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



 
    OVERSIGHT HEARING ON OUTER CONTINENTAL SHELF OIL AND GAS LEASING

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

                           OVERSIGHT HEARING

                               before the

                         SUBCOMMITTEE ON ENERGY
                         AND MINERAL RESOURCES

                                 of the

                         COMMITTEE ON RESOURCES
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED FIFTH CONGRESS

                             SECOND SESSION

                               __________

                      MAY 14, 1998, WASHINGTON, DC

                               __________

                           Serial No. 105-87

                               __________

           Printed for the use of the Committee on Resources



                                


                      U.S. GOVERNMENT PRINTING OFFICE
 49-051 CC                   WASHINGTON : 1998
------------------------------------------------------------------------------
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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               RON KIND, Wisconsin
JIM GIBBONS, Nevada                  LLOYD DOGGETT, Texas
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, Staff Director
                     Mike Henry, Professional Staff
                  Deborah Lanzone, Professsional Staff



                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held May 14, 1998........................................     1

Statements of Members:
    Boxer, Hon. Barbara, a United States Senator from the State 
      of California..............................................    14
        Prepared statement of....................................    16
    Capps,Hon. Lois, a Representative in Congress from the State 
      of California..............................................    17
        Prepared statement of....................................    18
    Cubin, Hon. Barbara, a Representative in Congress from the 
      State of Wyoming, prepared statement of....................     1
    Cunningham, Hon. Randy ``Duke'', a Representative in Congress 
      from the State of California...............................    12
        Prepared statement of....................................    13
    Goss, Hon. Porter J., a Representative in Congress from the 
      State of Florida...........................................    31
        Prepared statement of....................................    43
    Jones, Hon. Walter B., a Representative in Congress from the 
      State of North Carolina....................................     2
        Prepared statement of....................................     4
    Lampson, Hon. Nick, a Representative in Congress from the 
      State of Texas.............................................    26
        Prepared statement of....................................    28
    Miller, Hon. George, a Representative in Congress from the 
      State of California, prepared statement of.................    19
    Pallone, Hon. Frank, Jr., a Representative in Congress from 
      the State of New Jersey....................................    24
        Prepared statement of....................................    25
    Pickett, Hon. Owen B., a Representative in Congress from the 
      State of Virginia, prepared statement of...................    48
    Regula, Hon. Ralph, a Representative in Congress from the 
      State of Ohio..............................................     7
        Prepared statement of....................................     8
    Riggs, Hon. Frank D., a Representative in Congress from the 
      State of California, prepared statement of.................    38
    Scarborough, Hon. Joe, a Representative in Congress from the 
      State of Florida...........................................    20
        Prepared statement of....................................    22
    Taylor, Hon. Gene, a Representative in Congress from the 
      State of Mississippi.......................................    36
        Prepared statement of....................................    37

Statements of witnesses:
    Holman, William, Assistant Secretary for Environmental 
      Protection, North Carolina Department of Environment and 
      Natural Resources..........................................     5
        Prepared statement of....................................    40
    Quarterman, Cynthia L., Director, Minerals Management 
      Service, Department of the Interior........................    33
        Prepared statement of....................................    44
    Whitfield, Estus, Environmental Advisor to Governor Lawton 
      Chiles of Florida..........................................    29
        Prepared statement of....................................    41



    OVERSIGHT HEARING ON OUTER CONTINENTAL SHELF OIL AND GAS LEASING

                              ----------                              


                         THURSDAY, MAY 14, 1998

        Subcommittee on Energy and Mineral Resources, 
            Committee on Resources, Washington, DC.
    The Subcommittee met, pursuant to notice, at 2:24 p.m., in 
room 1334, Longworth House Office Building, Honorable Barbara 
Cubin (chairman of the Subcommittee) presiding.
    Mrs. Cubin. The Subcommittee on Minerals and Energy will 
please come to order.
    The first panel would please come forward.
    In the interest of time, since we don't any more votes this 
afternoon, and I know members all have planes to catch and 
other places to be, I'm going to submit my opening statement 
for the record, and we'll just be in recess until the Ranking 
Member has an opportunity to give his opening statement. So, if 
you'll just bear with us, it'll just be a minute. Actually, why 
don't we go ahead and start, Congressman Jones, and then we'll 
come back to his opening statement so that we can get moving.
    [The prepared statement of Mrs. Cubin follows:]

Statement of Hon. Barbara Cubin, a Representative in Congress from the 
                            State of Wyoming

