[House Hearing, 105 Congress]
[From the U.S. Government Publishing Office]



 
             INTERIOR DEPARTMENT BUDGET REQUESTS FOR FY '98

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

                           OVERSIGHT HEARING

                               before the

                         SUBCOMMITTEE ON ENERGY
                         AND MINERAL RESOURCES

                                 of the

                         COMMITTEE ON RESOURCES
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED FIFTH CONGRESS

                             FIRST SESSION

                                   on

  BUDGET REQUEST FOR DEPARTMENT OF THE INTERIOR AGENCIES AND PROGRAMS 
      WITHIN THE SUBCOMMITTEE'S JURISDICTION FOR FISCAL YEAR 1998

                               __________

                     MARCH 4, 1997--WASHINGTON, DC

                               __________

                            Serial No. 105-9

                               __________

           Printed for the use of the Committee on Resources


                                


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                         COMMITTEE ON RESOURCES

                      DON YOUNG, Alaska, Chairman
W.J. (BILLY) TAUZIN, Louisiana       GEORGE MILLER, California
JAMES V. HANSEN, Utah                EDWARD J. MARKEY, Massachusetts
JIM SAXTON, New Jersey               NICK J. RAHALL II, West Virginia
ELTON GALLEGLY, California           BRUCE F. VENTO, Minnesota
JOHN J. DUNCAN, Jr., Tennessee       DALE E. KILDEE, Michigan
JOEL HEFLEY, Colorado                PETER A. DeFAZIO, Oregon
JOHN T. DOOLITTLE, California        ENI F.H. FALEOMAVAEGA, American 
WAYNE T. GILCHREST, Maryland             Samoa
KEN CALVERT, California              NEIL ABERCROMBIE, Hawaii
RICHARD W. POMBO, California         SOLOMON P. ORTIZ, Texas
BARBARA CUBIN, Wyoming               OWEN B. PICKETT, Virginia
HELEN CHENOWETH, Idaho               FRANK PALLONE, Jr., New Jersey
LINDA SMITH, Washington              CALVIN M. DOOLEY, California
GEORGE P. RADANOVICH, California     CARLOS A. ROMERO-BARCELO, Puerto 
WALTER B. JONES, Jr., North              Rico
    Carolina                         MAURICE D. HINCHEY, New York
WILLIAM M. (MAC) THORNBERRY, Texas   ROBERT A. UNDERWOOD, Guam
JOHN SHADEGG, Arizona                SAM FARR, California
JOHN E. ENSIGN, Nevada               PATRICK J. KENNEDY, Rhode Island
ROBERT F. SMITH, Oregon              ADAM SMITH, Washington
CHRIS CANNON, Utah                   WILLIAM D. DELAHUNT, Massachusetts
KEVIN BRADY, Texas                   CHRIS JOHN, Louisiana
JOHN PETERSON, Pennsylvania          DONNA CHRISTIAN-GREEN, Virgin 
RICK HILL, Montana                       Islands
BOB SCHAFFER, Colorado               NICK LAMPSON, Texas
JIM GIBBONS, Nevada                  RON KIND, Wisconsin
MICHAEL D. CRAPO, Idaho

                     Lloyd A. Jones, Chief of Staff
                   Elizabeth Megginson, Chief Counsel
              Christine Kennedy, Chief Clerk/Administrator
                John Lawrence, Democratic Staff Director
                                 ------                                

              Subcommittee on Energy and Mineral Resources

                    BARBARA CUBIN, Wyoming, Chairman
W.J. (BILLY) TAUZIN, Louisiana       CARLOS ROMERO-BARCELO, Puerto Rico
JOHN L. DUNCAN, Jr., Tennessee       NICK J. RAHALL II, West Virginia
KEN CALVERT, California              SOLOMON P. ORTIZ, Texas
WILLIAM M. (MAC) THORNBERRY, Texas   CALVIN M. DOOLEY, California
CHRIS CANNON, Utah                   CHRIS JOHN, Louisiana
KEVIN BRADY, Texas                   DONNA CHRISTIAN-GREEN, Virgin 
JIM GIBBONS, Nevada                      Islands
                                     ------ ------
                    Bill Condit, Professional Staff
                   Sharla Bickley, Professional Staff
                    Liz Birnbaum, Democratic Counsel



                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held March 4, 1997.......................................     1

Statements of Members:
    Cubin, Hon. Barbara, a U.S. Representative from Wyoming......     1
    Rahall, Hon. Nick J., III, a U.S. Representative from West 
      Virginia...................................................     3
    Romero-Barcelo, Hon. Carlos, a U.S. Resident Commissioner 
      from the Commonwealth of Puerto Rico.......................     2

Statements of witnesses:
    Eaton, Gordon P., Director, U.S. Geological Survey...........     5
        Prepared statement.......................................    41
    Henry, Kathrine, Acting Director, Office of Surface Mining 
      Reclamation and Enforcement................................     6
        Prepared statement.......................................    45
    Kallaur, Carolita, Associate Director, Minerals Management 
      Service....................................................     8
        Prepared statement.......................................    48
    Tipton, W. Hord, Assistant Director, Minerals, Lands and 
      Resources Protection, Bureau of Land Management............    10

Additional material supplied:
    BLM: Drilling in Cave Gulch-Bullfrog-Waltman area............    35

Communications submitted:
    Cubin, Hon. Barbara: Letter of April 9, 1997, to Hon. Bruce 
      Babbitt with follow-up questions...........................    79
    Department of the Interior: Memorandum of July 10, 1991, from 
      Soicitor to Assistant Secretary, Land and Minerals 
      Management.................................................    55



 BUDGET REQUESTS FOR INTERIOR DEPARTMENT AGENCIES FOR FISCAL YEAR 1998

                              ----------                              



                         TUESDAY, MARCH 4, 1997

        House of Representatives, Subcommittee on Energy 
            and Mineral Resources, Committee on Resources,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 1:35 p.m., in 
room 1334, Longworth House Office Building, Hon. Barbara Cubin 
(Chair of the Subcommittee) presiding.

  STATEMENT OF HON. BARBARA CUBIN, A U.S. REPRESENTATIVE FROM 
   WYOMING; AND CHAIRMAN, SUBCOMMITTEE ON ENERGY AND MINERAL 
                           RESOURCES

    Mrs. Cubin. The Subcommittee on Energy and Mineral 
Resources will please come to order. The Subcommittee is 
meeting today to hear testimony on the Administration's fiscal 
year 1998 budget request for the four Interior Department 
agencies within our jurisdiction. These are the United States 
Geological Survey, except the Water Resources Division, the 
Minerals Management Service, the Bureau of Land Management's 
energy and minerals programs, and the Office of Surface Mining.
    Under rule 4(g) of the committee rules, any oral opening 
statements at hearings are limited to the Chairman and the 
Ranking Minority Member. This will allow us to hear from our 
witnesses sooner and help members keep to their schedules. 
Therefore, if other Members have statements, they can be 
included in the hearing record under unanimous consent.
    The bureaus before us today serve primarily in a regulatory 
role, with the exception of the USGS' role to collect 
scientific data. The Office of Surface Mining, or OSM, 
administers the Surface Mining Control and Reclamation Act of 
1977, as amended, governing the manner in which coal deposits 
are mined in this country from the standpoint of surface 
impacts of strip mining or underground mining.
    The Minerals Management Service, or MMS, administers leases 
for energy and mineral resources of the outer continental shelf 
of the United States and collects mineral royalty payments for 
onshore Federal leases as well as for the offshore.
    The Bureau of Land Management, or BLM, among other jobs 
administers the laws governing disposition of energy and 
mineral resources from our public domain lands and reserved 
Federal mineral estates. The mission of the USGS is to conduct 
research and provide geologic, topographic and hydrologic 
information for the well-being of this nation.
    Under the terms of the fiscal year 97 Omnibus 
Appropriations Act the National Biological Service became the 
Biological Resources Division of the USGS, thereby broadening 
the bureau's mandate to include research in the biological 
sciences.
    These are big jobs which these agencies are called upon to 
do. Access to, and development of, a large part of our 
country's mineral endowment is regulated by MMS and/or BLM in 
their roles as the lessor for federally owned mineral estates, 
while OSM supervises coal mining on private as well as public 
lands.
    The Subcommittee's charge is to provide oversight of the 
mission of each bureau and ask the question: ``Are the hard-
earned tax dollars of our citizens well spent by the agencies 
charged with pursuing these programs, or should we in Congress 
direct improvements be made toward achieving these goals?''
    Mrs. Cubin. The Chairman now recognizes the Ranking 
Minority Member for any statement he might have.

STATEMENT OF HON. CARLOS ROMERO-BARCELO, RESIDENT COMMISSIONER 
              FROM THE COMMONWEALTH OF PUERTO RICO

    Mr. Romero-Barcelo. Thank you, Madam Chair. I am pleased to 
join you in welcoming our four witnesses from the Department of 
the Interior as to the funding for the Bureau of Land 
Management and Energy and Mineral programs, and the Minerals 
Management Service of the Office of Surface Mining, and the 
U.S. Geological Survey.
    The programs that come under our jurisdiction of the 
Subcommittee are important to all Americans because these 
programs are responsible for the wide development of the oil, 
gas, and coal resources of public lands. The outer continental 
shelf alone produces 25 percent of domestic oil production and 
15 percent of natural gas production.
    In addition, the Minerals Management Service reports this 
program raises an average of $3 billion a year. These programs 
must therefore be managed wisely and fairly. And the budget 
reports before us today include some of the controversial 
measures of recent years such as the reductions-in-force.
    Nevertheless, I am concerned that these programs before us 
today proposing essentially a flat budget request while also 
proposing significant increases in program activity. Each 
program is absorbing the uncontrollable cost like rent 
increases without seeing a correlating addition in funding.
    For example, the need to conduct the Escalante wilderness 
study is apparent, yet what effect does the corresponding 
reduction in the Bureau of Land Management's oil, gas, and coal 
programs to pay for this study, how will BLM's ability to 
manage the minerals program.
    Clearly, we must all seek ways to reduce the national 
deficit, yet we must be careful to avoid cutting programs that 
can otherwise help reduce the deficit for raising revenues. The 
wide development of energy resources also depends on sound 
science and the importance of the work done by the U.S. 
Geological Survey is self-evident.
    As greater demands are placed on our natural resources, 
more drinking water, more home heating oil, more gasoline for 
our cars, the work done by the USGS becomes more critical. The 
Office of Surface Mining is not facing another major reduction 
as it did in fiscal year 1997, but still how effective will the 
Bureau be with 182 fewer people managing the regulatory 
management of our nation's coal resources.
    Will OSM personnel accomplish prevention of pollution from 
coal mining. I do not pretend to know the answers to these 
questions but I look forward to disclosing my concerns with the 
officials appearing before us today and in the days and months 
to come. Thank you very much.
    Mrs. Cubin. Since there are so few members of the 
Subcommittee here, I would be willing to waive the rule to 
allow other members to have opening statements if they wish to. 
Mr. Rahall.

 STATEMENT OF HON. NICK J. RAHALL, A U.S. REPRESENTATIVE FROM 
                         WEST VIRGINIA

    Mr. Rahall. Thank you, Madam Chair. Madam Chair, I would 
simply like to take this opportunity to commend the 
Administration for finally moving forward to address the 
pressing need to devise meaningful mining and reclamation 
standards governing hardrock mining operations on Federal 
lands.
    I have long maintained that the Administration does not 
need an act of Congress to impose meaningful bonding and 
reclamation requirements on these operations of the type that I 
along with our ranking minority member on the full committee, 
George Miller, have been advancing for several years as part of 
our efforts to provide comprehensive reforms of the Mining Law 
of 1872.
    The Interior Department already has the authority to devise 
and enforce these types of standards, but to date, has lacked 
the will to move forward with initiative of this nature, so I 
am pleased to see that sentiments are changing over at the 
Department on this particular matter.
    I also would like to commend the Administration, Madam 
Chair, for its budget submission as it relates to the hardrock 
mining royalty proposal, with the proceeds to be used for the 
reclamation of abandoned hardrock mined lands. This, too, has 
been an element of the reform legislation that we have been 
pursuing for the past few years.
    And, finally, with respect to the Office of Surface Mining, 
I do want to take note of the fact that at the end of this 
fiscal year, it is estimated that the unappropriated balance in 
the Abandoned Mine Reclamation Fund will exceed $1.2 billion.
    That level of unappropriated reclamation funds is simply 
unacceptable in light of the large inventory of high-priority 
AML sites which remain unfunded almost 20 years after the 
enactment of SMCRA. I do want to commend the Acting Director 
from whom we are going to hear today, Kathrine Henry, for her 
taking on the leadership reins during this transition period. 
Nothing has told me in her comments to me that she would like 
to give up her day job but I do salute her for the work that 
she is doing.
    The Administration's AML budget request does nothing to 
draw-down that unappropriated balance that exists, and I simply 
want it noted that I will join with other like-minded 
colleagues to continue to press the Appropriations Committee to 
do this program more justice. Thank you, Madam Chair.
    Mrs. Cubin. Certainly. Now I will introduce our witnesses, 
Dr. Gordon Eaton, Director of the U.S. Geological Survey; Ms. 
Kathrine Henry, Acting Director of the Office of Surface Mining 
Reclamation and Enforcement; Ms. Carolita Kallaur--is that the 
way to say that?
    Ms. Kallaur. Yes.
    Mrs. Cubin. Well, I am surprised. Deputy Director of the 
Minerals Management Service; and Dr. W. Hord Tipton, Assistant 
Director, Minerals, Lands and Resources Protection, Bureau of 
Land Management. Welcome to all of you. I thank you for coming 
over and look forward to a productive hearing.
    Now before you begin your testimony I would like all the 
witnesses to stand to be sworn in and please raise your right 
hand.
    Mr. Romero-Barcelo. Madam Chair, this is just a point of 
order. Make sure that the witnesses have been advised of the 
consequences of their being sworn in.
    Mrs. Cubin. Well, the consequences mean only that if you 
did not tell the truth that you could be subject to perjury.
    Mr. Romero-Barcelo. And they are being given copies of the 
rules.
    Mrs. Cubin. Yes, I believe in the letter that was sent out 
to them it was included in there.
    Mr. Romero-Barcelo. All right, thank you very much, Madam 
Chair.
    Mr. Rahall. Madam Chair, a point of order.
    Mrs. Cubin. Mr. Rahall, sure.
    Mr. Rahall. May I just ask if the witnesses were notified 
prior to this swearing in ceremony of their big event today.
    Mrs. Cubin. Mr. Rahall, in the letter that we sent asking 
them to--to Secretary Babbitt we indicated that the witnesses 
might be sworn in, that the possibility existed.
    Mr. Dooley. Madam Chair, I just have a question. Does this 
same standard of being subject to perjury apply to members too? 
I mean we have not taken an oath. I am serious.
    Mrs. Cubin. Well, if we all would like to take the oath, we 
could too.
    Mr. Dooley. Well, I just wonder if we are not setting a 
double standard here with our witnesses versus those of us who 
are sitting on the committee.
    Mrs. Cubin. Well, certainly that is not my intention and I 
am not singling out any group of witnesses. Every single person 
who testifies in front of this Subcommittee will be sworn in 
and it certainly is not any----
    Mr. Dooley. Then what is its intent?
    Mrs. Cubin. It is just a new process that I have adopted. 
It certainly does not mean that I think someone is not going to 
tell the truth. It is just something that I think should be 
done.
    Mr. Dooley. The fact that you are not asking members of the 
panel to take the same oath, does that mean that you think we 
are more inclined to tell the truth than the witnesses?
    Mrs. Cubin. No, Mr. Pallone, it does not.
    Mr. Dooley. Mr. Dooley.
    Mrs. Cubin. Dooley, yes. Excuse me, Mr. Dooley. Raise your 
right hand, please. Do you solemnly swear or affirm under the 
penalty of perjury that the responses given and the statements 
made will be the truth, the whole truth, and nothing but the 
truth? Thank you.
    Let me remind the witnesses that under our committee rules 
the testimony will be limited to five minutes but your entire 
testimony will be entered into the record. The traffic lights 
down there will help you know where you are as far as time is 
concerned. So Dr. Eaton, would you care to begin the testimony?

 STATEMENT OF GORDON P. EATON, DIRECTOR, U.S. GEOLOGICAL SURVEY

    Mr. Eaton. I would be happy to. Good afternoon, Madam 
Chair, and members of the Subcommittee. It is a pleasure to be 
here to discuss the programs of the U.S. Geological Survey with 
you and our continued work on behalf of the American people. 
And being asked to be sworn in, I am reminded of Mark Twain's 
famous comment that if you do not lie you do not have to 
remember what you said, and so I do not personally have any 
trouble with the fact that we were asked to be sworn in.
    Let me begin my remarks by thanking the Congress as well as 
the Administration and all of the predecessors of both of these 
groups for 118 years of generous support for the U.S. 
Geological Survey. We celebrated our 118th birthday just 
yesterday. Our nation faces many challenges concerning the 
world we live in and the resources that we use every day and 
addressing these challenges demands new approaches and new 
partnerships.
    The opportunity to incorporate minerals information 
specialists from the former United States Bureau of Mines and 
the biological expertise of the former National Biological 
Service helps form a new U.S. Geological Survey this past year 
that enhances our ability to provide the sound science needed 
to attack some of these very challenging and vexing national 
issues.
    Our nearly 2,000 cooperating partners in the States and in 
the Federal Government help us to focus on the issues of 
greatest importance and concern. With your permission I would 
like to describe to you a few examples of some of our recent 
accomplishments. Natural hazards are taking an increasing toll 
on the lives and property of our citizens and I do not need to 
remind any of you in this room of the floods that are underway 
here in the northeast even as we speak.
    To reduce this burden, the Geological Survey maintains a 
number of high hazard monitoring programs for the nation. In 
March of 1996, the USGS, using real time data, was able to 
reassure 1,000 people living near Akutan volcano in the central 
Aleutians that they would not have to evacuate, despite the 
fact that there was increased seismic activity beneath the 
volcano.
    The local fishing industry headquartered there and valued 
at $120 million annually, was able to continue working safely. 
USGS' studies of mineral and energy deposits, land use, and 
wealth of plants and animals provide a central source of 
information to in-

dustry, to managers, to regulators, and the public for sound 
decisions on our resource heritage.
    USGS scientists are working to provide the information 
needed to sustain a healthy environment for our citizens. We 
are working with Federal land management agencies to remediate 
contamination associated with abandoned mines, focusing on the 
sites with the greatest effect on water quality and on 
ecosystem health in specific watersheds across the country.
    At the California Gulch Superfund Site in Leadville, 
Colorado, mineral maps produced by the USGS have cut costs and 
accelerated cleanup of mine wastes over a very large area. And 
the central part of our mission is making sure that the results 
of our scientific studies are widely available and in a form 
that is usable and useful.
    Through the USGS home page on the World Wide Web, we are 
providing more than 100,000 pages of information. During 1996 
the monthly tally of visitors to our Web site doubled to more 
than 160,000 people a month.
    Turning now to fiscal year 1998, I want to address three 
new program initiatives built largely out of the research and 
data gathering programs supported by the Congress in previous 
years that I think will allow us to serve the American people 
even better. For fiscal year 1998 the U.S. Geological Survey's 
budget request is $745.4 million.
    Our new program initiatives are $3 million, an increase to 
expand and upgrade the global seismographic network to service 
the technical requirements of this nation's nuclear test ban 
treaty, a $7.5 million increase to expand biological research 
on Federal lands, and $9 million as an increase to join with 
the Environmental Protection Agency and NOAA to expand the 
available information on water quality for the 75 largest 
metropolitan areas in the country.
    Further details about our 1998 budget are provided in the 
testimony that I have submitted for the record so let me just 
say in conclusion, Madam Chair, we are enormously proud of our 
118-year history of serving every citizen in this country every 
day in every State.
    The new USGS is continuing its proud tradition of providing 
science for a changing world. Again, we thank you for your 
continuing support, and I would be pleased to answer any 
questions that any member of the committee might have.
    [Statement of Mr. Eaton may be found at end of hearing.]
    Mrs. Cubin. Thank you, Dr. Eaton. The next person we would 
ask to testify is Ms. Kathrine Henry, the Acting Director of 
the Office of Surface Mining.

