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[Senate Hearing 114-185]
[From the U.S. Government Publishing Office]

 
     DEPARTMENT OF THE INTERIOR, ENVIRONMENT, AND RELATED AGENCIES 
                  APPROPRIATIONS FOR FISCAL YEAR 2016

                              ----------                              

                        WEDNESDAY, MAY 13, 2015

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 10:07 a.m., in room SD-124, Dirksen 
Senate Office Building, Hon. Lisa Murkowski (chairwoman) 
presiding.
    Present: Senators Murkowski, Cochran, Hoeven, Daines, 
Cassidy, Udall, and Merkley.

                       DEPARTMENT OF THE INTERIOR

                       Bureau of Land Management

STATEMENT OF NEIL KORNZE, DIRECTOR

              OPENING STATEMENT OF SENATOR LISA MURKOWSKI

    Senator Murkowski. We will call to order the Senate 
Appropriations Subcommittee on the Interior, Environment, and 
Related Agencies.
    Welcome to the committee, Mr. Kornze. We appreciate you 
being here today.
    I think it is fair to say that in recent years discussions 
about the Bureau of Land Management (BLM) budget or oversight 
issues in this subcommittee have been wrapped up into the 
bigger, broader budget hearing for the entire Department of the 
Interior. As we move toward marking up a bill, I do think that 
it is beneficial for subcommittee members to have an 
opportunity to discuss the operations and programs of the 
largest land manager in the United States in greater detail 
than can be accomplished at the broader department-wide budget 
hearing for the Interior.
    For fiscal year 2016, the President's budget has requested 
$1.2 billion for the BLM. This is a $107.6 million amount more 
than the current level. As I have noted in our subcommittee 
hearings, the President's request assumes Congress does not 
have to comply with spending limits. But with the budget that 
we passed last week, that assumption is no longer relevant. 
This subcommittee will have to make some tough choices about 
where to spend limited resources given the spending limits that 
we face in a way that the President's budget was able to avoid.
    The BLM is responsible for managing roughly 250 million 
acres of Federal land--this is about 38 percent of the entire 
Federal surface estate--and 700 million acres of subsurface 
estate. The vast majority of this land is in our 11 Western 
States and Alaska.
    BLM has a multiple use mission, part of which is 
facilitating most Federal onshore natural resource development. 
Consequently, BLM-managed lands are important economic drivers 
beyond recreation and conservation, and this is especially true 
in Alaska.
    While BLM only manages a small portion of the Alaska land 
base because of the large size of my State, nearly one-quarter 
of all BLM lands are located in the State of Alaska, the 
largest portion of this land is within the National Petroleum 
Reserve Alaska, NPRA. It is no secret that I believe 
responsible development of our Nation's energy resources is 
important to both our economic and our national security. The 
resources within NPRA can and must be developed in a 
responsible manner, and as a Nation we are relying on the BLM 
to make this responsible development possible.
    The work to bring affordable energy to our homes has come 
with some challenges. Prior to 1982, the Federal Government 
drilled more than 130 exploratory wells in an effort to 
determine the extent of oil and gas resources in the region. 
But unfortunately, those wells were abandoned and many of them 
are awaiting cleanup to this day.
    Passage of the Helium Stewardship Act a couple years ago 
provided BLM with the funding needed to make progress on 
cleanup of these blights, and we have made some headway in that 
area. We recognize that there is more to be done here, and I 
look forward to asking you, Mr. Kornze, about both the 
contaminated well issue and implementation of the Helium 
Stewardship Act.
    The BLM has made considerable progress on issues important 
to me and to Alaskans. I would like to thank you, Mr. Kornze, 
as well as Alaska State Director Bud Cribley. The team that has 
been working to complete the transfer of the economic tracks to 
see Alaska has worked well, and I appreciate that. I did have 
the opportunity to meet with Mr. Cribley a couple weeks ago. We 
are making some progress on the conveyance of Alaska lands 
under the Alaska Native Claims Settlement Act (ANCSA). It has 
been a long time in coming, though. It was the Alaska Lands 
Conveyance Act of 2004 that we passed and was signed into law, 
and the promise at that time was that the completion of the 
conveyances would be done by the 50th anniversary of statehood, 
which of course was 2009. We are sitting here in 2015. While we 
may be on track, we still have a ways to go there.
    We have some other challenging issues that need to be 
addressed. The Greater Mooses Tooth Project. I have expressed 
my frustration with the mitigation requirements and other 
process issues that have proceeded throughout that process. And 
some of the issues have been settled, but we are still in a 
place where the Federal Government is proposing to put 
conditions on the project that threaten to make it unaffordable 
to move forward.
    This is really about prioritization and pace of responsible 
energy development on public lands not only in Alaska but in 
the Lower 48 as well. I think many of my colleagues from the 
West can relate to the struggles that we face in Alaska.
    The most challenging issue facing the interior West, where 
most of the BLM-managed lands in the lower 48 are located, is 
potential regulatory action relating to the Greater sage-
grouse. While the threat of an Endangered Species Act listing 
looms, there are significant fears that regulations put in 
place to preserve sage-grouse habitat are perhaps even more 
restrictive and provide less certainty in the permitting 
process than an ESA listing. It is my understanding that the 
land use plan amendments that will govern management for sage-
grouse on BLM and Forest Service lands will be made public at 
the end of this month. And like my colleagues, I look forward 
to the release, the evaluation, and reception by impacted 
States. The contents of those plans will help this subcommittee 
determine the merits of the requested $45 million increase BLM 
requested for sage-grouse activities in the fiscal year 2016 
budget.
    The BLM included several other notable budget proposals, 
including the request to once again raise fees on public land 
users like grazers and onshore oil and gas producers. Oil and 
gas activities on public lands contributed more than $5 billion 
to the Federal Treasury in 2014. So I am not convinced that 
raising fees will not reduce this contribution by discouraging 
activity on our Federal lands. Less activity will ultimately 
result in less revenue to the Treasury and the communities 
which rely on these activities for economic sustainability.
    So, Mr. Kornze, I look forward to hearing from you this 
morning about BLM's national priorities, including renewable 
energy development, their role in the Secretary's wildfire 
strategy, and many other important issues before the committee.
    So again, thank you for agreeing to be with us this 
morning.
    And with that, I turn to my friend and ranking member, 
Senator Udall.

                     STATEMENT OF SENATOR TOM UDALL

    Senator Udall. Thank you, Chairman Murkowski. Good morning.
    And I would also like to welcome Director Kornze. Thank you 
for joining us today as we discuss the fiscal year 2016 budget 
request for the Bureau of Land Management.
    The lands managed by BLM in New Mexico are vital to our 
economic vitality and to our natural and cultural heritage. Oil 
and gas production, mineral extraction, renewable energy, 
grazing, and hunting and recreational opportunities from hiking 
to class 6 rapids all can be found on BLM lands and are a part 
of what makes New Mexico la tierra encantada.
    I am proud to have worked with my constituents and this 
administration to designate two of BLM's newest conservation 
units, the Organ Mountains-Desert Peaks National Monument in 
the south and the Rio Grande del Norte National Monument in 
northern New Mexico. Director Kornze, I really appreciate that 
you came to the State personally to walk the land we were 
talking about protecting. You and the BLM employees in New 
Mexico were so supportive and helpful to work with us on these 
designations. And I appreciate the outreach that is taking 
place now to include the local communities in the planning 
process. Both monuments are up for increased spending in the 
President's budget. We will talk about that today.
    I am also glad that we will have time to discuss oil and 
gas production. We hear a lot about offshore production, but 
Federal lands are an important energy producer as well. In 
2014, Federal lands were responsible for 41 percent of U.S. 
coal, 40 percent of geothermal, 11 percent of domestic natural 
gas, and 5 percent of domestically produced oil.
    BLM also approved renewable energy projects for up to 
16,000 megawatts of power. That is enough energy to take care 
of 4.8 million homes.
    And BLM provides key access to minerals, including uranium, 
gold, silver, potash, gypsum, and building stones, sand, and 
gravel. This all makes a difference to our economy, our 
vitality, and our security.
    I believe in responsible energy production and have long 
called for a ``do it all, do it right'' approach. Despite what 
its detractors may say, this administration has overseen a 
remarkable increase in oil development. We have seen an 
incredible 81 percent increase in production on public and 
tribal lands in 2014 versus 2008. Energy development is 
important to our economy in my State and elsewhere. But we also 
need to protect the environment and drinking water and make 
sure that the American public receives its fair share of 
revenue from industry's production of public resources.
    The Government Accountability Office has had the Interior 
Department's oil and gas programs on its high risk list for 
many years. There are two major concerns: the BLM's lack of 
authority to collect inspection fees and the difficulty in 
hiring and retaining a skilled workforce. The President's 
budget once again proposes to collect $48 million from new 
inspection fees for onshore oil and gas producers. This would 
bring onshore production in line with offshore production where 
Congress instituted an inspection fee in fiscal year 2012. And 
it would put the responsibility for paying for inspections on 
leaseholders not the American taxpayer.
    Director Kornze, another issue is the sage-grouse. I know 
that you have spent a good deal of time on this. I would like 
to talk about the next steps with you this morning. While not 
on the same scale in New Mexico as we have recently dealt with 
the endangered species issues from the lesser prairie chicken 
and the sand dune lizard, listing and delisting of species by 
Congress goes against the intent of the Endangered Species Act. 
It requires that the Government make these decisions based on 
science not politics.
    I believe that in New Mexico, we have created an effective 
model. In the case of the sand dune lizard, the U.S. Fish and 
Wildlife Service found that enough acres were enrolled 
voluntarily for legally binding conservation agreements for 
that protection to last and to take care of the species. It 
concluded that a listing was not warranted. For the lesser 
prairie chicken, Fish and Wildlife found that the significant 
conservation efforts were able to avoid an endangered species 
listing, but it was not enough to prevent a threatened listing. 
And the Service is working closely with the States to provide 
maximum flexibility under the law. I believe the process is 
working, bringing all stakeholders in to discuss how to protect 
species and habitat while ensuring economic growth.
    So I look forward to talking with you, Director Kornze, 
about oil and gas, national monuments, sage-grouse conservation 
efforts, and other important matters. Thank you again for being 
here this morning.
    Thank you, Madam Chair.
    Senator Murkowski. Thank you, Senator Udall.
    Mr. Kornze, welcome to the committee. Mr. Kornze is the 
Director of the Bureau of Land Management for the U.S. 
Department of the Interior. You have generated a crowd this 
morning, which I am assuming is a good thing. It could be fan 
club. It could be lots of people with equal interests in this 
aspect of the Department of the Interior. So, again, we thank 
you for being here before the subcommittee this morning. We 
look forward to your opening statement and for the opportunity 
to ask some questions. So, Mr. Kornze, if you want to begin 
with your comments. Thank you. Welcome.

