public opposes increased taxes on America's oil and natural 
gas industry, with most Americans agreeing that increasing taxes would 
destroy jobs.
    In addition to maintaining an effective tax structure and improving 
access to U.S. resources, we must also ensure that we have streamlined 
permitting and regulatory certainty to ensure continued job creation 
and a regulatory climate that encourages investment in U.S. projects.
    However, the federal government has taken step after step to 
decrease leasing, decrease permitting, and introduce uncertainty into 
the regulatory process to effectively place a drag on both short-term 
and long-term energy production, in both onshore and offshore areas. 
With respect to BLM-managed lands in particular, the picture is not 
promising.
    Lease sales in the West, which has been a very important region for 
U.S. oil and gas development, are down 70 percent in 2011 as compared 
to 2008. Some of the state-level examples are striking, with Interior 
offering a mere four parcels in Colorado in 2011 as compared to 241 in 
2008, a mere 17 in Utah in 2011 as compared to 124 in 2008, and only 
213 in Wyoming in 2011 as compared to 1,186 in 2008. Interior has not 
consistently met its statutory requirement of issuing leases within 
sixty days of the lease sale. On top of that, Interior has canceled or 
suspended numerous leases in Utah and Montana.
    Permitting is also delayed and down on BLM-managed lands. Companies 
simply do not get permits to drill in a timely fashion. Permitting 
times have averaged more than 200 days in recent years, and depending 
on the field office, it can actually take more than two years to obtain 
a permit. The Energy Policy Act of 2005 mandated a thirty day deadline 
for processing applications for permits to drill and this deadline is 
largely ignored. The number of permits being issued by Interior dropped 
by 39 percent when comparing the total permits issued in 2009 and 2010 
to the total permits issued in 2007 and 2008. The Administration is 
quick to point out that there are about 7,000 outstanding approved 
permits, but it conveniently neglects to explain that there are 
stipulation periods, lands that are now subjected to new planning 
requirements where development is prevented, lawsuits and other reasons 
that may prevent companies to utilize many permits. In addition, the 
uncertainty about when permits are approved means that companies may 
need to submit multiple applications in the hopes that some permits may 
actually get approved in a timely fashion. A copy of a January 2012 
report by Grand Junction based EIS Solutions on the impact of current 
federal lands policies lays out the declining leasing and permitting 
trends on BLM-managed lands and is provided for the subcommittee.
    Interior is also holding operations at bay through extremely long 
delays in completing the environmental analysis to support a project 
approval. This environmental analysis must occur before companies can 
apply for drilling permits. The Council on Environmental Quality's NEPA 
guidance states that Environmental Assessments (EA) should take three 
months to complete and Environmental Impact Statements (EIS) should 
take 12 months to complete. However, Interior routinely takes years to 
complete both EAs and EISs. A May 2011 report by SWCA Environmental 
Consultants, entitled ``Economic Impacts of Oil and Gas Development on 
BLM Lands in Wyoming'', demonstrated that six EISs were delayed in a 
range of one to five years. The impact of these delays is quite 
astonishing, with an estimated 17,000 total wells delayed due to the 
snail's pace of NEPA review by Interior. The estimated employment 
impacts from the delays in these 6 projects equate to 30,666 average 
job equivalents and $2.6 billion in earnings that would not be realized 
annually within the state of Wyoming. A copy of this report has been 
provided to the subcommittee for consideration.
    Interior has taken various other specific steps that effectively 
add uncertainty to the BLM-regulatory process. In January 2010, 
Interior introduced a slew of new administrative requirements and 
processes to an already burdensome onshore leasing process. According 
the Western Energy Alliance, these policies add three additional layers 
to the existing five levels of regulation and analysis. In February 
2011, Interior created a new category of wilderness called ``wild 
lands.'' This runs counter to the Wilderness Act, which specifically 
provides Congress with the authority to designate Wilderness Areas--not 
Interior. Congress has effectively designated more than 100,000,000 
acres as wilderness. However, the new ``wild lands'' policy has the 
potential to remove lands from multiple-use to one use, contrary to the 
directive of the Federal Land Policy Management Act. Interior also has 
chosen to severely limit the use of categorical exclusions as directed 
by Congress in Energy Policy Act 2005. Congress developed these five 
exclusions to address situations where the environmental impact is 
minimal or where additional review would be redundant, but Interior 
continues to ignore this Congressional mandate.
    The Rockies have steadfastly delivered oil and natural gas to the 
nation through strong state-level regulation of drilling and production 
operations on both state and federal lands. The records of Colorado, 
Montana, New Mexico, North Dakota, Utah and Wyoming are strong when it 
comes to developing and implementing oil and gas regulations. Yet 
despite all of this, Interior is moving forward with its own 
regulations for drilling operations. The Governors of the States of 
North Dakota and Utah recently sent letters to the Secretary of the 
Interior objecting to this regulatory effort. Copies of these letters 
are provided to the subcommittee. As stated by Governor Dalrymple of 
North Dakota, ``I believe additional regulations regarding these issues 
are unnecessary and redundant in an area that is already effectively 
regulated by the states.'' We simply have not seen a demonstration of 
inadequacy in the states' regulatory systems. In fact, EPA 
Administrator Lisa Jackson has spoken on multiple occasions in 
acknowledgment of the effective job states are doing.
    And we have seen the start of a similar pattern of obstruction with 
the U.S. Forest Service, which released a draft forest management plan 
that proposes a ban on horizontal drilling in the George Washington 
National Forest and which canceled a planned auction of public lands in 
the Wayne National Forest.
    The industry stands committed to safe and environmentally 
responsible development. We're working very hard, for example, to 
ensure that shale oil and natural gas development occurs with as little 
impact on the environment and with as much transparency as possible. 
API has more than 200 industry standards related to exploration and 
production activities, including a series of hydraulic fracturing 
documents that assist operators in well construction and integrity, 
water management, surface impact mitigation and environmental 
protection. A copy of the hydraulic fracturing series of documents has 
been provided to the subcommittee for consideration.
    We are aggressively promoting safe and responsible operations by 
holding a series of workshops across the country on the API hydraulic 
fracturing documents. Targeted to local audiences from industry, 
elected officials and other stakeholders, these workshops offer a high-
level explanation of the API standards and our ANSI-accredited 
standards process, and demonstrate industry's commitment to working 
with communities, local elected leaders and state regulators. To date, 
API has completed seven of these half day workshops in Arkansas, North 
Carolina, Maryland, New Jersey, West Virginia, Ohio and New York. Each 
event has also given the audience of approximately 100 participants the 
opportunity to hear from state regulators, local officials and business 
people about the latest developments of shale energy in their region. 
Additional workshops are scheduled in Bismarck, ND, Cheyenne, WY, 
Denver, CO, Baton Rouge, LA, Traverse City, MI and Washington, DC. And 
we've also been working closely with state regulators as they've 
reviewed and updated their rules to ensure regulations are shaped to 
promote safe and responsible industry operations. We understand the 
need to do it right, and are working every day to make it happen.
    And yet what we've seen on the federal level is a pulling back on 
new development on public lands. The administration has been 
restricting where oil and natural gas development may occur, leasing 
less often, shortening lease terms, going slow on permit approvals, and 
increasing or threatening to increase industry's development costs 
through higher taxes, higher royalty rates, higher minimum lease bids, 
and overlays of new regulations.
    The administration likes to point out that oil production is up 
nationwide, but it is claiming credit for production gains taking place 
on private and state lands within which the federal government does not 
have control over leasing, permitting and regulation of operations. In 
the areas where the federal government is in control, oil production is 
down 7.9 percent when comparing 2011 to 2009 and natural gas production 
is down 14.7 percent over the same period. It is important to keep in 
mind that BLM-managed lands in the Rockies have historically been a 
strong producer of natural gas for the nation, yet we are a seeing a 
lag in production. And over the same period, natural gas production 
increased by 21 percent on nonfederal lands.
    In his recently released book ``The Quest'', the Pulitzer-prize 
winning historian Daniel Yergin points out that ``[p]olicies related to 
access to energy and its production can have major impact on the 
timeliness of investment and the availability of supply--and thus on 
energy security.'' With the right policies and right leadership, we 
could be doing far better in developing our own energy and bolstering 
America's economic and energy security. The results could be 
astounding. Within 15 years, American and Canadian energy supplies 
could provide 100 percent of U.S. liquid fuel needs with increased 
biofuels development and the implementation of four straightforward 
policies:
          Providing access to U.S. oil and natural gas reserves 
        that are currently off-limits;
          Returning the Gulf of Mexico permitting rates to 
        premoratorium levels, at a minimum;
          Resisting calls for imposition of unnecessary new 
        regulatory requirements on oil and natural gas development; and
          Partnering with Canada to develop new pipeline 
        capacity to export Canadian crude to the United States, 
        including approval of the Keystone XL pipeline.
A document is provided that demonstrates how this level of energy 
security is achievable.
    We urge the Congress and the administration to promote energy 
policies that consistent with this strategy to aid our economic 
recovery and reduce our debt.
    Thank you. That concludes my statement.
                                 ______
                                 
    Mr. Lamborn [presiding]. Thank you.
    Ms. Skaer?

STATEMENT OF LAURA SKAER, EXECUTIVE DIRECTOR, NORTHWEST MINING 
                          ASSOCIATION

    Ms. Skaer. Thank you, Mr. Chairman and members of the 
Committee.
    For 40 years, America has been painfully aware of the need 
to lessen its dependence on foreign oil. Until recently, our 
growing dependence on foreign sources of minerals always took a 
back seat to energy with the public and our policy makers.
    There is evidence this is changing and that Congress 
understands the seriousness of our mineral vulnerability.
    Unfortunately, the Administration's budget priorities not 
only fail to address this issue, they actually compound the 
problem, resulting in serious national defense and economic 
consequences while impeding private sector job creation.
    The Administration talks the talk but its Fiscal Year 2013 
budget does not walk the walk.
    Instead of advancing policies that increase access to 
mineral deposits, reduce unconscionable permitting delays, and 
encourage domestic mineral exploration and development, the 
Administration prioritizes land use restrictions, wilderness, 
sage grouse conservation, and vague concepts like ecological 
sustainability, over multiple use and resource production, and 
proposes job killing taxes and fees that will lead to fewer 
private sector jobs, less mineral production, and an increased 
reliance on foreign sources of minerals.