STATEMENT OF KATHRINE HENRY, ACTING DIRECTOR, OFFICE OF SURFACE 
               MINING RECLAMATION AND ENFORCEMENT

    Ms. Henry. Madam Chairman and members of the committee, I 
appreciate this opportunity to appear before the House Energy 
and Mineral Resources Subcommittee to discuss the 
Administration's requested fiscal year 1998 funding level for 
the Interior Depart-

ment's Office of Surface Mining Reclamation and Enforcement, 
known as OSM.
    I also appreciate this opportunity to review OSM's work 
with the States and Indian tribes to protect the coal field 
environment during mining and to assure reclamation of the land 
from which coal has been mined. With your approval, I would 
like to submit my formal statement for the record and then 
summarize my opening remarks and respond to any questions the 
members of the Subcommittee may have about OSM's plans and 
activities.
    OSM's budget request for fiscal year 1998 is $271 million. 
This is essentially level with the current fiscal year but it 
is down slightly, $700,000, from the level that was enacted for 
fiscal year 1997. The request includes $93.7 for regulation and 
technology plus $177.4 million for abandoned mine land 
activities.
    Those amounts will support OSM programs at a stable level 
taking into account recent restructuring, downsizing, 
reinvention of program oversight, and the shift of resources in 
the direction of technical assistance focused on the prevention 
of environmental problems in the coal fields.
    To make it easier to understand, the budget is organized 
according to five OSM business lines. Those business lines are 
environmental protection, environmental restoration, technology 
development and transfer, financial management, and executive 
direction and administration.
    Previously, OSM's budget featured separate accounts 
reflecting various duties under the surface mining law. But it 
was not functionally or organizationally related to how OSM 
carries those duties out, so there may be a bit of an 
adjustment for those that are accustomed to operating under the 
previous budget system that OSM submitted.
    Most of OSM's funding passes through to the States and 
tribes which implement their own regulatory and reclamation 
programs in accordance with OSM standards. Direct grants, 
emergency reclamation projects, and high priority reclamation 
account for about 75 percent of OSM's appropriation each year. 
That pattern is maintained in the request for fiscal year 1998.
    State regulatory program grants are budgeted at $50.2 
million in the 1998 request, just slightly below 1997. State 
and tribal reclamation grants are budgeted at $142.3 million 
which is a slight increase. The States and the tribes carry out 
most of the work under the Surface Mining Control and 
Reclamation Act receiving technical support, financial support, 
and program oversight from OSM.
    In terms of human resources the coal States employ the 
equivalent of about 2,400 full-time staff positions in their 
surface mining programs contrasted with OSM's total work force 
of 674 which is down from 989 just two years ago. 1997 is the 
20th anniversary year of the Surface Mining Control and 
Reclamation Act. Everyone involved in the implementation of the 
Surface Mining Act--Congress, the States, the tribes, and OSM--
can be proud of the efforts of the past 20 years to see that 
the coal field people and their environment are protected 
during mining operations and that mine lands are restored for 
productive uses.
    With the advent of fiscal year 1998, we will begin OSM's 
next 20 years which can be just as successful as the first 20 
if we continue to work effectively together at the State, 
Federal and tribal levels, if we continue to be responsive to 
coal field citizens, if we continue to work positively with 
responsible coal mine operators who comply with the law, and if 
we continue to stand up for fair, consistent, even-handed 
enforcement of the law.
    Those are the things we intend to do in fiscal year 1998. 
They are supported by the budget request that the 
Administration has submitted for OSM. At this time or later I 
would be glad to respond to your questions about the budget as 
well as any other aspects of OSM's plans and activities that 
you would like to cover. Thank you.
    [Statement of Ms. Henry may be found at end of hearing.]
    Mrs. Cubin. Thank you, Ms. Henry. The next person we will 
ask to testify is Ms. Carolita Kallaur, Associate Director of 
the Minerals Management Service.

  STATEMENT OF CAROLITA KALLAUR, ASSOCIATE DIRECTOR, MINERALS 
                       MANAGEMENT SERVICE

    Ms. Kallaur. Thank you very much. Madam Chairman, and 
members of the Subcommittee, I appreciate very much the 
opportunity to appear before you this afternoon to discuss the 
Mineral Management Service fiscal year 1998 budget request and 
to discuss the two important programs we administer, the 
Royalty Management Program and the Offshore Minerals Program.
    Our budget request is for $205 million for fiscal year '98. 
This is approximately $600,000 above what we received for 
fiscal year '97. I would like to stress at the outset that MMS 
recognizes the need to make government smaller and more 
efficient. We are committed to meeting those goals and have 
made significant strides already.
    At the same time we are faced with an unprecedented 
increase in workload in our Gulf of Mexico OCS program which 
will translate into significant energy and economic benefits 
for the American people. In 1996 alone, industry acquired an 
additional 1,500 leases and tomorrow we will be holding another 
record-breaking sale where it is likely industry will acquire 
close to another 1,000 leases.
    On the royalty front, we are working diligently to insure 
that we are getting what is due us while dealing with the 
implementation of a major new piece of legislation, the Royalty 
Simplification and Fairness Act. Our budget represents a 
balancing of priorities. In our best judgment it is the best 
way to allocate funds in these tight budgetary times.
    Let me first touch upon what value is derived from the 
programs we manage. In fiscal year '98, MMS, through its 
royalty program will account for and distribute an estimated 
$6.7 billion, $5.5 billion from OCS receipts and $1.2 billion 
in onshore receipts. From an energy standpoint, the OCS 
currently contributes about 15 percent of our domestic oil 
production and 25 percent of the nation's domestic natural gas 
production.
    These percentages are expected to increase in the years 
ahead. Between now and the year 2002, oil production in the 
Gulf of Mexico is expected to increase 70 percent to at least 
1.7 million barrels a day, an increase that will rival what 
occurred in the North Sea in the 1980's. As I mentioned at the 
outset, there has been a dra-

matic turnaround in the Gulf. What was once referred to as the 
``Dead Sea'' is now viewed as a world class production 
province.
    To put what is happening in deep water in perspective, the 
average flow rate for a Gulf of Mexico well is 275 barrels per 
day. Contrast that rate with the initial flow rates from one of 
Shell Oil's recent deepwater discoveries which is averaging 
10,500 barrels per day. We are talking about Persian Gulf flow 
rates for the first time ever in the United States.
    What does all this mean for MMS as a regulator? It means a 
dramatic increase in workload associated with all phases of our 
operation--from lease adjudication; to approving exploration 
and development plans; to overseeing operations from an 
environmental and safety perspective; and to insuring that we 
receive fair market value for the resources we lease.
    If we are unable to process industry applications on a 
timely basis, we cost the private sector money. We also want to 
make sure that the excellent environmental and safety record of 
the OCS is maintained. We also have significant ongoing 
responsibilities associated with OCS lease operations in the 
Pacific and offshore Alaska that we must continue to devote our 
attention to.
    While we are moving forward on these fronts, we are also 
trying to reduce costs and improve the way we do business. 
These measures have allowed us to reduce personnel in the 
offshore program by 16 percent since 1992 and our headquarters 
staff by 27 percent.
    Let me turn now to our Royalty Management Program. A major 
activity for the Royalty Management Program is implementation 
of the Royalty Fairness and Simplification Act. There are 18 
major provisions in this legislation that require action and 
more than a dozen provisions that will require a rulemaking. 
Shortly after the President signed this bill into law, we began 
a series of consultation meetings that will continue throughout 
implementation.
    We are committed to meeting all the timeframes in the Act. 
For example, we will begin paying interest on overpayments made 
in February according to a timing schedule established in the 
Act. In addition, we hope to publish a proposed rule on the 
section 205 State delegation provision by the end of this 
month.
    In conjunction with the implementation of RSFA the royalty 
program has initiated a comprehensive process re-engineering 
project. This effort will involve all aspects of the Royalty 
Program including changes indicated by RSFA as well as making 
sure that all our processes are carried out in the most 
systematic and efficient way possible.
    As you know, the RMP budget request represents a decrease 
of $3.7 million from the fiscal year '97 enacted amount. The 
proposed reduction to be achieved through buy-out, reduction in 
the workload, and staffing assigned to our accounting support 
services contract and savings in infrastructure which we are 
able to fund this year.
    We are able to make significant cuts because over the past 
few years through a series of process innovations the royalty 
program has constantly strived to increase the efficiency by 
which it carries out many of its functions. These are further 
highlighted in my written testimony.
    In closing, I hope you will agree that we have a lot of 
important work before us. We recognize the need to make 
government smaller and more efficient. Our budget reflects the 
balancing of priorities and our best judgment on how to 
allocate funds in these tight budgetary times. We are committed 
to further improving efficiencies of the programs we manage and 
look forward to working with this committee. I will be happy to 
answer any questions you may have.
    [Statement of Ms. Kallaur may be found at end of hearing.]
    Mrs. Cubin. Thank you very much. The last witness on this 
panel is Mr. Hord Tipton, Director of the Minerals, Lands and 
Resources, BLM.

  STATEMENT OF W. HORD TIPTON, ASSISTANT DIRECTOR, MINERALS, 
   LANDS AND RESOURCES PROTECTION, BUREAU OF LAND MANAGEMENT

    Mr. Tipton. Thank you, Madam Chair. That is assistant 
director. I appreciate the promotion.
    Mrs. Cubin. Well, you see with just this one I missed the 
first part.
    Mr. Tipton. I too appreciate the opportunity to appear here 
today to discuss the fiscal year 1998 budget request for the 
energy and minerals programs administered by the Bureau of Land 
Management, better known as BLM. The President's 1998 budget 
proposes $1.2 billion for the BLM including funds for the 
operation of the Bureau, shared revenues, Payment in Lieu of 
Taxes, and our firefighting activities.
    Of the $740 million requested for BLM operations, the 
request for energy and minerals activities is $68.3 million. 
This is an increase of $770,000 or 1.1 percent above the level 
enacted for 1997, and includes the following changes from 1997. 
We want an increase of $414,000 or eight-tenths of 1 percent 
for oil and gas management, which provides for the competitive 
and non-competitive leasing of oil and gas resources and for 
inspection and enforcement of active leases.
    We would like an increase of $164,000 or 2.4 percent for 
leasing and management of coal leases, and an increase of 
$192,000 or 2.2 percent for other minerals management 
activities, which include leasing and management of potash, 
phosphate, sodium, geothermal and other mineral resources, 
including mineral materials.
    In addition, the President's budget request includes $32.6 
million for administration of the mining claims under the 
Mining Law of 1872. These costs are fully financed by mining 
claim fees.
    Historically, the energy and mineral resources of the 
public lands have contributed enormously to the nation's 
economic and social development. Today, BLM manages the 
resources on about 264 million acres of public land, an 
additional 300 million acres of federally-owned subsurface 
mineral estate, and tribal lands. The scope and importance of 
BLM's management of energy and mineral resources is reflected 
in these statistics.
    At the end of fiscal year 1996, there were over 46,000 oil 
and gas leases in effect on 33 million acres, including 19,000 
leases in producing status, and there were another 3,900 
producing leases managed by the BLM on Tribal lands.
    In 1997 and 1998, BLM expects to issue about 2,000 
competitive oil and gas leases covering about 1.2 million 
acres, and 1,300 non-competitive leases on about 1.7 million 
acres. At the end of 1996, there were 142 producing coal 
leases, producing about 317 million tons.
    At the end of 1996, there were a total of 469 leases of 
other mineral resources, such as potash, phosphate, sodium and 
trona. From these activities, the States received shared 
revenues totaling $457 million in 1996. These shared revenues 
from activities on Federal lands are projected to increase in 
both 1997 and 1998. Federal royalties from these mineral 
activities total approximately $1 billion.
    I might further add that it is estimated that $10.5 billion 
of this is product value and creates about 188,000 jobs, most 
of which are supplied by the minerals programs. There are 
several areas of the energy and minerals program that I would 
like to highlight briefly.
    These include the initiation of a planning and 
environmental process which may lead to oil and gas leasing in 
the National Petroleum Reserve in Alaska which was recently 
announced by the Administration. We will continue oversight of 
the Trans-Alaska Pipeline System, and continue efforts to 
reduce the environmental effects of past mining practices, with 
emphasis on reducing stormwater pollution from abandoned mine 
lands.
    Our cooperative efforts with States and other Federal 
agencies are now demonstrating that we can successfully reduce 
the pollution from many sites, and this should lead to 
significant improvements in downstream land and habitat 
conditions.
    On Friday, February 28, we published in the Federal 
Register a final rule on the requirements for bonding on 
hardrock mining operations. Further, the Secretary has formed a 
task force to evaluate and propose new reclamation standards 
for hardrock mining operations. Completion of this effort is 
expected to take from 18-22 months.
    There is continued heavy workload in the preparation of the 
environmental impact statements regarding gold mining in 
Nevada, where 60 percent of the nation's gold production is 
occurring. And continuation of efforts to reduce and simplify 
the Federal regulations, with heavy emphasis currently on the 
oil and gas regulations at 43 CFR 3100, and continuation of 
discussions with States and tribes concerning the Reinventing 
Government proposal to transfer inspection and enforcement 
responsibilities from Federal authority.
    The BLM has been working diligently with the Interstate Oil 
and Gas Compact Commission to implement the proposal. The BLM 
is also changing its rules to increase funding for Cooperative 
Inspection Agreements entered into with tribes from 50 percent 
to 100 percent.
    In smaller ways too, BLM is also working with other 
agencies and with industry and the interested public. For 
example, we will co-host, along with the U.S. Geological Survey 
and the Wyoming Geological Survey, the First International Soda 
Ash Conference in June. This concludes my statement. I will be 
pleased to answer questions.
    Mrs. Cubin. I thank all of you for your testimony. I think 
I will begin the questioning. I would like to hear briefly from 
each one of you about your agency's commitment to the 
Government Per-

formance and Results Act of 1993. Specifically, I understand 
the Act passed by a Democrat Congress, I will point out, to 
require several things of the agencies in preparation of 
strategic plans, not the least of which is consultation with 
Congress.
    Now I know that you go before the Appropriations Committee 
and request your appropriations and that I guess you answer 
questions and explain things and I guess that could be 
considered sort of consultation with Congress. But we are the 
authorizing committee for all of your agencies and we need to 
be fully consulted when you draw up these plans.
    I think that is what the law meant that you are to consult 
with Congress in drawing up the plans, not drop a ready-made 
plan on somebody's desk and say this is a done deal. And in 
this committee, I will not be allowing that anymore because I 
think it is so important that we work together. We will save 
time, money, and many misunderstandings.
    And I believe there is just a mood of distrust throughout 
this whole city and we can overcome that but we cannot do it if 
we do not communicate, so that is something that I want to say 
to you. And I would like to hear about your agency's commitment 
to fulfill that. What have you done other than what I have 
observed which is the appropriations process, requesting 
appropriations?
    Mr. Eaton. If I may lead off, I am happy to say that the 
U.S. Geological Survey is fully committed to complying with 
this mandate from the Congress. We have prepared a draft 
strategic plan which we would be happy to share with members of 
this committee. We have submitted it to the Department for 
their review so it is a work in progress.
    It lays out, in some considerable detail, outcomes that we 
expect to occur as a result of our work. But let me take this 
opportunity to share with you one concern that I as someone 
trained in science has, and that is that the payoff from 
scientific inquiries sometimes is not very immediate. I think 
we have a concern, as I am sure the National Science Foundation 
and NASA know, and others are concerned that if, on an annual 
basis, appropriations are tied to immediate outcomes, none of 
us in science are going to be able to demonstrate that on a 
regular basis that is annual in nature.
    It takes sometimes several years to gather the data, to 
analyze the data, to prepare interpretations, and then to offer 
that. Nevertheless, we have listed in this plan which, again, I 
would be happy to share with members of this Subcommittee, many 
dozens of accomplishments by which you can judge both our 
intention and our performance.
    Mrs. Cubin. Could I just respond to that, and I will do it 
as each one of you answer the question. I do not sense that 
this is something that we are here to cast judgment on, the 
strategic plan that you drew up. The way I sense this is that 
we should be a party to it. I am a chemist by training. I am a 
scientist as well. I understand scientific modeling. I 
understand that science takes a long time to pay off in some 
cases.
    And I think that other Members of Congress can have that 
explained to them and they can know it too, so I just hope that 
you will be more forthcoming in the future and at least talk to 
all the members of the committee, not just me or my side, all 
the members of the committee and truly consult with Congress 
when you are doing your strategic planning.
    Mr. Eaton. We would be very pleased to do that and I would 
be happy to meet on a one on one basis or with the Subcommittee 
as a whole.
    Mrs. Cubin. I would appreciate seeing the draft that you 
have. Thank you.
    Mr. Eaton. All right, fine. Thank you.
    Mrs. Cubin. Ms. Henry, would you like to answer the same 
question?
    Ms. Henry. Yes. OSM is also very committed to complying 
with the Government Performance and Results Act. We have been 
working very, very hard on our draft strategic plan and we are 
really very proud of the progress that we have made.
    I would like to say that I think that at least in the view 
of the department OSM and perhaps one or two of the other 
bureaus are really a little further ahead on this than some of 
the other bureaus. So we are really very proud of the progress 
that we have made. It is still a work in progress.
    As Dr. Eaton mentioned about USGS, we have met with the 
Appropriations Committee and shared our progress so far with 
them. We fully intended to come and discuss this also with the 
authorizing committee and would be happy to do so in the next 
couple of weeks and share with you what we have come up with so 
far. I certainly am in full agreement that this should be a 
cooperative effort.
    One of the things that I think we seem to be struggling 
with is really how to come up with good measures for this. We 
would certainly welcome any ideas that your committee could 
share with us in coming up with that.
    Mrs. Cubin. Thank you. Ms. Kallaur.
    Ms. Kallaur. Yes, the Minerals Management Service developed 
a strategic plan over a year ago and we did it in cooperation 
with all of our employees and we have been using that as the 
basis for developing I guess what is called a ``GPRA'' plan. 
One of the GPRA areas is ``performance measurements'' and our 
RMP program actually serves as a pilot to see if we could 
identify some good measures, and these measures have been 
reflected in our budget.
    We set up a team about a year ago when the Offshore Program 
developed the measures that we thought truly would reflect our 
performance and we have put these in our draft performance--
GPRA plan. It is my understanding that meetings have been set 
up both with the Appropriations staff and with the authorizing 
committee. It was clearly our intent to meet with both sides 
because we recognize that you both have views.
    We are struggling somewhat in trying to come up with truly 
good performance measures, and while we have something that we 
can use as a discussion point, we are clearly looking for ideas 
from others as to how best to carry out this function. We are 
very much committed to working with everybody who has an 
interest in this area.
    Mrs. Cubin. Well, I thank you for that. Another reason it 
seems so important to me is that you are located here in 
Washington and you see the people that can come to Washington 
and tell you their story and we come from out there, we come 
from home, where peo-