                    SUMMARY STATEMENT OF NEIL KORNZE

    Mr. Kornze. Thank you very much. Chairman Murkowski, 
Ranking Member Udall, Chairman Cochran, members of the 
subcommittee, thank you for the opportunity to be here with you 
today.
    The Bureau of Land Management manages nearly 250 million 
acres of land across the country and 700 million acres of 
subsurface estate. That means 10 percent of the Nation's 
surface or more and nearly a third of the Nation's minerals and 
soils. We manage these lands under the dual framework of 
multiple use and sustained yield.
    As you know, the BLM also manages nearly 20 percent of the 
State of Alaska.
    I recently traveled to Alaska to meet with the Governor to 
discuss our innovative approach for surveying for land 
conveyances and hosted a Federal roundtable related to 
contaminated lands. We appreciate your partnership and support 
as we address the unique issues on public lands in places like 
Alaska and New Mexico.
    Today, the entire Bureau's work is more complicated than 
ever, and the professionals at the BLM have to work hard to 
make quality choices in a difficult environment every day. And 
we make sure that the public has a strong voice in the work 
that we do. We play a major role in the economies of many 
States in supporting oil and gas development, all kinds of 
recreation, hunting and fishing, helium production, timber, 
coal production, ranching, wildland fire fighting, and even 
beekeeping.
    Last year the BLM and the lands we manage supported more 
than 450,000 jobs across the country, and we are one of only a 
handful of agencies that returns more revenue to the Government 
than we receive in appropriations. In fact, for every dollar 
you provide, we return $5.
    In terms of the 2016 budget, I want to highlight four 
different programs today.
    First is sage-grouse. The Bureau of Land Management is 
leading the west-wide effort with Western Governors from 11 
States to strengthen management of sage-grouse habitat 
including extensive collaboration with State agencies, the 
Forest Service, the Fish and Wildlife Service, counties, and 
many other partners. The President's budget requests a total 
$60 million to engage our partners and implement projects on 
the ground that will reduce the threat of wildfire, that will 
slow and reverse the spread of invasive species, that will 
improve riparian areas, and that will remove hundreds of 
thousands of pinyon juniper trees. Without this investment in 
proactive sage-grouse conservation, the agency is more likely 
to be faced with difficult decisions in the future regarding 
balancing the conservation of this bird and many other 
important resources.
    The second program I want to highlight is our National 
Conservation Lands. The President requests an important 
increase in this program this year. These special areas make up 
roughly 10 percent of the lands that we manage, but they 
receive roughly 25 percent of the visitors that we have to the 
Nation's public lands. Additional support for these 
congressionally and presidentially protected areas will allow 
us to provide basic levels of service to our many visitors and 
will boost the economies of local communities that rely on 
visitation to these areas.
    The third program is the BLM Foundation. In connection with 
this budget, the President has moved forward language that 
would allow Congress to establish a chartered foundation, a 
nonprofit, that would support the Bureau in a manner very 
similar to the work done by the National Park Foundation, the 
National Forest Foundation, and the National Fish and Wildlife 
Foundation. I would submit to you that the Bureau of Land 
Management has the most complicated mission of any of these 
agencies, and we could greatly use the support and the outside 
facilitation that would come with the BLM Foundation.
    The fourth program I would like to highlight today is the 
oil and gas fee proposal. In the last 10 years, the BLM has 
authorized more than 50,000 new oil and gas wells, bringing our 
total portfolio to nearly 100,000 wells nationwide. We are 
proud of oil and gas production on lands that we have a role in 
regulating. The production on those lands closely tracks 
comparable production on State and private lands. From 2008 to 
2014, the years during this administration, oil production from 
lands requiring a BLM permit has increased 81 percent, from 113 
million barrels to 205 million barrels. With the modest fee 
that we are requesting, we are seeking the ability to be 
responsive to the ups and downs of the oil and gas industry, 
ensuring that these activities are done safely on the public 
lands, and our expanding portfolio requires that we have more 
inspectors than ever before. It is a natural consequence of the 
success of the oil and gas program that we have. Today we have 
roughly 160 inspectors. We need 220. In order to get to where 
we need to be for a safe and responsible program, we need your 
help.
    In conclusion, this is a very important time for the 
American West, for the Bureau of Land Management. And we 
greatly appreciate the relationship that we have had with this 
committee in years past and we look forward to working with you 
on the 2016 budget. Thank you.
    [The statement follows:]
                  Prepared Statement of Neil G. Kornze
    Madam Chairman and members of the subcommittee, I am pleased to 
join you today to discuss the President's fiscal year 2016 budget 
request for the Bureau of Land Management (BLM). The BLM manages nearly 
250 million acres of land and 700 million acres of subsurface estate. 
That's more than 10 percent of the Nation's surface and nearly a third 
of its minerals. The BLM manages this vast portfolio on behalf of the 
American people under the dual framework of multiple use and sustained 
yield. This means the BLM manages public lands for a broad range of 
uses including renewable and conventional energy development, livestock 
grazing, timber production, hunting, fishing, recreation, and 
conservation. We manage lands with some of the most significant energy 
development in the world and some of North America's most wild and 
sacred landscapes.
    The professionals at the BLM make hard choices every day and we 
take pride in making sure the public has a strong voice in the work we 
do. Compared to many other Federal agencies, we are relatively small in 
number--just 9,700 full-time equivalent (FTE)--but the impact of the 
BLM and BLM-managed resources is tremendous. Recent Interior studies 
indicate BLM's management of the public lands provides an outstanding 
economic return to the American public. In 2013, activities on lands 
under the BLM's management were estimated to contribute over $107 
billion to the Nation's economic output and support more than 440,000 
jobs across a broad range of industries. While the BLM receives just 
over a billion dollars in annual appropriations to support our programs 
nationwide, our programs support the collection and distribution of 
more than five billion dollars to the U.S. Treasury and to State 
governments each year.
    Our fiscal year 2016 budget continues our tradition of serving the 
American public by supporting economic development and jobs in 
traditional and emerging industries, conserving our natural resources, 
reducing our dependence on foreign energy, protecting our Nation's 
cultural heritage, and preserving some of our Nation's most cherished 
places.
                           blm budget request
    The fiscal year 2016 BLM budget request is $1.2 billion, an 
increase of $107.6 million from the 2015 enacted level. The budget 
proposes $1.1 billion for the Management of Lands and Resources 
appropriation and $107.7 million for the Oregon and California Grant 
Lands appropriation, the BLM's two operating accounts. The budget also 
proposes $38.0 million in discretionary funding for Land Acquisition, 
to complement $55.4 million proposed in mandatory Land Acquisition 
funding. These investments fall under the following program areas.
  supporting and modernizing management of increased energy production
    The 2016 budget advances the President's all-of-the-above energy 
strategy to continue to promote safe and responsible energy 
development. The fiscal year 2016 budget request advances the goals of 
this strategy with priority funding for both renewable and conventional 
energy development on public lands.
    Renewable Energy.--In the past 6 years, the BLM has worked to 
facilitate a clean energy revolution on public lands through the 
approval of scores of utility-scale renewable energy generation and 
transmission projects. This includes 29 utility-scale solar facilities, 
11 wind farms, and 12 geothermal plants, with associated transmission 
corridors and infrastructure to connect with established power grids. 
When completed, these projects will provide more than 14,000 megawatts 
of power, or enough electricity to power about 4.8 million homes, and 
provide over 20,000 construction and operations jobs.
    The 2016 President's budget requests $29.4 million for Renewable 
Energy Management, which maintains funding at the 2015 enacted level 
plus an increase of $295,000 for fixed costs. This would provide the 
BLM the necessary resources to continue to actively facilitate and 
support solar, wind, and geothermal energy development on BLM lands, 
which will create jobs, provide clean energy, and enhance U.S. energy 
security by adding to the domestic energy supply. It will also support 
the President's aggressive goal of increasing the permitting of new 
renewable electricity generation on public lands to 20,000 megawatts by 
2020. The BLM is committed to contributing to this goal by permitting 
environmentally responsible projects on public lands.
    Conventional Energy.--The agency has also overseen continued 
natural gas production and a significant increase in oil production 
from public lands in recent years. Oil production from Federal and 
Indian lands in 2014 rose 12 percent from the previous year and is now 
up 81 percent since 2008--113 million barrels to 205 million barrels 
per year. For comparison, nationwide oil production over the same 
period increased 73 percent. It is also worth highlighting that the BLM 
continues to make public lands available for oil and gas development 
well in excess of industry demand.
    The BLM works closely with partners across the country to ensure 
development of renewable and conventional energy occurs in the right 
places and projects are managed safely and responsibly. The President's 
budget proposes significant investments for improving how the BLM 
leases, permits, and inspects oil and gas wells, including updating 
regulations to reflect current industry practices and putting needed 
technology in the hands of BLM employees.
    The 2016 budget for oil and gas management activities from all 
sources represents an increase of $29.1 million over the 2015 enacted 
level, a roughly 20 percent increase. This additional funding will help 
make the BLM faster and more effective in responding to management 
challenges, public concerns, and the needs of industry. The President's 
budget reflects a new approach to providing resources to the field with 
a proposal to strengthen BLM's inspection program by charging a fee 
comparable to that charged in offshore oil and gas development. The new 
fee is estimated to generate $48 million in 2016, which will provide a 
program increase of $6.9 million for these activities, while reducing 
the need for direct discretionary appropriations.
    The increased funding will allow the BLM to hire additional 
inspectors who are sorely needed to fulfill the agency's high priority 
inspection workload. Approximately 220 inspectors are required 
nationwide to complete the agency's large and growing inspection 
workload. While last year's budget provided a small increase for this 
program area, we remain understaffed in this important program, with 
only 155 inspectors. This increase is critical for the BLM to be more 
responsive to industry demand and a constantly changing inspections 
workload. Significantly, it will also support BLM efforts to address 
ongoing program management concerns that have placed the program on the 
Government Accountability Office's (GAO's) High Risk list. Finally, the 
President's budget also reflects the BLM's commitment to improving its 
processes for responsibly permitting oil and gas operations, requesting 
an increase of $4.0 million to complete the final phase of the BLM's 
transition to a new electronic permitting system.
    Coal produced from Federal lands is the source of over 20 percent 
of all U.S. electricity. The BLM is working to strengthen management of 
coal leasing activities and address recommendations made by GAO and the 
Inspector General (IG) in 2013 and 2014 reports. These efforts enhance 
the appraisal process and determination of fair market value when 
conducting lease sales, help ensure a consistent and efficient coal 
lease sale process, and enable BLM to account for export potential 
through analysis of comparable sales and income. An increase of $1.1 
million in Coal Management will support the automation and tracking of 
licenses, leases and permitting as well as inspection activities, 
including production verification associated with coal. A $1.1 million 
increase is also requested for a similar automated tracking system in 
the Other Mineral Resources Management program.
    Transmission.--The BLM also supports the modernization of energy 
transmission infrastructure. To support necessary upgrades for 
reliability and increased capacity, the budget includes a $5.0 million 
increase to identify and designate energy corridors in low conflict 
areas and to site high-voltage electrical transmission lines, 
substations, and related infrastructure in an environmentally sensitive 
manner.
  restoring sage-grouse habitat through partnerships and collaboration
    To ensure the long-term viability of sage-grouse and the continued 
vitality of western economies, the BLM is leading an unprecedented, 
collaborative west-wide effort to update and strengthen management of 
sage-grouse habitat. Key collaborators include western Governors, State 
wildlife agencies, counties, the U.S. Fish and Wildlife Service, U.S. 
Geological Survey, and the U.S. Forest Service. The 2016 BLM budget 
request includes a total of $60 million--a $45.0 million increase over 
the 2015 enacted level--for implementing the Sage-Grouse Conservation 
Strategy to enhance sage steppe conservation and restoration; a 
landscape which supports significant economic activity and more than 
350 species.
    These funds will allow the agency and its many partners to take 
meaningful steps forward on restoring rangelands, minimizing the threat 
of wildfire, controlling invasive plants, and improving riparian areas. 
Since 2013, the BLM has targeted $15.0 million per year toward the 