    The Subcommittee meets today to review Outer Continental 
Shelf oil and gas development issues, primarily from the 
perspective of Members from coastal States and congressional 
districts. Such Members, be they Republicans or Democrats, 
represent constituents who are often very passionate in their 
views about offshore drilling near their State's coastline--and 
the passion is reflected in these Members' efforts as 
manifested in legislation to ban a range of activities by the 
Secretary of the Interior from pre-leasing studies, through the 
auctioning of OCS tracts, to in some instances a bar on 
approving drilling or development permits for already leased 
shelf areas.
    On the other hand, occasionally Members support measures to 
provide incentives to companies to risk the huge sums of money 
necessary to explore for, drill and produce oil and gas from 
the OCS, such as the Deepwater Royalty Relief Act of 1995, 
which has been an unqualified success in stimulating bidding 
for central and western Gulf of Mexico tracts. For the five 
lease sales post-enactment of this relief, the Federal treasury 
has been enriched to the tune of $3.2 billion in high bids--not 
exactly chump change. And the leases that have been awarded 
will likely contain oil and gas fields upon which production 
royalties of far greater magnitude will be forthcoming as the 
thresholds in the deepwater relief Act are exceeded. And let me 
remind everyone, that a large portion of these receipts are 
dedicated to the Land & Water Conservation Fund, to which many 
Members look for funding of environmentally sensitive lands 
within their States.
    The Members we are scheduled to hear from today are 
predominantly of the view to restrict OCS development, at least 
in certain geographic regions. Several of our witnesses have 
sponsored authorizing bills to do so which are referred to this 
Committee. The need to act upon these bills has largely been 
supplanted by moratoria in the annual appropriations bill for 
the Department of the Interior, via limitations of funds 
provisions--sometimes derisively called ``riders'' by those 
opposed to legis-

lating policy matters on spending bills--at least those 
policies which they don't support. But I've learned in my three 
and one-half years here that the OCS moratoria ``riders'' have 
a life of their own. Our colleague from Ohio, Mr. Regula 
valiantly tried to avoid these riders in the first bill he 
reported from his subcommittee, only to be amended in the full 
Appropriations Committee by an overwhelming margin. So much for 
not legislating in the context of a spending bill.
    Two years ago when a similar hearing was held, the Minerals 
Management Service reported to us the OCS provides 15 percent 
of domestic oil production and 25 percent of natural gas 
output. Those fractions have now increased to 18 percent for 
oil and 27 percent for gas, no doubt because of burgeoning 
activity in the central and western Gulf of Mexico. Management 
of the nation's offshore oil and gas resources is governed by 
the Outer Continental Shelf Lands Act (OCSLA), which specifies 
the conditions under which the Secretary of the Interior grants 
rights to explore for, develop, and produce those resources.
    The OCSLA requires the Secretary to prepare an oil and gas 
leasing program that indicates a 5-year schedule of lease sales 
determined to best meet domestic energy needs. Areas for which 
the 5-year plan does not recommend leasing activity are 
effectively under moratoria. And even for areas that are so 
recommended, the planned sales may be postponed, or diminished 
in area, such as has occurred with a Beaufort Sea sale 
scheduled for this August. Given the technical revision of the 
limitations of funds ``riders'' in the fiscal year 1998 
Interior Appropriations Act from that of previous years, 
Congressional dictates and the Department's 5-year plan for 
1997-2002 are now consistent with one another.
    There should be little cause for alarm by Members concerned 
about near-term decisions by the Administration about where 
leasing may occur. There are concerns by some of us who believe 
an opportunity to increase revenues is being postponed by this 
plan, and the corresponding Congressional moratoria, but we are 
obviously of the minority view. A 1995 Clinton Administration 
analysis of the OCS estimated over four billion barrels of oil 
equivalent resources are subject to moratoria. Even using 
today's depressed price of $15 per barrel, this means 
approximately $8.5 billion of potential Federal royalties are 
locked out of the Treasury.
    Given the passions of this debate, it seems unlikely that 
the entire OCS will ever be opened, nor is it likely that the 
very productive western and central regions in the Gulf of 
Mexico will be shut in, so the debate is really about the 
remainder. As we approach the end of the current plan in 2002 
perhaps Congress and coastal States can engage in rational 
discourse about the next phase. Canadian development in the 
North Atlantic is coming on stream now. Perhaps some 
northeastern Members whose constituents will clearly benefit 
from trans-border deliveries of natural gas will become 
advocates of exploration in U.S. Atlantic waters when MMS 
proposes the 2003-2008 plan. Or perhaps not. I won't speculate 
as to the future of OCS development off the California coast--
except to say that its likely to be a campaign issue for a long 
time to come.