    Specifically, the President's budget and legislative 
proposals will increase the cost to explore and produce seven 
hard rock minerals critical to infrastructure development, 
manufacturing, national defense and energy, by imposing a gross 
royalty of not less than five percent coupled with new and 
increased fees on all hard rock mines, demonstrating a lack of 
understanding of the differences both in terms of geology and 
capital investment between finding and producing hard rock 
minerals and finding and producing oil and natural gas and coal 
by proposing a leasing system for seven critical and strategic 
metals do not address the most significant risk to mining 
projects in the U.S.
    Permitting delays that have caused the U.S. to tie for last 
with Papua New Guinea among 25 mineral producing countries, and 
attract only eight percent of worldwide exploration spending.
    If this is not a call to action, I do not know what is.
    The proposals threaten to lock up access to rare and hard 
to find mineral deposits through regulatory initiatives like 
sage grouse conservation and mineral withdrawals like what took 
place in Northern Arizona.
    The proposals do not address critical workforce, retirement 
and training issues in the BLM and Forest Service locatable 
mineral programs, and they do not include Good Samaritan 
legislation to encourage AML clean up.
    We are entering an era of resource nationalism, where many 
countries led by China are using control over resources to 
attract long term manufacturing jobs.
    In today's highly competitive global minerals industry, 
geologic, economic, and political risk factors determine where 
a company invests and where high paying jobs are created. Not 
only mining jobs but manufacturing jobs and many indirect jobs.
    To attract new wealth-creating, job-creating mining 
investments, they pay an average wage of $75,000, with an 
indirect job multiplier of twice the national average, the U.S. 
must adopt policies that will encourage investment and 
production of America's vast mineral resources to supply the 
metals and materials necessary to create and sustain U.S. 
manufacturing jobs and sustain a robust economy and our 
standard of living.
    Unfortunately, the President's budget and legislative 
proposals do not move us in that direction.
    We urge the Committee and Congress to reject the 
President's budget and its legislative and regulatory proposals 
and instead enact policies that will guarantee access to 
mineral potential lands, guarantee the certainty and security 
of tenure required to invest hundreds of millions to more than 
$1 billion to find and develop a mine, all before any return on 
investment.
    Balance sage grouse conservation with multiple use as 
mandated by FLPMA. Much like they did with wildlands, the 
Agency is elevating sage grouse conservation ahead of all other 
multiple uses in violation of FLPMA.
    They need to guarantee timely permits, the number one risk 
to mineral investment in the U.S., and they need to address 
workforce retirement and training issues in the BLM and the 
Forest Service locatable mineral programs where 60 percent of 
the trained expertise is eligible for retirement by 2015.
    Mr. Chairman, members of the Committee, we look forward to 
working with you to find solutions to these issues, and I will 
be happy to answer any questions you might have.
    Thank you.
    [The prepared statement of Ms. Skaer follows:]

             Statement of Laura Skaer, Executive Director, 
                      Northwest Mining Association

Executive Summary
    Chairman Lamborn, Ranking Member Holt and Members of the Committee, 
the Northwest Mining Association (NWMA) appreciates this opportunity to 
provide testimony on the Effect of the President's FY-2013 Budget and 
Legislative Proposals for the Bureau of Land Management and the U.S. 
Forest Service's Energy and Minerals Programs on Private Sector Job 
Creation, Domestic Energy and Minerals Production and Deficit 
Reduction.
    At a time when Members of Congress, the Administration, the media 
and the public are acknowledging that the United States has become 
increasingly vulnerable and dependant on foreign sources of strategic 
and critical minerals, the Administration's budget and legislative 
priorities not only fail to address this serious issue, they actually 
compound the problem. As you know, this vulnerability has serious 
national defense and economic consequences. This increased 
vulnerability and reliance on foreign sources of minerals is not new to 
NWMA or the mining industry, as we have been delivering that message 
for the past ten years.
    While Members on both sides of the aisle are introducing 
legislation to address these mineral vulnerability issues, e.g., Mr. 
Lamborn's Strategic and Critical Minerals Policy Act of 2011 (H.R. 
2011),the Administration's budget ignores this reality by proposing 
increased fees and royalties; advocating policies that make access to 
mineral lands and permits more and more difficult; fails to address 
serious workforce issues in both the Bureau of Land Management (BLM) 
and the U.S. Forest Service (USFS); and basically ignores Congressional 
mandates to manage public and National Forest Lands for multiple-use, 
sustained yield and the production of fiber, food, minerals and energy 
the Nation requires. Just one example of the latter is the BLM and USFS 
Notice of Intent to incorporate Greater Sage-Grouse conservation 
measures into Land Use and Land Management Plans. The conservation 
measures proposed by the Sage-Grouse National Technical Team (NTT) are 
draconian, prohibit or restrict use of public lands for mineral and 
energy development and place conservation of sage-grouse habitat above 
all other multiple-uses in violation of FLPMA.
    The Federal Land Policy and Management Act of 1966 (FLPMA) 43 
U.S.C. 17.01 et seq lists twelve policies with respect to the public 
lands of the United States. Section 102(a)(12) states that it is the 
policy of the United States that:
        the public lands be managed in a manner which recognizes the 
        Nation's need for domestic sources of minerals, food, timber 
        and fiber from the public lands including implementation of the 
        Mining and Minerals Policy Act of 1970 (30 U.S.C. 21a) as it 
        pertains to the public lands;
    The Mining and Minerals Policy Act of 1970 declares, in part:
        [t]hat it is the continuing policy of the Federal Government in 
        the national interest to foster and encourage private 
        enterprise in (1) the development of economically sound and 
        stable domestic mining, minerals, metal and mineral reclamation 
        industries,. . ..
    The Multiple-Use and Sustained Yield Act of 1960 (16 U.S.C. 528) 
and the National Forest Management Act of 1976 contain similar policy 
declarations for the USFS.
    It is within the context of these statutes and congressional 
declaration of policy that NWMA finds the Administration's budget 
proposals relating to private sector job creation, domestic minerals 
and energy production, and deficit reduction woefully lacking. Instead 
of allocating budgetary resources to wealth and job creating mineral 
and energy resource programs, and providing incentives and required 
certainty to attract mineral investment, the Administration's budget 
and legislative proposals focus on protection, removing lands from 
productive use, increasing royalties, fees, and taxes, increasing 
uncertainty and regulatory burdens and implementing controversial and 
job killing policies revolving around climate change and sage-grouse 
conservation. While the Administration talks the job creation talk, 
their proposals clearly do not walk the job creation walk.
    The Administration's job killing budget and legislative proposals 
include increased fees and a gross royalty/leasing system for seven 
hardrock minerals that will discourage exploration, development and 
production of those metals on public lands and increase our Nation's 
dangerous reliance on foreign sources of minerals as well as energy. 
The President's FY-2013 budget also fails to address project delays 
caused by bureaucratic red tape, a broken NEPA process and a failure to 
address workforce issues.
    Finally, if the Administration was truly interested in reducing the 
environmental impact of abandoned hardrock mines, it would have 
included Good Samaritan legislation similar to H.R. 3203 introduced by 
Chairman Lamborn in the 111th Congress.
Northwest Mining Association: Who We Are
    NWMA is a 117 year old, 2,300 member, non-profit, non-partisan 
trade association based in Spokane, Washington. NWMA members reside in 
44 states and are actively involved in exploration and mining 
operations on public and private lands, especially in the West. Our 
diverse membership includes every facet of the mining industry 
including geology, exploration, mining, engineering, equipment 
manufacturing, technical services, and sales of equipment and supplies. 
NWMA's broad membership represents a true cross-section of the American 
mining community from small miners and exploration geologists to both 
junior and large mining companies. More than 90% of our members are 
small businesses or work for small businesses. Most of our members are 
individual citizens.
Bureau of Land Management Budget and Legislative Proposals
    Our testimony focuses on the budget and legislative proposals 
impacting the hardrock mining industry, namely the proposed gross 
royalty and leasing system for seven locatable minerals, the abandoned 
mine land fee for hardrock minerals, regulatory proposals, such as the 
draconian sage-grouse conservation measures proposed by the NTT and the 
Northern Arizona mineral withdrawal (Public Land Order 7787), the 
failure to address delays in the NEPA/permitting process and replacing 
and training new professionals to replace an aging workforce. Instead 
of focusing on enhancing the programs that create jobs, lessen 
America's reliance on foreign sources of minerals and promote the 
production of the minerals, food, timber and fiber Americans require, 
the Department has elevated protection as its budgetary and legislative 
priority.
A. Proposed Leasing/Gross Royalty System for Seven Hardrock Minerals
    The President's FY-2013 budget includes a legislative proposal to 
institute a leasing process under the Minerals Leasing Act of 1920 for 
seven hardrock minerals--gold, silver, lead, zinc, copper, uranium and 
molybdenum. These seven minerals currently are subject to location 
under the General Mining Laws of the United States. The President's 
proposal would include a new leasing process and subject these seven 
minerals to annual rental payments and a royalty of not less than 5% of 
gross proceeds. One half of the royalty proceeds would be distributed 
to the states and the other half would be deposited in the General 
Treasury. Existing mining claims would be exempt from the leasing 
system but would be subject to increases in annual claim maintenance 
fees.
    This proposal would have the effect of killing private sector job 
creation and discouraging private investment in the exploration, 
development and production of domestic mineral resources. It would 
increase our nation's reliance on foreign sources of minerals and lower 
the United States' standing among the twenty-five largest mineral 
producing countries in the world.
    The leasing proposal will increase uncertainty by failing to 
recognize that unlike coal and oil and natural gas, which are typically 
located in vast sedimentary basins, economically viable deposits of the 
seven minerals mentioned in the President's proposal are rare and hard 
to find. Discovery, delineation and development of metallic ore bodies 
require years of fact-finding, including ground, aerial and satellite 
reconnaissance, exploration drilling, environmental baseline gathering, 
workforce hiring and training, mine and mill planning, design and 
construction and closure and reclamation.
    In a 1999 report, the National Research Council of the National 
Academy of Sciences recognized just how rare economically viable 
mineral deposits are: ``Only a very small portion of Earth's 
continental crust (less than 0.01%) contains economically viable 
mineral deposits. Thus, mines can only be located in those few places 
where economically viable deposits were formed and discovered.'' 
Hardrock Mining on Federal Lands, National Research Council, National 
Academy Press, 1999, p. 2-3.
    On page 24 of the same report, the National Research Council 
Committee included a sidebar on ``How Hard is it to Find a Mineral 
Deposit?'' This is what the NRC Committee had to say:
        The art and science of finding new mineral deposits is much 
        better than pure luck, but it is still far from perfect. 