implementation of broad-scale sage-grouse planning and conservation 
activities. These efforts involve extraordinary collaboration between 
the BLM, western Governors, and non-governmental partners to conserve 
the sage steppe ecosystem.
   supporting the blm national conservation lands, america's newest 
                          conservation system
    The President's budget includes an $11.2 million program increase 
for the BLM National Conservation Lands, which celebrate their 15th 
anniversary this June. This investment will address high-priority needs 
in conservation areas, including providing basic support for recreation 
and visitor services. While National Conservation Lands represent only 
a small portion of the lands managed by BLM, one-quarter of all 
visitors to BLM lands visit these special areas. This investment will 
help to ensure these untamed places remain a legacy for all future 
generations.
    Although visitation to BLM-managed lands has grown, financial 
investment in the Recreation and Visitor Services program has not kept 
pace with this growth. This request proposes an additional $6.6 million 
to implement a National Recreation Strategy that aligns BLM Recreation 
& Visitor Services Program resources with the desired benefits sought 
by local communities. A strong commitment to conservation also means 
proactive management of cultural and paleontological resources. The 
2016 budget also includes increases for programs funded through the 
Land and Water Conservation Fund, a vital component of the America's 
Great Outdoors initiative. The 2016 budget proposal includes a total of 
$93.4 million for conservation land acquisition from willing sellers, 
including $38.0 million in requested discretionary appropriations and 
$55.4 million in mandatory funding.
                       other priority initiatives
    Helium.--Additionally, the BLM has begun implementation of the 
Helium Stewardship Act of 2013, which authorized the program to 
transition out of the role it has played for a century. With the start 
of Phase B Helium Auctions and Sales last year, the BLM conducted its 
first ever helium auction that offered 92.8 million cubic feet (MMcf) 
and a sale that offered 835.3 MMcf of helium for delivery in fiscal 
year 2015 and an additional 250 MMcf of helium for delivery in fiscal 
year 2016. The auctioned helium sold for an average price of over $161 
per Mcf, much higher than anyone expected. The average auction price 
was factored into the helium sale price, which was set at $106 per Mcf. 
As a result of the auction and sale, the BLM collected nearly $130 
million. Currently, the BLM is preparing for the next Helium Auction 
and Sale scheduled for this summer and expects to offer 25 percent of 
the helium available for auction which equals 300 MMcf of helium and 
the remaining Phase B Helium Sale volume for fiscal year 2016 of 600 
MMcf. The BLM is expecting to use the average auction price to set the 
helium sale price. The BLM's crude helium sales are generating revenue 
for the American taxpayers and providing 22 percent of the world's 
annual Helium supply.
    The BLM plays a significant role in Alaska and Arctic resource 
management and provides significant support to Native Alaskans. The 
2016 BLM budget includes $78.9 million for Alaska and Arctic 
activities, an increase of $1.8 million above the 2015 enacted level. 
Some of BLM's priority activities in this region are highlighted below.
    Legacy Well Remediation.--The BLM continues to prioritize clean-up 
of abandoned Federal wells in Alaska and has spent approximately $70 
million dollars towards this clean-up through fiscal year 2014. In 
fiscal year 2014, BLM spent over $800,000 on priority wells on Simpson 
Peninsula preparation for winter remediation. Thanks to the leadership 
of Senator Murkowski and others who made the passage of the recent 
Helium Act possible, the BLM has spent nearly $10.5 million on 
remediation of priority wells identified in the 2013 Legacy Well 
Strategic Plan. In March-April 2015, the BLM completed subsurface work 
in Umiat through an Inter-Agency Agreement with the United States Army 
Corps of Engineers, and with full coordination with the Alaska Oil and 
Gas Conservation Commission. Umiat #1, #3, and #11 were plugged, and 
wellheads were removed at the previously plugged wells, Umiat #4, #8, 
#10. The BLM is currently preparing to conduct surface cleanup in 
August 2015 at the Simpson Core Test sites 26, 30 and 30A, and take 
additional sampling to verify there are no remaining contaminants from 
the wells drilled in the early 1950s. This work is expected to cost 
$1.03 million. Additionally, the BLM expects to have contracts in place 
for the winter of 2016 to plug and complete surface sampling of 7 
legacy wells in the Barrow area.
    Alaska Land Transfer Program.--For decades, the Bureau of Land 
Management has been surveying and monumenting lands based on standards 
outlined in a 1973 agreement between the agency and the State. The 
Bureau has recently taken a close look at the best available practices 
for this program and has determined that, using modern tools and 
techniques, the remaining surveys and conveyances can be accomplished 
in a substantially shorter amount of time while providing the State of 
Alaska with higher quality data than was ever envisioned in 1973. The 
new approach also has the potential to save millions of dollars for the 
American taxpayer, while fulfilling the promise of land conveyances 
called for in the Alaska Statehood Act. This new approach is a 
significant opportunity for the State of Alaska and the Bureau of Land 
Management to jointly innovate and demonstrate meaningful progress on 
an issue important to many Alaskans. We look forward to formalizing 
these new and significantly improved procedures with an update of the 
1973 MOU between the Governor of Alaska and the BLM Director.
    In fiscal year 2015, BLM Alaska plans to survey nearly 4 million 
acres of Alaska Statehood Entitlement land, which will allow for patent 
issuance within 3 years. The BLM will also fulfill entitlements for 15 
Alaska Native Claim Settlement Act (ANCSA) village corporations this 
fiscal year, which means the BLM will have completely fulfilled 50 
percent of village entitlements in Alaska. Additionally, the BLM will 
undertake a number of surveys this field season including final 
entitlement surveys for seven ANCSA village corporations, survey of 
nearly 130,000 acres of regional entitlements (including three tracts 
of land for Sealaska Corporation conveyed pursuant to the 2015 National 
Defense Authorization Act), and three post-conveyance obligation 
surveys (ANCSA 14(c)) providing the affected village corporations site 
control for community development.
    Alaska Native Claims Settlement Act Contaminated Lands.--The BLM is 
on schedule to submit a report to Congress in June of this year as an 
update to the 1998 Report to Congress. In recent years, the agency has 
focused on developing a comprehensive database of potential 
contaminated sites conveyed to ANCSA corporations based on inventories 
compiled by State and Federal partners in Alaska. To date, the BLM has 
reviewed the land status of over 6,000 sites within the database to 
determine whether they are on land conveyed to ANCSA corporations and 
which agency is responsible for the existing contamination. The BLM is 
currently facilitating a collaborative effort with Alaska Native 
corporations, Department of Defense agencies, the Federal Aviation 
Administration, the State of Alaska, and Alaska Native regional and 
village corporations to enhance the inventory data by verifying site 
ownership and site cleanup status on lands conveyed to ANCSA Native 
entities.
    A preliminary review of inventoried sties in the database has found 
that a majority of sites are not on land conveyed to an ANCSA entity, 
most contaminated sites on conveyed land are on parcels that were not 
managed by the BLM before conveyance, and cleanup is complete or 
institutional controls have been established for approximately two-
thirds of all known contaminated sites conveyed to an ANCSA 
corporation.
    Arctic Council.--The Arctic Council is a consensus-based 
international body made up of the eight Arctic nations and six 
Permanent Participant organizations representing Arctic indigenous 
groups, four of which are rooted in Alaska. It allows for non-voting 
participation of observer nations and organizations, and manages six 
working groups that address matters of concern to the Council. The 
United States assumed the 2-year Arctic Council Chairmanship in late 
April, a responsibility that will require participation and engagement 
from all of the Federal agencies engaged in the Arctic. Interior has 
perhaps the most substantial Federal management role in the region, as 
we manage 74 percent of the U.S. landmass above the Arctic Circle and 
all of the Outer Continental Shelf beyond 3 miles from the coast. BLM 
Alaska alone manages 31 percent of the landmass in the U.S. Arctic and 
40-percent of the landscape north of the Brooks Range (North Slope of 
Alaska).
    Of the six working groups under the Arctic Council, the 
Conservation of Arctic Flora and Fauna (CAFF) Working Group is the 
foundation for the marine, terrestrial, freshwater and coastal 
environments. Currently, the BLM and North Slope Science Initiative co-
lead a subgroup of CAFF, the Circumpolar Biodiversity Monitoring 
Program (CBMP), with the Kingdom of Denmark (Denmark, Greenland and 
Faroe Islands). The CBMP harmonizes data from many disparate sources 
and Arctic ecosystems across all eight Arctic nations to support 
effective and collaborative large-landscape management. These efforts 
provide critical information that U.S. Arctic resource managers 
leverage to make informed, defensible land management decisions in the 
Arctic.
                         legislative proposals
    Establishing a BLM Foundation.--In connection with the budget 
request, the administration sent to Congress a legislative proposal for 
a congressionally chartered non-profit foundation for the BLM. A 
foundation would strengthen the BLM's efforts to link Americans to 
their public lands through an organization that would raise and spend 
private funds and foster constructive partnerships in support of the 
BLM's mission. The foundation would operate in a manner similar to the 
National Park Foundation, the National Fish and Wildlife Foundation, 
and the National Forest Foundation, all of which were approved by 
Congress.
    Oil and Gas Management Reforms.--The administration proposes a 
package of legislative reforms to bolster and backstop administrative 
actions being taken to reform the management of Interior's onshore and 
offshore oil and gas programs, with a key focus on improving the return 
to taxpayers from the sale of these Federal resources and on improving 
transparency and oversight. Proposed statutory and administrative 
changes fall into three general categories: advancing royalty reforms, 
encouraging diligent development of oil and gas leases, and improving 
revenue collection processes.
    Royalty reforms include evaluating minimum royalty rates for oil, 
gas, and similar products; adjusting onshore royalty rates; analyzing a 
price-based tiered royalty rate; and repealing legislatively mandated 
royalty relief. Diligent development requirements include shorter 
primary lease terms, stricter enforcement of lease terms, and monetary 
incentives to get leases into production, for example, through a new 
per-acre fee on nonproducing leases. Revenue collection improvements 
include simplification of the royalty valuation process, elimination of 
interest accruals on company overpayments of royalties, and permanent 
repeal of Interior's authority to accept in-kind royalty payments. 
Collectively, these reforms will generate roughly $2.5 billion in 
revenue to the Treasury over 10 years, of which an estimated $1.7 
billion will result from statutory changes. Related to these 
initiatives, the BLM recently released an Advance Notice of Proposed 
Rulemaking that seeks comments on whether: royalty rates for new 
competitively-issued leases should be changed; annual rental payments 
and minimum acceptable bids should be increased; and bonding 
requirements and civil penalty assessments should be changed.
    Hardrock Mining Reform.--The 2016 budget includes two legislative 
proposals to reform hardrock mining on public and private lands by 
addressing abandoned mine land hazards and providing a better return to 
the taxpayer from hardrock mineral production on public lands. The 
first component of this reform addresses abandoned hardrock mines 
across the country through a new Abandoned Mine Lands fee on hardrock 
mineral production. The second legislative proposal institutes 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. Under this 
proposal, mining for these metals on Federal lands would be governed by 
the new leasing process and subject to annual rental payments and a 
royalty of not less than 5 percent of gross proceeds.
    Recreation Fee Program.--The budget proposes legislation to 
permanently authorize the Federal Lands Recreation Enhancement Act, 
which will expire on September 30, 2016. The BLM currently collects 
approximately $18.0 million in recreation fees annually under this 
authority and uses them to enhance the visitor experience at recreation 
facilities. These funds represent a significant portion of all the 
resources BLM has to devote to supporting recreational activities on 
public lands.
    Reauthorize the Federal Land Transaction Facilitation Act 
(FLTFA).--The 2016 budget proposes to reauthorize the Act, which 
expired in July 2011, to allow lands identified as suitable for 
disposal in recent land use plans to be sold using the FLTFA authority. 
The sales revenues would continue to be used to fund the acquisition of 
environmentally-sensitive lands and to cover the administrative costs 
associated with conducting sales. Utilization of the FLTFA authority 
would help simplify the land patterns of the American West, promoting 
both conservation and community development goals.
                               conclusion
    The President's fiscal year 2016 budget request for the BLM makes 
important investments at a critical time for our agency and for the 
lands we manage across the Nation. The BLM has a unique and broad 
mission to manage public lands for multiple-uses and for sustained-
yield. I am incredibly proud of the work done by BLM employees every 
day to ensure the agency is engaging with and listening to our partners 
and the communities we serve. I look forward to continuing our close 
partnership with this subcommittee as we strive to provide BLM's 
professionals with the tools and resources they need to succeed and to 
make our public lands an even larger contributor to the success of 
communities across the United States.
    Thank you for the opportunity to present this testimony.