STATEMENT OF HON. WALTER B. JONES, A REPRESENTATIVE IN CONGRESS 
                FROM THE STATE OF NORTH CAROLINA

    Mr. Jones. Thank you, Madam Chairman and Committee members. 
I'd like to thank you and the staff for scheduling this hearing 
on Outer Continental Shell Oil and Gas Leasing, and for 
allowing me to speak on behalf of H.R. 2615.
    On a daily basis, coastal citizens are presented with the 
threat of drilling off their coast. And as one can imagine, 
these citizens tend to be strongly opposed to this 
environmental and economic threat to their way of life. These 
concerns have been prevalent in North Carolina since the early 
1980's when leases were first purchased. Again, they are being 
vocalized today with the recent announcement of Chevron's 
intention to drill off the State's coast.
    To ensure that our fragile coast is being properly 
protected, I, along with Senator Faircloth, introduced the 
Outer Banks Protection Act last year in hopes of providing an 
additional layer of protection. This legislation does not ban 
drilling--I'd like to repeat that--this legislation does not 
ban drilling. It simply prohibits the Federal Government from 
issuing any permits relating to drilling without the consent of 
the State.
    This legislation is important because it provides a layer 
of economic and environmental protection for our coast, while 
ensuring the rights of North Carolina. Quite frankly, drilling 
will have a detrimental effect on the booming tourism industry 
which is dependent on a healthy coast, clean water, and an 
abundant fishery.
    Right or wrong, due to the perception that offshore 
drilling will contaminate the waters, it is widely believed 
that tourism will be directly affected. This effect would have 
a devastating effect on a large number of Eastern North 
Carolina families and businesses.
    Tourism has become the shot in the economic arm for the 
area. The industry continues to grow by leaps and bounds. Last 
year in Dare county, tourists spent more than $400 million, 
making the county one of the largest tourism destinations in 
the State. Nearly 6 million people visit the Outer Banks 
annually and 52 percent of all jobs in Dare County are tourism 
related.
    There is always an environmental threat with offshore 
drilling. However, I tend to believe there is a greater threat 
to drilling off the North Carolina coast due to the depth of 
the water and the unpredictable weather conditions. The 
drilling would occur more than 40 miles off the coast in 
approximately 2,600 feet of water with a steep drop-off just 
beyond. This area is known as ``The Point'' because it is where 
the Gulf Stream and the Labrador Current meets and collides, 
creating fierce currents and unpredictable conditions.
    The Point is popular fishing ground due to the abundance of 
fish. The Point attracts more fish than any other location 
along the entire Atlantic Coast. Specifically, the area has 
become a breeding ground for a number of different species. To 
lose this environmentally valuable area would have a 
devastating effect on the entire Atlantic Coast fisheries that 
are already stressed. I think drilling in this location is an 
environmental gamble and should not be taken.
    As a proponent of States' rights, I believe that it is 
essential that the State has the final say on whether drilling 
should occur. Currently, the State is allowed to voice its 
support or opposition on management plans. However, the Mineral 
Management Service makes the final decision on if a drilling 
permit is issued.
    H.R. 2615 reverses this trend by granting the State this 
authority. I believe there is precedence for legislature of 
this nature. For example, the Coastal Zone Management Act and 
the Clean Water Act transfers Federal authority to individual 
States. To be exact, the Federal Government has transferred 
authority under the Clean Water Act to 38 States. Further, it 
seems reasonable that the State of North Carolina gain this 
authority since it has been held to a different level than 
other States for numerous years.
    In 1989, President Bush placed a moratorium on new oil and 
gas development along the United States, excluding North 
Carolina, Florida, and Alaska. Clearly, North Carolina has been 
singled out by Federal regulations and energy companies. If an 
accident should occur, North Carolina would suffer the 
environmental and economic consequences--not the Federal 
Government. The bottom line is that drilling is the wrong 
industry for the Outer Banks of North Carolina.
    Madam Chairman, thank you again for providing me this 
opportunity to speak on behalf of H.R. 2615. Also, I would like 
to thank the Subcommittee for allowing a very good friend of 
mine from North Carolina, Bill Holman, who is sitting to my 
left, who will be speaking today on behalf of Governor Jim 
Hunt, the Governor of North Carolina. Thank you.
    [The prepared statement of Mr. Jones follows:]

 Statement of Hon. Walter B. Jones, a Representative in Congress from 
                      the State of North Carolina