ple that you will never see have feelings and attitudes and 
quite intelligent opinions.
    And that is why I think it is so important that you do 
consult as we go along so thank you. Hord, Mr. Tipton.
    Mr. Tipton. We too have a fairly well-advanced draft of the 
strategic plan. I share a lot of the concern that Dr. Eaton 
articulated but actually I guess ours is probably easier than 
VSGS' plan but it is very difficult to do this. This is hard 
work.
    We have been working on ours for about three years. I know 
OSM has as well because I worked on it when I was over there 
too. That was at least three years ago. So it is not that we 
waited until the last minute to try to figure this out. It is 
just that we are having a difficult time in going from a system 
of counting things to one of producing outcomes and trying to 
measure results.
    Most of us tend to look at things as accountants and miles 
of fence that we put up or permits that we issue, APDs that we 
approved, and that type of thing. So it has been very difficult 
to come to grips with internally. We produced at least three 
drafts. Our folks internally have been pooling their time to 
figure out to do this.
    But I think we finally reached the turning point last week 
when we provided our latest draft to our State directors who 
were all in town for a meeting. And at this time we have enough 
detail in our plan that we got their attention and all of a 
sudden they started to see what this really meant and how 
things were going to be measured by it, budgets would be 
prepared by it, and people would actually be evaluated by it.
    And at that point a lot of comment came back from our field 
that we want to respond to that. We noted that since the 
submission time for us at least internally is June 1 we do not 
have a lot of time to bring this to closure so we have drafted 
out an outreach plan for this and I think there has been some 
staff conversations, at least with Congress.
    Our draft communications plan does include a congressional 
strategy to sit down now that we finally have something that is 
meaningful and I think you can help us visualize where we can 
make some progress. It is not just Congress that we want full 
involvement, we want full public participation from the ground 
level up.
    This is the type of thing that seems to develop from the 
top down and at some point in the process we have to bring the 
grass roots reality check back to it and that is basically 
where we are now.
    Mrs. Cubin. Well, I think that is the whole problem that 
you consider it a top down process and now you finally have 
something meaningful. How do I know if I think it is 
meaningful? How does anybody know? You have spent three years 
without consulting the authorizing committee and maybe you know 
there are folks outside the BLM who have a very important part 
to play in your agency that could have helped all along the 
way.
    I understand the management style of the current Secretary 
is a hands-on, a top down type person, and that is his 
management style. I am not making a judgment on that. But I do 
know that the Act requires that you consult with Congress. I 
have made my point too many times.
    Let me--I am going to at this time defer to the ranking 
minority member.
    Mr. Romero-Barcelo. Thank you, Madam Chair. Madam Chair, I 
would ask for the gentleman from West Virginia, Mr. Rahall, 
whether he could ask the one question that he wants to and he 
has to leave. I am just going to postpone my turn until after 
him and after you have somebody else on your side. Will it be 
all right with you, Madam Chair?
    Mrs. Cubin. Yes, certainly, without objection.
    Mr. Rahall. Thank you, Madam Chair. I thank the 
distinguished ranking minority member for yielding to me to ask 
a quick question so I might get to a previous commitment. I 
would like to ask this of Ms. Henry. I am looking at your OSM 
mining reclamation and enforcement submission, table 5.
    I am looking at the column entitled State inspections and 
at the total number of State inspections and what I am reading 
from is 119,000. This is for the period now October 1, 1995 to 
September 30, 1996, Federal inspection programs. Total 
nationwide State inspections is 119,573. Now that is almost 
120,000 State inspections.
    The number of OSM inspections, the number of OSM 
inspections is only 2,198, and further number of notice of 
violations issued by OSM is only 46 and the number of cessation 
orders issued is 24. Let me note first with a total nationwide 
State inspections of close to 120,000, and yet Federal OSM 
inspections only barely over 2,000, to me that is hardly the 
view of a huge Federal bureaucracy coming in and stampeding 
over our States doing the job.
    I would ask you the question if the fact that there are 
only 46 notice of violations and 24 cessation orders, is this 
number so low due to the fact that the States have been doing a 
better job of their inspections or is it a matter of budget 
cuts have not allowed you to do the proper number of 
inspections or perhaps the combination of both?
    Ms. Henry. Congressman Rahall, we have certainly been 
looking at our own inspection and enforcement results over the 
last couple of years to evaluate how the program is going. We 
believe in the normal maturing of this program over the last 20 
years that the States certainly have been doing a far better 
job than at the beginning of the Act in 1977.
    And we think that the inspection and enforcement figures 
that you have cited are consistent with how the program should 
be maturing, that certainly the majority of inspections should 
be done by the States with more limited oversight inspections 
done by OSM.
    And by the same token, the number of enforcement actions 
that are taken by the States should far outweigh the Federal 
enforcement actions as the program matures and as the States 
become better at enforcing their programs. We think that most 
States are doing a very good job now at carrying out the 
mission of the Surface Mining Act.
    It is true that over the last couple of years we have 
experienced substantial budget cuts and substantial reductions 
in the number of Federal personnel that we have. We feel that 
we are still able to do an adequate job with oversight 
inspections and with our enforcement even though our Federal 
presence has lessened somewhat over the last couple of years.
    Part of this is due I think to our revised oversight policy 
which we put into effect about a year ago. We have now had 
about a year's experience with that. We are going to be taking 
a very, very careful look at how that oversight policy is 
working. What it has enabled us to do is to take our reduced 
personnel and resources and focus those on the real problems 
that exist in each State now.
    All the problems are not the same from State to State and 
this policy allows us to focus our resources on the real 
problems that are out there and really to get some good on the 
ground results rather than the previous process-oriented 
oversight policy that we had.
    Mr. Rahall. I appreciate that response. If I might ask just 
one more quick question because this gets to an issue of 
States' rights as well. It is my understanding that a recent 
court decision affecting the AVA, Applicant Violator System, 
may end up or has the potential to end up costing certain 
States several millions of dollars. Could you elaborate further 
on that court decision and what might be the next step?
    Ms. Henry. Yes, I would be happy to. On about January 31, I 
believe, the D.C. Circuit Court of Appeals here ruled that the 
ownership and control regulations on which the Applicant 
Violator System is based are invalid. We are discussing with 
the Justice Department and are seeking a rehearing of that. In 
fact we have recommended to the Justice Department that the 
D.C. Circuit review its decision and overturn that decision, so 
we do not yet know how that will come out ultimately.
    It is true that while the ownership and control regulations 
have been in effect since 1988 a number of States entered into 
global settlement negotiations with companies with regard to 
their ownership and control situations. And our review of some 
of those settlement agreements reveals that there were clauses 
in several of them that provided that if the ownership and 
control regulations were found to be invalid, because at that 
time they were being challenged in the lower courts, that the 
States would then pay back settlement amounts plus interest.
    And I believe that is of real concern to several States 
that would be----
    Mr. Rahall. Including my own which would be quite costly.
    Ms. Henry. Yes, I believe that is correct. We have yet to 
see the final outcome of this case.
    Mr. Rahall. Thank you. Thank you, Madam Chair. Thank you, 
Carlos.
    Mrs. Cubin. OK, Mr. Cannon.
    Mr. Cannon. Thank you, Madam Chair. I have another 
Subcommittee that I need to get to so if you would not mind, I 
would appreciate asking a couple questions. In deference to our 
colleague, Mr. Dooley, I have been sitting here thinking when 
the last time Mr. Tipton and I were together and I think, and I 
only think, this is not an averment, that we were on the other 
side of this table talking to Congress and it is nice to have 
you back and it is sure nice to be on this side.
    If I could ask just a couple questions. Were you involved, 
Mr. Tipton, directly in the budget process, setting the budget 
for Pay-

ment in Lieu of Taxes. You referred to that in your testimony. 
Were you actually involved in that?
    Mr. Tipton. No, sir.
    Mr. Cannon. OK. And I suppose you were not involved in the 
decisions as to the monument in southern Utah?
    Mr. Tipton. No, sir, I was not.
    Mr. Cannon. Thank you. I just wanted to clarify for members 
in the audience what BLM's Energy and Minerals Management Act 
budget projects the increases. You speak in your testimony for 
uncontrollable unrelated charges, usually pay raises. The 
actual program changes are reductions totaling $500,000, as I 
understand it.
    The budget request shows an accumulative $150,000 increase 
to the three subactivities within the Energy and Minerals 
Management activity to work on the Escalante National Monument 
development plan. I am concerned that this plan will only prove 
to follow the trend of the Administration as shown as 
specifically disallowing mineral development within the 
monument as part of the overall monument plan.
    How would the work performed by BLM employees on the plan 
be coded, in other words, will those charges be taken from the 
net receipt sharing portion due to the State of Utah?
    Mr. Tipton. To the best of my knowledge, it very well could 
work that way. The cost of the land use, planning is an 
integral part of a mineral development program, regardless of 
location or the circumstances. To assist in the land use 
planning, we will use $150,000 total from the energy minerals 
portion of the BLM budget request.
    Mr. Cannon. I think that would be unfortunate. My view of 
the budget for the monument is that it basically comes out of 
the Payment In Lieu of Taxes so the counties in southern Utah 
are taking a financial hit with the services they have to 
provide and then take a hit again by losing some of their PILT 
money and it would be unfortunate to take a third hit of this 
nature.
    Mr. Tipton. Well, we had an unfortunate misstatement in our 
budget package which as explained to me was making a connection 
to the reduction in payment in lieu of taxes to the funding of 
the monument. And I think there has been detailed explanation 
as to how that is supposed to work and that the two are not 
connected.
    Mr. Cannon. I understand that there was a connection that 
was made by the Secretary actually and then subsequently 
corrected but in fact whether they are related or not is to 
have two burdens that come back to these counties as well as 
other counties that have public lands within them. Thank you, 
Madam Chairman.
    Mrs. Cubin. Ms. Green, do you have questions for the panel?
    Ms. Christian-Green. Thank you, Madam Chairman. Yes, I have 
two questions for Dr. Eaton. I notice that there is a $1.5 
million reduction in the budget for studies of geological 
hazards, resources and processes. How does that impact on the 
work that you might have to do?
    I notice that the Virgin Islands and the other territories 
are not included on the map in the exhibit, and have studies 
been done there and does this prevent us from having them done?
    Mr. Eaton. I think the reduction that you are referring to 
relates specifically to the program of geological mapping which 
is a func-