    Senator Murkowski. Thank you, Director Kornze.
    As a courtesy to the chairman of our full committee, I am 
going to turn to Senator Cochran for any comments that he might 
make and he may ask the first question.

                           PINEY WOODS SCHOOL

    Senator Cochran. Well, thank you very much, Madam Chairman. 
I am pleased to join you in welcoming our witnesses today to 
review the BLM's budget request for fiscal year 2016.
    In my State of Mississippi, the Piney Woods School is 
located in the central part of the State and has an agreement 
with the Bureau of Land Management to house a wild horse and 
burro short-term holding facility. That agreement ended in 
March, and it is my understanding that there have been some 
complications related to closure of the facility. I hope we can 
get your commitment to personally look into this and work with 
the Piney Woods School to reach a reasonable resolution of this 
issue.
    Mr. Kornze. Chairman, I appreciate your raising this issue. 
I just recently became aware of the parting of ways between our 
program and the Piney Woods School, and I have asked my State 
director to head down there. She will be there before the end 
of the month. And we will take a close look at what is going on 
and see what we can do.
    Senator Cochran. Thank you very much.
    I yield back. Thank you.
    Senator Murkowski. Thank you.
    I will go ahead and turn to Senator Udall for his 
questions, and the next is Senator Cassidy.

                              CHACO CANYON

    Senator Udall. Madam Chair, thank you very much.
    Chaco Canyon is critically important to my State as an 
incredibly rich cultural destination, as well as a sacred place 
to the tribes of the Southwest. But as you know, Chaco Canyon 
is situated right in one of the most productive oil and gas 
production areas in the country. It appears that many new 
leases are getting closer to the Chaco Cultural National 
Historic Park, which really concerns me. Our congressional 
delegation in a letter we sent yesterday--I believe you have a 
copy of that. It was sent to Secretary Jewell and the assistant 
secretaries. And what we are requesting is that the assistant 
secretaries take a personal look at this issue and come to New 
Mexico to hear the concerns of our constituents.
    I have a couple of questions here. One, can I get your 
commitment to work with me to ensure that oil and gas leasing 
near this iconic site are handled with the utmost consideration 
for the archaeological value that Chaco holds?
    Mr. Kornze. Absolutely, sir. I have not had the pleasure of 
seeing Chaco myself, but I look forward to it. And I know that 
this is an issue that we have been taking very seriously and we 
will continue to work with you on.
    Senator Udall. Thank you. Thank you very much.
    I understand there is some potential for increased 
production in the San Juan Basin both for shale gas and shale 
oil. What is the status of the regional resource management 
plan, and how will it address future increased production in 
and around Chaco?
    Mr. Kornze. Right now we are operating under a plan from 
2003 for the Mancos shale area, or the San Juan Basin. We 
initiated a new plan last year in 2014. It will take us 
reasonably another 3 or 4 years to complete that plan. But in 
the time since 2003, there has been the revolution in shale 
production, and we will address that and look at the future 
prospectivity and make sure that is built into our operations.
    Senator Udall. And you work through these issues in all 
your resource plans I believe.
    Mr. Kornze. We do.

                    NEW MEXICO/ARIZONA STATE OFFICES

    Senator Udall. Shifting direction here a little bit, you 
and I have talked about a possible proposal to merge the New 
Mexico and Arizona State BLM offices. As you know, I am very 
skeptical of this idea. Having a State director in New Mexico 
focused on New Mexico's many unique public lands issues has 
served us well for decades. Many New Mexico stakeholders, 
including former Bureau managers, are concerned that a merger 
might mean less for a State director to focus on New Mexico. 
And I share those concerns.
    What I want is for the people on the ground to have the 
best customer service. How can you assure us that services will 
not suffer? Will there not be a negative local impact?
    Mr. Kornze. I appreciate you raising this issue. Your 
priority is also my priority in making sure that we have the 
best customer service in the offices where we have the most 
contact with the public. In the last 5 years, we have seen a 
reduction of 12 percent in BLM employees in full-time 
equivalents (FTE's). It is a major reduction in our workforce. 
It means less public contact. It means more work falling on the 
shoulders of fewer people. I am very proud of the work that the 
agency does, but it really puts us in a very difficult position 
in terms of serving the needs of the communities that are 
important to you and important to us.
    So part of the Arizona-New Mexico concept, which no 
decisions have been made on, is we have to run on two tracks.
    One is working with you. We have a budget in front of you 
that we think is a great blueprint for success and allows us to 
move in the direction of fulfilling our mission better and more 
fully.
    On the other hand, we frequently receive requests from 
Congress to figure out, within the pie that we have, how could 
we run more efficiently. And so one of the tools that we have 
is to look within our management structure and see if are there 
ways where we can push more of the resources that have 
previously been invested there to our field offices, to our 
district offices, so that our boots on the ground are there and 
that we have the people and the support for the communities 
that see the greatest impact in places where the permitting 
gets done or plans get done.
    So I look forward to working with you on this. I think a 
lot more conversation should take place, and I appreciate you 
keeping an open mind about it as we proceed.
    Senator Udall. I could not agree with you more, Director 
Kornze. I want to work with you on this and hear all of your 
proposals that you lay out.
    I have two additional questions that I will give you for 
the record because I know you are preparing some things to move 
us down the right road here. What is your plan for stakeholder 
outreach in the five States that will be impacted by this 
proposal?
    [The information follows:]
    potential consolidation of arizona and new mexico state offices
    The BLM has commissioned a small team of employees from both the 
Arizona and New Mexico organizations to take a hard look at workload in 
the two States to identify more precisely where efficiencies can be 
gained and assess where there are critical, unmet needs. This will 
identify where the BLM may focus any resources made available by gains 
in efficiencies. Once this information is in hand the BLM will conduct 
outreach to all groups who may be affected by this potential change.

    And do you have the metrics from past efforts that 
demonstrate the pros and cons of this kind of consolidation?
    [The information follows:]

    As for the pros, consolidating administrative and oversight 
functions increases the efficiency of the organization because less of 
the BLM's budget will be invested in these functions and more will be 
invested in on the ground work. Consolidating the administrative and 
oversight functions increases the productivity of the people engaged in 
these functions since they will provide services to a larger number of 
employees. Consolidating the two organizations allows for BLM resources 
to be focused at lower levels in the organization where more direct 
service to the public takes place.
    As for the cons, requests for reconsideration of District Manager 
decisions may take longer to process. In addition, there are likely to 
be some implementation costs to consolidating the two State offices.

    But my next question--and I am running out of time here--is 
pretty quick. But New Mexico has these two new national 
monuments I talked about. And the President's budget includes 
$4.4 million for New Mexico's national monuments and national 
conservation areas, including Organ Mountains-Desert Peaks and 
the Rio Grande del Norte. One of the reasons I supported 
creating these national monuments was to increase awareness 
across the country of the uniqueness of these landscapes.
    Have you already seen an uptick in visitors to these areas? 
What can you report there in terms of what is happening on the 
ground?
    Mr. Kornze. One of my favorite examples of the power of 
some of these protected areas is the Rio Grande del Norte. In 
the 1 year after designation, the local county saw a 30 percent 
uptick in room taxes, and they expect that was corresponding to 
a 40 percent increase in visitorship. So the local economy was 
very excited about that. There were a lot of businesses on 
board, and I think that is paying dividends for the investment 
that they are making in their nearby public lands.
    Senator Udall. Thank you very much.
    Thank you, Madam Chair.
    Senator Murkowski. Senator Cassidy.

                            LAND ACQUISITION

    Senator Cassidy. Hi, sir.
    So Louisiana has 738 acres in the BLM. But then I look at 
this map, and you guys own Nevada.
    Mr. Kornze. We manage quite a bit of it. We do.
    Senator Cassidy. And he tells me you own a third of--or the 
Feds own a third of Montana. And Alaska--I believe I learned 
more about Alaska, since becoming a Senator, than I ever 
thought I wanted to know.
    But you are impressive on this map. Why do you want $38 
million more to buy more land? I mean, I am looking at this 
thinking, wow, let us break the addiction. You see what I am 
saying? We need some rehab. So why do you want to buy more?
    Mr. Kornze. So I think you are talking about the Land and 
Water Conservation Fund and potential land acquisitions that 
would come with that. It has been a very important program for 
the Nation in terms of a decision that this Congress made to 
reinvest proceeds from the Outer Continental Shelf----
    Senator Cassidy. We are billions behind in maintenance. And 
you got, Mr. Udall, 12.5 million acres in New Mexico?
    Senator Udall. That is right.
    Senator Cassidy. It seems like we should be selling. I say 
that in all seriousness. If I was Nevada, I would be really 
angry. Do you see what I am saying? They do not control their 
destiny. You do. Why are we buying more?
    Mr. Kornze. Well, I think the simple answer from the 
perspective of the Bureau of Land Management is this Congress 
and a previous President decided that--and made a very bold 
decision in the 1970's--that the estate that we have should 
remain in Federal management for the benefit of the public 
good. So that is our organic act that lays out that desire.
    Now, the estate that we help manage is more scattered than 
other agencies. If you work for the Park Service or the Fish 
and Wildlife Service, you have a nice bright line around the 
lands that they manage. For us, however, sometimes it is 
checkerboard, you know, across much of northern Nevada where I 
am from.
    Senator Cassidy. So we you want to fill in the 
checkerboard.
    Mr. Kornze. There is a very significant pattern of 
complexity, and so in many cases, whether it is in a 
conservation unit or elsewhere, acquisitions can, in fact, 
decrease our management costs by providing a more unified----

                             ROYALTY RATES

    Senator Cassidy. I accept that rationale, though I am 
skeptical of the kind of overall kind of, my gosh, how much are 
we going to own.
    I want to move on, not to be rude, but because I have other 
things.
    You want to increase the royalty payments. Now, there is 
going to be some price point by which a well is profitable. 
Obviously, there is going to be transportation costs. There is 
going to be production costs. So if it is $50 per barrel, as 
required for something to remain open, have you all done 
modeling of the assets that you lease, their economic viability 
given the current price of oil, and what your additional 
royalty payments will do to the economic viability of that? I 
am asking because of the jobs, and so I ask kind of as an 
academic, if you will.
    Mr. Kornze. Well, I think in order to put some baseline 
here, most States have an oil and gas royalty rate of more than 
16 percent. Sixteen to twenty-five percent is what most States 
have. The Federal Government operates at 12.5 percent. So you 
already see a distinction there.
    The Government Accountability Office (GAO) has put us on 
their high risk list, and part of it is because of the royalty 
rate and their concerns about our ability to have a fair return 
for the American taxpayer.
    So we have not made any decisions related to a royalty 
increase. We have an advance notice of proposed rulemaking out 
to the public, which has a number of questions so that we can 
look at questions like what you have raised in terms of what 
the impact of potential increases would be or potential models 
that might not simply raise the rate but under certain economic 
conditions would allow the rate to rise.
    Senator Cassidy. So you mentioned your tiered royalty rate. 
It would go up under certain circumstances not under others?
    Mr. Kornze. Well, under offshore, for instance----
    Senator Cassidy. No. Onshore.
    Mr. Kornze. Yes, but I think it is important to note for 
the audience that offshore, the rate is 16 percent and a little 
bit, and on a lease-by-lease basis, they raise that. So usually 
it is more than 18 percent. And so we would be looking at 
whether or not models like that or related models would be 
something that would be of benefit to the American taxpayer.
    Senator Cassidy. Got you. I do not know this, and so I am 
asking as purely a question to inform myself. You mentioned 
repeal legislatively mandated royalty relief. I am not familiar 
with that legislatively mandated royalty relief. What does that 
pertain to?
    Mr. Kornze. I would need more context.
    Senator Cassidy. It is in your testimony.
    Mr. Kornze. There are a number of proposals that the Office 
of Management and Budget (OMB) and others have pulled together 
for potential revenue raisers. I think within the oil and gas 
lexicon there are some fairly complicated tax law and other 
financial pieces. We could get back to you with more detail.
    [The information follows:]
                  federal onshore oil and gas reforms
    The 2017 President's budget includes a package of legislative 
reforms to bolster and backstop administrative actions being taken to 
reform management of Interior's onshore and offshore oil and gas 
programs, with a key focus on improving the return to taxpayers from 
the sale of these Federal resources and on improving transparency and 
oversight. One of the components of this package of proposed reforms is 
the repeal of legislatively mandated royalty relief. Specifically, the 
budget would repeal section 344 of the Energy Policy Act of 2005, which 
provides incentive for natural gas produced from deep wells in shallow 
water in the Gulf of Mexico. The repeal does not pertain to existing 
leases that incorporate the section 344 relief authority. It would only 
apply to new leases issued after enactment of the proposed legislative.

    Senator Cassidy. Please. I am unfamiliar with that, so I 
would appreciate that.
    And I think I will yield back now. Thank you.
    Senator Murkowski. Senator Merkley.

                           TRANSMISSION LINES

    Senator Merkley. Thank you, Madam Chair, and thank you, 
Director Kornze.
    A couple questions I wanted to get through. One of the 
issues--and you mentioned it in your testimony--is the 
challenge of draft guidance regarding sage-grouse. And under 
the BLM's preferred alternative, it mentions the potential 
strategy of burying transmission lines as a mitigation measure. 
And this particular provision has produced a lot of feedback in 
Oregon from our electrical co-ops. The estimate is it would 
cost about $3 million a mile to bury a line.
    And to give you one example, in eastern Oregon, Harney 
Electric--they have 42 miles of transmission lines through 
sage-grouse habitat and 201 miles of distribution lines. So 
primary lines and then distribution lines. The estimated cost 
to bury those lines would be $400,000 per customer. Obviously, 
we stretched a lot of wire to reach communities that were small 
communities so they could be electrified.
    Is this strategy one that remains high consideration by the 
BLM, and how would a small electrical co-op possibly pay to 
bury lines at $3 million a mile?
    Mr. Kornze. In terms of burial of lines, it is something 
that we are looking at more and more in our analysis. It is not 
necessarily something we are requiring. But as the West fills 
in, and as we have more needs, more uses and more sensitivities 
on the public lands, it is one of those tools in the toolbox, 
and I cannot tell you it is something that is going to be 
required.
    In New Mexico, for instance, we were working on a very long 
line called SunZia and worked with the military with the idea 
that some small portions of that might need to be undergrounded 
to prevent impacts to the White Sands Missile Range.
    Similarly, if new lines were built, in some areas we might 
look at undergrounding as a way to limit impacts on important 
bird populations.
    So it is a tool in the toolbox. It might be part of an 
analysis.
    Senator Merkley. Under your preferred alternative, I do not 
think that it referred specifically to new power lines, but is 
that your clarification that you are offering today is that 
that is the context within which you look at that?
    Mr. Kornze. Well, we will be releasing those plans in a few 
weeks, so I do not want to get into fine details today. But 
this is an issue where I think there is going to be flexibility 
for your teams. My sense is we are not looking retrospectively.