    Good afternoon, Madame Chairman. I would like to thank you 
and the Subcommittee staff for scheduling this hearing on outer 
continental shelf oil and gas leasing and for allowing me to 
speak on behalf of H.R. 2615.
    On a daily basis, coastal citizens are presented with the 
threat of drilling off of their coast. And as one can imagine, 
these citizens tend to be strongly opposed to this 
environmental and economic threat to their way of life. These 
concerns have been prevalent in North Carolina since the early 
1980's when leases were first purchased. Again, they are being 
vocalized today with the recent announcement of Chevron's 
intention to drill off the State's coast.
    To ensure that our fragile coast is being properly 
protected, I along with Senator Faircloth introduced the Outer 
Banks Protection Act last year in hopes of providing an 
additional layer of protection. The legislation does not ban 
drilling--it simply prohibits the Federal Government from 
issuing any permits relating to drilling without the consent of 
the state.
    This legislation is important because it provides a layer 
of economic and environmental protection for our coasts while 
ensuring the rights of North Carolina.
    Quite frankly, drilling will have a detrimental effect on 
the booming tourism industry which is dependent on a healthy 
coast, clean water and an abundant fishery.
    Right or wrong, due to the perception that offshore 
drilling will contaminate the waters, it is widely believed 
that tourism will be directly affected. This effect would have 
a devastating effect on a large number of Eastern North 
Carolina families and businesses.
    Tourism has become the shot in the economic arm for the 
area. The industry continues to grow by leaps and bounds. Last 
year in Dare County, tourists spent more than $400 million, 
making the county one of the largest tourism destinations in 
the state. Nearly six million people visit the Outer Banks 
annually and 52 percent of all jobs in Dare County are tourism 
related.
    There is always an environmental threat with offshore 
drilling. However, I tend to believe there is a greater threat 
to drilling off the North Carolina coast due to the depth of 
the water and the unpredictable weather conditions.
    The drilling would occur more than 40 miles off the coast 
in approximately 2,600 feet of water with a steep drop off just 
beyond. This area is known as ``The Point'' because it is where 
the Gulf Stream and the Labrador Current meet and collides, 
creating fierce currents and unpredictable conditions.
    ``The Point'' is popular fishing ground due to the 
abundance of fish.
    ``The Point'' attracts more fish than any other location 
along the entire Atlantic coast. Specifically, the area has 
become a breeding ground for a number of different species. To 
lose this environmentally valuable area would have a 
devastating effect on the entire Atlantic coast fisheries that 
are already stressed.
    I think drilling in this location is an environmental 
gamble that should not be taken.
    As a proponent of state's rights, I believe that it is 
essential that the state has the final say on whether drilling 
should occur. Currently, the state is allowed to voice its 
support or opposition on management plans. However, the Mineral 
Management Service makes the final decision on drilling if a 
drilling permit is issued.
    H.R. 2615 reverses this trend by granting the state this 
authority. I believe there is precedent for legislation of this 
nature. For example, the Coastal Zone Management Act and the 
Clean Water Act transfer Federal authority to individual 
states. To be exact, the Federal Government has transferred 
authority under the Clean Water Act to 38 states.
    Further, it seems reasonable that the State of North 
Carolina gain this authority since it has been held to a 
different level than other states for numerous years. In 1989, 
President Bush placed a moratorium on new oil and gas 
development along the United States, excluding North Carolina, 
Florida and Alaska.
    Clearly, North Carolina has been singled out by Federal 
regulations and energy companies. If an accident should occur, 
North Carolina would suffer the environmental and economic 
consequences--not the Federal Government.
    The bottom line is that drilling is the wrong industry for 
the Outer Banks.
    Madame Chairman, thank you again for providing me this 
opportunity to speak on behalf of H.R. 2615. Also, I would like 
to thank the Subcommittee for allowing Bill Hollman who is here 
today speaking on behalf of Governor Jim Hunt.

    Mrs. Cubin. Thank you, Mr. Jones. And now, I will recognize 
William Holman, the assistant secretary for environmental 
protection in North Carolina Department of Environment and 
Natural Resources.

     STATEMENT OF WILLIAM HOLMAN, ASSISTANT SECRETARY FOR 
    ENVIRONMENTAL PROTECTION, NORTH CAROLINA DEPARTMENT OF 
               ENVIRONMENT AND NATURAL RESOURCES