        Moreover, the search for new mineral deposits is costly, time 
        consuming, and without guarantee of success. For example, 
        Roscoe (1971) showed that the number of mineral indications in 
        Canada that had to be investigated to discover a significant 
        mineral deposit was about 100 in 1951 and rose to about 1,000 
        in 1969. There is no reason to expect that this trend has 
        changed. Similarly, in a probabilistic analysis of exploration 
        experience in the United States by Homestake Mining Company, 
        Anderson (1982) concluded that from an initial sample of 1,000 
        reconnaissance examinations (more or less equivalent to casual 
        use activities), 100 drillable exploration targets (roughly 
        equivalent to notice-level activities) would emerge in which 
        there would be a 75% chance of finding one deposit with 3 
        million ounces of gold. The statistics may not be quite as grim 
        as they first appear, because there are many cases of someone 
        with a better concept, more persistence, or luck finding an 
        economic deposit in a prospect or worked-out mine that several 
        companies have deemed worthless. Successful projects can be 
        spectacularly profitable, but overall, mining has one of the 
        lowest returns on investment of major industries (Dobra, 1977).
    It is not uncommon for mining companies to spend millions of 
dollars just to identify 100 drillable exploration targets. Sometimes 
more than $100 million can be expended before a decision is made to 
build a mine. At a recent mining conference in Denver, the chief 
financial officer of a large gold company told the audience that his 
company was initially surprised when it spent $2 billion dollars to 
explore for, develop and build a mine but they now consider that to be 
a common figure. Bear in mind that all of this investment occurs up 
front before production and the beginning of cash flow. Furthermore, 
the combination of cyclical price volatility and the variations in the 
concentration and geologic characteristics of these seven metals within 
a single ore body can turn ore with economic value into waste rock at a 
sudden downturn in the market.
    These are among many reasons that these metals were not removed 
from the operation of the Mining Law when the Mineral Leasing Act was 
passed in 1920. Congress recognized then, as it should today, that in 
order to encourage private enterprise in the development of hardrock 
minerals, there must be an incentive for those who take substantial 
risk to explore for, find and develop a mineral deposit. The Mining Law 
has served this Nation well for 140 years by providing a self-executing 
process to enter upon federal lands open to mineral entry to explore 
for, find, use and occupy those lands for all uses reasonably incident 
to prospecting, exploration, processing and mining. The Mining Law has 
provided the necessary framework and security of tenure or certainty 
required to attract mineral investment and take the risk to find that 
true needle-in-a-haystack, one-in-ten thousand economically viable 
mineral deposit.
    Removing these seven minerals from the operation of the Mining Law 
and placing them in a leasing system will result in less mineral 
investment in the U.S. and exacerbate our dangerous reliance on foreign 
sources of critical and necessary minerals.
    The President's proposal came as a surprise because it is 
inconsistent with Secretary Salazar's testimony before the Senate 
Energy and Natural Resources Committee on July 14, 2009. While 
supporting a need to amend the Mining Law of 1872, including patent 
reform and providing a fair return to the taxpayers for the extraction 
of valuable resources and the creation of an AML Fund that included a 
Good Samaritan provision, the Secretary never suggested a leasing 
program. In fact, neither Congressman Rahall's Mining Law Reform bill 
introduced in the 110th (H.R. 2262) and 111th (H.R. 699) Congress nor 
Senator Bingaman's bill (S. 796) introduced in the 111th Congress 
contained a leasing system for hardrock minerals. Both Representative 
Rahall and Senator Bingaman's legislation recognized the importance of 
the self-initiation rights under the Mining Law to encourage the search 
for and production of hardrock minerals.
B. A Gross Royalty Not Less Than 5% Will Adversely Impact Investment in 
        Domestic Mining.
    A royalty assessed on gross proceeds increases the economic risk of 
a given mining project investment and acts as a disincentive to 
investment. This disincentive becomes pronounced when one considers the 
cyclical nature of commodity prices. In other words, as commodity 
prices decrease, the rate of return required to justify a mining 
investment increases. A gross royalty becomes a fixed cost that, in 
times of low commodity prices, can mean the difference between a mine 
closing prematurely, resulting in lost jobs, and a mine continuing to 
operate because it can cover its fixed costs thereby keeping people 
employed during times of low prices. In other words, a gross royalty 
raises the ``cut off grade'' between recoverable ore and waste rock. 
The life of a mine is shortened by causing what otherwise would be 
valuable minerals below the cut off point to be lost. A gross royalty 
prevents conservation of the resource and is not an environmentally 
sustainable policy. Early mine closures waste public minerals by 
leaving minerals in the ground. Premature closures of mines means more 
mineral deposits have to be discovered, more mines built, impacting 
more land.
    Unlike oil, natural gas and coal which are generally marketable as 
found in place in the ground, hardrock minerals require extensive and 
costly processing and beneficiation to produce a marketable product. A 
gross royalty does not consider these costs. A gross royalty is 
punitive in periods of low commodity prices. During periods of low 
commodity prices, a mining company would continue to have to pay the 
gross royalty even if it meant operating at a loss. Since no mine can 
be operated at a loss for any significant amount of time, the result is 
that some mines will shut down prematurely creating loss of jobs; loss 
of federal, state and local taxes; and indirectly adversely impacting 
suppliers of goods and services to the mine and the mine employees. The 
economic devastation from a gross royalty would be significant, 
especially in the rural West where most hardrock mines are located and 
mining provides some of the best jobs available, jobs that average more 
than $75,000 per year.
    On the other hand, a net royalty does not cause a mining company to 
operate at a loss. With a net royalty, operators pay higher royalties 
when their net is high during periods of robust mineral prices and/or 
operating costs are lower. When mineral prices are depressed, and/or 
operating costs are higher, operators pay lower royalties, so the 
royalty does not cause premature mine closures resulting in job losses. 
Because mineral prices are cyclical in nature, there have been and 
always will be periods of lower commodity prices. A net royalty 
provides the best incentive to explore for minerals on federal lands, 
regardless of the economic cycle. A net royalty promotes conservation 
of the resource, ensures a longer royalty stream from operating mines, 
and promotes job retention.
    The Metals Economics Group produces an annual report ``World 
Exploration Trends'' which tracks global exploration and industry 
trends. The 2012 report estimates that nonferrous exploration budgets 
for 2011 will total $18.2 billion, a 50% increase over 2010. Despite 
significant mineral resources, the United States attracts only 8% of 
total world-wide exploration dollars, while Latin America attracts 25%, 
Canada 18%, Africa 15%, and Australia 13%. The following report 
provides insight into why the U.S. lags in attracting job creating 
exploration dollars.
    An internationally respected minerals industry advisory firm, Behre 
Dolbear, prepares an annual report ranking the twenty-five largest 
mineral producing countries in the world. The latest report is entitled 
2012 Ranking of Countries for Mining Investment--Where ``Not to 
Invest'' and is attached and incorporated by reference. Behre Dolbear 
considers seven criteria in ranking countries:
          The country's economic system
          The country's political system
          The degree of social issues affecting mining in the 
        country
          Delays in receiving permits due to bureaucratic and 
        other delays
          The degree of corruption prevalent in the country
          The stability of the country's currency
          The country's tax regime
    While the United States ranks high (eight or above on a one to ten 
scale) for its economic and political system, the United States 
received a ranking of three with respect to social issues affecting 
mining; ranked last with Papua New Guinea in permitting delays (scoring 
2 on a one to ten scale) and a rating of four with respect to its tax 
regime. Behre Dolbear considers the total taxes applicable to a mining 
project, including income taxes, severance and excise taxes, duties and 
imposts, and royalties. The United States corporate tax rate is 35% 
plus, which, when combined with state levies effectively makes it the 
highest corporate tax rate in the world. This high corporate tax rate 
provides a significant disincentive for mineral investment in the 
United States. A gross royalty would only exacerbate this disincentive, 
and any net royalty must take into consideration the overall government 
take.'' According to the study, when the ``government take'' from 
combined taxes and royalty reaches 50%, a mining project's economic 
viability, during periods of normal commodity pricing, is threatened.
    In addition, the Administration doesn't seem to understand that our 
lifestyle and standard of living is made possible by mining. 
Furthermore, it doesn't understand that the production of solar, wind 
and geothermal electricity capacity requires minerals. The 
Administration proposes key funding increases for renewable energy 
development while proposing new fees and taxes on mineral production, 
proposing a new leasing system and enacting policies that will 
adversely impact the security of tenure necessary to attract mineral 
investment, and failing to address significant workforce issues in the 
Mining Law program. The bottom line is that all energy production, 
including renewable energy requires minerals, and lots of them. And 
they need American minerals--unless, of course, we are willing to trade 
our unhealthy dependence on foreign oil for a dangerous dependence on 
foreign sources of critical minerals.
    In 1995, the United States Geological Survey reported that the 
United States was import reliant on 43 nonfuel minerals with a $51 
billion value. In 2011, the U.S. had become import reliant on 67 
minerals (an increase of 4 over 2010), and 100% reliant on 19 minerals 
with a value of $90.4 billion. The U.S. is more import-dependent on 43 
non-fuel minerals than it is on crude oil. Unfortunately, the 
President's budget and legislative proposals will discourage mineral 
production in the United States and further increase our Nation's 
reliance on foreign sources of minerals.
C. Abandoned Mine Land Fee
    The President's FY-2013 budget proposes a new ``dirt tax'' on 
hardrock mining to be used for reclaiming abandoned mines. While framed 
as a fee on the production of hardrock minerals beginning January 1, 
2013, the ``dirt tax' is based on the volume of material removed or 
displaced (overburden and waste rock as well as ore), with the receipts 
distributed through a competitive grant program. The President's AML 
proposal of a ``dirt tax'' of approximately 7.8 cents per ton of the 
material displaced would apply to hardrock mining operations on private 
and public lands and is significantly different than any AML fee 
proposed in the past either through Mining Law Reform bills introduced 
in the last two Congresses or the Secretary's testimony in July, 2009. 
What is noticeably absent from the President's proposal is a Good 
Samaritan provision.
    A Good Samaritan law, similar to the one introduced by Chairman 
Lamborn in the last Congress (H.R. 3203), will do more to bring about 
the cleanup and reclamation of abandoned hardrock mines than any fee 
imposed on production or material moved.