tion that we engage in in conjunction with the partners in each 
of the States to prepare basic geologic data for the purposes 
of making interpretations with respect to the occurrence of 
resources or to the occurrence of hazards.
    That amounts to about an 8 percent reduction in this 
program. We are very supportive of the program itself. In fact, 
we are in the process of supporting the reauthorization of the 
program and it is my hope that this is a very temporary matter 
of arresting the growth in the program and at the beginning of 
next year it will continue to grow.
    Our budget increase as handed to us by the Administration 
amounted to about $6.5 million. But those three new tasks that 
are referred to in my oral remarks add up to a good bit more 
than that, and so throughout our budget you will see 
reductions, very small ones of the sort that you just referred 
to, where we gathered the funds to support some of these new 
initiatives.
    Now as to our activity in your part of the world, the 
Virgin Islands, and so forth, I have to confess that I have no 
specific information that I can share with you this afternoon 
but I would be happy to look into that and provide you with 
what it is we have done there in the past or may even be doing 
there now.
    Ms. Christian-Green. Thank you. And the other question is 
on the incorporation of the National Biological Services into 
the USGS.
    Mr. Eaton. Yes.
    Ms. Christian-Green. Last weekend in the Subcommittee on 
Parks and Public Lands, there was testimony to the fact that 
science is not informing management policies of the Park 
Service, that it is decreasing the amount of dollars being 
spent on research because of pressing needs elsewhere, and that 
there was a lack of objectivity on what types of research was 
done and other concerns were voiced. How does the incorporation 
of NBS into USGS help to address some of these concerns?
    Mr. Eaton. First of all, let me say in response to your 
initial remarks that I do not agree with the views that were 
expressed. This is an organization that was put together a 
little more than three years ago by bringing research 
scientists with biological backgrounds together from a variety 
of interior bureaus. The intention, at that time, was to 
separate scientific research and investigation from management, 
regulatory enforcement, and listing issues which the Geological 
Survey nor NBS before they became part of us did not engage in.
    And my sense is that it was a correct concept. It kept 
political pressure from coming to bear on the scientific 
outcomes. Now what happened was that this agency existed in 
that form for about two-and-a-half years, and then the 104th 
Congress made a determination that NBS would become part of the 
Geological Survey. That happened on October 1. They became a 
new division.
    But the fact of the matter is that almost all of the 
scientists involved here, now over a period of four years, had 
worked for three different Federal bureaus, have constantly 
been changing hats and chairs, and at the same time took an 18 
percent budget reduction.
    Now a hit that large in the budget is obviously going to 
reduce what anybody, even a stable scientific organization, can 
deliver; but to couple that with this organizational chaos that 
went on, or the result of being assigned first here, then 
there, and still a third place, I think you might expect that, 
in fact, the services that they might provide to the Park 
Service were somehow going to be impacted.
    My own opinion is that it is going to really not be very 
meaningful to comment on what this new division of the 
Geological Survey can deliver for a period of another two to 
three years. They are just now getting into a stable mode. We 
have asked for an increase in their budget.
    The whole aim here is to better serve the management 
bureau. I would hope that in a period of two to three years 
time that you nor I would be hearing criticisms of this kind. I 
can understand them and I have no doubt that in fact perhaps 
the service has in some way been reduced, but when a budget is 
reduced by almost one-fifth, that is a consequence that is 
going to occur.
    Ms. Christian-Green. Thank you, and happy birthday.
    Mr. Eaton. Thank you.
    Mrs. Cubin. Yes, happy birthday. I am going to recognize 
the ranking minority member now before our second round of 
questioning.
    Mr. Romero-Barcelo. Thank you, Madam Chair. Dr. Eaton, to 
follow up a little bit on what Ms. Green was asking about the 
merger. There has been a considerable concern among some 
Members regarding the merger between the Biological Service and 
the USGS since last October.
    Now could you describe how the merger is going along and 
how you feel the U.S. Geological Survey office has been helped 
or hindered by the merger?
    Mr. Eaton. I would be happy to do that, Congressman. Let me 
preface my remarks with a personal view from two years back 
when the Congress decided to consider this merger and then in 
December of '95 the conference language that came out of the 
Appropriations Committee said that it was to happen on October 
1 of this past year.
    I was somewhat skeptical from the position that I occupy as 
to how well and how readily this might work. I was concerned 
because there were political red flags flying from the mast of 
the Biological Service that I felt could in turn perhaps create 
difficulties with the Geological Survey and I am happy to 
report to you this afternoon that I have a reformed view of the 
value of this and the ease with which we did it.
    And part of that change in heart on my part stems from the 
fact that no matter what the field of science, the value of 
scientists and their outlook on things are very much the same. 
This has been a very comfortable merger from the standpoint of 
the old Geological Survey. My sense is that it has been a 
fairly comfortable merger given what all they have been through 
on the part of the biologists.
    We are working together. One of the things that surprised 
me as I began to visit their major centers, research centers, 
around the country, was to find, in fact, that many of their 
research partners came from other divisions of the Geological 
Survey before they were a part of USGS.
    So, all in all, I would characterize this as about as 
smooth and effective and happy an outcome as one might have 
anticipated at the outset so I am very enthusiastic about it.
    Mr. Romero-Barcelo. I would sure like to hear about that if 
that is the case. Ms. Henry, there was a cutback in inspectors, 
a considerable cutback last year. I think it was about one-
third of your inspectors were laid off. How has that affected 
the work of your office?
    Ms. Henry. I think that the actual percentage is slightly 
less than that. When we experienced our budget cuts and we knew 
that we would have to reduce our work force, we really took a 
lot of effort to look at every OSM office that then existed to 
make a really good evaluation of what resources were needed 
around the country to carry out our mission under the Surface 
Mining Act.
    So we really strove to preserve the inspection resources 
where they were most needed in the States that still have the 
most active surface coal mining operations. Surface coal mining 
operations have declined in some places around the country and 
there simply is not as much need for OSM inspection resources 
in those places.
    So we took a good hard look to where the resources were 
most needed. There is no question that we have had some 
cutbacks in our inspection staff. We feel that we are still 
doing an adequate oversight inspection job and that we are 
certainly doing a good job in our Federal program inspections 
where we are the primary regulatory authority.
    Not every State has chosen to assume its own regulatory 
program. And, again, I would like to repeat that with our 
revised oversight policy we feel that we have been able to 
focus our reduced human resources inspectors and our other 
technical people on the real problems that still exist around 
the country in States that have surface coal mining operations 
rather than having to expend those scarcer resources on 
problems that simply do not exist anymore.
    We feel that we have been able to streamline our operations 
and to take care of this reduction in our personnel.
    Mr. Romero-Barcelo. Thank you. And so you feel you are 
satisfied that you have enough inspectors right now to do the 
job that you need to do at this point in time?
    Ms. Henry. Yes, that is correct. We are currently 
satisfied. We feel that the new oversight policy is working 
fairly well with the States as our partners in this. We are, as 
I said, going to take a very close look now that the new 
oversight policy has been in effect for a year. We are going to 
have each of our regions take a look at the results from this 
first year's operation and make sure that the policy is working 
the way we intended it to.
    Mr. Romero-Barcelo. Thank you. Ms. Kallaur.
    Ms. Kallaur. Yes.
    Mr. Romero-Barcelo. The MMS is seeking an additional $1.3 
million for the management of the outer continental shelf in 
the Gulf of Mexico. Now the budget request States that the 
environmental studies program will get an increase focused on 
the risk issues associated with deep water operations. How much 
will this increase be used for this and how will it be spent?
    Ms. Kallaur. I believe that the number that we are 
requesting for the outer continental shelf program is larger 
than the one that you cited and that the amount that we are 
requesting for increased environmental studies is slightly in 
excess of $1 million. And all of that money would be dedicated 
to doing some additional work in the Gulf of Mexico deep water 
area so that we have a better understanding of the environment 
there.
    We also have moneys that we are requesting in our 
regulatory program as well as in our geological program so that 
we can acquire some additional geologic information. I believe 
our overall increase is around $6 million for the OCS program, 
a portion of which would be used to conduct these environmental 
studies.
    Mr. Romero-Barcelo. And you are satisfied that funding will 
be enough for you to meet your concerns?
    Ms. Kallaur. Yes. I am sure if it were ten years ago and 
people were not concerned about the deficit, we would come here 
and ask for more money, but we also recognize the tight 
budgetary times and we think that the proposal we have on the 
table is a realistic one and will allow us to do our work 
properly.
    Mr. Romero-Barcelo. OK, thank you. My time is up.
    Mrs. Cubin. I think I will begin my second round of 
questioning with Ms. Henry and I just wish that Mr. Rahall did 
not have to leave because he and I have a good time up here. 
Let me begin by noting that your statement highlights the 
cooperative arrangement between the--in the SMCRA legislation, 
and that is the primacy role that the States for the most part 
has been achieved.
    And I really appreciate that OSM is moving in that 
direction under your leadership and the leadership of Mr. 
Yuram. Despite the absolute trashing of my bill by Secretary 
Babbitt and maybe the President and unnamed people who left the 
room just now that used to be sitting up here who is a friend 
of mine, so I do appreciate that very much. I really think that 
is the way government is supposed to work.
    I think that the proposed directive to your field offices 
on TDNs is a very good idea and a good start. When do you 
expect that you will finish digesting the comments and finalize 
those ideas?
    Ms. Henry. The comment period that we allow people for 
response to the latest draft ten-day notice that we filed--we 
came out with a ten-day notice directive, expired just last 
Friday on February 28. I was told by my staff that we received 
approximately 25 comments to that latest draft and some of 
these comments were quite extensive.
    So we anticipate that it is going to take us at least 
another couple of months to digest all of those comments and to 
see whether there are additional changes that might need to be 
made to the last draft before we finalize it. We certainly hope 
that we will be able to have a final revised ten-day notice 
directive within the next six months.
    Mrs. Cubin. Well, keep up the good work. With respect to 
OSM's recently published rule that you referred to earlier, 
valid existing rights under SMCRA, just let me say that it 
contradicts common sense to me that good faith and all permit 
standards that was sought to be imposed will withstand the 
challenge of the appeal in the Federal courts.
    One thing that makes me think this is the largest 
settlement of its kind ever was in my own State of Wyoming, 
Sheridan, Wyoming. It was Whitney Benefits, I think it was $140 
million, and Peter Kiewit and Sons was also a plaintiff in 
that, over a dispute to a coal mine and I realize that the 
factual situation is different.
    But I do not understand that someone who lawfully owns coal 
rights on a tract of land on August 2, 1977, but had no desire 
to develop it then could lose those rights without just 
compensation. I have this house, it belongs to me. Someone 
cannot come in there and take it because I did not sleep in it 
seven nights out of 20 or something.
    I mean it seems like an arbitrary judgment way down the 
road and you just cannot say once someone has a right you 
cannot take that away. Go ahead and give me the other side.
    Ms. Henry. I would be happy to. I wanted to certainly 
emphasize that the proposed rule that we published recently on 
valid existing rights is exactly that, as well as the companion 
proposal that concerns subsidence from underground mining. 
These are both proposals. We have given people until early June 
to file comments on those proposals.
    We certainly are open to having hearings on both of these 
proposals if they are requested. So I certainly want to 
emphasize that on both of those, we feel that we had good 
reasons for both proposals or we would not have proposed them, 
we remain open-minded to comments and the final rule for those 
proposals may turn out to be different.
    We may end up with a different definition of valid existing 
rights from what we currently propose. So in my answer I do not 
want to be so forceful that anyone would think that we had 
already made a decision on this and had closed our mind to any 
comments that we might receive.
    OSM has attempted to define valid existing rights almost 
ever since the inception of the Surface Mining Act, 
unsuccessfully. Almost every attempt that has been made has 
been struck down by the courts either on substantive grounds or 
procedural grounds.
    The first attempt that was made was called the all permits 
test which would have actually required an operator to have 
actually obtained all of the permits that were needed at the 
time of the passage of the Surface Mining Act as opposed to the 
current proposal which is just that a good faith effort had 
been made to obtain the permits. That was struck down on 
substantive grounds.
    The District Court here in the District of Columbia found 
that that was too strict a standard but did indicate that a 
good faith all permits standard might be legally sufficient. So 
we have sort of harkened back to that. There have been other 
attempts to define this that would have given perhaps a more 
permissive interpretation to the term valid existing rights 
including the taking standard.
    Those attempts have been struck down usually on procedural 
grounds. We hope we have learned some lessons about how to 
conduct rulemakings in accordance with the Administrative 
Procedures Act. But we do feel that the current definition that 
we have proposed is the one that is the most consistent with 
Congress' purpose in enacting this portion of the Act.
    There were certain very fragile important lands that are 
listed in Section 522 which range from portions of the National 
Park System and the Wild and Scenic River System, all the way 
down to people's homes and cemeteries and public buildings. 
Those are the kinds of things to which the prohibitions apply 
subject to valid existing rights.
    We are not purporting in this proposed rule to make a 
determination on taking issues. It may very well be that if a 
coal mine operator cannot satisfy the standard for a valid 
existing right and is not permitted to mine, he or she may 
choose to go to court and to file a takings claim. That claim 
would be decided by the court so this rulemaking does not 
really purport to address the takings issue.
    Mrs. Cubin. But I do not honestly see how it can avoid 
having an impact on takings if it is enacted.
    Ms. Henry. We feel that there probably will be some taking 
claims that will be filed as a result of this. But as I said we 
feel that that is a matter for the court of Federal claims to 
decide in accordance with the current taking standards.
    However, the mere fact that takings claims may be filed we 
do not feel it is a sufficient reason to define valid existing 
rights at this point. Again I want to emphasize that we are 
open-minded on this and we certainly are going to be 
considering all the comments that are filed. But under the 
current proposal we do not feel that the fact that a takings 
claim may be filed is sufficient to avoid the very strong 
protection that we felt Congress meant in enacting this section 
of SMCRA.
    Mrs. Cubin. That valid existing right just sounds way too 
familiar to the patenting process, doesn't it?
    Ms. Henry. Yes, the term valid existing right is contained 
in a number of statutes. In some statutes it is better defined 
than in SMCRA where there is really no definition at all. It 
has been left totally up to the agency.
    Mrs. Cubin. Could you please supply to the Subcommittee the 
solicitor's opinion on that appeal?
    Ms. Henry. This is on the subsidence portion of the 
rulemaking. That is----
    Mrs. Cubin. The valid and existing rights.
    Ms. Henry. I do not believe we have a solicitor's opinion 
on that portion of the proposed rule. We have a solicitor's 
opinion that was issued on the other portion of the proposed 
rule which is that subsidence from underground mining is not 
subject to the prohibition in Section 522(e). Our proposed rule 
on that part of the section would incorporate that solicitor's 
opinion which was issued in 1991. We would be happy to supply 
that too.
    Mrs. Cubin. OK, thank you. My time is up.
    Mr. Romero-Barcelo. Thank you, Madam Chair. Ms. Kallaur, 
how do you respond to the criticism that the Minerals and 
Management Service is inadequately considering the long-term 
effects of the 70 to 100 percent increase in the oil production 
in the Gulf of Mexico?
    Ms. Kallaur. I am sorry, sir. You said the long-term 
effects of----
    Mr. Romero-Barcelo. Of the exploration in--the increase of 
70 to 100 percent in the exploration of oil in the Gulf of 
Mexico, the production.
    Ms. Kallaur. I think one of the reasons why we came forward 
with this initiative is that we wanted to make sure that we had 
adequate funds to be able to manage this increase in activity, 
and we divided our funds between our regulatory program and our 
environmental program and our resource evaluation program so 
that we would be able to meet all of our responsibilities.
    We consider this both a challenge and an opportunity that 
has been placed before us because we think if this activity is 
carried out correctly it can really reap a lot of benefits for 
our country. At the same time, we need to make sure that we get 
fair market value and that it is done in an environmentally 
safe and sound way. That was why we came forward with this 
initiative in FY 1998.
    We think we are on top of things at this point, but we 
think in the years ahead because the number of leases that are 
now in industries and it has increased so much that we really 
do need more resources to be able to manage the OCS properly.
    Mr. Romero-Barcelo. And with these resources you will have 
enough to do what you----
    Ms. Kallaur. Yes, we do, sir, because one of the things we 
have been doing over time too is looking at the way in which we 
carry out our responsibilities so that we can maximize the use 
of the dollars. We have already done some streamlining in the 
Gulf of Mexico and the way we do our EIS is we look to have 
like an 80 percent reduction in the amount of resources to 
prepare the EISs over a five-year period and still maintaining 
a high level of quality.
    So we continue to look at the way we do our work. At the 
same time we have recognized with this dramatic increase in 
workload that we needed more resources in FY 1998.
    Mr. Romero-Barcelo. There has been renewed interest 
obviously in the exploration of oil and gas resources in the 
deep water. Does that mean you feel that this has been a result 
of the act that was passed in Congress, the Deep Water Royalty 
Relief law, or do you think that it is due to other reasons in 
the supply of the amount of oil in the market?
    Ms. Kallaur. I think it is really due to a combination of 
factors. Clearly, oil prices have been relatively steady the 
last couple of years. In fact it has been increasing. There has 
also been dramatic increases in technology, and U.S. companies 
have become leaders in deep water technology so they have been 
able to lower the cost.
    The Deep Water Royalty Relief Act clearly has been another 
reason we have had such a tremendous response at our recent 
lease sales and it also provides us the opportunity to present 
the premature abandonment of some deep water leases that might 
not be able to be developed without this type of economic 
incentive.
    We just think there are a number of factors that have 
converged that have really changed the picture in the Gulf of 
Mexico, something we could never have forecasted years ago.
    Mr. Romero-Barcelo. Has the Administration sought funding 
for the marine mining technology program which will extend 
funding for studies that are currently underway in Alaska and 
Hawaii and the Gulf of Mexico and the research is focused on 
the finding, economical and environmental, a safe way to mining 
of the oceans.
    What type of studies or similar work is being done in the 
Caribbean, if any, and if they were to be done in the Caribbean 
would this be helpful, would this supply additional data or 
different data or can that data be obtained in the places where 
they are being conducted now?
    Ms. Kallaur. Well, at this point I believe you are 
referring to the Marine Mineral Technology Centers that were 
transferred over to the Minerals Management Service last year. 
The problem with that transfer is that there were no moneys 
transferred over to us to carry out these programs and we are 
really in a transition stage at this time.
    We do have a program in place that has been looking at 
environmentally safe ways of extracting sand and gravel from 
our coastal areas. We have a number of cooperative agreements 
with coastal States and whether or not we could also conduct 
some of the work we have done in the Caribbean is something 
that we would clearly be interested in looking at.
    The one thing we try to do is to make sure that we do not 
have to duplicate experiments from one part of the country to 
another but try to make sure that when we do this work that is 
something that can benefit the entire coastline because we 
realize that there is a limited amount of money to dedicate to 
this growing program.
    Mr. Romero-Barcelo. Thank you. Mr. Tipton, the President's 
budget includes a proposal to start collecting royalty on 
hardrock minerals such as gold and silver. What minerals other 
than hardrock minerals does the Federal Government not receive 
a royalty on or collect a fee for the development and 
production today, and how do you explain the fact that these 
minerals are not under some sort of royalty or fee system?
    Mr. Tipton. To the best of my knowledge, essentially all of 
the minerals that we either lease or sell are subject to fair 
market value standards of one way or the other. Only in 
construction materials such as sand and gravel which are free 
to local governments for urban development such as has been 
experienced in Phoenix and in Las Vegas are those type of 
materials that are free.
    As to why there is not a royalty or a reclamation fee as it 
is being called now on hardrock minerals that is because of the 
1872 Mining Law and our lack of authority in that area to 
collect a royalty. And various attempts have been made in past 
Congresses to try to bridge that gap and to work out a 
reasonable value for that.
    Mr. Romero-Barcelo. Those are the only minerals right now 
that are not being--royalties are not being collected from the 
mining?
    Mr. Tipton. To the best of my knowledge, that is correct, 
sir. It is gold, copper, silver, platinum.
    Mr. Romero-Barcelo. Thank you very much.
    Mrs. Cubin. Ms. Kallaur, would you describe the funding and 
manpower resources MMS has shifted to the Biological Resources 
Division over the past couple of years?
    Ms. Kallaur. I believe that the initial amount that was 
transferred to the, at that point it was the National 
Biological Service, was approximately $4.9 million. I would 
hope that I could review these figures for the record.
    Mrs. Cubin. Certainly.
    Ms. Kallaur. Subsequent to that transfer, because of the 
cutbacks in the budget for the National Biological Service, our 
funding was cut approximately 40 percent from that original 
transfer. And then it was reduced by 40 percent, and the lower 
number is the number that the Biological Research Division is 
dealing with right now.
    Mrs. Cubin. OK. You said 40 or 14?
    Ms. Kallaur. We had a 40 percent decrease.
    Mrs. Cubin. 40, OK.
    Ms. Kallaur. [continuing]--from the $4.9 million that we 
had originally transferred.
    Mrs. Cubin. OK. What cuts have been made in those funds and 
how are those cuts impacting MMS studies and research?
    Ms. Kallaur. Well, these moneys are used to fund biological 
research as part of our Environmental Studies Program. And what 
we have had to do was to set some new priorities for studies 
and to delay some studies. I would need to provide for the 
record the specific studies that have been delayed as a result 
of this reduced funding.
    Mrs. Cubin. And that is only for biological projects?
    Ms. Kallaur. That is correct, because the agreement that we 
have with the National Biological Service is that they would do 
our biological research. We also have a studies program within 
the MMS budget that funds other types of research.
    Mrs. Cubin. What do you think the long-term development 
impacts of this situation are?
    Ms. Kallaur. Well, I mean clearly we would like to have 
that money restored but I think it is something that we are 
going to be able to live with. I think, if we do find that 
there are needs that cannot be met, I would believe in future 
budget years that we would work together with the Geological 
Survey and reflect those needs and the budget submitted by the 
Administration.
    Mrs. Cubin. Well, I think what I am sort of getting at is 
when we produce more minerals there is more money in the 
Federal treasury and then more money in the State treasuries 
from the royalties. And I just wonder if you have any estimate 
of how much money will be held back that might otherwise--
projects that might otherwise have been developed. Do you have 
any sense of that at all?
    Ms. Kallaur. I think in terms of the funding for the 
biological research that there would not necessarily be a delay 
in activity. I think where you would see more of delay in 
activity if we were not able to receive the funding that we 
requested for the Gulf of Mexico office, a lot of our work in 
the environmental area is longer term so now that we know what 
our budget is we can try to plan over the long-term so that we 
can meet all of our needs.
    And hopefully like with deep water because that is a new 
activity that is before us, if we can get the funding that we 
requested for the environmental studies I think that we will 
not be in a position where we would be delaying approval of any 
deep water plans because we did not have an adequate 
environmental base.
    One thing we have been fortunate is that Congress over the 
years has appropriated over a half a billion dollars to fund 
our Environmental Studies Program and particularly because of 
these tight budgetary times over the last few years we have 
done a lot of creative work working with other institutions so 
we can leverage funds.
    I think we are getting much better at the way we spend the 
money that we get from Congress. We can get the maximum 
benefit.
    Mrs. Cubin. I think that is great and everybody across the 
country has had to do that and so I am glad that you had to. I 
think that you said when you were answering another question 
that there was another lease sale going to come up in the Gulf 
of Mexico. Do you have any idea what MMS' expectations are for 
the bonus bids on that?
    Ms. Kallaur. I believe that the estimate that we were 
carrying in the budget was in the vicinity of $315 million.
    Mrs. Cubin. How much was the last one, it was considerably 
more than that, wasn't it?
    Ms. Kallaur. Yes, that is correct. It was--let me check, if 
I may.
    Mrs. Cubin. About a half billion or something? Big bucks. 
That is OK.
    Ms. Kallaur. It was big bucks but it was approximately $600 
million and we should know by the end of the day tomorrow as to 
what tomorrow's sale will bring but we think we may again be 
low in our budget estimate.
    Mrs. Cubin. And that is tomorrow?
    Ms. Kallaur. That is correct.
    Mrs. Cubin. Good.
    Ms. Kallaur. I am sorry. Yes, it is Wednesday, yes.
    Mrs. Cubin. Tomorrow.
    Ms. Kallaur. That is tomorrow. It has been a very busy 
week.
    Mrs. Cubin. Listen, I understand. Would you tell me the 
status of implementing the Federal Oil and Gas Royalty 
Simplification and Fairness Act?
    Ms. Kallaur. Yes. And clearly that is a very important 
activity in our Royalty Management Program. We initially 
recognized that we could not do it on our own and we put 
together a significant outreach plan and have come up with a 
schedule that is probably going to extend over three years.
    But one of the things we did was to look at the timeframes 
that were dictated by that Act and to make sure that we were 
able to meet those timeframes. And I know one of the first 
things we had to make sure we could do was to be able to pay 
interest by this month on overpayments, and we are meeting that 
target.
    Another very important activity, I note to the people back 
in Wyoming too, is the section 205 State delegation provision. 
We are charged by the Act to have regulations out by a year 
from its passage which would be this coming August, and we are 
scheduled to come out with a proposed rule on the State 
delegation by the end of this month.
    That will be followed by also some guidelines and standards 
that would need to be met by the States who would have these 
responsibilities delegated to them. The one thing we have tried 
to do is to work with the States from day-one so that there 
would be no surprises and we also--for those provisions that 
affect industry, we have involved them in all of our 
discussions to try to see if we could come up with some sort of 
meeting of the minds of how best to meet the true intent of the 
Act.
    Mrs. Cubin. Does it look--are things moving along so that 
it looks as though that will be completed by the end of the 
month?
    Ms. Kallaur. In terms of the delegation rule?
    Mrs. Cubin. Right.
    Ms. Kallaur. You never know with rulemaking but at least 
when I was advised by our people it looks as though we will be 
able to publish the proposed rule by the end of the month. We 
have met all of our internal hurdles within the Department and 
we expect we will be able to do that.
    Mrs. Cubin. I met with the governor from my State and he is 
very hopeful as well that you will be able to do that. I am 
just trying to learn how to read these green books. As I 
discussed with Ms. Henry earlier, it is pretty confusing. It 
does not mention specifically any savings attributable to the 
royalty fairness. Could you show me where that is in here?
    Ms. Kallaur. I do not think at this point that we would be 
able to really identify savings because we are just in the 
process of implementing the different provisions and sometimes 
what happens in a program like this you might even have some 
initial increase in some of your costs because you have to make 
system changes but then when those systems are in place then 
you will be able to reap the savings.
    And we are very sensitive to this issue as to how much a 
particular onshore oil and gas program costs because the fact 
that these costs are shared by the mineral-producing States so 
everything we are doing is to try to minimize cost.
    One of the things I mentioned in my opening remarks too is 
a project we have underway dealing with compliance re-
engineering. And the whole focus of that project is to try to 
find ways to do things more efficiently that would have lower 
cost. And I cannot point to savings today but our goal is to be 
able to clearly point to savings in the future and we are 
trying to involve all our constituents so that we can achieve 
that.
    Mrs. Cubin. What about cost? I thought it addressed cost, 
that you did project cost but no savings. Am I wrong on that 
because I admit I do not know how to read these books very 
well.
    Ms. Kallaur. I do not believe that we have projected any 
cost.
    Mrs. Cubin. Either one, cost or savings?
    Ms. Kallaur. Cost or savings but I think what our belief is 
that within the budget that we have proposed we will be able to 
meet the system changes and be able to move forward on royalty 
simplification as well as all the other things we are doing in 
the royalty area. We did propose an actual reduction in our 
Royalty Program.
    Mrs. Cubin. OK, thank you very much. Since I do not have 
anybody else, I will just keep on talking because we do have a 
lot of things that we need to know before we take the budget in 
front of the Full Committee for markup for that matter.
    Ms. Henry, the new business plan we talked about earlier in 
my office is intended to clarify how OSM spends its funds and I 
just barely learned what the old book was like when this came 
along and I mentioned to you earlier that there were things 
that I could not find in there and I won't go through the whole 
list but I will pick one out.
    I could not find a Small Operator's Assistance Program, for 
example. I understand from your staff that it is there but can 
you point it out to me where it is in there?
    Ms. Henry. Yes, we included----
    Mrs. Cubin. Just kind of remember you were talking about 
the diagram. If you could just go over that one step with me 
that would be great.
    Ms. Henry. OK. We used to have the SOAP program as a 
separate line item in our budget. The SOAP funds actually come 
out of the AML money. But the purpose of the SOAP funds is to 
assist small operators with their permitting process because 
sometimes they do not quite have the knowledge that some of the 
larger operators have. That is really what the fund is for.
    For that reason we determined that the best place to put 
that was under the technology development and transfer business 
line as opposed to the environmental restoration business line 
which contains most of the AML moneys. We have provided--since 
this is the first year that we have submitted a budget in the 
new business lines structure, we have provided I believe a 
crosswalk that compares the items in the '97 structure with the 
business lines for '98.
    Mrs. Cubin. Where is that?
    Ms. Henry. I am not sure. Mine does not have page numbers 
on it. There is a--it should be entitled up at the top, 
``regulation and technology,'' up at the very top of the page. 
There is the old structure and then there is business lines. 
This is not in the green book. It is a separate handout that I 
believe was provided. I am sorry.
    Mrs. Cubin. OK.
    Ms. Henry. This is just an assistance sheet.
    Mrs. Cubin. Yes, OK.
    Ms. Henry. It shows where it would have been under the old 
structure and where it is under the new structure.
    Mrs. Cubin. One of my concerns about this new method of 
bookkeeping is that it really does not tell the authorizers, 
particularly the authorizers, but also the appropriators really 
exactly where the money is going and we are accountable for 
that. You are not, we are.
    And I think of it like, well, Hord, I will just pick on 
you, the BLM regulations that are being--that are out there 
right now where they are trying to change things from legal 
ease into plain English. Now I can say it is illegal to rock 
hunt on this acre on my land, illegal to rock hunt.
    Well, you know, fossils are rocks and if you say it is 
illegal to hunt fossils then everybody knows what you mean but 
if you say it is illegal to hunt rocks doesn't that truly 
expand what you, the bureaucrat, the authority that you have, 
and diminish the knowledge that everybody else has? And that is 
what I do not like about this bookkeeping system and, you know, 
I am going to keep press-