    Mr. Holman. Thank you, Madam Chairman, members of the 
Committee. I am Bill Holman. I'm assistant secretary for 
environmental protection at the North Carolina Department of 
Environment and Natural Resources. I'm pleased to be here today 
on behalf of Governor Hunt and the State of North Carolina.
    I want to thank Congressman Jones for this opportunity to 
participate in your discussions, and to comment on Outer 
Continental Shelf issues.
    I'm here today to deliver two basic messages: First, it is 
critically important that States like North Carolina have a 
strong and clearly defined role in the management and 
stewardship of our offshore resources. Second, it is essential 
and possible for energy and mineral resources of the Outer 
Continental Shelf to be managed in a coordinated and 
progressive manner that maximizes benefits to both our 
economies and our marine and coastal environment.
    Mr. Jones asked the State to participate here today to 
convey our views on his legislation, the Outer Banks Protection 
Act, which require concurrence of the Governor of North 
Carolina as a condition for exploratory drilling off the Outer 
Banks of North Carolina. We greatly appreciate the recognition 
this bill embodies of the responsibility that States have for 
safeguarding the marine and coastal environment, and their 
coastal tourism economy. We are gratified by its title and its 
content, and we believe that bill makes a very strong statement 
that the Governor has a central role when making decisions that 
affect our citizens on the Outer Banks.
    As members of the Subcommittee know, the current process 
for State review of offshore energy exploration proposals is 
based on the States' coastal protection planning 
responsibilities provided under the Coastal Zone Management 
Act. Through a consistency review and determination by the 
State, the exploration plans are examined by the State for 
consistency with our approval coastal management plan. If the 
State finds the plan inconsistent, no permit can be issued 
unless the Secretary of Commerce overrides the State's 
determination that the project is inconsistent.
    We appreciate Mr. Jones' concern that this may not provide 
a sufficiently strong voice for States in reviewing drilling 
proposals. We--that is North Carolina--are currently awaiting 
detailed proposals regarding proposed exploratory drilling on 
the Outer Continental Shelf off the Outer Banks, in an area 
known as The Point, that Mr. Jones talked about.
    The Committee may be aware that The Point off Cape Hatteras 
is also under consideration for designation as a ``Habitat Area 
of Particular Concern'' under the Essential Fish Habitat 
provisions of the Magnuson-Stevens Fisheries Management Act 
that Congress enacted last session. This area has become 
recognized, as Mr. Jones said, a unique mixing zone. Larvae of 
some 300 fish species that are native to coastal waters, the 
Labrador Current and the Gulf Stream are found at The Point, 
all in one place.
    I'm told that this concentration of fish species is far 
higher than might be found in typical OCS areas, and it 
reinforces the importance of assuring both economic and 
environmental values are fully evaluated in assessing any 
drilling proposal. This is new information that we believe must 
be considered by both the State and the Nation in making 
appropriate decisions on whether and how to proceed in the 
pursuit of energy resources of the coast of North Carolina. 
Though we view it as the part of duty and responsibility of the 
State to assure that if any such drilling is to occur, that it 
be done in a manner that is sensitive to and protective of this 
unique marine environment, and our coast. We do not have firm 
word from the Minerals Management Service that they will in 
fact grant us consistent review that we strongly feel is our 
right.
    The reason for this is in 1982, when much less was know 
about the environmental characteristics and significance of The 
Point, the State made a determination that a previous different 
exploration proposal was consistent with our coastal management 
plan. That exploration proposal was never carried out. Unless 
the Minerals Management Service finds that the potential 
environmental impact of the new exploration plan is 
significantly greater than the prior proposal, and that new 
permits are required, then under the Minerals Management 
Services rules the State will not be granted a new consistency 
review.
    The legislation proposed by Mr. Jones assures that the 
State have a voice in a project proposal that is 16 years old, 
in the context of substantial new information about use of 
resources in the area.
    The State is working cooperatively with the Minerals 
Management Service, and I want to say to them here today that 
we appreciate the collegial approach that they have taken. 
However, we do feel a firm commitment is needed to the concept 
of strong State role in this decision process. We see Mr. 
Jones' bill as a constructive part of this ongoing dialogue.
    Let me conclude for the record by stating that the State of 
North Carolina has in no way reached any predetermined decision 
on proposed exploratory well off the Outer Banks. We are eager 
to have as much information as possible to reach a conclusion 
that will reflect and balance the many issues that are 
presented by the preliminary proposal we have seen in regard to 
such drilling. We need a full proposal. We need as much 
information as can be gained on the particulars of the plan, 
and the emerging importance of The Point as fisheries habitat. 
We need to carefully and vigilantly assess potential impacts on 
our famous Outer Banks and our coastal communities. We also 
need a continued recognition and commitment of the role of the 
State in this decision process.
    We thank you for the opportunity to speak today, and will 
be happy to answer any questions.
    [The prepared statement of Mr. Holman may be found at end 
of hearing.]
    Mrs. Cubin. Thank you for your testimony, Mr. Holman, and 
excuse my whispering up here. We have members that are trying 
to catch planes and we're trying to accommodate them.
    I would like to compliment you, Mr. Jones, on your 
legislation upholding States' rights. I have never seen a law 
at the Federal level that I didn't think a better decision, or 
as good a decision, could have been made at the State level. 
So, thank you very much for that.
    Now, I will recognize--you're dismissed. You can go and 
grab the plane if you want to.
    [Laugher.]
    I don't have any questions. Are there any questions from 
the panel?
    Mr. Romero-Barcelo. No questions.
    Mrs. Cubin. And now I'll recognize the Ranking Member for 
his opening statement.
    Mr. Romero-Barcelo. Chair, in the interest of time--I know 
that Senator Boxer and several other Members of Congress are 
there to testify--I'll submit my statement for the record. 
Obviously, most of the people who are here today to testify are 
going to be backing the extension of the moratorium. I don't 
see how I would go any other way than with the desires of the 
elected members of those States.
    Mrs. Cubin. OK, the next panel that I'll call--what the 
Ranking Member and I have decided to do is to call the members 
in the order in which they arrived. So, the next panel I'm 
going to call for will be Duke Cunningham, Ralph Regula, 
Senator Boxer and Mrs. Capps. Congressman Regula, would you 
like to start?