    It appears the President's proposal is based on the coal AML 
program administered by the Office of Surface Mining (OSM). As was 
discussed in more detail earlier in this testimony, increasing fees on 
hardrock production is counterproductive to private sector job 
creation, domestic energy and minerals production and deficit 
reduction. Because most currently producing mines are located in the 
same mining districts as most abandoned hardrock mines, a Good 
Samaritan provision would enable mining companies to utilize current 
permitted processing and tailings facilities, equipment and mine 
personnel to reclaim nearby abandoned mines without the legal risk of 
incurring cradle to grave liability under the Clean Water Act (CWA) and 
the Comprehensive Environmental Response, Compensation and Liability 
Act (CERCLA).
    On October 2, 2007 at a legislative hearing on H.R. 2262 entitled 
Royalties and Abandoned Mine Reclamation, and last year at a hearing 
this committee held on Abandoned Mined Lands: Innovative Solutions for 
Restoring the Environment, Improving Safety and Creating Jobs, I 
provided testimony on hardrock AML issues including the need for Good 
Samaritan legislation. As I stated at that time, the mining industry 
supports the creation of a new federal AML fund to be financed from 
royalties owing under any Mining Law legislation enacted by the 
Congress to augment the monies available to state AML Funds to address 
safety and, where needed, environmental hazards at AML sites. Our 
industry also strongly supports the enactment of comprehensive Good 
Samaritan legislation like H.R. 3203, which would allow mining 
companies with no previous involvement at an AML site to voluntarily 
remediate and reclaim that site in whole or in part without the threat 
of potential enormous liability under the CWA, CERCLA and other federal 
and state environmental laws. I have attached a copy of that testimony 
for the record of this hearing and incorporate it by reference.
    Rather than imposing a job-killing ``dirt tax'' on the volume of 
material displaced at hardrock mines for reclaiming abandoned mine 
sites, Congress should pass Good Samaritan legislation and use, in 
addition to state AML funds, monies collected from existing claims 
maintenance and location fees that are not used to administer the 
General Mining Laws or provide for mineral program workforce hiring and 
training as discussed below. Over the past five years, the amount of 
claim maintenance and location fees collected has exceeded the amount 
allocated by the Secretary of the Interior for administration of the 
General Mining Laws by more than $16 million per year. We submit that 
this would be a much better use of those excess funds than depositing 
them into the General Treasury.
D. Proposed Sage-grouse Conservation Measures will restrict access to 
        mineral deposits, prevent renewable energy development and 
        exacerbate our reliance on foreign sources of minerals and 
        energy
    BLM proposes an increase of $15 million to ``implement broad-scale 
sage-grouse planning and conservation activities.'' Ten million dollars 
would be used to amend or revise 98 land use plans to designate 
priority greater sage-grouse habitat where BLM will set draconian 
disturbance thresholds for energy and mineral development. Only $2.5 
million is designated for on-the-ground habitat restoration and fuel 
management. Another $2.5 million would be used for mapping, assessment 
and monitoring.
    NWMA submits that BLM has it backwards. This budgetary increase 
should be used on-the-ground and to better implement Manual 6840 
Special Status Species Management. On page IV--6 of BLM's 2013 Budget 
Justifications, BLM states ``[I]n its finding, the FWS said the BLM was 
not `fully implementing the regulatory mechanisms available' to ensure 
species conservation.'' Instead of fully implementing the regulatory 
mechanisms available in Manual 6840, BLM has chosen to initiate a 
planning process around recommendations that include mineral 
withdrawals and validity examinations in priority habitat areas.
    Neither BLM's Notice of Intent to incorporate greater sage-grouse 
conservation measures in land use plans nor IM 2012-043 and IM 2012-044 
mention Manual 6840 (emphasis added). For three years, the current 
administration has attempted to implement land use restrictions that 
limit or prohibit domestic mineral and energy production and thwart job 
creation. We saw it with Secretarial Order 3310, the Wildlands Policy; 
we see it with the northern Arizona withdrawal; we see it with 
administrative policies that add delays to the permitting process; and 
now we have greater sage-grouse conservation. The two IM's mentioned 
above already have been used to delay the China Mountain Wind Project 
and reduce oil & gas lease sales in Nevada. The failure to mention 
Manual 6840 and focus on new regulatory mechanisms instead of better 
implementation of available regulatory mechanisms begs the question of 
what is the real purpose of BLM's sage-grouse conservation measures.
    Is it to truly conserve the greater sage-grouse or is it to do what 
they could not do through the aborted Wild Lands Policy? Is it to 
conserve the greater sage-grouse or prevent mining, energy development 
(both conventional and renewable), and multiple-use of public lands? 
Given the fact the greater sage-grouse habitat covers more than 50 
million acres across 10 western states, the greater sage-grouse has the 
potential of being the spotted owl on steroids as resource dependent 
communities across the west face economic devastation.
Addressing Permit Delays and Workforce Training
    The hardrock mining location and claim fees have brought in between 
$51.5 and $67.3 million over the last five years. These monies are 
earmarked for administering the Mining Law Program, yet, over the same 
time period, only $32.7 to $39.7 million have been appropriated to run 
the program. The balance has gone to the Treasury.
    During this same time period, Mining Law/Minerals Program managers 
and BLM/USFS field personnel responsible for the locatable minerals 
programs have been retiring at an unprecedented rate. Within the next 
five years, more than 60% of BLM and USFS employees responsible for the 
respective locatable minerals programs will retire or be eligible for 
retirement. Yet, there appears to be no effort at the departmental 
level to address this issue. The President's FY-2013 budget certainly 
doesn't address it.
    The 2012 Behre Dolbear report ranking countries for mining 
investment ranked the United States dead last in delays in receiving 
permits due to bureaucratic and other delays, and near the bottom with 
a rating of three out of ten on the degree of social issues affecting 
mining in the country. With respect to permitting delays, Behre Dolbear 
ranked the United States tied for last among the twenty-five countries 
rated stating:
        Permitting delays are the most significant risks to mining 
        projects in the United States. A few mining friendly states 
        (Nevada, Utah, Kentucky, West Virginia, and Arizona) are an 
        exception to this rule but are negatively impacted by federal 
        rules that they are bound to enforce resulting in a 7- to 10-
        year waiting period before mine development can begin.
    The delays are not due to environmental regulations being stronger 
in the United States than in other countries because most countries 
have environmental regulations equal, at a minimum, to the standards 
established by the World Bank Group. Rather, it is abuse of the NEPA 
process, unnecessary bureaucratic red tape and the fact that virtually 
every mining project is litigated. These delays represent jobs that are 
not being created, jobs by an industry that, according to the 
President's Job Council Report, was the only industry to show a net 
increase in employment since 2007, pays an average wage of $75,000, and 
has an indirect job multiplier equal to twice the national average.
    With respect to projects on BLM-managed lands, additional, 
substantial delays result from a BLM Instruction Memorandum issued on 
December 23, 2009 (IM 2010-043) requiring all Federal Register Notices 
be sent to the BLM Washington Office for review and approval prior to 
publication in the Federal Register. This Instruction Memorandum also 
implemented a 12 to 14 step review and approval process that is taking 
approximately four months per Notice, prior to publication. Included 
are three procedural notices required by NEPA: (1) Notice of Intent to 
prepare an EIS which starts the public scoping process; (2) Notice of 
Intent to publish the Draft Environmental Impact Statement; and (3) 
Notice of Intent to publish the Final Environmental Impact Statement 
and Record of Decision. Note that all three Notices are purely 
procedural--nothing substantive.
    Contrast the BLM policy with the USFS policy which allows these 
purely procedural Federal Register Notices to be sent directly to the 
Federal Register by the local forest supervisor. This is not to say 
that the USFS NEPA process does not have its own problems, rather, 
merely to contrast the USFS' policy with the BLM's policy that is 
inhibiting job creation by unnecessarily adding up to a year to what is 
already a very broken, anti-job NEPA process. We can think of no 
rational reason for the BLM to require these three procedural Notices 
to each undergo a four month review and approval process in the 
Washington, D.C. office prior to publication in the Federal Register. 
It is no wonder the United States ranks last in terms of permitting 
delays.
    As mentioned previously, claim maintenance and location fees are 
bringing in $16-$20 million a year more than is being appropriated to 
administer the BLM's locatable minerals program. This is not taxpayer 
money. This is money from the mining industry, and we believe some of 
this more than $16 million per year could and should be used to hire 
and train the necessary professionals to help break the backlog of 
permit delays and replace an aging workforce. We believe this should be 
BLM's and the USFS's number one budgetary priority for locatable 
minerals.
    Among all of the programs administered by the BLM and USFS, 
hardrock mining is the most technically complex, legally complex and 
capital intensive. Hardrock mineral deposits result from complex 
geological forces, and, as discussed earlier, are rare and hard to 
find. The variation in geology among the different metals as well as 
variations within a metal require specific geologic and engineering 
knowledge and training.
    In addition, BLM and USFS professionals responsible for managing 
the locatable mineral programs require an understanding of the General 
Mining Laws of the U.S. and their relationship with other laws and 
regulations, including environmental laws and regulations. The 
technical and legal issues are far more complex than other mineral 
resources like coal, oil and gas. Additionally, hardrock mine 
development is the most capital intensive activity taking place on 
federal lands. Hundreds of millions to several billions of dollars of 
investment is required, up front, before there is any cash flow or 
return on investment.
    These factors demand professionals with specialized education and 
training in geology and mining engineering, so they understand the 
complex technical, legal and capital investment issues associated with 
hardrock mining.
The U.S. Forest Service
    While we have focused our testimony on the BLM's budget proposals, 
the USFS budget contains many of the same misguided priorities as the 
BLM, with a focus on protection, ecological sustainability and climate 
change rather than congressionally-mandated multiple-use, mineral and 
energy production and job creation. Based on information compiled by 
the USFS Minerals and Geology Management staff, the nine largest 
locatable mineral mines producing on National Forest Lands in 2010 
produced metals worth $1.3 billion, more than all other USFS programs 
combined. This represents wealth creation, high paying jobs and 
significant state and local tax revenues. It also supports U.S. 
manufacturing jobs by helping to ensure a domestic supply of minerals.
    As mentioned above, the USFS faces similar workforce issues as the 
BLM. As of January 25, three-quarters of the USFS's certified mineral 
examiners were eligible for retirement. A December 20, 2010 workforce 
analysis by the USFS shows 61% of USFS employees eligible for or will 
be eligible for retirement by 2015. Thus, it is likely that within the 
next three or four years, the USFS will lose over 60% of its mineral 
management expertise, yet, little is being done to replace this 
workforce, and the Administration's proposed budget actually reduces 
the amount of monies budgeted to manage the mineral wealth of our 
National Forest System Lands. The budget shows reductions in monies to 
administer mineral operations, process mineral applications and manage 
the abandoned mine land program.