ing on this because we need specifics. We are accountable for 
every dollar and I am going to keep pressing on this for next 
year that we get the specifics.
    In fact, I will just check with staff and see how we can 
actually get those specifics so that I can compare apples with 
apples. I am new and I am going to tell you that the other 
people on the committee know less about it than I do so we 
deserve to be able to understand what it is we are talking 
about.
    Ms. Henry. The reason, quite frankly, that we went to the 
business lines approach was dual. The first reason was that we 
had received a lot of complaints in the past that people could 
not understand the old structure and that they did not think 
that listing what we do by function was really a true 
reflection of how OSM does business and how OSM reflects the 
cost of doing its business. So our intent here was certainly 
not to hide things.
    Mrs. Cubin. Right. I know that.
    Ms. Henry. It was really to make it clearer and actually, 
believe it or not, some people have told us that they do 
understand it better now than they used to. So we are getting 
different reviews on this and certainly your views are very 
helpful for us in future years. Our intent was to make things 
clearer and we will certainly be glad to sit down and, as I 
said, walk through and explain where a couple of these items 
might be missing.
    But I think we have tried to be fairly specific here. There 
may be one or two items like SOAP that do not jump out as 
clearly as they did under the old structure. But on the other 
hand I think there are some things that are more detailed now 
than they used to be.
    Mrs. Cubin. I think anyone can understand it but what 
anyone cannot do is know exactly what the money is going for 
and I wonder if the people who complained about the old system 
were the people who were responsible who had to answer for the 
way the money was spent. I would guess no because----
    Ms. Henry. I think actually it was some members of the 
Appropriations Committee that had said that now that they have 
gone over it with us, and it certainly is an adjustment from 
the old system, that several of those people told us that they 
liked it better and found our budget more understandable.
    Mrs. Cubin. Well, I think what will happen is that your 
agency is just going to have to do a lot more work because we 
are going to have to call for the information that we need and 
the appropriators really have a jump ahead of the rest of the 
Congress because they do understand that budget in detail, and 
we do not.
    And we are the authorizing committee and it is time that 
the authorizing committees, and this has nothing to do with 
you, this is just internal within the Congress and the business 
of the Congress, the authorizing committees have a very 
important role which has not been honored, if you will, in 
previous years. So anyway it will be harder----
    Ms. Henry. If I could just mention that the second reason 
why we went to the business lines was also to enable us to 
comply with the Government Performance and Results Act. I think 
there are some other agencies who already have kind of a 
business lines approach to their budget. It is much easier, I 
think it will be for us, to come up with performance measures 
with this budget than it would have been under the old 
structure. It would have been very, very difficult to find 
performance measures that would have corresponded to the old 
functions that we had.
    So the second purpose for us going to the business lines 
approach was really to get us in gear for complying with the 
Government Performance and Results Act.
    Mrs. Cubin. And that certainly is important too. This is 
the last question that I have for you. I have a list of things 
here that I would have the staff get a list of things for you 
for information that we would like to have, things like full-
time equivalent employees that OSM has assigned to your 
headquarters and the regional offices and various field offices 
and what accounts these folks code their time to. So I will 
just have the staff get that to you in writing. If you would 
please furnish that to the Subcommittee.
    Ms. Henry. I would be happy to provide it for you.
    Mrs. Cubin. Good, thank you. OK, well, now I am getting to 
the guys. I talked to them last because I have a lot to talk to 
them about. If you need a break, say so. BLM, last fall this 
committee under the leadership of Chairman Calvert and ranking 
minority member Abercrombie held two oversight hearings on the 
progress of the transfer of oil and gas inspection and 
enforcement functions from the BLM to the States.
    And then as a follow-up to the second hearing, Chairman 
Calvert and Mr. Abercrombie wrote to the BLM asking them for a 
time line for their accomplishments. And then three weeks later 
they received a reply that said that, quote--no, this is not a 
quote yet. A response was received which listed how that time 
line for implementing agreements, and this is a quote, ``served 
no purpose'' and so no time line was given to the committee.
    And we are soon approaching the second year anniversary of 
the Administration's Reinventing Government II which was set 
forth on March 27, 1995, and I am curious to know what sort of 
time line the BLM envisions for implementing this idea.
    Mr. Tipton. Well, again, the concept is optional to the 
States. The meetings were held, as we discussed, and we had a 
national meeting in December involving all the States in which 
our assistant secretary participated. And at that time the 
States basically told us that they did not think that basically 
a transfer of the inspection and enforcement aspect of the BLM 
program was in and of itself enough to make their process 
simpler to save any money and to be basically compatible with 
operating systems.
    They wanted to talk in greater detail about other aspects 
of the program, primarily the down hole operating part. The 
assistant secretary agreed that we could broaden our 
discussions to talk about those things and in following up on 
that we had a meeting around the first of February with all of 
the States again sitting down and looking at the common 
objectives of both of our programs.
    Mrs. Cubin. Could I just interrupt one second? What States 
were they that said they were not interested in taking over or 
they were not interested in----
    Mr. Tipton. In just the inspection and enforcement portion.
    Mrs. Cubin. Right.
    Mr. Tipton. It was practically unanimous. They did not 
absolutely turn down or say that they did not want to continue 
talking. They did not want to enter into any type of agreement 
with us absent talking about the other aspects of the program, 
their point being that the real duplication and the real 
savings in the programs would not occur on the inspection and 
enforcement portion of that.
    States want to be more involved in the preparation analysis 
and even approval of the applications to drill, for example. So 
in agreeing to discuss that further, the States suggested that 
we start from scratch and know more about each other's program 
and work more towards the objectives as opposed to arguing with 
each other over whose standard to use, whether it is the 
Federal inspection standard, Federal operating standard rules, 
as opposed to using the States.
    We could never reach agreement upon a common standard 
absent that. So we held a two-day meeting with the Oil and Gas 
Commissioners. And as it turns out a collection of industry 
associates were also meeting in the same town so we had two 
interfaces with them to let them know what we were doing.
    We had two very good days. We developed a number of 
objectives and found that in terms of actually operating a 
program we are in very close agreement. It is scientific 
operation and scientists really do not disagree all that often 
nor do engineers.
    But we did recognize that we disagreed in the management 
aspect of the program. And then after discovering what our real 
problem was, we met again with the trade associations. They 
made a very strong point that they did not want to be on the 
receiving end of State and Federal Government coming up with 
any type of a plan that affected them without their 
involvement.
    They did not even want us to put it in writing and to run 
it up the pole, if you will. So as a result of that we agreed 
to conduct a series of outreach meetings to discuss our 
objectives, how we would go about managing that program, get 
more information from the public and I am not talking about 
just industry.
    We have a series of meetings going on across the country at 
this point to collect and gather more information. Once we have 
done that, we will refine our objectives. We will know more 
about the development of our oil and gas operating regulations 
and at that point hopefully come up with some meaningful 
arrangements of some type, whether they be cooperative 
agreements with States to share work or whether they be actual 
delegations.
    So, again, I am afraid that does not answer much of what 
you are looking for in terms of a time line other than we have 
set the times for the meetings. We have set times at the 
States' request again to come together at another meeting and 
to put this all down into a final paper.
    And I might add that Mr. Jim Carter of Utah has been very, 
very cooperative, very instrumental in trying to work out all 
of this with the States and thus I think we are cooperating to 
the maximum extent possible. We simply have not gotten to the 
end result.
    Mrs. Cubin. Speaking of the States and your statement about 
scientists and engineers rarely disagreeing and some things are 
common sense to me, it seems like, and maybe to other people it 
would not seem the same, but it has come to my attention that a 
draft transfer proposal by the State of Colorado and the 
Colorado BLM has been circulated or is being circulated and 
this draft estimates a cost of savings of over $1 million a 
year once the transfer is in place.
    So extrapolating those figures nationwide it looks like we 
could have a far greater savings than the $500 million cut in 
the oil and gas management subactivity--excuse me, $100,000. 
Excuse me. We are all, I know I am and you are as well, very 
interested in this type of cost savings and I am ready to 
endorse this proposal when it is finalized. What is the status 
of BLM's review of the Colorado proposal?
    Mr. Tipton. We talked about that and that proposal was 
discussed at our two-day meeting last month.
    Mrs. Cubin. Last month, OK.
    Mr. Tipton. The proposal is an innovative step forward. It 
was a no holds barred attempt at producing a plan involving 
participants from the State and from our Colorado office. They 
basically turned their staffs loose to put something on paper 
for the purposes of getting unrestricted ideas on how a 
transfer might work.
    It is my understanding after their review of the draft 
document, both sides now question the savings figures. They 
also question whether or not they have covered the interests of 
both sides. They have asked us, before passing judgment or 
doing anything further with it, that we let them come to an 
agreement inside the boundaries of Colorado, and that basically 
is where it is.
    We have not drawn any conclusions about the legality of it 
at this time. They have asked that we give them a bit more time 
to review their own study.
    Mrs. Cubin. So you do not know--that was going to be my 
next question. Are you aware of any legal impediments to 
proceeding and so you are not so will you be asking for 
solicitor's opinion on that?
    Mr. Tipton. It depends on what the final product looks 
like. Just a rough reading of the document, it has some things 
in it that we know we will have to talk to the solicitors about 
and that they will have some problems with but until they are 
in agreement as a management team from both the State and from 
the Federal side it is premature to even involve the attorneys.
    Mrs. Cubin. Would Colorado, assuming they came to 
agreement, be allowed to proceed on a pilot project basis, do 
you think?
    Mr. Tipton. Actually I talked to the director of the 
Colorado program if in the event if he would be interested in 
something like that and the reaction I got was that there might 
be.
    Mrs. Cubin. You know, I am conservative in almost every way 
and so many times in my life somebody will bring up something 
new and I will go, oh, no, no, you know, we did that 15 years 
and we tried it and it did not work and so sometimes I think 
when we have been in an agency or in a position for a certain 
amount of time that we tend to not think outside of our 
boundaries or, maybe we need to establish a different view or, 
just not have the confines, I guess.
    Do you encourage especially on this issue, do you encourage 
BLM State directors to try to work out innovative ways to solve 
these problems? Because, you know, we talked about this a 
little earlier. I understand the Secretary's management style 
but those folks out there are not morons and, you know, I have 
heard ideas from them that some of them are afraid to even talk 
about, they are afraid to even say anything about it. Is there 
any type of encouragement for thinking outside the normal 
boundaries, if you will?
    Mr. Tipton. Oh, absolutely. If you will recall, once we 
completed an educating process about a year ago of what each 
other's interests were in managing land and oil and gas 
operations, we left it to State directors to go back to their 
counterparts within the States and to see what State interests 
were and what they could work out.
    Things will be different in practically every State. There 
is no one plan or one size that will fit all. In that regard, 
the Colorado proposal is quite innovative. It was a no holds 
barred approach that did not consider such things as what 
administrative policy might be or what other type interests 
would be or legal interests, for that matter.
    And I agree with you, we need that type of creativity to 
stimulate thinking. You need that to see where you could go and 
what it would really be worth to you. If you want to clear the 
hurdles you often have to wrestle with attorneys to actually 
effect change in policies and regulations. So in that regard it 
was a very creative study.
    Mrs. Cubin. Where I live, Natrona County, Wyoming, we have 
a big gas reserve there and I think your testimony said earlier 
that--was this it, that you had 2,000--made 2,000 competitive 
and 1,300 noncompetitive leases last year, is that what you 
said?
    Mr. Tipton. I believe that was our target for 1998.
    Mrs. Cubin. Oh, OK, target for '98. Well, I certainly hope 
that Cape Gulch in Natrona County, Wyoming, is on that target. 
It is my understanding that the BLM, and I do not want this to 
be a lecture but I really need to make a point to you, it is my 
understanding that BLM is proposing regulations requiring cost 
recovery for work that is done to prepare an area for leasing.
    And I was under the impression that these costs were 
traditionally covered by lease rentals and bonuses. But I also 
have information that indicates that industry already pays for 
most of the cost associated with the environmental impact 
statements. In fact, not only does industry pay these costs but 
they pay costs outside of that realm as well.
    For example, in the Cape Gulch area industry was paying on 
the environmental impact statement for an amendment to the 
Resource Recovery Management Plan or the Resource Management 
Plan, excuse me, that the BLM wanted. And let me just give you 
an example of how the money is spent that these folks are 
paying for--it is their money, they are paying for it.
    In Cape Gulch, Chevron needed a 2,800-foot right-of-way. 
Everything was ready to go. It went right by a county road, 
right along side a county road, 2,800 feet. They applied for 
this right-of-way July 11, 1996. They contacted the BLM local 
office and then on July 12, 15 and 16, they contacted the same 
person several more times. July 17 they submitted an ROW 
application under protest. July 23, '96, they submitted a plan 
of development. July through September, '96, they continued 
dialog to try to resolve sundry prob-

lems with their ROW application and tried to find out when it 
would be granted.
    September 26, they wrote, and I am leaving the people's 
names out, the employees, September 26, '96, they wrote, this 
is the company wrote, asking for help in resolving this issue 
to a superior of the regional officer. October 10, 1996, called 
to check on the progress, called the guy back again. Now this 
has been two weeks and, you know, calling the supervisor.
    Just let me read the dates. October 15, '96, October 17 
through 24, '96, October 25, '96, October 29, October 30, 
October 31, November 5, November 11, November 12, November 15, 
and as of November 25 it was still not resolved. As of December 
10 when I was involved it was not resolved. This is for a 
simple doggone right-of-way of 2,800 feet.
    They had a window of opportunity because there are raptors 
in the area. They had a window of opportunity in which they 
could drill because they would be nesting which was also 
controversial whether it was true or not. But anyway so the BLM 
through this kind of action forced those companies right up to 
the day and they did not know until the day before that window 
of whether or not they would be able to put that pipeline in 
because they could not go in there. They did not know if they 
would be able to proceed.
    And I swear, Hord, I could give you more examples than you 
want to hear. So could you explain the rationale to me for what 
will not--no, can you explain the rationale for me about what 
the future fees that will be charged to the industry to defray 
the cost of leasing activities and all of that stuff, what they 
will be used for when they are already paying even more than 
for the statements themselves, and why should the industry be 
charged double because of encountering ridiculous bureaucratic 
delays like this.
    I do not know if you are aware of that Cape Gulch situation 
but it has been going on a long, long, long time. It took the 
BLM I think it was nine months to permit the Express pipeline. 
A foreign company coming through the United States across seven 
rivers, they were permitted in nine months and this project has 
been going on for years. Why should they pay you more money?
    Mr. Tipton. I think you have asked a lot of questions. And 
actually I thought Cave Gulch was on better grounds than that. 
I will have to check into the specifics. That is particular 
surprising too, because I know of the commitment of our oil and 
gas staff, or what is left of them, in Wyoming. To some extent 
we need to shore them up. That is one of the things that we are 
looking at now.
    [The following was submitted:]

              Drilling in Cave Gulch-Bullfrog-Waltman Area

    As you know, Barrett Resources and Chevron each proposed 
drilling a number of wells in the Cave Gulch-Bullfrog-Waltman 
area. The area includes nests for bald eagles and ferruginous 
hawks. Five raptor species also occupy the project area.
    In response to the proposals from Barrett and Chevron, BLM 
initiated Environmental Assessments (EA's). However, the 
proposed actions evolved during 1996 as estimates of the size 
of the reservoir were revised upward.
    BLM, in compliance with the National Environmental Policy 
Act (NEPA) and the Migratory Bird Treaty Act, determined that 
EA's would be insufficient and that an Environmental Impact 
Statement (EIS) was required. More time is required to do an 
EIS than an EA. The BLM has issued a Draft EIS and plans to 
issue its Record of Decision in August 1997. Meanwhile, the BLM 
has approved 14 new wells for de-

velopment, meaning over 40 wells could be drilled and completed 
before the EIS is completed. The BLM also approved 4 new wells 
during the interim for Cooper Reservoir, an area within Cave 
Gulch area of cumulative impact analysis.
    Although this process may appear to be inordinately 
lengthy, the Draft EIS was completed and sent out for public 
review in a singularly short time. The Wyoming State Director 
identified the Cave Gulch EIS as a state priority and has made 
resources available to complete this EIS in time to issue the 
Record of Decision in August.