 STATEMENT OF HON. RALPH REGULA, A REPRESENTATIVE IN CONGRESS 
                     FROM THE STATE OF OHIO

    Mr. Regula. Thank you, Madam Chairman. I ask unanimous 
consent that I may submit my full statement for the record.
    Mrs. Cubin. Without objection.
    Mr. Regula. I will summarize. There is not much doubt as to 
where I stand on this issue. I oppose any permanent moratorium. 
I have included a moratorium in our Interior appropriations 
bill each year, and I think this is the appropriate way to do 
it. But to make it permanent is taking away a right that exists 
for the people of these United States.
    We have heard about States' rights, and States' rights 
extend three miles offshore, but beyond that the 260 million 
Americans own the right to the minerals. They also own the 
rights to the minerals on the Federal lands.
    If you follow the logic of today's testimony to the 
conclusion, we would not drill on any Federal property, which 
is 30 percent of the United States.
    Today we drill on the timberlands and on the BLM lands, and 
I'm sure that there are people who would prefer we not do so. 
But these are Federal lands in Federal ownership, and I think 
the peo-

ple have a right to their resources. We give the States a 
portion of the revenues. There's a great resource out there 
with new exploration and drilling techniques. It doesn't really 
become offensive. I know a lot of the opposition is 
``viewscape'': people don't want to see a drilling rig in the 
sunset. But it's been demonstrated clearly that there's very 
little risk from spills and many more risks from tankers than 
from drilling platforms.
    We're spending $200 million a year in the Interior 
Appropriations bill to maintain the SPR, which is a strategic 
petroleum reserve to give us security in case we are cutoff 
from petroleum in the middle east, because over 50 percent of 
our petroleum resources are imported. To suddenly take a huge 
portion of our domestic production off the table as we would 
propose in a permanent moratorium makes no sense at all in 
terms of our national security. We use these Federal lands all 
over the United States for many different purposes to serve the 
public. For all of those reasons, I think the policy matter of 
making moratoria permanent would be a great mistake.
    Certainly, a moratorium is appropriate at this time, and we 
plan to continue the moratorium in our bill again this year. 
The world conditions are fragile, and things could change 
overnight as far as access to mineral assets to petroleum. To 
make it a permanent moratorium, to me, doesn't make any sense 
in today's world.
    Madame Chairman, I thank you for giving me an opportunity 
to be heard. I thank the other members of the panel for the 
courtesy.
    [The prepared statement of Mr. Regula follows:]

 Statement of Hon. Ralph Regula, a Representative in Congress from the 
                             State of Ohio

    Madam Chairman and distinguished members of the 
Subcommittee, I appreciate the opportunity to express my strong 
opposition to legislative initiatives that constrain the 
development of our nation's energy resources. Restricting the 
exploration and production of oil and natural gas on the Outer 
Continental Shelf (OCS) takes our country in the wrong 
direction because it artificially and unnecessarily denies the 
American people access to an essential natural resource.
    Since the early 1980's, Congress has used the 
appropriations process to impose moratoria on leasing offshore. 
This policy has restricted the oil and gas industry's access to 
over 600 million acres. These appropriations moratoria have 
impacted almost all of the best prospects for major new 
offshore discoveries outside the central and western Gulf of 
Mexico. Congressional moratoria and other deferrals have placed 
one third of the OCS's oil reserves, and 20 percent of its 
natural gas reserves, off limits to exploration and 
development.
    In 1990, President Bush issued an executive order canceling 
all scheduled lease sales off California, southern Florida, 
portions of the North Atlantic, areas off Washington and 
Oregon, and withdrew those areas from leasing until after 2000.
    Now, Madam Chairman, some of my colleagues in Congress 
advocate permanent bans on oil and gas drilling in vast areas 
of the OCS. That would have two adverse impacts. First, it 
would restrict future opportunities for increased Federal 
revenues. And second, it would put our nation's energy security 
at risk.
    When government lands are leased for oil and gas 
development, they first produce bonus bids and rents on the 
lease until drilling occurs. If the drilling is successful, a 
stream of oil and gas means a stream of revenue to the Federal 
Government and to participating state governments. Permanent 
moratoria would further restrict the amount of revenue that can 
be generated.