    As previously noted, the mining industry is the only industry to 
show a net increase in employment since 2007, and provides high paying 
jobs with an indirect job multiplier equal to twice the national 
average. Given these facts, and the economic contribution of mineral 
production on National Forest Lands, NWMA is at a loss to understand 
why the USFS is proposing to cut more than $10 million from its 
Minerals and Geology Management program. This will only compound 
permitting delays and exacerbate our reliance on foreign sources of 
minerals. The proposed budget reduction also prevents the USFS from 
addressing its workforce replacement needs.
    In these times of robust mineral prices, we believe the Forest 
Service should be increasing its budget request for Minerals and 
Geology Management, so it can hire and train the professionals needed 
to administer the program and process plans of operation in a more 
timely fashion.
Conclusion
    The U.S. minerals industry operates in a highly competitive global 
environment. The search for new mineral deposits occurs around the 
globe. Major mining companies operate internationally and weigh many 
factors in determining whether the potential return on mineral 
investment is worth the geologic, economic and political risk.
    There can be no question that mining creates new wealth and 
provides high paying jobs with an indirect job multiplier more than 
twice the national average. As mining companies weigh the geology/
mineral potential, economic and political risk, they will invest in 
mineral development where they can obtain access to the land; access to 
regulatory approvals; access to capital; and access to the resources 
necessary to build and operate the mine such as people, water and 
energy. While the United States scores high in terms of its economic 
and political systems, lack of government corruption and currency 
stability, it ranks last or near the bottom in terms of permitting 
delays, social issues and tax policy. Thus, in the Behre Dolbear 2012 
Ranking of Countries, the United States is sixth behind Australia, 
Canada, Chile, Brazil and Mexico.
    We also are entering a period of resource nationalism where many 
countries, led by China, are asserting control over natural resources 
located within their country. Unlike the Arab oil embargo of the early 
70's, countries like China are using resource nationalism not to 
control the market or the market price for a given commodity, but to 
attract long term manufacturing jobs. Manufacturing require minerals. 
Manufacturing concerns require a stable and affordable supply of metals 
and minerals. In a nut shell, resource nationalism says ``if you want 
our minerals, locate your manufacturing facility in our country.''
    This is most evident and transparent in China with rare earth 
minerals. China currently controls 97% of global rare earth production. 
China has announced that it is cutting back on rare earth exports in 
favor of internal consumption. Rare earths are required not only in 
wind turbines and hybrid vehicles, but also in dozens of consumer 
products like flat screen TV's, computer monitors, and energy saving 
CFL light bulbs. China is telling these manufacturing concerns that 
they have a choice. They can hope to obtain the rare earths they need 
in the global market place at the global commodity price, or they can 
relocate their manufacturing facility in China and be guaranteed a 
supply of rare earths at a discount. China has been very transparent in 
this policy because first and foremost they want to create 
manufacturing jobs.
    Last week, the administration joined with Japan and the European 
Union to file a complaint with the World Trade Organization over 
China's policy of restricting export of its rare earth minerals. 
Instead of settling for Chinese imports, the U.S. should expedite the 
development of our own supplies of rare earths and other critical and 
strategic minerals. The best way for the administration and congress to 
combat China's dominance of critical and strategic minerals production 
is to enact a National Minerals Policy based on H.R. 2011 and S. 1113 
that promotes domestic production and creates high-paying jobs.
    If the United States is going to compete in this global mineral 
environment fueled by resource nationalism, it must adopt policies that 
guarantee access to lands with mineral deposits, must provide a 
competitive tax regime, and must reduce permitting delays. We should be 
embarrassed that we rank last among the twenty-five largest mineral 
producing countries in terms of permitting delays. The fact a country 
with a mineral resource base as rich as the United States attracts only 
8% of world-wide exploration spending should be a call to action.
    Unfortunately, the President's FY-2013 budget and legislative 
proposals for the BLM's and USFS's energy and mineral programs do not 
answer this call to action. Instead of advancing policies that will 
encourage mineral production, job creation and deficit reduction, the 
Administration's proposals will result in less domestic energy and 
minerals production, adversely impact private sector job creation, and 
increase the United States' dangerous reliance on foreign sources of 
strategic and critical minerals. This will have a negative impact on 
our balance of payments and will not contribute to deficit reduction, 
as we watch other countries reap the benefits of mineral investment and 
the resulting private sector jobs, both in mineral exploration and 
development as well as manufacturing.
    We urge this Committee and Congress to reject the President's 
budget and legislative proposals and, instead, enact incentives that 
will encourage investment and production of America's vast mineral 
resources to supply the strategic and base metals and materials 
necessary to create and sustain U.S. manufacturing jobs, a robust 
economy, and our standard of living.
    Thank you for the opportunity to provide testimony on these 
important issues. I will be happy to answer any questions.
                                 ______
                                 
    Mr. Lamborn. Thank you.
    Mr. Fosburgh?

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

    Mr. Fosburgh. Thank you, Mr. Chairman, Mr. Markey. I 
appreciate being here. My name is Whit Fosburgh. I am the 
President and CEO of the Theodore Roosevelt Conservation 
Partnership.
    Today, I am speaking on behalf of TRCP and Sportsmen for 
Responsible Energy Development, which is a coalition with Trout 
Unlimited and National Wildlife Federation, and more than 500 
other groups, businesses, and individuals who support energy 
development on public lands but want to see it done right.
    My full testimony has been submitted for the record. That 
testimony cites the impacts that irresponsible development has 
had on fish and wildlife, and how sensible reforms put into 
place in 2010 have reduced conflict, expedited development, and 
restored some balance to public lands management, balance that 
was sorely lacking after the passage of the 2005 energy bill.
    The testimony also notes that there is no shortage of 
public lands available for oil and gas development, as many 
Members have noted today.
    More than 38 million acres of leases are held by industry 
and less than half that amount of land is in production, with 
about 7,000 permits on public lands currently being unused.
    In my oral remarks, I want to highlight the jobs' issue. 
First, I want to reiterate that energy development is a valid 
and important use of our public lands, whether it be oil and 
gas, solar or wind.
    A lot of us scratch our heads when we hear that balancing 
development with fish and wildlife and recreation is somehow a 
job killing strategy.
    2010 saw more than 58 million visitors to BLM lands, with a 
resulting benefit of $7.4 billion to the economy. Most of those 
visits were to hunt, fish, camp, mountain bike, watch wildlife, 
or have other outdoor recreational experiences.
    During the economic downturn, the outdoor recreation 
industry has been growing at an average annual rate of about 
six percent, almost three times the rate of the national 
economy.
    In a report commissioned by the National Fish and Wildlife 
Foundation last November, recreation, conservation and historic 
preservation contribute more than $1 trillion annually to the 
national economy and support 9.4 million jobs.
    Another peer reviewed report which will be released later 
this Spring examines the relationship between economic security 
and varying land management strategies in the rural Rocky 
Mountain West.
    Going back over 30 years, the report looks at rural 
counties where (a) commodity development dominates; (b) 
recreation and conserved lands dominate; or (c) where there is 
a combination of conserved lands and limited commodity 
development.
    This analysis indicates that jobs, income and growth in the 
commodity production sectors in the rural Rocky Mountain West 
while still significant have not experienced the growth seen by 
the rest of the regional economy.
    Rural counties with greater areas actively conserved for 
recreation and conservation plus lower impact development uses, 
like balanced uses of mining, timber, energy development, 
actually enjoy higher income, population and employment growth.
    Counties dominated by conservation and recreation lands 
also have higher property values and higher proportions of high 
income workers.
    Communities need the energy and materials provided by the 
commodities sector. Individuals, residents and tourists alike 
demand the quality of life provided by the region's fish, 
wildlife, and scenic resources.
    Nearly all the Rocky Mountain communities need jobs and 
income generated by both sectors.
    Opening all areas for energy development and relaxing or 
eliminating the rules that seek to balance development with 
conservation flies in the face of good public policy and good 
economic policy.
    I want to point out that we have some frustrations with the 
BLM and the way it is doing its job as well.
    While the promise of the 2000 reforms is good, figure out 
up front where developments should be and how it should happen, 
too often BLM state directors simply ignore this guidance 
creating a patchwork approach throughout the West.
    Nowhere is this more evident than in the slow and extremely 
uneven application of the Master Lease Planning process. This 
is a process we should all embrace, as it should result in 
consolidated and expedited development while also keeping 
development from critical fish and wildlife and recreation 
areas.
    Instead of pushing to open more areas of development with 
less consideration of fish and wildlife, we would urge the 
Committee to use its oversight powers to ask why BLM has been 
so slow in implementing its own plans to balance energy 
production with fish and wildlife conservation.
    The President's proposed budget includes funding the 
implementation of lease reforms and increased development fees. 
This is promising but only if BLM follows through on the 
ground.
    I also want to make a comment on what Laura said, that the 
environmental community supports the whole abandoned mine lands 
reclamation process, and the Good Samaritan provisions would 
actually encourage private parties, be it Trout Unlimited or 
mining companies themselves, to go back in and fix up chronic 
pollution sources on our Western lands.
    Thank you. I am happy to answer any questions.
    [The prepared statement of Mr. Fosburgh follows:]

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

    Mr. Chairman:
    Thank you for the opportunity to testify before the House Natural 
Resources Committee, Subcommittee on Energy and Mineral Resources. My 
name is Whit Fosburgh, and I am the president and CEO of the Theodore 
Roosevelt Conservation Partnership, a national non-profit conservation 
organization (501-3c) that is dedicated to guaranteeing every American 
places to hunt or fish. I am also here on behalf of Sportsmen for 
Responsible Energy Development, a coalition of more than 500 
businesses, organizations and individuals dedicated to conserving 
irreplaceable habitats so future generations can hunt and fish on 
public lands. The coalition is led by the Theodore Roosevelt 
Conservation Partnership, Trout Unlimited and the National Wildlife 
Federation.
    As a lifetime hunter and angler and a long-time professional in the 
conservation field with experience at numerous levels of government and 
non-governmental organizations, I am honored to provide comments on the 
important issue of energy development and its potential impacts on 
fish, wildlife and sportsmen. The quality of life in this nation, one 
enjoyed by sportsmen and non-sportsmen alike, depends on a sound 
economy fueled in part by responsible energy production that is 
balanced with the needs of fish, wildlife, habitat and water.