                          HYDRAULIC FRACTURING

    Senator Merkley. That is helpful. Thank you very much.
    I want to turn to fracking on BLM land. We have about 
100,000 active wells, others that are not active. 90 percent of 
those wells use fracking. And I am pleased that the agency 
finalized a rule in March to update the fracking regulations, 
but I have some concerns about it.
    It is weaker than many States. For example, Wyoming 
requires publication of the proposed chemical components before 
fracking occurs so that a baseline can be established to 
compare the impact afterwards. Unfortunately, the BLM rule does 
not match Wyoming.
    Also, there is a loophole in the BLM rule regarding trade 
secrets. And specifically, as I understand it, all that a 
fracking operator has to do is assert that they believe that 
they meet the standard for trade secrets, and that is just a 
done deal. So it is very easy. I just say, yes, my chemicals 
probably meet this, so therefore this information is not going 
to be disclosed, which is a pretty big loophole. That pretty 
much violates or wipes out the entire fling of the disclosure. 
This is chemicals on public land. This is our public land. This 
is not private land. And that is a pretty big deal to have a 
secret soup of chemicals that the BLM loophole is going to 
allow to continue to be private.
    And there is also not even, in that situation, a disclosure 
provision for first responders and medical professionals. 
Colorado has such a program. Pennsylvania has such a program. 
Texas has such a program. Why did the BLM have such deficient 
provisions in its rules in March?
    Mr. Kornze. Well, I consider the hydraulic fracturing rule 
to be a major step forward. A lot of our oil and gas regulation 
at the Bureau of Land Management dates back to the 1980s. Some 
of it dates back to the time of Dwight D. Eisenhower. So it is 
time for a fresh look at a lot of our rules. Hydraulic 
fracturing has just been finalized as a rule, as you noted. Our 
three big pieces----
    Senator Merkley. But should the public not have a right to 
know what chemical soup is put into the ground on public lands?
    Mr. Kornze. Yes. And so one of the key pieces of the three 
is disclosure. There is an exception for trade secrets.
    Senator Merkley. But does that not wipe out the self-
assertion of trade secrets, wipe out the requirement for 
disclosure?
    Mr. Kornze. We are operating in a similar way to most 
States. So Wyoming, which you pulled as a best case scenario 
under a different piece--they have a trade secrets exception. 
We do as well.
    However, we have the ability to go and get that 
information. So it is held by the company. They have to sign an 
affidavit that the information that they are withholding meets 
a whole set of standards, and they have to sign that at a 
fairly high level within their company. If we have doubts about 
that or if we have a medical incident or we have other 
concerns, we can access that information and we can use that 
information in an appropriate way. So it is not as though that 
information is off to the side and is some sort of secret soup.
    Senator Merkley. So I am out of time, but it is secret soup 
if it is not posted for the public to be able to access it and 
if a company can easily assert, as I understand they can, the 
trade secrets provision. You say they have to sign an 
affidavit. However, that is a signature. That is a pretty 
simple standard there.
    And the information under your rule is put on an industry-
funded website that has been reported to be inconsistent 
information, limited information, and very difficult for the 
public to search. And so it does not meet the Federal standards 
for databases.
    So these are real concerns, and I think it is important to 
keep looking at it. The public deserves to know what chemicals 
are put into the ground on public land.
    Mr. Kornze. I am saying on the trade secrets that there are 
trade secret laws that have been passed by this country. So we 
are trying to honor that while also having disclosure that is 
meaningful for the public. So it is a balancing act.
    And in terms of the disclosure mechanism, FracFocus, we are 
now a member of the FracFocus board. We have commitments from 
FracFocus to make significant improvements related to the 
searchability of their database and the information that is on 
there. And part of the use of that system, frankly, is a matter 
of just practicality. Many States--I believe somewhere in the 
ball park of 20 States--are already using it. So we are trying 
to go in a place where industry has some experience. Department 
of Energy is doing a lot of funding of that system now. But 
also when the Secretary of Energy's advisory board estimated 
what it would cost the Bureau of Land Management to stand up 
and maintain a system like that, it was somewhere in the realm 
of $25 million. So I am trying to scrape together every dollar 
I can for work, the sage-grouse, land conveyances, other 
programs, and if there is an outside system that we think can 
get to a quality standard that meets public standards, it is 
important that we head in that direction.
    Senator Merkley. Thank you.
    Senator Murkowski. Senator Daines.

                          HYDRAULIC FRACTURING

    Senator Daines. Thank you, Madam Chair.
    It is good to see you here this morning, Director Kornze. 
Also, you notice we have a lot of Western States here. We have 
got Oregon. We have got New Mexico. We have got Alaska. We have 
got Montana.
    And I know Senator Cassidy was talking about, I think, less 
than 1,000 acres of BLM ground there in Louisiana. I will say 
he made the comment about the Land and Water Conservation Fund. 
It is a very important tool in the tool chest in my opinion as 
it relates to our ability actually to improve our access to our 
public lands. We have 2 million acres in Montana of public 
lands that we do not have access to, and the LWCF is a tool 
that we use to provide better access for the public to their 
lands.
    But thank you for being here this morning.
    As we have spoken before, Montanans rely heavily on their 
natural resources for energy, for mineral development, for 
jobs, for tax revenues to fund our teachers and our schools. 
And we understand that acting safely and responsibly is the 
only option when exploring and producing these resources.
    Unfortunately, developing our Federal land in Montana has 
become ladened with red tape and creating challenges both in 
terms of time and money for responsible development.
    As I mentioned in April at the Energy and Natural Resources 
Committee hearing on hydraulic fracturing, Montana updated its 
rules in 2011. And as Senator Merkley was talking about the 
regulations, we have some of the most robust hydraulic 
fracturing rules and regulations in Montana developed there in 
the State in the Nation. And our State depends on hydraulic 
fracturing to be able to access these mineral resources to 
create the jobs, generate the tax revenues I talked about.
    The question for you is, how exactly is BLM proceeding in 
implementing the final rule for hydraulic fracturing, and how 
much do you believe it will cost BLM to do that?
    Mr. Kornze. So I appreciate the opportunity to continue our 
conversation from a previous hearing on this.
    We are moving ahead through a lot of public outreach, 
number one. We have had a number of conversations with State 
regulators to make sure that we are sitting down and we are 
understanding the best ways to work together because there is 
some flexibility built into our rule to make sure that we can 
honor higher standards like the ones that you are calling out 
for the State of Montana, and then similarly sitting down with 
industry and making sure they understand what the regulations 
are. We have sat down with hundreds of operators. And so we are 
being very aggressive about that outreach to make sure there 
are no surprises and that we have a fluid, successful 
implementation.
    Senator Daines. Do you have idea what it might cost? And 
the reason I ask that question is here we are struggling in 
Washington, wanting to achieve balance in our budgets, 
safeguarding the taxpayer. And yet, there is a redundancy now 
coming in in Montana. We have very robust regulations for 
hydraulic fracturing, and now we have the BLM coming in saying 
we also want to be a part of this equation, when we think we 
could save the taxpayer a lot of money, as well as ensure that 
we are safeguarding our resource with these very robust 
regulations. Any idea what it might cost BLM to implement these 
regs?
    Mr. Kornze. Well, I will give you some numbers to work with 
on potential costs. But I think it is important to point out 
that we work in a Federalist system, and the Bureau of Land 
Management has oil and gas leases in 32 different States for 
which we have oversight responsibility. Montana may have done a 
knock-out job. Alaska may have done a knock-out job with their 
rules locally, but only roughly half of the States that we have 
to regulate have stepped forward and put forward hydraulic 
fracturing rules. So we designed a rule to be a basic layer or 
basic standard largely modeled off of efforts throughout the 
West.
    Related to cost, we think this is going to take us on 
average for your average drilling permit, application for 
permit to drill (APD), about an additional 4 hours. So when you 
add that together against all the APD's that are coming in, we 
think it will be about an additional 12 positions that we will 
have to fill.

                              SAGE-GROUSE

    Senator Daines. I want to pivot over and talk about sage-
grouse. Another potential major challenge to responsible energy 
development in Montana is the potential listing of the Greater 
sage-grouse and specifically the proposed stipulations in BLM's 
resource management plans. Now Montana recently approved and 
funded its sage-grouse conservation plan. It is good news. It 
is investing significant resources. It is my understanding the 
Montana plan is significantly different than the draft Federal 
plans, including when it comes to surface occupancy around 
leks.
    My question is when is the BLM scheduled to release the 
final resource management plans in Montana?
    Mr. Kornze. I would note we have had a fantastic dialogue 
with Governor Bullock and Tim Baker, a lot of folks in your 
State. We do appreciate them stepping forward and your entire 
legislature recently in funding a very good system on the State 
side.
    The BLM plans will be coming out within a few weeks, so 
before the end of the month.
    Senator Daines. And how will these plans reflect Montana's 
plan?
    Mr. Kornze. So we will have to see in the final, when it 
comes out, the fine details. But I will tell you that we have 
built in special flexibility related to the needs of each 
State. Oregon has a special system. Idaho has a special system. 
Montana has a special system. Wyoming has a special system. 
There is commonality amongst all of them, but we have been at 
the table and listening intently and working closely with 
partners in the State of Montana to make sure that we can get 
as close to something that works for them as possible.

                             ROYALTY RATES

    Senator Daines. I appreciate the flexibility you have been 
able to give on that so we can come together with a solution 
that will ensure that the sage-grouse is not listed. So we look 
forward to further discussions.
    Last question is regarding the increased royalty rates. 
Director Kornze, I am aware of the Department of the Interior's 
proposed budget requesting reforms to Federal onshore royalty 
rates and also the Department of the Interior's advance notice 
of proposed rulemaking. Now, according to a Department of the 
Interior report for 2011, increasing Federal royalty rates 
could result in a competitive disadvantage for energy 
production on Federal lands.
    Has your Department done analysis how increasing royalty 
rates on Federal land would increase or potentially decrease 
production on Federal lands?
    Mr. Kornze. So we are at the first step of a multi-step 
process in a potential rulemaking related to royalty rates. So 
we will have an analysis on those questions as part of what we 
do.
    One thing to point out about the GAO concerns and the 
reason that we are on the high risk list, which is a list you 
do not want to be on if you are a Government agency--there are 
only 25-30 different programs on it--is that they believe--and 
they have put this in their reports--we are passing up on 
billions of dollars in revenue annually that belong to the 
American taxpayer.
    So we will balance all these things out, but the ability 
for industry to lean forward and produce and make American 
energy is something that we care greatly about.