    Mr. Tipton. We have lost a lot of people to the buy-out. We 
have had hiring freezes and what have you. Only in the last 
couple of weeks have we kind of had a green light to look 
internally at where some of our people needs are. Right-of-
ways, although it might not be connected directly to this, is 
an area that we would have to focus a lot more attention on 
because we have some unhappy customers, not necessarily all in 
Wyoming, but in several of our States.
    We have 3,000 right-of-ways, for example, in our case log 
so we know we have to put some people on those. I think it is a 
matter of getting skills in the right places. But it certainly 
is not the intent for BLM people not to be responsive. We will 
just have to check out this particular case for you in more 
detail.
    As far as the cost recovery goes, there are initiatives to 
do full cost recovery where appropriate, but it is very 
difficult to set those costs. It is difficult to determine what 
costs you need to seek and at what level. I think there has 
been some confusion in Wyoming on the part of some industry 
that we are trying to get the pre-leasing cost from them up 
front.
    Mrs. Cubin. That has not been part of the delay problem.
    Mr. Tipton. I am sure it is not part of the delay but may 
be a concern regarding cost recovery. I was in the field a 
couple weeks ago. An industry official did mention that he 
thought at least that BLM was demanding help on payment for 
cumulative impact statements, before they would do leasing in 
his area and that is not the case.
    We do have a solicitor's opinion that lays out in a fair 
amount of detail what our obligations are with respect to 
recovering our costs and we would hope to propose some 
rulemaking later in the spring once we resolve some internal 
differences on just exactly what we should be collecting for on 
both the minerals area and in the lands area.
    Mrs. Cubin. I think with all due respect you have got it 
just backwards, that you should not be looking to them to give 
you more money. You should be looking inside your own agency 
and force them to be productive and force them to do a good 
job. In two different districts in the same State, I am not 
talking about my own State right now, you have two land 
managers that give people different answers to the same 
question and so there is the constituent.
    I think it just goes back to this whole concept of the guy 
at the top knows the best and you guys get in line. I do not 
think you have any business asking for more money until you 
clean up your house a little bit. Like I said, I could tell you 
more and these folks sitting out in this--some of them, I do 
not know who all are with agencies and who all are not, but you 
just could not listen long enough to hear the problems that the 
BLM has across the whole country.
    One last thing, you were talking about earlier--well, it is 
the last thing. Are you glad?
    Mr. Tipton. Madam Chair, I would like to say that we would 
be perfectly happy at your convenience to sit down and to go 
into whatever level of detail that you might have interests to 
help us improve our program.
    Mrs. Cubin. You know, it goes back to what I talked about. 
I do not think that my program is the issue here. I think it is 
a symptom of a sick bureaucracy that is trying with the best 
intentions and the best motives to do a good job but there is 
no coordination and people are afraid to speak up within the 
agency. They are afraid to lift their head that it might get 
shot at. And I do not mean literally, I mean from the agency.
    But it is not that one instance. It is endemic throughout 
the BLM. Now you talked earlier about the good working 
relationship with the Colorado BLM and the State of Colorado 
and that it is working out and that you want to get back to 
more agreements like that.
    Well, I really want to get to a lot of agreements like that 
as well. I think that that is a win/win situation when two 
parties can work things out without having interference from 
someone that really does not even understand the situation. And 
I know that you have no personal responsibility in this but I 
am curious about the Green River Basin advisory committee, the 
RAC, a Resource Advisory Committee.
    You know, I was so skeptical of that whole process when the 
Secretary established that advisory committee out there but I 
thought, well, do not be such a winch, give it a chance. And I 
thought all along it is not going to work because if the 
government does not get the government's way then they take 
their ball and go home. And you know what, that is exactly what 
happened.
    And you are familiar, everyone is familiar with the 
situation that is in now and that is between those two men and 
does not have anything to do with you or me. I think both of 
them probably could use a little maturity on that particular 
issue. But do you know what is going to happen now, will the 
committee be disbanded?
    Mr. Tipton. I really do not. I do not have information on 
that.
    Mrs. Cubin. Are they going to continue to be used in other 
parts of the country?
    Mr. Tipton. Let me clarify. Are we talking about the Green 
River advisory council, oil and gas, or the Resource Advisory 
Council?
    Mrs. Cubin. I am talking about the Resource Advisory 
Council.
    Mr. Tipton. That I do not know.
    Mrs. Cubin. OK. Do you know what the approximate amount of 
money the State of Wyoming contributes to the net receipts 
sharing costs?
    Mr. Tipton. Substantially. They are the major----
    Mrs. Cubin. Yes, I know they are. I am glad they are and 
you will never tell, will you? Yes, they are because Wyoming 
gets more than any other State but considerable is not enough. 
My State's oil and gas supervisor, Don Basco, has reported to 
me that he has requested many, many times a detailed accounting 
by function and activity on what you spend in the State of 
Wyoming but he has not been provided with that information. 
Could you provide that to me, please, and I will put it in 
writing what it is we want.
    Mr. Tipton. I thought that we had given him everything he 
needed.
    Mrs. Cubin. We just spoke with him and he said that he 
tried for a long time and has not gotten any response. OK, take 
a breath, I am done. And really I do not want to be 
adversarial. I just really do want things to work better. There 
is no reason for any of us to be here if we cannot be of 
service and that is really where I am trying to get.
    OK, Director Eaton, you were speaking very forcefully and I 
agree with your statements of the USGS' expertise to provide 
sound objective science for the nation. So now that the former 
NBS is under your wing, I think that you will be challenged to 
keep it so I know that you and your predecessor have had a few 
independent mines to deal with.
    And this goes back to what I was saying to Mr. Tipton. And 
what comes to my mind is a gentleman, a biologist, that risked 
his neck to speak out on Yellowstone Park policy. He disagreed, 
a policy that he sees to be at odds with his biological 
opinion. It is his scientific opinion.
    In the Bush Administration, Director Peck agreed to pay for 
a hostile witness from the U.S. Geological Survey to come to a 
hearing on geothermal issues but it is my understanding that 
you refused to let this gentleman come to testify in front of 
this committee so we subpoenaed him and then we paid his 
expenses so that he could do that.
    Now I cannot understand how you can square an action like 
that, how this equation balances that you say you want good 
science but you will only allow people who agree with you to 
talk about it.
    Mr. Eaton. Let me respond to that and let me turn to my 
staff to make sure the response was correct. To the best of my 
knowledge, that decision was not made in the Geological Survey. 
I believe it was made in the Department of the Interior. I am 
told that is correct.
    Mrs. Cubin. Who made that decision?
    Mr. Eaton. The Secretary's office.
    Mrs. Cubin. Well, what do you know? Why are we not 
surprised? I knew scientifically that is not what you would do. 
As the Subcommittee Chair, I agree with my Chairman Don Young 
on the need for sound objective science.
    We just simply have to have it. And we read reports 
recently that the USGS is conducting yet another assessment of 
the resource potential of ANWR. Where in your budget are these 
costs identified? I have trouble with the book again.
    Mr. Eaton. OK. If it is any comfort to you, I have trouble 
with the book as well. Excuse me just a minute, Madam Chair.
    Mrs. Cubin. Do you want to just provide that for the record 
and you will not have to go through that?
    Mr. Eaton. All right, I will do that.
    Mrs. Cubin. OK.
    Mr. Eaton. Do you have in your possession the book of 
illustrations and the text that goes with those?
    Mrs. Cubin. Yes, I do.
    Mr. Eaton. Because, in part, this is addressed on the page 
facing map number 9, illustration number 9.
    Mrs. Cubin. What subheading is that under?
    Mr. Eaton. That would be under resources and the title of 
the text is Alaska North Slope Oil Resources and Federal Lands. 
If you look down in the lower right-hand corner of the text, 
there you will see the budget line items that address this 
issue. It is more than one.
    Then in the back of the budget book on green pages, I hope 
they are in your copy.
    Mrs. Cubin. In the back of----
    Mr. Eaton. Of our green book.
    Mrs. Cubin. Green book, OK.
    Mr. Eaton. There is an index that should allow you then to 
go immediately to those pages. Now Dr. McGregor is showing me 
that if you will turn to page 136 in the green book, you will 
find this particular topic addressed. And it is--we are 
continuing an investigation that was begun more than a year and 
a half ago in that area.
    When we released a new five-year assessment of oil and gas 
resources for the country two years ago on the basis of data 
that were then newly available, we downplayed the oil resources 
and raised our best estimate of gas resources.
    But this is an area that I think none of us, including 
industry, really has all that good a grasp of, since every time 
a new hole is drilled, we learn something that has implications 
with respect to those resources. So I would guess that this is 
going to be a continuing process of change as new information 
is gained.
    Mrs. Cubin. That just leaves me a little room for concern, 
and I may be wrong on this so I am sure you will correct me if 
I am. Five miles apart the MMS projected a certain amount of 
oil and then USGS predicted a certain amount and then there was 
a huge change in those projections the following year. What was 
the reason for that?
    Mr. Eaton. Ours was based on the fact that we had new data 
which had not been available to us in the earlier estimate, but 
it spoke to the issue of the timing of when the structure was 
developed and when the maturation of the oil took place, so we 
tried to take into account in our newer estimate, the 
significance of this information.
    Mrs. Cubin. You underestimated it by a lot?
    Mr. Eaton. We had overestimated the North Slope oil 
reserves and we reduced that and, in a sense, replaced it with 
a new enlarged estimate of the gas resources.
    Mrs. Cubin. That first study, how long did that take when 
you came up with those results?
    Mr. Eaton. I would be happy to answer that for the record. 
I was not part of the Geological Survey at that time so I do 
not know off the top of my head what the answer is.
    Mrs. Cubin. Just describe the new information for me. It is 
different formations than you thought were there or, you know, 
for someone who does not know about this exact science.
    Mr. Eaton. Let me take a shot at answering your question.
    Mrs. Cubin. OK. This would be the new information that has 
caused the changes?
    Mr. Eaton. Yes. In the creation of an oil field you need a 
source rock and then you need a trapping structure of some 
kind. If the structure develops before the oil matures, then 
there is hope of it accumulating in the structure, and so the 
timing of the maturation and the timing of the development of 
the structure are very important in terms of understanding or 
estimating whether oil might be present or not.
    And in our earlier estimates based on the data that were 
available to us at that time we made one determination. Then a 
new hole was drilled and when that information was made 
available to us we saw that the assumptions that we had made 
earlier were incorrect.
    Mrs. Cubin. So maybe that was a hurried up job. Now here 
goes old cynical me but I cannot help but think that the new 
oil and gas resource estimates for ANWR which were announced 
two years ago were hurried up to help the Administration's 
position on drilling there. Now I may very well be wrong but it 
just seems--I cannot come up with another answer.
    Mr. Eaton. There are two issues here. I think we need to 
clarify the difference between them. The oil and gas assessment 
for the hole of the North Slope that was released two years ago 
was based on five years of study and was not hurried. I think 
what you are referring to is a track within ANWR for which 
there was some interest on the part of industry in developing 
an exploratory hole and we were then asked by the Department to 
provide our best estimate of what the resources in that tract 
might be and, yes, that was done fairly quickly but the work on 
that continues even to this day.
    And we provided an answer in a timely way but we continued 
to work to refine that answer. I have personally been briefed 
by the petroleum geologist who was expert in that area and was 
convinced that even though the estimate was a disappointing one 
that it was based on sound judgments and interpretations on his 
part.
    At the same time, I think it is important that the record 
shows that the value we placed on that was not so insignificant 
that there would not have been commercial interest in it and 
indeed I believe there was.
    Mrs. Cubin. I guess the most important thing at this point 
is what is the timing for completion of the assessment and when 
will the Administration make an announcement?
    Mr. Eaton. If I may, I need to turn to one of my staff.
    Mrs. Cubin. Sure, I understand that.
    Mr. Eaton. We are going to have to provide that for the 
record, Madam Chair. We will get that to you. We do not have 
that at our fingers.
    Mrs. Cubin. OK, I would appreciate that. Politicizing 
science is bad. I have math and chemistry as my background and 
I love it because two and two is always four and I love it 
because when you mix certain chemicals you always get the same 
reaction. It is so dependable. And when people politicize 
science or when people use science for political means that is 
very disturbing.
    And I just really hope that the political pressures that 
are brought to bear on people who have the say do not submit to 
a political agenda. I am just asking you to not do that in case 
you ever should experience anything like that. I do not think I 
have anything else.
    But, yes, I do want to know one thing. This is the last 
thing. Why is the agency charged with outer continental shelf 
resource estimates seemingly at odds with onshore estimates? Is 
that because of the drilling that you talked about earlier?
    Mr. Eaton. It is not clear to me what that question means.
    Mrs. Cubin. ANWR, offshore----
    Mr. Eaton. In ANWR?
    Mrs. Cubin. And immediately onshore.
    Mr. Eaton. Again, I am going to have to provide something 
for the record.
    Mrs. Cubin. OK. Well, I do not have anything else. I bet I 
do but we are all tired so enough is enough. I sincerely thank 
you all for being here. And I thank you for your patience. I 
have not been through this before and thank you for helping me 
learn and please stay in touch because we need to do that.
    Mr. Eaton. Thank you, Madam Chair.
    Mrs. Cubin. If there is no further business then the 
Subcommittee is adjourned.
    [Whereupon, at 4:05 p.m., the Subcommittee was adjourned; 
and the following was submitted for the record:]

                      Testimony of Gordon P. Eaton

    It is a pleasure to join you today to discuss the programs 
of the U.S. Geological Survey (USGS) and our FY 1998 budget 
request.
    Our Nation faces challenging questions concerning the world 
we live in and the resources we use each day.
    How can we prevent or mitigate the effects of 
natural hazards--earthquakes, floods, volcanoes, landslides, 
wildfires, coastal erosion, outbreaks of disease among our 
wildlife?

    How can we ensure an adequate supply of critical 
resources--land, water, energy, minerals--for our children and 
grandchildren?

    How is our natural environment altered when we 
extract and use these resources, and how can we minimize or 
repair any negative effects of these alterations?

    How can we make accessible the ever-increasing 
amounts of data and information about the Earth's natural 
resources, environment, and natural hazards?
    For more than a century, the mission of the U. S. 
Geological Survey (USGS) has been to provide the sound, 
credible, impartial scientific information to help answer 
questions like these.
    The issues facing our society have become increasingly 
complex, demanding new approaches and new partnerships. In the 
past few years, the USGS has changed dramatically to meet the 
changing needs of the Nation. The New USGS incorporates 
minerals information specialists from the former U.S. Bureau of 
Mines and the biological expertise of the former National 
Biological Service, complementing our traditional strengths in 
geology, mapping, and water.
    The Earth's physical, chemical, and biological systems 
depend on and are influenced by each other. The integration of 
physical and biological research at the USGS enhances our 
ability to provide the sound science needed to attack some of 
the vexing issues facing our Nation. We are building strong 
multidisciplinary teams of scientists focused on research and 
research outcomes that people can use.
    While we continue to address critical national issues and 
conduct high-priority research we also work with nearly 2,000 
cooperating agencies and organizations to focus on the resource 
development and management issues of greatest concern. To that 
end, we have staff, facilities, and instrumentation at work in 
every State, helping to serve millions of local, regional, and 
national customers.

    Coping With Natural Hazards

    Natural hazards are taking an increasing toll on the lives 
and property of our Nation. To help reduce this burden of 
suffering and economic loss, the USGS maintains a number of 
research and monitoring programs across the United States. In 
1996, the USGS responded to threats posed by landslides, 
volcanoes, hurricanes, floods, and a major outbreak of avian 
botulism.

    Landslide experts worked in the Pacific Northwest, 
Virginia, and California to document ground failures and work 
with other Federal agencies, including the Federal Emergency 
Management Agency and the National Park Service, to develop 
mitigation strategies for the future. In Colorado, our 
scientists gave advance warning to county officials that the 
Aspen Country Day School was at risk from possible debris 
flows. Classes were moved, and when the flows hit the school a 
few days later no one was hurt.

    Three volcano observatories assess the dangers from 
active volcanoes in Alaska, Hawaii, and the Cascade Range in 
Washington, Oregon, and northern California. In cooperation 
with the aviation industry, the USGS continuously monitors 
volcanoes in the Aleutian Island chain to reduce the risk to 
airplanes from clouds of volcanic ash. A year ago, in March 
1996, Akutan volcano in the central Aleutians was shaken by 
intense seismic swarms. Telemetered real-time data and work by 
our scientists on the island enabled us to reassure the 1,000 
people on Akutan that an eruption was unlikely and they did not 
have to evacuate. The local fishing industry, valued at $120 
million annually, was able to continue. The United States, with 
65 active volcanoes, ranks third in the world in the number of 
active volcanoes within its borders.

    In California, USGS investigators studying the 
deaths of unprecedented numbers of pelicans at the Salton Sea 
determined that a simultaneous fish die-off posed a possible 
hazard to human health. Our staff guided the disease control 
efforts of the U.S. Fish and Wildlife Service and worked to 
develop consensus views among representatives of agriculture, 
wildlife conservation, water resources agencies, and other 
parties that depend on the Sea for their activities. USGS 
scientists are also studying emerging diseases such as 
cryptosporidiosis, Valley fever (coccidioidomycosis), and 
bubonic plague to understand wildlife diseases and effects on 
human health.

    National seismic hazard maps, which we completed 
and released in 1996, show the severity of expected shaking of 
the ground in response to earthquakes all across the United 
States. These maps are being put to immediate use by the 
Building Seismic Safety Council as it publishes its recommended 
seismic regulations for building codes throughout the Nation.

    The National Earthquake Information Center works 
with partners at State and regional levels and around the world 
to monitor earthquake activity. In addition, earthquake studies 
and geologic mapping are needed to outline the areas that are 
most vulnerable to damage from earthquakes. Through cooperative 
efforts with engineers and urban planners, the USGS is working 
to reduce the human and economic losses from potential 
earthquakes in Alaska, the West Coast, and the lesser known 
hazardous areas of the Central United States and South 
Carolina.

    A network of 7,000 stream-gaging stations, many of 
them funded in partnership with local, State, and Federal 
agencies, provides continuous information on floods and 
droughts. More than 2,500 of those stations are linked by 
satellite communications to the World Wide Web, where the 
public, emergency management agencies, utilities, private 
industry, and others can access real-time streamflow data 
updated as often as four times an hour during floods. Major 
flooding in California, Nevada, and the Pacific Northwest in 
January 1997 set all-time records for peak flows at nearly 40 
stream-gaging stations in five States, caused record-setting 
inflows to San Francisco Bay, and damaged or destroyed about 
150 of our stream-gaging stations, along with other serious 
damage to homes and businesses. At the request of the 
California Department of Transportation, our scientists 
assessed the stability of a bridge just downstream from one 
that had collapsed during the flooding and determined that the 
downstream bridge was not likely to fail.

    Understanding Our Natural Resources

    Much of our strength as a Nation comes from our abundant--
yet finite--heritage of natural resources. USGS studies of 
water supplies, mineral and energy deposits, land use, and our 
wealth of plants and animals provide essential information to 
in-

dustry, managers, regulators, and the public for sound 
decisions on our unique resource heritage.

    Our information on the domestic and world soda ash 
industry were used by Congress, the Bureau of Land Management, 
the State of Wyoming, and industry to negotiate the new 
royalties for soda ash mined in Wyoming. The revenues generated 
by the proposed increase will be split between the Federal 
Government and the State of Wyoming. Scientists at the USGS 
monitor trends and statistics for more than 600 mineral 
commodities, from agricultural minerals to zirconium, and study 
where and how mineral deposits are created and modified. 
National, regional, and local assessments delineate the amounts 
and quality of our mineral and energy resources.

    A new analysis of the dramatic changes in land use 
in the Baltimore-Washington area over the past 200 years, and a 
similar analysis for the San Francisco area, are helping city 
and county planners, regulators, developers, and the general 
public better understand the overall patterns of urban growth.

    In Tennessee, information from the Gap Analysis 
Program (GAP), a cooperative effort to map natural land cover, 
vertebrate species, and the lands that are managed in ways that 
maintain biological diversity, is being used by the Tennessee 
Wildlife Resources Agency for locating and managing particular 
habitat types. In California, GAP information is used by 
developers to help make real estate investment decisions and by 
area governments to guide decisions on open space planning.

    USGS scientists, in cooperation with States, 
universities, and local groups, are monitoring the health of 
America's biological resources, from polar bears in Alaska to 
manatees in Florida. In the Great Lakes, the populations of 
major commercial and sport fish are being monitored in a 
cooperative effort to provide a scientific basis by which 
fisheries managers and researchers can evaluate potential 
management plans for the region's important commercial and 
recreational fisheries.

    On average, each U.S. citizen uses 78 gallons of 
water at home per day, and the demand for good-quality water 
for drinking, recreation, farming, and industry continues to 
rise. Through the National Water Quality Assessment Program, 
USGS scientists are tracking the quality of our surface- and 
ground-water resources in 60 large areas across the country 
that account for two thirds of the Nation's water use.

    Addressing Environmental Issues

    The safety and health of our Nation's citizens depend on 
the environment in which we live. USGS scientists are working 
to provide the information needed to help sustain a healthy 
environment and to recognize and mitigate adverse effects on 
it.

    Through a cooperative effort to provide ``Science 
in the Parks'', our scientists are working with the National 
Park Service in more than 250 parks, monuments, national 
rivers, and recreation areas. Investigations in Nevada are 
looking at possible links between disruptions in fish endocrine 
systems and pesticides and organic chemicals in the Lake Mead 
National Recreation Area. And Visitors Centers at Lake Mead, 
Grand Canyon National Park, and elsewhere are being redesigned 
in partnership with USGS geologists to emphasize the geologic 
history of the parks.

    USGS studies at the Marine Corps Air Station in 
Beautort (BEWfort), South Carolina, are saving the Marine Corps 
hundreds of thousands of dollars in cleanup costs. A leaky 
storage tank had released about 10,000 gallons of jet fuel into 
the soil and ground water in 1990, and conventional cleanup of 
the spill would have cost about $600,000. Our scientists showed 
that natural attenuation, the natural ability of bacteria 
living in the soil and water to remove contaminants, was 
effectively confining the contaminated ground water and thus no 
risk was posed to the environment.

    More than 500,000 abandoned mines dot the landscape 
of the United States. USGS geologists, biologists, 
hydrologists, cartographers, and others are working with 
Federal land management agencies to remediate contamination 
associated with abandoned mines, focusing on the sites that 
have the greatest effect on water quality and ecosystem health 
in specific watersheds. The work requires coordinated efforts 
by experts in digital data collection and management, ecology, 
geochemistry, geology, water quality studies, hydrology, and 
mapping. At the California Gulch Superfund Site in Leadville, 
Colo., mineral maps produced by the USGS using imaging 
spectroscopy, the latest in remote sensing technology, have cut 
costs and accelerated cleanup of mine wastes over a large area.