    The TRCP and the sportsmen's community support responsible energy 
development. We understand and appreciate the need for exploration and 
production of our domestic energy resources but maintain it must be 
done responsibly and in a way that conserves and sustains other values 
(such as fish and wildlife, clean water, and recreation) with those of 
energy production. America needs the raw materials provided on western 
public lands and the jobs supported by these activities are important 
contributors to the western economy. Likewise, jobs and economic 
benefits dependent on fish, wildlife and the West's outstanding scenery 
and recreation values have provided steady growth and are also 
important--but often overlooked--contributors to the wealth of the 
region and the country. Recognizing that both energy production and 
fish and wildlife resources are valuable, and that they often can occur 
in the same locations, it is important to strike a proper and 
sustainable balance. We advocate true multiple use and sustained yield 
of public-lands resources as mandated in federal laws, including energy 
production, while maintaining a fish and wildlife conservation legacy 
for this and future generations.
    The reforms to the onshore oil and gas program announced by 
Secretary Salazar in 2010 and beginning to be implemented now represent 
positive steps in restoring recognition of the fish and wildlife values 
on public lands. We agree with the Secretary that more can be done at 
the land use planning and leasing stages to address protection of fish, 
wildlife, water and recreation and that this will result in less 
conflict and better conservation of multiple-use values on public 
lands. It will also provide more certainty for industry during the 
development of our public land energy resources and for sportsmen who 
depend on the availability of public lands and the vital habitat these 
lands provide. Finally, we believe that federal land management and 
fish and wildlife agencies need adequate budgets to manage fish and 
wildlife resources and that drastic cuts are not acceptable. Federal 
budgets for fish and wildlife programs have been neglected for decades 
and remain inadequate. Further budget cuts would cause irreparable 
harm. We support increased funding for implementation of leasing reform 
and higher royalty rates. We also support commensurate increases in 
fish and wildlife budgets to handle the additional workload and 
resource needs in order to properly evaluate and process the increase 
in energy interest in public lands. Having given an overview of our 
position l will discuss some of these issues in detail.
    Public lands are held in trust for the American people and must be 
managed to meet the multiple needs of the citizenry--today and in the 
future. Access to public lands for private energy development is a 
privilege not a right. The American public expects federal land 
managers to require that energy development is conducted in a 
responsible manner that ensures the long-term conservation of fish and 
wildlife. Polls consistently show that public-lands users want the 
federal government to do more to protect fish and wildlife during 
energy development, not less. These polling results have been constant 
regardless of energy prices and the fiscal recession our country has 
experienced. In 2007, the TRCP commissioned a poll of public-lands 
users: 85 percent wanted more protection for fish and wildlife during 
energy development. Polls executed after the recession and high 
gasoline prices in 2008 showed similar results. A poll commissioned by 
Trout Unlimited and Sportsmen for Responsible Energy Development showed 
that 75 percent of respondents wanted more protections for fish and 
wildlife on public lands during energy development and 85 percent 
opposed limiting or eliminating the ability for the public to be 
involved during energy development planning and permitting. A poll done 
last year by Public Opinion Strategies and FM3 (a Republican and a 
Democratic polling company) showed that 77 percent of respondents 
wanted stronger laws and enforcement for fish and wildlife protection 
rather than lessening restrictions (this is up from 74 percent in 
2009). Clearly the American public and public-lands users and sportsmen 
want more to be done for fish and wildlife, even after experiencing 
serious pain at the gas pump and through the hardest financial times 
since the Great Depression.
    During the energy boom that began in the late 1990s, energy 
development practices and policies on public lands diverged with the 
principles of multiple use and sustained yield and the expressed values 
of sportsmen and other public-lands users. In order to meet industry 
demands for leases and permits, fish and wildlife often were treated by 
federal land managers as an impediment to development rather than a 
valuable resource to be managed in tandem with development. The 2005 
Energy Policy Act (EPAct) further prioritized energy development over 
other resources and concerns through the establishment of pilot offices 
in seven BLM offices for the purpose of expediting permits for 
drilling, and the establishment of ``statement of adverse impacts to 
energy development'' for actions that were perceived to delay or deny 
immediate approval. These legislative directives helped foster an ``oil 
and gas trump everything else'' attitude within the agency. This 
resulted in practices that crippled the agency's ability to manage 
other resources like fish and wildlife, including redirecting 
appropriated funding intended for fish and wildlife management to 
energy planning and permitting and instructing biologists and other 
specialists to prioritize energy above their fundamental tasks of 
managing fish and wildlife habitats. Consequently, given full 
implementation of the provisions of the 2005 EPAct, industry is still 
complaining that they cannot get permits fast enough--a proof that more 
access and permitting will not solve our energy problems.
    The consequences of this ``energy takes all'' approach to public 
lands management were predictable. Sportsmen and other public lands 
users would not stand idly by and watch as fish and wildlife values 
were sacrificed across the West. For sportsmen and others concerned 
about the impact of this imbalance on fish and wildlife, the only clear 
avenue of relief was to formally protest lease sales. Between fiscal 
year 1998 and fiscal year 2009, the percentage of oil and gas leases 
protested jumped from one percent to nearly 50 percent. In some states, 
nearly all lease sales were protested. This is more proof that the 
model for unfettered access to public lands was not acceptable to the 
public who owns these lands.
    Unlike other activities on public lands, oil and gas leasing 
historically included little opportunity for public involvement. Lease 
parcels were secretly nominated by industry six to nine months ahead of 
a sale. Then just 45 days before sale, the locations of the parcels 
were made available for public review. The only opportunity for the 
public to express concerns was to file a formal protest to the BLM 15 
days before the sale date. The stakes riding on a decision to protest a 
lease sale were high. Once public lands were leased, BLM often 
acquiesced to industry claims that the agency had little or no 
authority to address impacts on fish and wildlife. Yet, the agency 
continued to issue leases based upon environmental analyses that were 
decades old, grossly underestimated the number of wells that could be 
drilled and relied on fish and wildlife mitigation measures that no 
longer reflected the existing wildlife science and were ineffective. 
Leased lands became lost lands in the sense that the BLM can no longer 
properly manage them for current and future multiple uses.
    The current administration inherited an onshore oil and gas program 
that was broken. Because protests and lawsuits were clogging the system 
and preventing the issuance of leases, it did not function for the 
agency or for industry. It certainly was not working for sportsmen and 
other public-lands users.
    Leasing and permitting have slowed in recent years due primarily to 
market forces, not regulation, reflected by fewer nominations from 
industry. For example, the largest reduction in the number of wells 
drilled on public lands occurred between 2008 (5044) and 2009 (3267) 
before any restrictions could have been implemented by a new 
administration. Since 2009, the number of wells drilled remained at 
about 3200. The largest reduction in permits issued occurred between 
2007 (7000) and 2008 (5500). Annual leased acreage dropped from over 
4.6 million in 2007 to 2.6 million in 2008 to a low of 1.4 million in 
2010. Industry itself nominates lands to be leased. Industry 
nominations declined from 3000 in 2007 to 1300 in 2010. Figures for 
2011, however, show an increase in nominations as well as acreage 
leased (2 million) and revenues. Any reductions in leases sold or 
permits issued have had little or no impact on industry access to 
public lands. More than 38 million acres of leases are held by 
industry. Less than half of that land is in production. Industry 
currently holds more than 7,000 unused permits to drill for oil and gas 
public lands.
    After taking office, the administration did take some common sense 
steps to repair a dysfunctional approach to developing oil and gas on 
our public lands. The administration rightly recognized that these 
policies posed a significant threat to fish and wildlife and were 
leading to more and more conflict over every lease. In an effort to 
reduce the conflict in the leasing process and balance out resource 
considerations, the Department of the Interior provided a number of 
reforms through Instruction Memoranda (IMs). Reforms from these IMs 
require the Bureau of Land Management to develop local ``Master Leasing 
Plans'' to facilitate thorough environmental review of potential 
drilling impacts BEFORE offering leases in areas with high energy 
potential and high risk of environmental conflicts. BLM also revised 
its lease sale procedures to create room for concerns about particular 
parcels to be raised and resolved before the sale date.
    A halt to these reforms now would be a mistake. Master Leasing 
Plans (MLPs), for example, could provide a new and powerful opportunity 
to avoid and minimize wildlife and other environmental conflicts that 
could result from poorly planned oil and gas leasing before a project 
is sited and investments are made. This type of ``smart from the 
start'' planning results in a win-win because it has the potential both 
to conserve fish and wildlife habitat and to resolve conflicts prior to 
the siting and development of oil and natural gas wells, thus avoiding 
costly delays and litigation. This approach also would follow the time 
tested progression of mitigation actions in which avoidance is the best 
and least costly way to deal with impacts.
    The immediate benefit of these reforms for BLM and industry is 
demonstrated by the fact that the percentage of leases for which 
protests were filed in 2011 is down to 35 percent while lease sale 
revenues increased 20 percent over 2010. Unfortunately, industry is 
costing the BLM precious time with irrelevant lawsuits aimed at 
stopping the reforms and costing the taxpayers precious funding, which 
could be used to properly manage leases and development. The full value 
of these reforms for sportsmen and other public-land users will not be 
proven, however, until sportsmen see on-the-ground benefits for fish 
and wildlife. Maintaining huntable, fishable populations of game 
species on public lands are critical to sportsmen.
    It is well-documented that oil and gas development can have 
devastating and long-lasting impacts on fish and wildlife habitat. A 
typical production field includes a complex network of roads, well 
pads, pipelines, compressor stations, waste pits, staging areas, and 
other structures that will remain in place for 30 to 50 years. This 
cumulative industrial framework fragments fish and wildlife habitats. 
Habitat fragmentation affects the feeding, courtship, migration, and 
other wildlife behaviors, as their patterns of habitat use across the 
landscape are disrupted. It also negatively impacts the overall health 
of habitats, assisting the spread of invasive species and diseases, 
causing sediment to wash into streams, and changing the makeup of local 
vegetation. Sportsmen across the West have been eyewitnesses to the 
impacts of this development on the game they have hunted and fished for 
generations.
    The Greater Sage-grouse is an important game bird that inhabits the 
sagebrush steppe habitat of the Rocky Mountain West. The species has 
disappeared from nearly half of its historic range due to habitat 
fragmentation and other disturbances. The Department of the Interior 
has determined the species is warranted, but precluded for for 
protection under the Endangered Species Act (this means there is enough 
evidence to protect the bird right now, but because of other reasons it 
is deferring any action). Oil and gas development is cited by the U.S. 
Fish and Wildlife Service as a primary threat to sage-grouse 
populations in the Rocky Mountain West. However, sage-grouse is just 
one example of the many species dependent on sagebrush steppe habitat 
that are threatened by oil and gas development.