The OCS Is A National Resource

    The OCS is a rich resource. The U.S. Department of the 
Interior (DOI) reports that the OCS holds oil reserves of 14.4 
billion barrels and natural gas reserves of 72.5 trillion cubic 
feet. Moratoria on the appropriations bills year after year, 
however, have prevented the oil and gas industry from 
developing a significant portion of these resources. We will 
not know their ultimate value until the OCS is fully ex-

plored. However, in 1995, the Department of the Interior 
estimated that 26 billion barrels of oil equivalent (oil and 
gas) are under moratoria.
    As a vital national resource, the oil and natural gas 
beneath the Federal OCS are there for the benefit of all 
Americans--and development of these resources is needed as 
demand for both fuels increases. The U.S. Department of 
Energy's Energy Information Administration (EIA) expects the 
demand for oil in the United States in the year 2015 to be 4 
million barrels a day higher than in 1995, when consumption was 
18 million barrels per day. The Gas Research Institute has 
predicted a market of 30.9 trillion cubic feet for gas in 2015, 
compared to a demand of 22.2 trillion cubic feet in 1996. Mr. 
Chairman, bans on offshore production would adversely affect 
our ability to meet the nation's growing need for the new 
sources of oil and natural gas.

Federal Revenue

    The OCS moratoria prevent new revenue from coming into the 
Treasury at the very moment the U.S. has ended decades of 
damaging annual budget deficits. Cutting off future OCS 
production would diminish the revenue stream and make balancing 
the budget more difficult as existing production declines 
without replacement.
    Consider what the revenue from offshore operations has 
already produced. Since the Federal offshore leasing program 
began, offshore oil and gas activities have generated over $120 
billion in Federal Government revenues. This total includes 
over $18 billion for the Land and Water Conservation Fund, over 
$2.5 billion for the National Historic Preservation Fund and 
over $2.5 billion to the coastal states. In 1997 alone, 
participating states received over $116 million. Bans on OCS 
exploration and production preclude opportunities for new 
revenue, and the opportunity to help keep the budget balanced 
in the 21st century.
    Other revenue that accrues to the Federal Government from 
offshore operations is that collected in payroll, Social 
Security and Medicare taxes from those employed in the 
industry, and those who supply them with goods and services. 
Yet over the past several years, employment in the domestic 
offshore industry has declined. Moreover, just 10 years ago, 70 
percent of the capital spent on exploration and production was 
invested here at home. Today, a growing percentage is being 
invested abroad. Other countries are, understandably, taking 
advantage of our shortsightedness. Earlier this month, 
officials from Brazil, Great Britain and Nova Scotia came to 
the Houston Offshore Technology Conference to invite offshore 
operators to explore for oil and gas in their waters.
    Madam Chairman, the bans deny American workers and American 
companies in virtually every state an essential opportunity for 
better jobs and for economic growth here at home. Creating jobs 
offshore creates jobs onshore. The OCS Policy Committee, part 
of the OCS Advisory Board established by the Department of the 
Interior to advise the secretary, established that in addition 
to the jobs created offshore, ``OCS activities indirectly 
provide about 2.5 jobs for every person directly employed by 
industry.'' Whether it is fabricating steel in Ohio, or making 
computer chips in California, almost every state in the Union 
benefits because the offshore industry buys from them.
    Despite the fact that a significant portion of exploration 
and production investment had been driven overseas, a 1996 
study by the American Petroleum Institute found that companies 
involved in exploration and production of oil and gas in the 
Gulf of Mexico spent almost $6 billion with 6,600 vendors in 
the 49 states. While much of that $6 billion was spent in 
states adjacent to the Gulf, tens of millions of dollars, and 
sometimes hundreds of millions, were spent with vendors in New 
York, Pennsylvania, Illinois, Florida, and North Carolina. In 
Ohio, vendors invoiced over $16 million in offshore business. 
In New Jersey, vendors invoiced almost $7 million in offshore 
business. And in California, vendors received over $80.7 
million from Gulf activities alone in 1996. It is ironic that 
many in California's congressional delegation are among the 
most zealous advocates of ban on oil and gas operations on the 
OCS, and some have sponsored bills that would even close down 
existing production, despite the business offshore activities 
in the Gulf have brought to the state.
    I have attached a table to my testimony that identifies 
that 10 states whose companies have the largest sales to the 
offshore industry. But let me emphasize that vendors and their 
employees in the 49 states benefit from this business. These 
vendors add value at every stage of the process. Their 
employees earn wages and benefits from their families, and they 
all pay taxes. In sum, offshore drilling produces jobs, 
paychecks and benefits for American families from the Gulf of 
Mexico to the Pacific Ocean. Even though American-based oil 
explorers employ U.S. workers abroad, our economy does not 
benefit nearly as much as when drilling and production occur 
here.