    Invasive exotic plants and animals are a major 
threat throughout the Nation, costing billions of dollars in 
economic losses and causing untold damage to the environment. 
Non-native species damage agricultural crops and rangelands, 
contribute to the decline of commercially important fishes, 
spread diseases that affect domestic animals and people, and 
disrupt vital ecosystem functions. USGS biologists are studying 
such invaders as zebra mussels, leafy spurge, and brown tree 
snakes to determine the best ways of controlling their spread.

    More and more people live and work near a coast, 
yet increasing populations put enormous stresses on these 
fragile environments. USGS studies in coastal estuaries like 
San Francisco Bay and Chesapeake Bay are helping to explain how 
the Nation's coastal environments respond to natural sources of 
change, such as floods and hurricanes, as well as human 
influences.

    Managing Data and Information

    An essential part of the USGS mission is making sure that 
the results of our scientific studies are available in a wide 
variety of formats, both traditional and electronic, to those 
who need the information. The USGS maintains a wide range of 
databases and other sources of information that are consulted 
millions of times each year.

    The USGS home page on the World Wide Web provides 
access to more than 100,000 pages of information, from how to 
order any of more than 80,000 U.S. maps and other publications 
to what is the latest volcano activity in Alaska. During 1996, 
the monthly tally of visitors to our Web site doubled to more 
than 160,000 people a month.

    At our EROS Data Center in South Dakota, nearly 15 
million aerial photographs and satellite images are archived 
and available for purchase. These images, spanning three 
decades, provide valuable information about our planet's 
landforms, vegetation, and resources.

    USGS topographic maps have provided an accurate 
foundation for planning and decisionmaking for the past 100 
years. Today, digital geospatial information in geographic 
information systems is helping resource managers, planners, 
emergency personnel, and others make decisions quickly and with 
confidence. Last summer we signed a cooperative research and 
development agreement (CRADA) with 3M of St. Paul, Minn., 
through which we will develop on-demand alternatives to hard 
copy maps and 3M will develop a series of commercial instant 
map-printing systems. The new print-on-demand capability will 
provide an alternative to the traditional USGS printed map 
products, enabling a customer to print a specific topographic 
map in a matter of minutes.

    The USGS Library, established in 1882, is one of 
the largest earth science libraries in the world. More than 1 
million books and 500,000 maps in the library system cover all 
aspects of the earth sciences. The 12 libraries of the former 
National Biological Service and the library of the former 
Bureau of Mines have been added to the USGS library system, 
greatly expanding its holdings and coverage. In 1996, a new 
electronic library catalog became available at the main library 
in Reston, Va., and the branch libraries in Denver, Colo., and 
Menlo Park, Calif.

    Reaching to the Future

    For FY 1998, the USGS budget request is $745.4 million, a 
net increase of $6.5 million above the FY 97 enacted level 
(including the budget for the National Biological Service, now 
the Survey's Biological Resources Division). This total 
includes $19.5 million in program increases that are partially 
offset by redirecting about $13 million in program efforts.
    Changes in our FY 98 budget include:

    A $7. 5 million increase to expand biological 
research on Federal lands, increase technical assistance to 
land managers in Interior Department agencies, and increase the 
Cooperative Research Units program to assist in fulfilling 
partnership commitments to states. New research will focus on 
Pacific salmon and coastal habitats, invasive and exotic 
species, potential threats from endocrine disrupters, migratory 
birds, and Great Lakes fisheries and habitats.

    An increase of $3.0 million to expand and upgrade 
the global seismographic network to service the technical 
requirements of the nuclear test ban treaty. The data and 
network will also be used for scientific and disaster-
assistance purposes.

    An increase of $9.0 million to join with the 
Environmental Protection Agency and the National Oceanic and 
Atmospheric Administration to expand the available information 
on water quality for the 75 largest metropolitan areas in the 
country.
    Redeployment of funds to these higher priority activities 
will be achieved by accelerating our streamlining efforts (a 
savings of $6.8 million) and reducing some programmatic 
activities (a savings of $6.2 million). Some programs will be 
eliminated, with key components being incorporated into other 
existing programs, such as parts of Acid Rain into NAWQA. Other 
programs will be deferred such as 10 planned cooperative 
investigations dealing with water management issues.
    We are also refocusing $1.2 million of geographic research 
and applications funds to support investigations of urban 
growth patterns in New York Chicago, Philadelphia, and 
Portland. This effort builds on prototype studies conducted in 
San Francisco-Sacramento and Baltimore-Washington urban 
corridors which is shown below.
[GRAPHIC] [TIFF OMITTED] T0601.001

    With our rich scientific heritage and our unique mix of 
expertise, we at the USGS are poised to reach a new 
understanding of our Earth. America's abundant water, land, 
energy, mineral, and biological resources provide the 
foundation for much of our Nation's wealth and the well-being 
of its citizens. The New USGS is uniquely able to provide the 
knowledge and understanding needed for the careful stewardship 
of these resources and helping to ensure the health, prosperity 
and quality of life enjoyed by current and future generations 
of Americans.

                                ------                                


  Statement of Kathrine L. Henry, Acting Director, Office of Surface 
                   Mining Reclamation and Enforcement

    Overview

    The fiscal year (FY) 1998 budget request for the 
Office of Surface Mining Reclamation and Enforcement (OSM) 
discretionary appropriation is $271 million, a slight decrease 
($700,000) from the FY 1997 enacted level. In addition, OSM 
requests a permanent indefinite appropriation of $56 million, 
which is generated from the abandoned mine land fund investment 
earnings. This is transferred to the United Mine Workers of 
America Combined Benefits Fund in accordance with the Energy 
Policy Act of 1992.
    OSM's FY 1998 request reflects the need for budget 
stability to evaluate the impact of recent programmatic 
changes. Over the past few years, OSM has undergone a myriad of 
changes including a reorganization based on a regional 
structure, significant downsizing and a reduction-in-force, 
reinvention of its oversight program, and a shift of resources 
to technical assistance programs focused on preventing problems 
from occurring in the coalfields. The FY 1997 budget, together 
with improved efficiencies, enabled OSM to resume delivery of 
services and programs to meet customer needs more effectively. 
The FY 1998 budget request maintains this level of service and 
allows OSM and its stakeholders to review the outcome/progress 
of the non-budgetary changes in organization, oversight, and 
enforcement.
    OSM's 1998 budget request includes: $93,709,000 for the 
Regulation & Technology account ($963,000 less than the FY 1997 
enacted level), plus $177,348,000 for the Abandoned Mine 
Reclamation Fund ($263,000 more than the FY 1997 enacted 
level).
    Most of OSM's funding is passed on to States and Tribes in 
the form of grants. On an annual basis, grants and emergencies 
and high priority projects comprise about three-fourths of 
OSM's appropriation. Regulatory program grants to States are 
budgeted at $50.2 million in the FY 1998 request, slightly 
below the FY 1997 level. State and Tribal AML reclamation 
grants are budgeted at $142.3 million in the FY 1998 request, a 
slight increase above the FY 1997 level. In terms of human 
resources, individual States have about 2,400 FTE's compared to 
OSM's total workforce of 674. Of the 674, 69 FTE's are used 
primarily on regulatory program oversight-related components. 
Of these 69, only 43 are inspectors.

    FY1998 Budget Request Highlights
    This year, America celebrates the 20th anniversary of the 
enactment of the Surface Mining Control and Reclamation Act 
(SMCRA). OSM, the coal States, and the coal resource Tribes can 
be proud of the efforts over the past 20 years to ensure that 
coalfield citizens and the environment are protected during 
coal mining operations and that mined lands are reclaimed. 
Permitted acreage has increased fourfold, production levels 
have doubled, and public demands for environmental compliance 
have increased, resulting in a continuing workload for OSM, the 
States and the Tribes.
    This year's budget is the first submitted in our new 
business line structure. The new structure, submitted to, and 
coordinated with, the Department of the Interior, the Office of 
Management and Budget, and Congressional committees, better 
reflects the way OSM carries out its mission and goals. This 
business line structure will help OSM to fulfill the intent of 
the Government Performance and Results Act of 1993 (GPRA). OSM 
is working to meet the GPRA requirements through a business 
line-based accounting system to better determine the cost of 
each program activity, provide a mechanism for linking costs to 
performance outputs, and enhance OSM's management decision-
making process.

    Environmental Restoration

    The Environmental Restoration business line involves all 
functions that contribute to reclaiming lands affected by past 
coal mining practices. It provides for the use of Abandoned 
Mine Land (AML) reclamation funds to protect public health, 
safety, and general welfare from extreme danger and adverse 
effects of past coal mining practices. It also restores land 
and water resources and the environment previously degraded by 
these practices. In addition, OSM provides funding for the 
Appalachian Clean Streams Initiative within this business line.
    Funding in this business line totals $166.2 million, an 
increase of $0.6 million over the FY 1997 enacted level. In 
addition to uncontrollable cost increases, an additional $1 
million is provided for the popular Appalachian Clean Streams 
Initiative. Currently, there are over 75 State, Federal, and 
local organizations who have joined together in reversing the 
detrimental impacts of acid mine drainage on local communities. 
The Appalachian Clean Streams Initiative increase is offset by 
a modest decrease in regular reclamation grants which will 
still continue to fully fund ongoing reclamation projects as 
well as new projects.
    Under the Clean Streams initiative, OSM provides seed 
monies which can be leveraged by contributions from other 
partners. For example, $140,000 of OSM monies in Tennessee are 
being leveraged by an additional $226,O00 coming from five 
other partners in addition to other ``in-kind'' assistance. 
Additionally, in Indiana, $325,000 in Clean Streams funding 
recently was allocated to the Patoka River Project. The State 
and the Patoka South Fork Watershed Steering Committee already 
have obtained over $35,000 from the Environmental Protection 
Agency, Pike County and local businesses. Additional funding 
proposals are pending.
    On our twentieth anniversary, the results of our efforts 
are clearly visible; yet much remains to be done. Of the $3.6 
billion in high priority reclamation costs currently 
identified, only one-third have been completed leaving an 
outstanding $2.3 billion in direct reclamation needs still to 
be addressed. Moreover, there are $1.7 billion of known lower 
priority problems which remain unreclaimed.

    Environmental Protection

    This business line involves the oversight of State programs 
and the operation of Federal and Indian programs. As with the 
Environmental Restoration business line, the principal means of 
delivering environmental protection within the framework of the 
SMCRA are through providing regulatory grants to the States to 
operate State regulatory programs. Other important programs and 
activities supported by this business line include State 
program oversight through the inspection and evaluation 
processes and the operation of the Applicant/Violator System.
    In cooperation with State regulatory authorities, in 1996 
OSM implemented a new, innovative results based oversight 
strategy. Under the re-engineered oversight policy, OSM's 
oversight activities primarily focus on end results and the on-
the-ground success of States in meeting SMCRA's environmental 
protection and public participation goals.
    Funding in this business line totals $72.3 million, a 
decrease of $0.3 million from the FY 1997 enacted level. The 
request provides for uncontrollable cost increases and a small 
decrease of $500,000 (less than 1%) in State regulatory grants 
made possible by anticipated cost savings as States adopt the 
new inspection frequency guidelines.
    The request also includes a $0.3 million decrease made 
possible by efficiencies in the issuance and assessment of 
civil penalty violations and the operations of the Applicant/
Violator System. The regulations underlying the Applicant/
Violator System have recently come under scrutiny in the U. S. 
Court of Appeals for the District of Columbia Circuit.
    OSM is shoring up remaining issues concerning its Ten-Day 
Notice (TDN) procedures. OSM's Ten-Day Notice Directive 
supplements the Federal Ten-Day Notice regulations by providing 
OSM field units with additional guidance on the use of TDN's. 
After considerable outreach to our customers, including the 
States, OSM developed a new draft directive to address 
situations related to programmatic issues and to clarify the 
standard of review used to assess State responses. The draft 
was available for public comment through February 28, 1997. We 
are now reviewing the comments.
    To provide regulatory clarity and to respond to 
Congressional interest, OSM recently published in the Federal 
Register a proposed rule defining valid existing rights (VER) 
to coal where surface mining is otherwise prohibited. The 
proposed definition, the most stringent OSM believes the courts 
will support, is a good faith/all permits standard. The 
proposed rule, when adopted, will establish a clear Federal 
standard.
    OSM also released a related proposal clarifying the effect 
of subsidence from underground coal mining in specially 
protected areas. This related proposal responds to a court 
directive regarding OSM's previous effort to incorporate into 
regulations the Department of Interior's legal opinion that 
subsidence is not a ``surface coal mining operation'', as 
defined in SMCRA, subject to certain statutory prohibitions 
that apply to surface coal mining operations.
    In coordination with other Departmental bureaus, OSM 
performs various regulatory duties on Tribal lands. To enable 
Tribes to assume primacy under SMCRA, OSM will continue to work 
with the Tribes to develop necessary legislation, provide the 
technical assistance needed to develop Tribal regulations, and 
provide technical expertise.

    Technology Development & Transfer

    This business line provides the resources necessary to 
operate the Technical Information Processing System (TIPS), 
technology transfer, the technical training program, and 
supports COALEX, a computer-assisted library search service. 
TIPS provides OSM and State users various scientific and 
technical data to assist in mine review and permitting, 
reclamation design efforts, and hydrologic and environmental 
assessments.
    The budget request of $11.2 million is a net decrease of 
less than $0.1 million from FY 1997. The budget provides for 
uncontrollable cost increases and savings associated with the 
completion of one-time equipment replacement costs.
    OSM's technical training program is a successful example of 
State-Federal cooperation. States and OSM cooperatively 
identify needs and prepare courses; both provide instructors 
for the various course offerings. In FY 1997 and 1998, OSM 
plans to hold fifty sessions of twenty-five course offerings 
that will reach about 1,000 students yearly. About seventy 
percent of the course attendees are State and Tribal employees.
    In 1996, OSM also provided States with technical assistance 
by conducting forums on bond releases in the arid and semi-arid 
regions of the West, and entering into MOUs with Montana, Utah, 
and Wyoming to exchange and share environmental data used in 
permitting, regulating mining and facilitating reclamation bond 
releases. Future forums planned to aid OSM and the States 
include prime farmland reclamation and electronic permitting.

    Financial Management

    This business line includes the costs of collecting, 
managing, disbursing and investing abandoned mine land 
reclamation fees. It also includes the full range of audit, 
billing and collection processes. It also finances the costs of 
collecting receivables including civil penalties from 
operators, as well as other administrative collections.
    During the past year, FY 1996, OSM collected over $256 
million in AML receipts and managed the earning of $69 million 
in investment interest for the AML fund. It is estimated that 
approximately $340 million will be collected and earned in FY 
1998.
    The budget request of $6.1 million, a net decrease of $0.4 
million, includes an increase for uncontrollable costs and 
decreases made possible by the continued outsourcing of 
delinquent debt collection functions ($150,000) and prudent 
management of all available funds, including use of no-year 
funds which have been carried over from prior years allowing 
current year appropriations to be decreased ($400,000).
    Since enactment of the Chief Financial Officers Act of 1990 
all financial management activities have been audited as 
prescribed. OSM has received clean audit opinions from the 
Office of the Inspector General for the past six years.

    Executive Direction & Administration

    Funding in this business line totals $15.2 million for the 
executive direction, administrative support and general 
services for all of OSM. This funding level represents a net 
decrease of $0.6 million from the FY 1997 level. The budget 
request includes program decreases ($541,000) and 
uncontrollable cost decreases ($13,000). The program decreases 
reflect the continued impact of the recent downsizing, as space 
is finally relinquished per General Services Administration 
guidelines and other support costs continue to level out.

    Summary

    Over the twenty year period since SMCRA was enacted, OSM's 
appropriated funding and FTE levels have fluctuated in ways 
reflective of program maturity, and in response to specific 
program challenges and events. For example, as recently as 
1995, OSM had 989 FTE's compared with its current level of 674 
FTE's. Our current request will allow OSM to ensure that the 
objectives of SMCRA continue to be achieved.

                                ------                                


Statement of Carolita Kallaur, Associate Director for Offshore Minerals 
  Management, Minerals Management Service, Department of the Interior

    Madam Chairman and Members of the Subcommittee, the 
Minerals Management Service (MMS) appreciates the opportunity 
to testify today on its Fiscal Year (FY) 1998 budget request. 
This request reflects our best assessment of monies needed to 
carry out critical MMS programs during the upcoming year.
    In general, MMS is requesting $205.040 million, which is 
approximately $.6 million more than that appropriated in FY 
1997. In formulating its request, MMS looked closely at its 
ongoing operations and recently increased responsibilities. The 
MMS budget request for FY 1998 reflects the need for additional 
funding balanced against savings gained from past and ongoing 
efforts to streamline operations and find more efficient ways 
of doing business. The remainder of this testimony will focus 
on some of our more recent efforts to streamline and improve 
our operations; challenges and opportunities confronting the 
agency; and an overview of funding requested to meet those 
challenges.

    Background

    Prior to discussing MMS's budget request in some detail, it 
is important to put that request into perspective by providing 
a brief overview of the agency and its programs as well as the 
benefits derived from those programs. MMS is responsible for 
two major programs within the Department of the Interior--the 
Royalty Management Program (RMP) and the Offshore Minerals 
Management Program (OMM). As such, all mineral revenue 
collection and distribution functions on both Federal (onshore 
and offshore) and Indian lands are centralized within the 
bureau. Further, the leasing and oversight of minerals 
operations on the Nation's Outer Continental Shelf (OCS) also 
are centralized in MMS. Together, these programs contribute 
significantly to the Nation's economic well-being and energy 
security.
    From an energy standpoint, MMS currently manages more than 
27 million acres of offshore Federal lands. Production from 
those lands account for approximately 25 and 15 percent, 
respectively, of our domestic natural gas and oil production.
    From an economic standpoint, in FY 1998, MMS will account 
for an estimated $6.7 billion in Federal receipts, including 
$5.5 billion from OCS receipts and $1.2 billion in onshore 
receipts. From a taxpayer's perspective, that converts to:

    *$4.3 billion deposited to the General Fund of the Treasury 
to pay for Federal programs and reduce the deficit;

    *$581 million in mineral revenue payments made to onshore 
States;

    *$119 million in shared natural gas and oil receipts with 
coastal States;

    *$74 million to Indian tribes and allottees;

    *$900 million transferred to the Land and Water 
Conservation Fund;

    *$458 million credited to the Reclamation Fund; and

    *$150 million transferred to the Historic Preservation 
Fund.

    Finding Better and More Efficient Ways of Doing Business

    Although MMS is only 15 years old, a hallmark of the agency 
has been its ability to evolve in response to a changing 
business and governmental climate. In response to those 
changes, and due to a desire to continually improve on the way 
it does business, MMS has devoted a significant amount of 
attention to developing a long-range vision for the agency in 
light of its missions and responsibilities. Further, we have 
looked and are continuing to look for better ways to carry out 
our programs more effectively. The goals of these efforts are 
several: to make the agency more efficient, thereby better 
utilizing limited resources; to be more responsive to our 
customers; and to better position ourselves to anticipate and 
meet new challenges that inevitably arise.
    With regard to long-term planning, MMS developed and issued 
its first strategic plan--MMS 2000. As a direct result of that 
planning process, the agency recently implemented a 
reorganization plan that reduces management layers and realigns 
several functions to better coordinate program activities. In 
addition, MMS is in the process of finalizing its plan under 
the ``Government Performance and Results Act,'' which will 
include quantifiable performance goals and measures that will 
be incorporated into all levels of management. Taken together, 
these two major initiatives provide the basic framework to 
guide our efforts towards achieving the goals listed above.
    As part of this strategic planning, MMS has been aggressive 
in analyzing its processes and procedures to make them more 
efficient and to be more responsive to our customers. Examples 
of some more recent efforts and accomplishments are listed 
below.