                      PRODUCTION ON FEDERAL LANDS

    Senator Daines. Yes. And I look forward to further 
discussions. I know I am out of time, Madam Chair. I know we 
have seen production certainly on private and State lands is up 
60 percent since the President took office. It is down 6 
percent on Federal lands. So I look forward to further 
discussions as it relates to how we are continuing to help out 
the taxpayer, creating jobs. Those jobs are paying taxes and 
certainly have been a big boost to this economy.
    Thank you.
    Senator Murkowski. Thank you, Senator Daines.
    And I will just follow up with some comments here. It is 
somewhat interesting in recognizing it was out of the 
Department of the Interior in 2013, the report that was 
commissioned by the Department of the Interior (DOI), that did 
conclude that raising the royalty rates on the onshore oil and 
gas production would discourage investment and thus bring less 
money into the Treasury and thus was not warranted.
    So now GAO comes out with a report, and what we see is, in 
the budget proposal, we are going to increase the--the proposal 
is to increase the rates.
    I appreciate the fact that you are saying you are going to 
do an analysis, but one would think that you would do the 
analysis before you move to advance it through a budget 
proposal. So I agree with Senator Daines. That is something 
that I am concerned about because I think it is going to have 
an unintended consequence or perhaps intended, depending on 
your perspective. I think it is important that we do what we 
can to increase production on our public lands and thus 
increase revenues to our Treasury because production is up.
    It is interesting to me that when you look at the leasing 
statistics through BLM over the past couple decades, we are 
seeing a decline in the leasing. Throughout the Clinton 
administration, the average acres leased per year was 3.3 
million. Then in the Bush administration, the average was 3.6 
million per year. During the first 6 years of the Obama 
administration, the number drops to an average of about 1.6 
million acres per year. So this is a trend that in my view is 
not good for us, and then when you overlay the hydraulic 
fracking rules, the proposals to increase regulation on 
methane, possibly this proposal to increase royalty rates, I 
see that just pushing it down further.
    Can you give me any hope that in fact we are not going to 
continue this downward trend but that we are going to see 
increased production on our public lands?
    Mr. Kornze. I can give you a lot of hope.
    Senator Murkowski. Good. I want a lot of hope.
    Mr. Kornze. Because we have seen an 81 percent increase. On 
the places where you need a BLM permit to operate, we have seen 
an 81 percent increase in oil production during this 
administration.
    Senator Murkowski. So not necessarily new leases but on 
existing leases, you are seeing increased production.
    Mr. Kornze. It would be a combination of both. So we have 
seen a huge increase, which we are very proud of being part of.
    And then there are also some important numbers out there. 
One is that 34 million acres of land have been leased. Only a 
third of that is producing. So within industry's hands today 
there is significant head room for development.
    Senator Murkowski. Would you agree that some of the 
limitations on the ability to produce have been related to some 
of the regulatory issues? I mean, all you need to do is look at 
National Petroleum Reserve Alaska (NPRA), and it is a perfect 
case in point in terms of acreage out there that is being 
leased. But we are not seeing a drop of anything at this point 
in time, and it is not because you do not have operators that 
are willing and able to move forward. You have got a lot of 
going at one another through regulatory requirements that is 
just stalling out any initiative there.
    Mr. Kornze. Well, I am not sure that is always the case. So 
in the Lower 48, there is an average of about 3,000 wells 
drilled on public and Indian lands each year. We, however, have 
6,000 permits that we have approved and are ready to go. So 
industry has come in. They said we would like to drill here. We 
have approved that application. It needs no further work from 
us at all. They can start today.
    Senator Murkowski. How do you respond, though, to those--
and I was out in North Dakota with Senator Hoeven some years 
ago, and you talk to the operators that are ready, willing, and 
able to go. They have got Federal leases. But quite honestly, 
they can move to production so much more quickly on State and 
private lands than they can on the Federal that they will 
literally go around Federal lands. They will look for every 
opportunity to be anywhere except our public lands.
    Mr. Kornze. Well, I think when you look at the fact that we 
have a 2-year front-log essentially of permits that are ready 
to go, I think somewhere there is a disconnect that is very 
important because there is huge opportunity out there for 
industry to produce today.
    Senator Murkowski. We understand that there is huge 
opportunity, and as I am talking to those who are ready, 
willing, and able to go, they tell me their biggest obstacle is 
our Federal Government. It is not that they do not have the 
technology. It is not that they do not have the capital to 
invest. It is the regulatory hurdles that they face in 
accessing our public lands.

                           ONSHORE PERMITTING

    Mr. Kornze. And I hear that occasionally too. Those 6,000 
permits, the 2 years' worth of work that can be done today--
there are no hurdles. There is nothing. So there are 2 years' 
worth of work. There are billions of dollars of investment that 
is available.
    And I do appreciate that we need to have a forward-leaning 
system for developing American energy. We are doing that. There 
are places where we certainly can improve. Our permitting times 
are one of those. So a few years ago, when I joined the Bureau 
of Land Management, we were at 300 days per permit. We are down 
to roughly 200-225 days.
    Senator Murkowski. That is certainly not in Alaska.
    Mr. Kornze. Well, we are headed in the right direction. One 
thing that we are doing system-wide is we are going to an 
online system so that instead of passing paper back and forth, 
which is a big time-killer, we potentially can get down to 
averages like they have seen at times in Carlsbad, New Mexico 
where it is in the 60-70 day realm. So we are moving 
aggressively. We are trying to find some of the efficiencies 
that I think you are pointing at.
    Senator Murkowski. Well, and we need to find those 
efficiencies. I wish I had the chart with me today that shows 
how long it takes to get to permitting on State, private lands 
versus how long it is taking us through our BLM lands. And the 
contrast is extraordinary. And there are lands that are 
literally side by side, and in many cases, operators that 
clearly know what they are doing. So saying that we can do a 
better job I think belies the obvious, and I think this is one 
of those things that we need to get down to.
    I know that within the Department of the Interior, you have 
got a stated goal of permitting 10,000 megawatts of renewable 
energy production on Federal lands. We met that goal back in 
2012, I am told. But it does not seem that we are willing to 
dedicate equal focus to our more traditional energy sources on 
public lands.
    Do you even have a measurable goal for conventional 
production of oil and gas on our public lands?
    Mr. Kornze. I would say that our budget reflects a serious 
commitment to conventional energy.

                     CONVENTIONAL ENERGY PRODUCTION

    Senator Murkowski. But I mean, do you have a goal? As you 
stated earlier within the Department in terms of what it is 
that we want to see with renewables, you set a goal out there. 
You met it. Do we do the same for conventional?
    Mr. Kornze. We do not.
    Senator Murkowski. Why is that?
    Mr. Kornze. Well, the renewable energy goal that you noted 
was created here in Congress. It was part of the 2005 Energy 
Act.
    Senator Murkowski. So we would just need to create in 
Congress a goal for our conventional fuels on public lands.
    Mr. Kornze. Well, I am saying that in the 2005 Energy Act, 
there was an aspirational goal saying that by 2015, we would 
like to see the Department of the Interior authorize 10,000 
megawatts. We exceeded that. At this point, we are at 14,000 
megawatts plus. We are very proud of that. We took a program 
that basically did not exist and turned it into something 
pretty spectacular.
    On the oil and gas side, we need the resources to do the 
same. So that is part of our roughly 20 percent budget increase 
request for our oil program----
    Senator Murkowski. Well, wait a minute. When you say you 
need the resources to do the same, you have got the private 
sector that is out there that is ready, willing, and able to go 
after the resource. So it is not as if you and BLM need to 
reinvent the wheel. In my view, you need to have a more 
expedited process. In many cases, you just need to get out of 
the way. So I do not understand why you would say we need more 
resourcing to do this.
    Now, you mentioned earlier that you do need additional 
resources for inspectors. We know that we have got to have a 
level of safety and protocol out there. I certainly understand 
that.
    But again, I think when you are looking at those ways, 
those measures that you can enhance production on our Federal 
lands to increase jobs, to increase revenues, it is not 
something that as a Department you need to increase your budget 
to do that. I think you have got an industry that is ready to 
go to work, but we make it so hard on our public lands. We make 
it so difficult that those that are ready, willing, and able 
will go out of their way to avoid the production on our public 
lands. And you have cited that you are pleased with the level 
of leasing that you have, but in fact what we have seen is a 
very direct and clear trajectory downward in terms of leasing 
on our public lands over this past 6 years here.
    And so, yes, we might be able to say that production is up. 
Production is up because you have got a commitment to extract 
as much as you can out of these existing leases. But it is 
tough to be able to explain to people who believe very strongly 
that our energy assets are something that we should value when 
we say on our Federal lands, it is just that much more 
difficult. It is just that much more complicated. And yet, you 
have got good operators making things happen on State and 
private lands, contributing to jobs, contributing to our energy 
security.
    And there is a disconnect here, and I am trying to drill 
down to how we can do the reconnect. And we need to be working 
with you on these initiatives to make that difference.
    I have gone over my time. I want to turn to the Senator 
from North Dakota.

                   VENTING, FLARING AND RIGHTS OF WAY

    Senator Hoeven. Thank you, Madam Chairman.
    Director, good to see you and thanks for being here today.
    We are trying to reduce flaring in our State. Actually the 
highest flaring is on Federal lands and particularly on some of 
our Native American lands. Now, the right-of-way is the issue. 
Getting the right-of-way fast enough is the issue with getting 
these gas-gathering systems put in place.
    And so how can the BLM help? And I know that BIA is 
primarily responsible here, but can you help in some way to 
expedite getting this right-of-way so that we can get these 
gathering systems put in place to reduce natural gas flaring?
    Mr. Kornze. Flaring is very important, and we appreciate 
that North Dakota has stepped out on this issue. So thank you 
for being part of that leadership team.
    Related to the rights-of-way for the capture systems, 
absolutely part of the equation. Around the Bureau of Land 
Management, we have been focused on getting the right realty 
staff in the right places to help make sure that we are not 
part of the holdup. I do think that we could--we are in the 
course of getting the right people in places like Dickinson 
where we have had huge human capital challenges. Folks can walk 
across the street and often make twice as much. And so we have 
been working hard to get special pay rates and locality pay for 
folks in those offices so they have got a reason to stay and to 
make sure that we do not have the turnover, which also impacts 
our ability to get those rights-of-ways and other efforts 
completed.
    Senator Hoeven. Is there something Congress can do to help 
expedite the process?
    Mr. Kornze. Well, having the right people matters. So I 
will tell you our special pay rate for our petroleum engineers 
and petroleum engineer techs expires at the end of this year. 
We have had it for 2 years. It has been a very important thing 
for our oil and gas system across the board. We would be 
interested in working with you on a potential extension of 
that.
    Senator Hoeven. Well, one of the things--before 2008, I 
think there was one oil well drilled on the Three Affiliated 
Tribes reservation. I then signed an agreement--I was Governor 
at that time--with the tribe whereby they agreed to have the 
State regulatory process apply on the reservation too. So that 
was an agreement we signed. And, of course, now I think if that 
reservation were a State, it would be like the eighth largest 
oil-producing State in the country. I mean, they are just doing 
tremendously well, which of course necessitates the need for 
more infrastructure.
    So is there some kind of cooperative agreement or something 
we could do interagency here, or is there legislation that 
would help expedite this right-of-way process? And you know, 
the chairwoman, Senator Barrasso, and myself have got some 
legislation in to try to expedite these gas-gathering systems 
and getting this right-of-way. Is that something you can work 
with us on? Do you see some ability to help get some tools out 
there so we can leverage the manpower that you have?
    Mr. Kornze. I do. And so I would be very interested to have 
some offline conversations with you about how we can use tools 
like the Bakken Executive Group to put a focus on this----
    Senator Hoeven. Right.
    Mr. Kornze [continuing]. And see if there are other 
national resources we need to bring to bear.

                          HYDRAULIC FRACTURING

    Senator Hoeven. Between BIA, BLM, Grasslands, I think there 
is enough people. We could certainly better leverage our 
efforts, and if there is some legislation required, I would be 
very interested in getting your assistance on a number of bills 
that we have proposed to expedite this process.
    Along that same line, BLM has come out recently with its 
hydraulic fracturing rule. So now we have a situation where 
States like North Dakota, Alaska, Texas--you know, I think 
there are 27 States that produce 99.9 percent of the country's 
oil and natural gas. And so we have these hydraulic fracturing 
rules that require disclosure. They require using FracFocus. 
They require making sure that your seals and your cement and 
all these things are properly in place and that you are 
monitoring the integrity of the well, the catch basin, the very 
things that apply in the Federal rule.
    So now we have got this duplicate situation. We have got 
the State regulation, and then we have also got the Federal 
hydraulic fracturing regulation. So now the energy producers 
face two sets of regulation, and they are largely the same. So 
you could say, well, what is wrong with that? Right? I mean, 
they are the same except now you have got to go through the 
State regulatory process and you have got to go through the 
Federal regulatory process, and we are back to this long period 
of time and delays.
    How do we work with BLM so that the State can get primacy 
for the regulatory oversight as long as they are properly 
overseeing all these things that we both agree should be there? 
We do it with air. We do it with water. How do we accomplish 
that with hydraulic fracturing?
    Mr. Kornze. Well, we specifically designed the hydraulic 
fracturing rule to allow for variances, and what that means 
essentially is you nest the Federal and the State rule 
together. Wherever the higher standard is, that is what we are 
going to follow. So if North Dakota has higher standards than 
what we put forward, we will be following the North Dakota 
standard.
    And I think it is important to note that this is how oil 
and gas has always worked. So the State of North Dakota and the 
Bureau of Land Management have not had completely parallel and 
completely matching rules and regulations in all areas of 
drilling and oversight. But yet, we have found a way through 
decades to work together and to make sure that we have an 
efficient system. This is no different. And we have been quite 
explicit in this rule to make sure folks understand that if 
there are local standards that are better, that we look at 
those and we will adopt those.
    Senator Hoeven. Where are we in that process of providing 
variances to the States? As you know, you have got litigation 
going with a number of States. It seems to me this might be, 
again, a way we work together to address the challenge. If we 
can make that variance process a very clear, understandable 
process that States can go through in a straightforward way, 
maybe we can address it. So, again, if there is some help 
needed from Congress--or you tell me how do we make sure that 
then States can go through that process in a straightforward 
way so that we are not duplicating regulation.
    Mr. Kornze. So I believe that Lynn Helms, your regulator, 
and our team are in conversation. If that has not taken place, 
all they need to do is pick up the phone and call Jamie or call 
myself, and we can get that conversation----
    Senator Hoeven. But essentially your intent is, through 
this variance process, to enable States to play that primacy 
role as long as they go through the process and you are 
comfortable that the oversight is there.
    Mr. Kornze. The way that we are going to work this. You put 
the two standards side by side. There is going to be a lot of 
commonality. And so if the State standard is equal to or better 
than ours, that will continue to be what we enforce on the 
Federal lands.
    Senator Hoeven. Okay, but there just has to be a 
straightforward way to get through that in a timely way so we 
do not get back to this we are taking a long time and we are 
not getting through the process. That is what I am after here 
is a rational process that we can get through in a 
straightforward and timely way.
    Mr. Kornze. And the rule is fairly straightforward, and our 
team has a great relationship with your team.
    Senator Hoeven. Yes.
    Mr. Kornze. So I do not see a problem there.
    Senator Hoeven. So you will work with us on it to see if we 
cannot make sure that process works.
    Mr. Kornze. Absolutely.
    Senator Hoeven. Thanks. I appreciate it, Director.
    Senator Murkowski. Thank you, Senator Hoeven.
    Senator Udall.