    Another example of the need for better planning and management of 
oil and gas development is the impact on vital mule deer habitats. Mule 
deer are a western deer species related to white-tailed deer but with 
very different requirements. They respond to human-caused disturbance 
much differently. Where white-tailed deer are generalists and highly 
adaptable, mule deer mostly inhabit larger western landscapes and 
require different seasonal habitats and annual migrations from summer 
to winter range. Mule deer populations have been declining across much 
of the West. Mule deer experts agree that one of the limiting factors 
for mule deer is available winter habitat. These winter habitats often 
are deemed ``crucial'' for survival by state game and fish agencies and 
have been afforded protection from disturbance for more than 40 years 
in many states.
    A recent evaluation and report of how mule deer have been addressed 
in federal land use planning and major energy projects of the greater 
Green River Basin of southwestern Wyoming, northwestern Colorado and 
northeastern Utah showed that of the 10.2 million acres of mule deer 
crucial winter range on BLM and National Forest lands, 2.4 million 
acres already have been leased for development. More than 15,000 wells 
have been drilled in this winter habitat. However, current mitigation 
plans for energy development in crucial winter range have not been 
successful. At the Pinedale Anticline in western Wyoming, the wintering 
population of the segment of the deer herd that winters within the 
project area has dropped by over 60 percent from levels that were 
documented before development began (approximately 6,000 deer used to 
winter on the mesa area of the project before development, now 
approximately 2,000 deer do so). Many state wildlife officials fear 
that a full recovery may not be possible without substantial changes in 
how energy development and other human disturbance is permitted and 
conducted in mule deer habitats.
    The problems with mule deer and sage grouse are important to this 
testimony because they offer examples of how BLM policy for energy 
development has affected fish and wildlife resources and therefore 
sportsmen. Significant new information and science are available 
regarding these two species to better balance wildlife with energy 
development during project planning, but unfortunately this science has 
not been embraced by the BLM and often is ignored or discounted because 
energy development is prioritized.
    Until now I have discussed problems with previous policies and 
budgets, but now I want to focus on some of the benefits of responsible 
fish and wildlife management of our public lands. The American system 
of public lands is unique, found nowhere else in the world. A 
fundamental American value, it was left to us by our predecessors and 
held in trust for future generations. FY 2010 saw more than 58 million 
visitors to BLM lands with a resulting benefit of $7.4 billion dollars 
to the economy. Most of these visits were to enjoy scenery, hunt, fish, 
camp, watch wildlife or have other great outdoor experiences. Americans 
and people from all over the world come year after year to experience 
our public lands, and they bring the economic benefits with them. This 
sustainable economic engine is dependent on healthy environments, clean 
air, clean water and abundant fish and wildlife. In 2010 in Wyoming, 
Colorado and Utah, more than 2.2 million hunters and anglers bought 
licenses, providing license revenues of more than $1.2 billion dollars 
back to those states. This figure does not include the federal match 
generated through the Pittman-Robertson and Dingell-Johnson acts or 
revenue from expenditures on food, hotels, equipment, or other 
purchases made by these hunters and anglers. Nationwide it is estimated 
that 1.2 million jobs are provided annually by the outdoor industry, 
many hunting and fishing related.
    A new report prepared for Sportsmen for Responsible Energy 
Development by Southwick Associates investigated the economic benefits 
of public lands adjacent to communities in the Rocky Mountain West. The 
report looked at the relationship between land use and economic growth 
in seven states in the Rocky Mountain West--Idaho, Montana, Wyoming, 
Utah, Colorado, New Mexico and Arizona. The study found that public 
lands in the Rocky Mountain West provide energy that has helped drive 
the economy and cast the region as one dominated by extractive 
industries. However, commodity-based employment has been cyclical and 
suffered more severe downturns than other industries. Commodity-based 
jobs have become a smaller part of the overall economy while the 
service industry, which includes high-paying, skilled positions, has 
increased and become the biggest segment of the market. The region's 
public lands managed for conservation and recreation are a magnet for 
tourists, people looking for a certain lifestyle, retirees and 
businesses hoping to draw workers. These jobs and economic benefits are 
sustainable, provide growth in hard times, and allow people to 
reconnect with nature. Federal policies and budgets significantly 
affect our ability to continue these benefits.
    Some places in this country are valuable or special and should not 
be developed. These ``special places'' have values that could not be 
replaced or mitigated if development took place. Places like the Rocky 
Mountain Front in Montana, Valle Vidal in New Mexico and Wyoming Range 
in Wyoming provide unique experiences for hunters and anglers and vital 
habitats for fish and wildlife. In the past decade, these areas have 
been threatened through lease nominations and sales and other 
development proposals. Previous policy prevented the BLM from 
identifying all but congressionally designated lands or previous 
administrative withdrawn areas during land use planning development. 
Local campaigns or legislation have been required to deal with threats 
to these areas, many of which have very little energy development 
potential or would be very difficult to develop because of their 
landscapes. We promote the identification and protection of these 
places to balance fish and wildlife values with areas that have been 
and will be developed for energy development. Not all lands are 
suitable for development; nor is development compatible with other uses 
in all areas.
    We also promote responsible development when energy development 
takes place. Acknowledging that some places will be developed more than 
others and some may become industrial zones, most lands can be 
developed while concerns about fish, wildlife and recreation are 
addressed. As stated previously, sportsmen want to see energy 
development balanced with fish and wildlife resources. The TRCP and our 
conservation-sportsmen partner organizations have developed a set of 
recommendations, revised in 2011, that can help achieve balance during 
energy development. The ``FACTS for Fish and Wildlife'' comprise 25 
specific recommendations in five targeted areas--Funding, 
Accountability, Coordination, Transparency and Science. The FACTS 
recommendations may be found at http://www.trcp.org/assets/pdf/
FACTSfor_web. If the FACTS are employed, conflicts with sportsmen-
conservation groups can be reduced, and we can expand development of 
our domestic energy resources. In addition, the TRCP joined SFRED is 
drafting a ``Sportsmen's Bill of Rights'' regarding energy development 
and a set of joint recommendations that compliment the TRCP's FACTS.
    Finally, I deliver this testimony to ensure a bright future for 
fish and wildlife, voice concerns about past policies and budget 
allocations, and express interest in working with Congress to address 
these important issues as we determine future energy policy. Sportsmen 
want some certainty that Western fish and wildlife resources can be 
sustained at levels that provide quality hunting and fishing 
opportunities--ones of which we can be proud. We want a system of 
public lands that provides energy AND fish and wildlife, not one that 
provides energy OR fish and wildlife. We believe recent policy changes 
by the Obama administration take a positive step toward that goal, but 
we still have concerns about successful implementation and benefits on 
the ground. We also are concerned that future cuts to fish and wildlife 
budgets in our federal natural resources agencies could have drastic 
consequences for hunting and fishing, along with other important uses 
of our public lands.
    In closing, the American public supports and promotes the use of 
our public lands for many purposes, including energy development but 
not at the expense of the fish, wildlife, and recreation these lands 
provide. The economic and employment gains from outdoor recreation and 
fish and wildlife management cannot be discounted because they are 
significant to local communities, state job outlook, and national 
interest. The proposed BLM budget does not limit nor hinder energy 
development but provides a means for BLM to balance multiple-uses on 
the public lands and provide opportunities for responsible energy 
development. Our country's energy production is thriving and public 
lands are part of that prosperity. Cutting or eliminating funding for 
fish and wildlife management, not charging industry proper fees nor 
collecting market based royalty rates, and removing protections for 
clean air, clean water, and healthy environment will not fix our energy 
problems. It will only make them worse.
                                 ______
                                 
    Mr. Lamborn. All right. Thank you. I now recognize myself 
for five minutes. Thank you all for being here.
    Mr. McKee, in your testimony, you say that approximately 
600,000 acres in Uintah County have been shelved for oil and 
gas leasing.
    Can you tell the Committee the potential that this land 
holds for American energy production and jobs in your 
community?
    Mr. McKee. Yes, thank you, Mr. Chairman. As I noted 
earlier, there was 77 leases that were canceled, six of those 
were reinstated. There were 6,000 acres reinstated. Just the 
royalty--the winning award was $48.6 million for those 6,000 
acres. This is a vast resource of oil shale and natural gas and 
all the different commodities that are there.
    To really be able to know exactly how much that is worth, 
it is hard to say, and there is more than just the 600,000 
acres. That was just under Master Leasing, take a plan 
amendment with the BLM's new plan now to be able to get to 
those resources.
    There are hundreds of thousands of other acres that are 
being not utilized just in my county, let alone the entire 
State of Utah and across the West.
    Mr. Lamborn. Jobs, any idea on jobs?
    Mr. McKee. Well, I know this. I have visited with 
companies. There are billions of dollars in investment that 
these companies would like to put into our area, but they have 
to have something that is predictable, something that is 
stable.
    What we are seeing is this investment going into other 
areas. When the 77 leases were canceled, most of these jobs 
were oil and gas jobs. We lost about 3,000 jobs in our county. 
It is a small county, about 32,000 people. We lost about 3,000 
jobs right at that time.
    Mr. Lamborn. Just with the stroke of a pen. Thank you.
    Mr. Milito, in your experience in the oil and gas industry, 
do you support the Department of the Interior's proposal to 
increase royalty rates for production on Federal lands and why 
or why not?
    Mr. Milito. No. The reason why is simple economics of 
running an oil and gas business, particularly onshore where you 
have really hundreds if not thousands of operators.
    By making those increases, you are essentially taking a lot 
of production off the table. You will have less people coming 
to the lease sales and purchasing the leases, and then you have 
less acreage leased and when we have less acreage leased, you 
get less production.
    You are disincentivizing the investment in these types of 
resources, and you ultimately would be losing production and 
jobs to go along with it.
    Mr. Lamborn. Maybe you heard my comments earlier, but if 
there is the ability to pass on to the consumers, like any 
other business, then that leads to higher prices. If that 
ability does not exist, then it discourages investment.
    In any case, it will not lower prices at the pump, would 
it?
    Mr. Milito. Well, we do not like to speculate on what will 
happen ultimately with the prices at the pump given our role as 
a trade association, but any time you are increasing costs on 
the industry, you are discouraging the industry from investing 
in U.S. projects, and you are discouraging the industry from 
investing in U.S. job creation.
    Given that it is a global market, we end up often times 
losing that investment to other areas of the world, and instead 
of securing our own energy future with our own resources, we 
end up losing it to other parts of the world, and we have 
significant ability to increase our production over the course 
of the next five to ten years, and we really have to look at it 
in the long term.