    Royalty Management Program

    For several years, MMS has dedicated itself to improving 
the various RMP functions it performs to collect, verify, and 
distribute mineral revenues received from Federal lands. This 
effort has paid off, not only for MMS but also for its various 
constituencies, particularly onshore States, which receive 
roughly 50 percent of the revenues derived from Federal onshore 
mineral leases located within their State boundaries.
    For example, in FY 1991--the first year a portion of the 
Federal Government's administrative costs associated with 
onshore mineral leasing and collection activities were deducted 
from payments to States--overall administrative costs were 
approximately $135.8 million, and about 41 percent of those 
costs were associated with MMS royalty management functions 
($56.2 million). However, by FY 1997, overall administrative 
costs have decreased roughly 16 percent--to $113.8 million--and 
about 31 percent of those costs are now associated with RMP 
functions ($34.5 million). During this interval, MMS has 
reduced its share of administrative costs by over 37 percent.
    Other efforts include--

    Simplifying various RMP processes and procedures. 
For example, MMS has--

    *Removed a substantial reporting burden on industry by 
eliminating most allowance-form filing requirements. The 
associated costs savings are estimated at about $500,000 per 
year. In 1996, MMS published a final rule streamlining filing 
requirements and changing associated penalties.

    *Refined its policy with regard to recouping royalty 
overpayment for Federal offshore mineral leases. This policy, 
which raises the de minimis reporting requirement and allows 
companies to recover overpayments below the de minimis from 
future royalty payments, will cut paperwork on this issue by 
over 50 percent. The associated cost savings are estimated at 
about $230,000 per year.

    *Offered a variety of electronic reporting and payment 
options to customers. The ultimate goal of this effort is to 
receive 100 percent of incoming reports electronically, with an 
expected savings of over $1 million when fully implemented.

    Working closely with our various constituencies. 
For example, MMS has--

    *Completed a 2-year project to expand the RMP dedicated 
wide-area network to the 17 State and tribal sites that have 
audit agreements with MMS. This effort provides State and 
tribal auditors with the means to retrieve royalty revenue data 
faster and allows for a more complete information exchange with 
RMP personnel.

    *Installed a client-server computer application system 
which is a powerful, easy-to-use tool that greatly enhances 
access to RMP data. MMS personnel, State and Indian customers 
can now access up to 6 years of mineral revenue data and all 
lease information residing on the RMP databases.

    *Coordinated, in conjunction with BLM and BIA, a ``one-stop 
shopping'' approach to Indian mineral services in a 2-year 
pilot program in the Farmington, New Mexico, office (which is 
one of three MMS offices dedicated to servicing the Indian 
minerals community).

    *Instituted an Indian Royalty Internship program, which is 
designed to provide tribes the opportunity to learn all facets 
of the RMP, thereby enabling them to make informed decisions 
concerning the assumption of functions currently performed for 
them by the Federal Government.

    *Worked closely with the Royalty Policy Committee on a 
variety of royalty policy and operational issues. This advisory 
Committee to provide input from affected parties on important 
policy questions. The Committee includes representatives of 
States, tribes, Indian allottees, industry, Federal agencies, 
and the public.

    Offshore Minerals Management Program (OMM)

    Over the past several years, the offshore program has moved 
to a more focused leasing program (Gulf of Mexico and certain 
areas offshore Alaska), with a concentrated emphasis on the 
safe and environmentally sound development of about 6,500 
existing leases (primarily in the Gulf of Mexico, but also 
certain areas of Alaska and a very small area offshore 
California). This focus has allowed MMS to reduce its offshore 
workforce by over 28 percent and to redirect critical resources 
to the Gulf of Mexico, where the vast majority of exploration 
and development is occurring.
    In line with this shift of focus, the agency is instituting 
changes aimed at making the program more efficient and 
effective while maintaining its excellent environmental and 
safety record. Several of the more recent efforts and 
accomplishments are listed below.

    Simplifying various OMM processes and procedures. 
For example, MMS has--

    *Re-engineered the regulatory program to be more 
performance-based and less prescriptive. Also, MMS has 
instituted a voluntary Safety and Environmental Management 
Program (SEMP).Through this program, MMS is collaborating with 
industry to develop company-specific plans that will better 
facilitate innovations while still ensuring safety and 
environmental protection.

    *Streamlined the EIS process so that documents will be 
shorter (by about 25 percent) and more readable while still 
containing all the information needed for making informed 
decisions. This new procedure will be used for all EIS's 
beginning in 1997. In the Gulf of Mexico, EIS work for the 
period 1997-2002 will be reduced by 80 percent due to these 
streamlining measures.

    *Revised existing regulations related to offshore bidding 
systems for new leases that will give the Secretary more 
discretion to set royalty terms which adjust automatically to 
changing market conditions.

    *Eliminated redundant oil spill reporting requirements so 
that operators will no longer be required to report to both MMS 
and the Coast Guard spills of less than one barrel. Instead, 
MMS has arranged to have the Coast Guard forward such reports 
and only require operators to report spills of more than one 
barrel. This change will reduce this reporting burden to both 
MMS and industry by 95 percent.

    Working closely with our various constituencies. 
For example, MMS has--

    *Finalized the first OCS 5-Year Oil and Natural Gas Program 
(1997-2002) that is consensus-based. This effort will allow 
industry access to OCS resources to help meet the Nation's 
energy needs while minimizing future conflicts concerning 
appropriate areas to lease.

    *Worked to resolve conflicts, and created and maintained a 
stable regulatory regime which has contributed to the positive 
business environment which has allowed natural gas and oil 
production to double (up to more than 185,000 barrels per day 
in 1996) from existing Pacific region leases since 1985 through 
cooperative efforts with local governments, State government, 
and industry, including the creation of a Tri-County Forum to 
address and resolve various issues related to the development 
of existing leases.

    *Devised a multi-constituent effort to address issues 
associated with implementing the financial responsibility 
provisions of the Oil Pollution Act (OPA).This effort resulted 
in amendments to OPA in 1996 which reflected the 
recommendations made by the special group.

    *Established an Alaska OCS Region Offshore Advisory 
Committee, which will provide the forum for planning for each 
of the Alaska lease sales proposed in the 1997-2002 OCS 5-Year 
Program.

    *Completed an atlas series (in conjunction with the 
Department of Energy, the Gas Research Institute, and the 
University of Texas Bureau of Economic Geology) on Gulf of 
Mexico offshore natural gas and oil fields. The database 
includes a wide variety of geologic and other information on 
more than 1,100 fields and 22,000 reservoirs.

    Future Challenges and Opportunities Facing MMS

    Based on past strides that MMS has made to become a more 
efficient, yet responsive agency, as well as its willingness to 
continually look for ways to become even more efficient, it is 
in an excellent position to favorably respond to new 
challenges. Listed below is a brief overview of some of those 
challenges. However, it is important to note that while these 
issues will demand the agency's full attention, MMS also views 
these as opportunities to more fully advance its mission and to 
further enhance our vision of becoming the best minerals 
manager.

    Royalty Management Program

    As you can see from some of the examples listed above, MMS, 
and in particular the Royalty Management Program, has been 
aggressive in scrutinizing its processes in order to streamline 
and improve them. While this effort has already paid dividends, 
there are several ongoing efforts which will help the program 
achieve even more dramatic efficiencies. For example--

    Implementation of the ``Federal Oil and Gas Royalty 
Simplification and Fairness Act'' (RSFA)
    The RSFA was enacted in August 1996 and will significantly 
impact the way MMS conducts its management of mineral revenues 
as well as how it interacts with its State and industry 
customers. In general, the Act provides:
    --the framework for additional delegations of certain 
royalty functions to States, subject to Secretarial discretion.
    --a 7-year statute of limitations for all royalty 
collections and limitations on industry liability, and a 33-
month limit on all administrative appeals.
    --the payment of interest on overpayments.
    --assurance of cost-effective audit and collection 
activities.
    --repeal of offshore refund requirements and streamlined 
adjustment procedures.
    MMS is committed to fulfilling the mandates of the Act and 
has developed a plan for implementing RSFA changes within the 
time frames required by law. We estimate that full 
implementation of this legislation will take approximately 3 
years from the date of enactment of the law (8/96) and will 
require extensive efforts during that time. However, after that 
time we expect that the various provisions of the law, combined 
with some of the efforts listed below, will help result in 
further program efficiencies.

    Royalty Management Program (RMP) Reengineering 
Project
    MMS recently began a major project, which will continue in 
1997, to intensively evaluate strategies to ensure that mineral 
lease revenues are paid on time and accurately. This 
comprehensive effort will involve several aspects: 1) 
implementation of systems and operational changes related to 
the RSFA; 2) evaluation of royalty management processes and 
automated systems to meet future requirements; 3) development 
of the best and most cost-effective operational strategies and 
organizational structures for the future; and 4) implementation 
of short and long-term systems and process changes.

    Recommendations of the Royalty Policy Committee
    The Committee was formed in FY 1995 as part of the Minerals 
Management Advisory Board and acts as a sounding board for new 
procedures and policies. The Committee subsequently designated 
eight subcommittees to look at wide range of issues associated 
with the royalty collection process--royalty reporting; audit; 
appeals and alternative dispute resolution; disbursements and 
Net Receipt Sharing; valuation; and phosphate, trona and 
leasable solid minerals. All eight subcommittees have presented 
either final or interim reports. These reports contain 
recommendations addressing major policy issues or ways to 
improve existing RMP operational procedures. MMS is committed 
to implementing as many of these recommendations as is feasible 
and is also considering these in the context of implementing 
RSFA requirements.

    State Benchmarking Study
    MMS recently completed a benchmarking study which describes 
and analyzes the functions performed and costs incurred by four 
selected States to manage royalties generated from leases on 
State-owned lands. The primary objective of this study is to 
identify State ``best practices'' for potential adoption by MMS 
as part of its RMP Reengineering Project.

    Oil and Natural Gas Valuation Regulations
    MMS is in the process is revising the way in which it 
calculates the value of these two products and has worked 
extensively with a broad array of our customers to incorporate 
their ideas and concerns into our rulemakings. The purpose of 
both rulemakings is to simplify royalty payments; make 
valuation methods responsive to modern market conditions; offer 
the industry more flexibility; reduce administrative costs; and 
maintain revenue neutrality.
    Taken in concert, the initiatives listed above will help 
MMS become even more cost efficient and will allow us to 
redirect our budgetary resources during FY 1998 to areas where 
we are seeing a dramatic increase in responsibilities.

    Offshore Minerals Management Program

    One of the most significant events to occur in the history 
of the OCS program is the dramatic rise in interest in the Gulf 
of Mexico by the natural gas and oil industry that has been 
occurring during the last several years. Further, this interest 
is expected to increase further due to a variety of factors--
favorable economics; new discoveries in the deep water areas of 
the Gulf; renewed interest in some of the more shallow waters 
due to discoveries in ``sub-salt'' areas; and the use of new 
technology to extend the life of current fields and accurately 
find new ones. While this is a very positive occurrence in 
terms of the Nation's economic and energy well-being, it also 
presents MMS with many challenges.

    Increased Responsibilities in the Gulf of Mexico
    Currently, there are over 6,500 active leases in the Gulf 
of Mexico. Bidding on leases increased by more than 155 percent 
from 1993 to 1996. During the same period, production rates 
have risen by more than 16 percent (to about 1.1 million 
barrels per day). In the next few years, this rate is expected 
to increase even more dramatically, due in part to passage in 
1995 of the ``Deep Water Royalty Relief Act.'' In 1996 (the 
first year the provisions of the Act applied to new leases), a 
record number of tracts were leased in the Central and Western 
Gulf of Mexico sales--approximately 1,500--with bonus bids of 
about $1 billion going to the Federal Treasury.
    MMS estimates that by the year 2002, oil production will 
increase roughly 70 percent--to about 1.7 million barrels per 
day. During that time, natural gas production is expected to 
remain steady (about 13 billion cubic feet per day) or increase 
slightly, and by the year 2007, production could rise to as 
high as 17.2 billion cubic feet per day.
    With this dramatic upsurge in interest comes the 
responsibility to continue to properly manage industry 
activities and to ensure that the environment is protected. MMS 
will face increased leasing-related responsibilities ranging 
from assuring that the Federal Government receives fair market 
value for tracts leased to review of industry exploration and 
development plans and increased lease monitoring 
responsibilities, such as scheduled and unscheduled inspections 
of operations. To gain some perspective on this increased 
workload, a table showing the increasing Gulf of Mexico 
workload from FY 1992-FY 1998 is depicted below:

            Gulf of Mexico OCS Activities FY 1992 - FY 1998
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    Ongoing Responsibilities Offshore Alaska and the 
Pacific
    Even though the bulk of OCS leasing, exploration and 
development has occurred, and will continue to occur, in the 
Gulf of Mexico, MMS is responsible for conducting important 
leasing activities offshore certain areas of Alaska and for 
overseeing the development of resources from existing leases 
offshore California. During the timeframe 1997-2002, there are 
five lease sales scheduled for areas offshore Alaska. 
Furthermore, due to past exploration efforts, there is a good 
chance that the first Federal OCS production offshore Alaska 
could occur by 1999.
    In addition to managing Alaska OCS leasing and operations, 
MMS must continue to devote an appropriate level of resources 
to addressing and overseeing various issues associated with 
ongoing and potential future OCS operations offshore 
California. Because of a past dedication to these issues and a 
willingness to work in collaboration with the State of 
California, local governments, and industry, MMS has helped 
facilitate a significant increase in oil production coming from 
existing leases. However, there are currently 40 existing, but 
still undeveloped, leases offshore California. MMS is committed 
to continuing its collaborative efforts with its stakeholders 
in an effort to determine if those leases can be developed in 
an acceptable manner.

    Overview of MMS's FY 1998 Budget Request

    In recognition of the Administration's commitment to 
balance the budget, the business pressures and opportunities 
for which MMS has stewardship, and the need to continue to 
improve the operations of the organization, MMS has crafted a 
budget request primarily refocusing some of our resources to 
the Gulf of Mexico in support of increased leasing, exploration 
and developmental activities.
    Industry enthusiasm is projected to remain high and be 
reflected in future lease sales. Because of the lag time 
between the issuance of new leases and the MMS workload 
associated with a lease, the Offshore program is now beginning 
to encounter increased work associated with its 1995 and 1996 
highly successful lease sales. By 1998, the enormous increase 
in the number of active leases in the Gulf of Mexico will 
require a redirection of resources to ensure MMS's capacity for 
managing the Offshore program in a safe and environmentally 
sound manner and for assuring the public a fair return on the 
sale of oil and gas leases.
    The record-breaking results of recent lease sales in the 
GOM, particularly in deeper waters, have placed a heavy demand 
on our efforts to ensure the safe and environmentally sound 
development of the OCS, to service the needs of our 
stakeholders in a timely manner, and to assure the public a 
fair return on the leasing of OCS minerals. Deep water 
operations are vastly different from conventional operations in 
shallower waters of the shelf. Deepwater operations also are 
much farther from shore, encounter different environmental 
conditions, are technologically more sophisticated, produce at 
much higher rates, and are subject to different economic 
determinants. These differences will significantly impact the 
MMS's workload and present many technical and regulatory 
challenges.
    Therefore, MMS's Leasing and Environmental Program is 
requesting additional funding to the Environmental Studies 
Program (+$1,526,000) and additional personnel to process the 
administrative reporting and permitting requirements (+$375,000 
and +6 FTE). These increases are partially offset by a decrease 
of $375,000 (and -6 FTE) which is possible because of 
successful efforts to streamline and make the Offshore program 
more efficient. For example, we are focusing leasing activities 
only on those areas currently experiencing OCS activities or 
areas with the near term potential for OCS activities.
    Industry geological and geophysical (G&G) permit requests 
have increased to their highest level ever. MMS will need to 
acquire new geologic and geophysical data (+$1,100,000) and 
correct and computerize historical well log data (+$1,200,000). 
An additional increase (+$300,000 and +4 FTE) is necessary for 
geologic and geophysical evaluations for new leases under the 
Deep Water Royalty Relief Act. This increase will give us the 
means to more accurately evaluate bids and royalty relief 
applications to ensure that the public receives fair market 
value on offshore leases and to continue to responsibly respond 
to surety requirements, safety precautions and conservation 
practices. Because the 1997-2002 Five Year Plan lease sale 
program contains no Atlantic lease sales, and through 
efficiencies through the establishment of a centralized data 
and information collection unit in the Gulf of Mexico, MMS is 
able to propose a reduction of $300,000 (and -3 FTE).
    MMS also needs to expand the inspector team and support 
increased helicopter use to maintain inspection rates over more 
offshore facilities and drilling operations, many of which are 
located great distances from land. MMS is receiving more 
exploration, development and deep water operating plans and 
pipeline applications for review and action that requires us to 
do more environmental assessments, categor-

ical exclusions and platform structural analysis. In order to 
continue to respond on a timely basis, the increased workload 
associated with document and application reviews and permitting 
required in the post-lease process must be addressed. In total, 
the Regulatory Program will require an additional $1,890,000 
(+18 FTE) to accomplish these tasks. However, this funding 
increase will be partially offset by savings of $746,000 (-3 
FTE) derived from a combination of buyouts and streamlining 
initiatives, as well as non-recurring FY 1997 costs associated 
with the acquisition of local area/wide area network hardware 
and software.
    As I mentioned earlier in my testimony, MMS has been 
diligent in identifying more efficient and effective methods of 
doing business. Those efficiencies make it possible for us to 
shift our limited resources to those areas where we will see a 
marked upswing in work.
    For example, efficiencies gained in the RMP have reduced 
resource requirements in that program area. The funding 
decrease, reflecting downsizing efforts, will be achieved 
through implementation of scheduled buyouts and a reduction in 
contractual support for mission operations. RMP has 
aggressively pursued streamlining, reducing management levels, 
and reducing staff support positions at divisional levels. The 
results of these efforts are fewer divisions, one less Deputy 
Associate Director, and fewer staff support levels. Through 
successful implementation of buyouts targeted to higher grades, 
these efforts have reduced requirements for FY 1998. MMS hopes 
to maintain the current high level of performance achieved 
though streamlining and improved efficiency of operations. We 
will continue to work to identify further efficiencies and to 
reengineer processes to help ensure high performance levels in 
the future.
    Additionally, RMP has evaluated the cost efficiency of 
performing functions under contractual services versus in-house 
staff. By now performing some functions inhouse that were 
originally contracted out, RMP anticipates a significant 
reduction in these costs and significant savings overall (-
$3,713,000 and -36 FTE).
    Through comparable methods and techniques, the Executive 
Direction (-$87,000), Policy and Management Improvement (-
$252,000) and Administrative Operations (-$571,000 and -3 FTE) 
reductions have been achievable.
    General Support Services, which provides office space, 
telephones, mail, communication services etc., we estimate a 
net reduction in requirements of $724,000.

    Summary

    In summary, the MMS budget proposal:

    provides the necessary environmental studies, 
geologic and geophysical data, and historical well-log data to 
help MMS ensure that the Federal Government receives a fair 
return on the public's offshore mineral resources and possesses 
adequate information needed to protect the environment as it 
pertains to exploration, development and production of natural 
gas and oil on the Gulf of Mexico OCS;

    provides the resources necessary to ensure that 
increased operations in the Gulf of Mexico are adequately 
monitored, given the reality of a dramatic increase in the 
number of leases as well as in exploration and development 
activities;

    provides the opportunity for the Nation to increase 
production in the Gulf of Mexico while protecting the 
environment, with the resultant royalty income significantly 
contributing to the Administration's efforts to balance the 
budget;

    provides continued organization strides towards 
efficiency to support the public's desire for less government; 
and

    provides a government that manages its 
responsibilities through inclusive rather than exclusive 
involvement with the constituency it serves.
    Madam Chairman, this concludes my testimony on the FY 1998 
budget request for MMS. However, I will be pleased to answer 
any questions you or Members may have regarding any aspect of 
this request.

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