                            INSPECTION FEES

    Senator Udall. Thank you, Madam Chair.
    As has been mentioned several times, the President's budget 
proposes a new inspection fee for onshore oil and gas leases. 
How will instituting this fee impact your inspection and 
enforcement programs, or asked another way, what are you not 
able to do today without these fees in place?
    Mr. Kornze. Thank you for the question.
    We have roughly 30,000 oil and gas inspections that we have 
to do on an annual basis. About half of those are high 
priority. Without the right number of folks, it puts us in a 
position where we have to really juggle resources and perhaps 
stretch them in a way that is not maximizing our full system on 
the production side. We have to be able to cover those 
inspections and make sure that we have a safe and responsible 
system. That has got to be the foundation of what we do. From 
there, you have got your APD's that you are working on, and 
then above that, you have got your leasing system. So we have 
to do multiple systems at once. We need the resources to do all 
of that.
    What the fee, which would be roughly $1,000 per lease on 
average--would do is allow us, similar to the offshore oil and 
gas system, which has a similar fee, which is significantly 
higher than what we are asking for--it would allow us to go in 
places like North Dakota where there is going to be a huge 
amount of production. It allows us to staff up there because 
those fees go to those local offices and it returns into the 
system. So we need to be able to make sure we have a safe, 
responsible program that allows us to build in areas like 
production.

                              SAGE-GROUSE

    Senator Udall. Thank you for that answer.
    Shifting over on the sage-grouse, I understand that your 
land use plans covering the priority areas for conservation are 
almost finalized and will be public very soon. Can you preview 
for us what we can expect from the release of these plans and 
what has been the preliminary reaction from cooperating States?
    Mr. Kornze. So the Fish and Wildlife Service has been very 
clear with us that they need essentially--they see a three-
tiered stool or a three-legged stool hopefully getting to a 
point where they do not have to list the Greater sage-grouse.
    And I would note that there was success recently on the bi-
State sage-grouse population on the Nevada-California border 
where the Fish and Wildlife Service declared that as not 
warranted based on plans the Federal agencies and local 
partners put forward.
    So there are three pieces that the Fish and Wildlife 
Service has asked for. One is strong Federal plans to make sure 
that we have allocations and plans in place that will limit 
disturbance in places that are important to the sage-grouse to 
allow those important population areas to prosper.
    The second is making sure that there are similar 
conservation-oriented efforts and allocations when possible on 
private and State lands. So you have States like Idaho that 
have just stepped forward on their State lands to do something 
similar.
    And then thirdly, they want to make sure that there is 
activity in fire to make sure that--the greatest threat to 
Greater sage-grouse in the Great Basin, for instance, is fire 
and the invasive plants that come in afterwards--and make sure 
that we are making headway there with things like the fire fix 
and then also efforts related to making sure simply that we are 
not losing that habitat. We are working carefully with our fire 
teams to make sure the sage-grouse and rangeland priorities are 
built into the way that we operate this summer and in all 
future years.
    Senator Udall. Now, how are you ensuring that the most 
important sage-grouse habitat is protected while still 
fulfilling your mandate for multiple use and providing access 
to resources?
    Mr. Kornze. So our multiple use and sustained yield mission 
is a continuum. In some places, you are going to have very 
significant development and use. In other places, you are going 
to have less use, and that can change over time. So it is well 
within the bounds of the BLM's mission to have some places that 
are set aside for certain uses like wildlife habitat and for 
helping this bird recover. And we will have other uses, 
traditional uses like grazing on those lands. So it is part of 
the balancing act we do on a daily basis.
    Senator Udall. The President's budget request proposes an 
increase of $45 million for the restoration and protection of 
the sage steppe ecosystem for a total of $60 million. This is a 
major increase for this program. What will BLM do with this 
funding? How is this funding critical to ensure that we can 
avoid a listing of the sage-grouse?
    Mr. Kornze. So we will do a few things. One, we need to 
have an investment in our partners. We do not know everything 
about the bird. We have got ranchers. We have got counties. We 
have got State agencies that we have to be working hand in hand 
with. So part of that money is to build on those partnerships 
and make sure that we have those links firmly in place.
    Another piece is making sure simply that we have boots on 
the ground. In places like Elko County where I was last week to 
check on the drought conditions and the fire season, we have 
one range conservationist, one range con, for about every 
million acres. We are going to have to do better than that in 
terms of giving our teams the resources to be working with 
grazers and working with other land users to make sure that we 
are doing the best thing for multiple use and the best thing 
for the bird. So we will be taking steps along those lines.
    Senator Udall. And my understanding is it takes a lot of 
time and effort and people on the ground to work in a 
collaborative way to try to make sure you are moving in the 
direction of not listing.
    Mr. Kornze. Absolutely.
    And the other thing we will do is we will be doing projects 
related to making sure that our wet meadows are of high 
quality, that our springs are good, that our riparian areas are 
supporting good wildlife habitat.
    And pinyon juniper encroachment, which is the situation 
that is largely in the Great Basin, is a spectacular and 
sometimes terrifying thing to look at these valleys that used 
to have pinyon juniper at a high elevation and because of the 
changed fire regime and climatic changes, these trees are 
choking out the sagebrush and sage-grouse and almost completely 
filling in these giant, say, 500,000-acre valleys. You can see 
it marching down year by year. So we will be making sure that 
we are pushing back on those trees and making sure that the 
sagebrush that we have that is high quality is protected and 
preserved.
    Senator Udall. Thank you, Madam Chair.

                       ALASKA CONTAMINATED LANDS

    Senator Murkowski. Thank you.
    Let me talk a little bit or let us have a discussion here 
about where we are with the contaminated lands that were 
conveyed to Alaska Natives, as well as the abandoned well 
cleanup there in National Petroleum Reserve Alaska (NPRA). I am 
going to be sitting down with Mr. Cribley in Alaska over the 
Memorial Day week and be able to go through some certain maps. 
So I am not going to drill down too hard here.
    But it is my understanding that with the lands that were 
conveyed to natives under the Alaska Native Claims Settlement 
Act (ANCSA), that we are building out the database, the 
inventory that needs to be completed. And it is my 
understanding that we are going to find out that a majority of 
the sites are not on BLM lands. So identifying the responsible 
party is clearly important, but that is just one step of it. 
Then we need somebody who serves as the point person, the point 
agency, if you will, to work with all the responsible Federal 
agencies.
    Is this something that BLM will agree to do, to be that 
facilitator once we have identified the inventory and just the 
priorities there? Is BLM prepared to be able to step up to then 
coordinate with all the Federal agencies?
    Mr. Kornze. Let me give you a description of where we are.
    Senator Murkowski. Okay.
    Mr. Kornze. So we have worked with the State and looked for 
how many known contaminated sites there are across the State. 
Roughly it is around 6,000. We did an overview to see how many 
of those were on conveyed lands. We got down to about 900. We 
have found that about two-thirds of those, so ball park 600, 
are either cleaned up or are in a state of some sort of 
remediation. So we have got about 300 that are open question. 
You will see that roughly half of those, our current 
information suggests, would be DOD-related, and then the other 
half is sort of a rainbow of different organizations.
    So going forward, I would like to have a conversation with 
you about whether or not BLM is the right agency because part 
of what you need is someone to compel action. I think you were 
looking for cleanup.
    Senator Murkowski. Yes.
    Mr. Kornze. And I think potentially the Environmental 
Protection Agency (EPA) or the State with delegated authorities 
from EPA would have a better handle on that kind of work than 
we do traditionally.
    Senator Murkowski. Well, what I would like to do is figure 
that out because, again, it is one thing to identify that these 
are these areas. It is another thing to have the action plan 
and have everybody understand what that action plan is and the 
level of expectation. So probably after my sit-down with Mr. 
Cribley in Alaska, we will have an opportunity to better 
identify that.
    On the abandoned wells, the good news for us is that we 
were able to secure some resources to address the abandoned 
well cleanup through the Helium Stewardship Act. It was really 
just kind of fortuitous. Actually it was a long of dang hard 
work. Thank you very much. And we have been able to finish up 
work on three of the wells this month at Umiat. So that is 
good.
    But this is, again, an area where we need to be looking 
beyond those one-time monies that we received within the Helium 
Stewardship Act to better define how we are going to address 
the cost of this cleanup, how we are going to be working with 
the State to make sure that there is some efficient use of 
dollars here for the cleanup. So we need to address that 
further just in terms of how much more you are going to be 
looking at to complete the cleanup after we expend the monies 
that were received under the Helium Stewardship Act.
    Do you want to comment on that?
    Mr. Kornze. Yes.
    So, first, I want to thank you and Senator Wyden for all 
the work that you did to get that funding. It was very 
significant.
    So we have cleaned up the wells in Umiat, as you noted. The 
next group that we will be working on is around Barrow. There 
are around seven wells there. The next step after that will be 
the Simpson Peninsula. So at that point, we will likely have 
expended most of the $50 million. That will be a 2- to 3-year 
work plan from now. And we are thinking carefully about what 
that larger universe of costs might be. Once we get past those 
clusters of wells on those sites that I noted, they get more 
spread out. And so we are going to have to get more creative 
about potentially piggybacking on new infrastructure that is 
built and other opportunities.
    Senator Murkowski. Well, and this is where really having 
somebody that is coordinating and helping to facilitate, again, 
some efficiencies--the costs are extraordinary.
    Mr. Kornze. They are.