    I do not want to speculate on prices, but at the same time, 
we have to understand Economics 101 shows that by increasing 
supplies, you do assert downward pressure on prices.
    Mr. Lamborn. Whatever happens on prices, we know there is 
absolutely a jobs' impact.
    Mr. Milito. Absolutely. Every study that we have seen shows 
increasing access, increasing the permitting, streamlining the 
permitting, and eliminating regulatory uncertainty, any one of 
those will provide additional incentive to invest and increase 
job creation.
    Mr. Lamborn. OK. Thank you. Finally, Ms. Skaer, the 
Administration recently joined with Japan and the European 
Union to file a complaint with the WTO over China's policy of 
restricting export of its rare earth minerals.
    Do you believe this is the best way for this Administration 
to ensure an adequate supply of critical and strategic minerals 
for our manufacturing base and our national security?
    Ms. Skaer. We do not. Instead of relying on China and other 
countries to provide the rare earth's and the critical and 
strategic minerals that our nation needs that we require as a 
society, we believe it would be better to become self reliant, 
to produce those minerals here.
    We are today import reliant, more than 50 percent import 
reliant on 43 minerals, and you compare that to where we are 
with crude oil, that to me is a pretty disturbing statistic.
    We have the third richest mineral endowment in the world 
within the borders of the United States, and we could very 
easily meet our needs, but we cannot do it with the regulatory 
burdens that we have, with the long permitting times, and with 
the uncertainty that we have in this country right now.
    Mr. Lamborn. Thank you very much. Mr. Markey?
    Mr. Markey. Thank you, Mr. Chairman, very much.
    Mr. Milito, I hope you heard the earlier conversation I had 
with Mr. Abbey about the fines for violations on public lands, 
where there were more than 2,000 violations over a 13-year 
period by oil and gas companies on public lands for things as 
egregious as drilling without a blowout preventer or drilling 
without an approved BLM permit.
    Yet, the average fine for these violations was only $135. 
We know how much money the oil industry made last year, $137 
billion.
    It is like paying a parking ticket for parking in the 
middle of the day on Connecticut Avenue that was $1. You pay 
the $1 every day because it costs you $30 to park in a garage. 
It is cheaper to pay the fine.
    It does not really provide a disincentive.
    Do you agree that the current penalties are too low and 
they have not been updated in 30 years, and they should be 
increased for the bad actors?
    Obviously, the American petroleum industry has many, many 
good companies. There are bad actors in every industry. You 
really do not have to discourage good companies from doing bad 
things. You have to discourage bad actors from doing bad 
things.
    Do you think the fines should be increased in order to 
discourage that kind of activity?
    Mr. Milito. I think that is a fair point, especially 
considering Director Abbey's statement that fewer than ten 
percent of companies have any infractions at all, and most are 
corrected immediately.
    I think what we support in terms of the fine system is 
really looking at reforming the whole process, including making 
sure that we have strong enforcement in place and making sure 
that the mechanism is there to deter bad actors.
    I would not look at it in a vacuum because you may have a 
$5,000 fine there, but I think the BLM has the discretion to 
issue $5,000 to $10,000 per day in civil penalties.
    I think you have to look at what is the overall framework 
that BLM is operating under to make sure it is effective both 
in regulating and enforcing.
    Mr. Markey. You do agree that a $5,000 fine for not having 
a blowout preventer is----
    Mr. Milito. That sounds low. I do not know the facts around 
that. If it is an egregious violation and the total fine is 
$5,000, that could be a very bad example.
    Mr. Markey. I appreciate it. Thank you.
    Mr. Fosburgh, oil companies currently hold 38 million acres 
of public land, onshore, but are not producing on 68 percent of 
that land, 25 million acres. That is the size of Indiana.
    In other words, the public lands of the American people, 
the size of Indiana, are out there now and leased for oil and 
gas drilling to the private sector, but they are not drilling 
on 25 million of those acres.
    The oil and gas industry is saying give us more, and they 
already have an area the size of Indiana and they are not 
drilling for oil and gas, even though they bid for the leases 
to drill for oil and gas on public lands.
    What is going on there, Mr. Fosburgh? Why do they keep 
asking for more when they have not even eaten what they have 
already purchased in terms of the oil and gas leases?
    What in your mind is going on here? Why do they not do the 
work where they already have it rather than keep asking for 
more before they finish the job on the 25 million acres?
    Mr. Fosburgh. I can only speculate. I do not own an oil 
company or gas company. Certainly, in the old days, during the 
Bush Administration, it seems they pretty much got anything 
they wanted.
    I think they got used to asking for a lot, even if they 
were not going to use it, because they could lock it up from a 
competitive or speculatory basis, and have it down the road, 
plus it prevents other people from getting in there and getting 
it, too.
    All I can say is there are a lot of places that were leased 
that were pretty critical to fish and wildlife areas that have 
suffered from the development that has occurred, and we just 
want to see a process moving forward.
    Mr. Markey. I appreciate that. Before they expand out into 
other areas, they have 7,000 approved permits to drill, and 
they are not drilling. They are saying give us another 7,000. 
That does not really make any economic sense, if you are not 
already doing the job where you already have the right to do 
so.
    A lot of us, I am included, think there should be kind of a 
time limit on how long you get a lease. You should not be able 
to lock it up indefinitely when other companies might want to 
go in and drill.
    I just do not like the idea where it has been decided it is 
OK to keep that oil and natural gas out of the hands of the 
American people. I just do not think that is right. Then to 
come in and ask for more to lock up that as well. What is the 
point of that.
    I just think credibility of the people who are asking for 
it is kind of questionable, given the fact that two-thirds of 
the leases they have already they are not drilling.
    That is kind of my point. I thank all of you for testifying 
here today. Thank you, Mr. Chairman.
    Mr. Lamborn. Thank you. We will finish up with 
Representative Thompson.
    Mr. Thompson. Thank you, Chairman. Thanks to the panelists 
for attending this hearing today.
    Ms. Skaer, in your testimony, you suggested the BLM would 
do better to use their requested budgetary increase for their 
Land Management Plan revisions to accommodate sage grouse 
should be used on the ground and to better implement Manual 
6840, the Special Status Species Management.
    Can you provide more detail regarding Manual 6840 and how 
would that be a better use of resources?
    Ms. Skaer. Manual 6840 is entitled ``Special Status Species 
Management.'' When you go through that manual, BLM has 
regulatory mechanisms and they have policies in place to deal 
with threatened species, endangered species, and candidates 
like the sage grouse which are warranted but precluded.
    Yet, when the National Technical Team Report was issued, 
BLM issued two instruction memoranda to implement that report 
while they are taking scoping comments, not one single mention 
is made of this manual that they already have.
    The Fish and Wildlife Service did not tell BLM to go adopt 
new regulatory mechanisms. They said you need to better 
implement the regulatory mechanisms that you have.
    Our view is rather than spending two-thirds of their budget 
request on the NEPA process, they would be much better off 
spending two-thirds of that on the ground implementing the 
tools they already have rather than creating new ones.
    If you look at the Western Governors' recent report, of the 
voluntary and state efforts to conserve sage grouse, they are 
working. They are having phenomenal success.
    Instead, we really believe that this is an effort to raise 
sage grouse conservation above multiple use, much like the 
wildlands project, and being from the Northwest and having seen 
the impact of the spotted owl on timber communities when the 
underlying science was not valid to support the Northwest 
Forest Plan, the sage grouse could be the spotted owl on 
steroids for the Interior West.
    Mr. Thompson. Thank you. Commissioner McKee, frankly, as an 
elected official in your county, it must be frightening that 
the BLM's preferred alternative is to reduce 75 percent of the 
land available for oil shale leasing.
    I think when it comes to energy, there are different types 
of pains. Obviously, the American citizens are experiencing a 
pain at the pump now when demand exceeds supply.
    In your community, what happens to your county's economy, 
local municipalities, and school districts, if greater burdens 
and barriers to energy development are continued by this 
Administration?
    Mr. McKee. Well, it affects us immensely. After the 77 
leases were canceled, we had a lot of our community that had to 
leave. Fifty percent of our jobs, 60 percent of our economy is 
tied to the extractive industry. It does affect us immensely, 
these different policies.
    We just had a resource management plan that was supposed to 
be a 15- to 20-year planning guide to direct what happens on 
the public lands.
    Essentially, this Administration threw it out and are kind 
of just doing really their own thing with this.
    It is unfortunate that we have yo-yo politics rather than 
consistent management, with good management goals.
    Mr. Thompson. Have you noticed any trends in your county? I 
do not know how much of the county is public lands. Have you 
observed any energy production trends on Government owned 
versus privately owned lands?
    I know your chart made some reference to the difference 
between Government owned and privately owned.
    Mr. McKee. What we are seeing out in our area right now, 
because it is so difficult and it is so timely on the public 
lands, and I noted that very few leases have been issued, only 
15 percent of our county is privately held. There is a lot of 
push for those privately held properties.
    It does make it difficult. It makes it extremely difficult. 
It just seems with the amount of energy we have in that area, 
it is a crying shame that we are not utilizing that potential.
    Mr. Thompson. Mr. Milito, you suggested that the President 
routinely likes to take credit for the fact that the overall 
domestic energy production in the U.S. is up.
    While he is correct that production has increased in recent 
years, it kind of speaks to the line of questioning and 
response from Commissioner McKee.
    I would agree with you that he has nothing to do with it. 
Production is up because of actions taken during previous 
Congress' and Administrations and the fact that gas production 
on private lands, which is outside the Federal permitting and 
leasing process, has increased significantly.
    Starting with Mr. Milito but I will open it up to all 
panelists, would you agree with this?
    Mr. Milito. Yes, I certainly would agree with that. In 
fact, we think the Administration's decisions and policies have 
been a drag on production, particularly if you look at 
offshore.
    We were projected to be at about 1.7 million barrels a day 
in 2011, and we are going to be at 1.3 million barrels a day. 
That is a 400,00 barrel a day impact in the negative direction.
    That is the type of supply increase we need to put downward 
pressure on gasoline prices.
    Things are good on private and state lands, but going down 
and the trend is continuing to go down on the Federal lands 
they control.
    Mr. Lamborn. We are going to have to wrap up with that. 
Thank you all for being here. Thank you for your testimony.
    I would ask that if any Members of the Committee have 
additional questions for the record, that when they submit 
those to you, you respond to those in writing.
    If there is no further business, without objection, the 
Committee stands adjourned.
    [Whereupon, at 12:26 p.m., the Subcommittee was adjourned.]

                                 
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