                          GREATER MOOSES TOOTH

    Senator Murkowski. We acknowledge that. But the obligation 
is paramount as well.
    Sticking to issues up within the north there and related to 
NPRA and Greater Mooses Tooth 1, as I mentioned in my opening 
comments, we are kind of at a stall-out or a standstill here 
with GMT1 regarding the outstanding issue of measuring 
production. I think we are, hopefully, done with the mitigation 
piece.
    But BLM is proposing this dedicated test separator as 
opposed to the multi-phase metering and allocation 
methodologies that are currently being used on State land, have 
been used on State land for decades. The Alaska Oil and Gas 
Conservation Commission, AOGCC, has been working with EPA for 
years. There has never been an issue. There has never been a 
problem. But now we have got coming out of Interior and BLM 
saying, well, you have to have this separate metering system, 
this test separator, and an appreciation and understanding in 
terms of what the costs then do to the project.
    It has not only been the operator Conoco that is saying 
this just is not reasonable. You have got the State of Alaska 
that has weighed in. You have the Arctic Slope Regional 
Corporation, which has objected to the requirement because of 
the added costs without appreciable benefits.
    So I guess the question to you is have you engaged with the 
Alaska Oil and Gas Conservation Commission (AOGCC) regarding 
this added requirement and why you think that the way it has 
been done for the past several decades is not sufficient and 
what we can do to resolve this because I think it is somewhat 
telling that it has been decades now that Conoco has been 
trying to get something going within the NPRA and we still have 
not seen a drop of anything. So we would like to get there. We 
thought that Conoco was going to be able to sanction this 
project this season and of course they have not. Where are we 
with this additional requirement for a test separator?
    Mr. Kornze. So the question that we are trying to work out 
is basically the error rates. What kind of confidence can we 
have in how much oil is flowing through those pipelines?
    Senator Murkowski. But have you talked with AOGCC about the 
confidence that they have and have had for years now?
    Mr. Kornze. So the system that ConocoPhillips has put 
forward, as you noted, has been used on State lands and under 
AOGCC authority. We look at that. ConocoPhillips operates on 
BLM lands in southern Alaska and places like New Mexico, and 
they have been meeting the standard that we have in place, 
which is roughly a .35 error rate. The system that they are 
putting forward likely has an error rate of somewhere between 4 
and 10 percent, and it is hard to verify.
    Senator Murkowski. Have we ever had problems, though, with 
the Alaska methodology?
    Mr. Kornze. Well, I am not sure there have been problems, 
but we certainly have some difference in the demand we are 
putting forward in terms of the error rate. So we have a very 
important responsibility to make sure that the American 
taxpayer and the tribes that we work with and other native 
populations----
    Senator Murkowski. Well, right now, the American taxpayer 
is getting 100 percent of nothing, and the tribes, the native 
corporations are not being benefited at all because there is no 
production. So we have got a situation where Conoco is prepared 
to say we cannot make this pencil out. We just cannot make it 
pencil out. And so if you are trying to talk benefits here, 
again, if those that are willing to invest hundreds of millions 
of dollars into a project and have nothing to show for it and 
may be forced to walk away from this project, walk away from 
this investment because of an overlay of a requirement that, 
again, adds substantial cost, with again minimal to no 
appreciable benefit, it causes people to say this does not make 
any sense.
    And this is where I think the administration gets the black 
mark in saying, you know, you say you support an all-of-the-
above energy policy. You say you support increased production 
or production on the National Petroleum Reserve Alaska, but you 
are not doing much to facilitate it. We just cannot figure out 
how we cannot come together to make sense on this. You see my 
point.
    Mr. Kornze. I do.
    And our goal is to get to production on Greater Mooses 
Tooth, and I believe we will get there. Part of the more 
complicated situation that we are within is that, one, 
ConocoPhillips is meeting the standard elsewhere where they 
operate on BLM lands in Alaska and in the lower 48. So there 
are no surprises here.
    Senator Murkowski. But they would have to build a 
completely separate system--a completely separate system--up 
north within NPRA, a redundant system at extraordinary cost.
    Mr. Kornze. It depends on what your standards are. We are 
held to a very high standard at the Bureau of Land Management.
    Senator Murkowski. And I think Alaska has led in terms of 
the standard. If the system was not working for us up there, I 
think that there is probably more room for a discussion, but 
nobody has ever questioned the soundness, the validity, the 
reliability. And that is where I think we have got somewhat of 
an impasse.
    Let me go to my colleague here for further questions.
    Senator Udall. Madam Chair, I have a couple more questions 
for the record, but I think I will submit those. So I have 
completed my questioning.
    Senator Murkowski. I just have a couple more, if I may.
    Senator Udall. Please go ahead.

                            LAND CONVEYANCES

    Senator Murkowski. And very quickly to you, as you know, 
with the land conveyances, we have been trying to get moving 
forward. We have been held back in being able to do the 
surveys. I appreciate the Department moving forward and saying 
there are other ways that we can do the surveys through GPS. 
Are we any closer to getting that level of acceptance and 
cooperation with the State on BLM's proposal for Global 
Positioning System (GPS) surveys?
    Mr. Kornze. I strongly share your desire to fulfill the 
Alaska Statehood Act and what is owed to the native 
corporations. I think this is an important step. I went up to 
Alaska 2 months ago to sit down with the Governor and the 
Lieutenant Governor and tell them how much faster we can go and 
at what a decreased cost to the Federal Government and to the 
State potentially and then also truly if we can come together 
on this, I think it is a huge opportunity for all of us. So 
that was a positive conversation.
    Our teams have been meeting since then. Ed Vogel's team and 
Mark Meyers' team have been sitting down with ours.
    I am interested in, hopefully, seeing if we can alter our 
MOU with the State, which was signed in 1973. Technology was 
very different then. We can provide the State of Alaska with a 
much better product with much finer detail that they can use 
going forward. So any support you can provide on that front is 
greatly appreciated.

                         HELIUM STEWARDSHIP ACT

    Senator Murkowski. Well, it is something that we are all 
trying to achieve the same goal here, and if we can utilize 
technologies to our advantage, it seems to me to make sense. So 
let us work on that.
    Let me ask about the helium issue. I mentioned a couple 
times the Helium Stewardship Act, which I think there was a 
good deal of benefit that came out of that, not the least of 
which was some revenues that helped.
    But just a few weeks ago, we saw a report from GAO raising 
questions about BLM's implementation of the act, which 
certainly has some repercussions for the helium industry and 
taxpayer.
    The first area that GAO raised concerns is with regard to 
these tolling agreements between the refiners and non-refiners. 
And unless both sides can reach agreements on tolling, one of 
the central elements of the Helium Stewardship Act, to bring 
more competition into the helium program, it is not going to be 
achieved.
    So can you give me your response to this GAO report? It is 
something that there is some real concern about. And we want to 
make sure that the provisions of that act function and that in 
fact we are able to see a level of competition that will allow 
for greater access to helium on the market. So can you address 
the GAO?
    Mr. Kornze. Absolutely. I think we appreciate the revision 
of the system a few years ago through legislation, which I know 
was not an easy lift. That legislation was designed at a time 
when the Bush Dome, the system that we operate out of Amarillo, 
Texas, was a much larger player. So since then, Qatar, Algeria, 
a plant in Wyoming have all either come on line or increased 
their production significantly, and it has really changed the 
dynamics around the system.
    Related to tolling, the idea is that we have producers that 
are on the system, and if they have excess capacity, they need 
to be allowing that to be used by folks who are off the system 
that might also have helium that needs to be processed. One of 
the things that we are seeing in our gas reservoir is that the 
pressure is going down significantly. We are not able to push 
as much gas to these producers as they would want to consume 
for their own production. So we are seeing significantly less 
gas being refined than sort of at an optimal level that they 
would need to hit in order to get to this concept of the 
requirement that they use their excess capacity for tolling.
    I think it is a fairly complex situation, but we are 
talking to GAO about some of the complexity. We do not 
necessarily see eye to eye with 100 percent of what they came 
out with. We would be happy to visit with your staff further 
about the situation.

         EASTERN AND WESTERN INTERIOR RESOURCE MANAGEMENT PLANS

    Senator Murkowski. Yes. I know that we want to explore this 
further. I want to make sure that we have got this right and, 
again, that we are achieving the progress.
    My last issue is one that I probably should not have saved 
for the end because it is going to be really animated and 
agitated. We have had an opportunity to talk about the BLM's 
eastern interior resource management plan. This is the 
management plan up in the interior of the State that will 
withdraw close to 700,000 acres in the district from mineral 
entry. This is something that the small miners in the Fortymile 
District are just beside themselves about. These are small 
operators, small operators in an extraordinarily remote part of 
the country. And to them, they are looking at this proposal and 
saying decisions that are being made 4,000 miles from here we 
cannot comprehend.
    As you know, there is a meeting in Chicken on the 29th of 
May. You had been invited to attend. I had asked that you 
attend. I understand that you will not be, but I understand 
that Bud Cribley is going up. Is anybody from Washington, DC, 
going up, do you know?
    Mr. Kornze. So I am looking at my schedule to see if it is 
possible to go.
    Senator Murkowski. That would be fabulous. That would be 
fabulous. I think it would be extraordinarily important for you 
to hear directly from the men and women on the ground in their 
place as to what this means.
    And the frustration here is that you have got a proposal to 
withdraw, again, nearly 700,000 acres in the Fortymile 
District, and you have these miners--not just miners. You have 
Alaskans that say, wait a minute. Tell me how this does not 
violate the intent of the Alaska National Interest Lands 
Conservation Act (ANILCA) and the no-more clause when you have 
in place a proposal like this. And I look at it and say I do 
not see how, other than a difference in terminology, this is 
not just a flagrant, in-your-face violation of the no-more 
clause under ANILCA.
    And then it is not just the eastern interior land plan, it 
is this current planning effort for the Bering Sea western 
interior area plan. These are areas that are being proposed for 
set-aside for environmental protection as areas of critical 
environmental concern, ACEC's. I can tell you most people in 
Alaska have never heard of an ACEC, but the proposals that we 
have here in terms of limitations on opportunity for access are 
really quite extraordinary, proposing to place off limits most 
any form of development.
    Now, I do understand that the current version of the plan 
reduces from 11 to 8 the number of existing ACEC's in western 
Alaska, but it also proposes to create eight new conservation 
areas. Some like the Unalakleet River ACEC are pretty large. 
You have another, the new sheefish spawning area just south of 
McGrath surrounding the Big River. You cannot see it from here, 
but you look at the map here along the rivers, and the impact 
for any level of development is considerable. It is beyond 
considerable. It will potentially block the route for a 
pipeline to bring any kind of energy to proposed Donlin Creek 
mine, an opportunity that the folks in that region have been 
keyed in intently. But in order to access mineral resources 
there, you have got to have some form of energy other than just 
diesel.
    But again, we have got provisions within ANILCA that make 
it illegal. You cannot do it. You cannot withdraw more than 
5,000 acres in Alaska for any single use without congressional 
approval. But under many of the agency's pending ACEC's, you 
are administratively affecting far more than 5,000 acres for 
single purposes, whether it is the sheefish spawning, even 
though their original spawning areas are actually outside of 
these proposed ACEC's.
    So I wander around with a map in my everyday folder that is 
what gets me up in the morning. It is what reminds me of my 
purpose here in the United States Senate. And these are Alaskan 
lands and waters that are withdrawn from development. And it is 
things like wilderness and NPRA withdrawals and withdrawals in 
the North Aleutian Basin and critical habitat proposed and 
wilderness and national park and Federal lands. And the colors 
just make a brilliant patchwork.
    But what this then does is take that patchwork and muddy 
all the colors so that it is even more restrictive so that in 
those areas where we thought we might have an opportunity for a 
small placer miner to engage in a little bit of income or for a 
community to perhaps have an opportunity for some jobs in a 
region or for some cheaper energy in a region, but if we are 
not going to be able to even allow for a pipeline corridor 
because now we have all of these ACEC's, we are going to be 
looking at the ESA, the Endangered Species Act, and critical 
habitat as chump change because everything else around the 
State is going to be blocked off.
    And I know I sound apocalyptic, but you have to appreciate 
the frustration, the anxiety. We felt that we had in place laws 
that are specific and unique to Alaska. Alaska is the ``A'' in 
ANILCA, and we thought we had a pretty good understanding as to 
what the no-more clause meant. And yet, what we are finding now 
is our Federal agencies are coming up with changes in semantics 
basically to get around what was clearly a well-defined law. 
When it says that you cannot withdraw more than 5,000 acres 
without congressional approval, we kind of thought that it 
meant what it said.
    And so now we are dealing with areas of critical 
environmental concern, but it effectively puts you again in a 
state of de facto wilderness, not unlike what the President did 
with his proposal up in the Arctic National Wildlife Refuge 
(ANWR). So it seems like anyway you slice it, any term that you 
want to call it, what it ends up being is withdrawal, 
restriction, and an inability of a State and a people to access 
a resource--resources that we were promised at statehood, land 
that we were promised at statehood. So we are feeling a little 
burned.
    I would encourage you--encourage you--to go to Alaska and 
to hear the people. And I thank you for the trips that you have 
made. And I know that they are not easy because Alaskans are 
pretty unfiltered. We will tell you what is on our mind, but I 
think that that is important. I think that that is important 
because this is our life. This is our livelihood, and we want 
to make sure that our lands are cared for. And we are kind of 
proud of how we have done it over the decades. But sometimes we 
feel like you all are trying to protect us from ourselves, and 
that makes us pretty angry.
    So I would encourage you to go to Chicken. I would 
encourage you to listen to the people on the ground. We have 
some things that we need to be working on together, clearly. I 
appreciate the efforts that you are making on the cleanup and 
the obligation that the Federal Government has there. We have 
got some other things that we need to do. But we must--must--
address some of these withdrawal issues that are strangling 
Alaskans. So I appreciate your attention to that as well.
    Mr. Kornze. It will have my attention, and let me say thank 
you both for your significant investment in issues related to 
the Bureau of Land Management and the Department of the 
Interior. The personal attention is greatly appreciated.
    Senator Murkowski. Thank you.

                         CONCLUSION OF HEARINGS

    With that, we stand adjourned.
    [Whereupon, at 11:46 a.m., Wednesday, May 13, the hearings 
were concluded, and the subcommittee was recessed, to reconvene 
subject to the call of the Chair.]
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