Protecting the Environment

    Oil and gas provide about two-thirds of the energy consumed 
in the United States. Producing the energy requires a careful 
balancing of economic benefits and environmental safeguards. 
Exploration and production activities offshore are managed so 
as to protect the marine and coastal environment and to protect 
communities onshore. Federal OCS oil and gas operations are 
among the most tightly regulated economic activity in the 
world. And the offshore industry has made meeting those 
stringent environmental standards part of its daily business 
plan.
    Existing Federal statutes and regulations that govern the 
industry offshore are numerous, complex, comprehensive and 
successful in producing domestic energy while protecting the 
environment. The laws that affect offshore operations include 
the Outer Continental Shelf Lands Act, the National 
Environmental Policy Act, the Clean Water Act, the Clean Air 
Act, the Oil Pollution Act, the National Marine Sanctuaries 
Act, the Marine Mammal Protection Act, the Coastal Zone 
Management Act and the Resource Conservation and Recovery Act.
    The oil and gas industry offshore has a strong and vigorous 
record of protecting the quality of our waters and safeguarding 
marine life. Offshore drillers are required to obtain 17 major 
permits and follow 90 sets of Federal regulations. The results 
of those regulations, which have been gathered by the 
Department of the Interior's Minerals Management Service, speak 
for themselves: Offshore drilling and production, and the 
pipelines that carry those resources ashore, have been shown to 
be environmentally sound operations. Since 1975, when current 
Federal offshore safety regulations went into effect, the 
industry has had a environmental record that is 99.999 percent 
safe. Only an infinitesimal amount of oil produced offshore--
less than one-thousandth of a percent--has been spilled. Even 
during Hurricane Andrew in 1992, the offshore industry's safety 
devices worked, shutting down production. Major spills were 
avoided, contrary to predictions of catastrophic spills from 
Gulf hurricanes.
    In addition to all the laws and all the rules and 
regulations, the exploration and production of oil and gas is a 
high tech industry that uses the latest advances to protect the 
environment. Horizontal drilling, for example, today allows for 
many more wells to be drilled from a single offshore platform. 
As new exploration and production techniques have further 
reduced adverse impacts on plant and animal life, production 
platforms serve as artificial reefs that attract marine life 
for spawning, feeding, and shelter.
    Bans on the OCS would not significantly improve the 
environment. Oil and gas operations are subject to the highest 
standards of environmental regulation, and represent successful 
and compatible multiple uses of this nation's resources. These 
operations actually enhance the environment by increasing the 
desirable habitat for marine species.

Energy Security

    Restricting oil and gas exploration and production in the 
United States had jeopardized our energy security and increased 
our energy dependence on foreign sources. Over half the 
petroleum products consumed in the United States today come 
from abroad. Continued restrictions on OCS operations would 
mean that we would increase our dependence on those suppliers, 
giving them added powers and added incentives to interrupt our 
supplies and affect prices.
    Moreover, making our country more vulnerable to foreign 
suppliers could complicate our foreign policy since policy 
makers would then have to consider the effects a decision would 
have on our future supply from the foreign power in question. 
In addition, foreign supplies add to our defense burdens. Every 
barrel of crude oil produced here at home is one less barrel 
that has to be imported in exchange for U.S. dollars that flow 
out of the country.

Conclusion

    Madam Chairman, permanently preventing oil and gas leasing 
in the OCS will not significantly improve the environment, but 
will restrict government revenues while destroying jobs, and 
will endanger our energy security while denying the American 
people the use of a public resource. We need more offshore 
development, not more restrictions.

[GRAPHIC] [TIFF OMITTED] T9051.001

    Mrs. Cubin. Thank you, Mr. Regula, and thank you for your 
work on the Interior appropriations bill.
    Mr. Miller. Could you stay and answer a few dozen 
questions. No, no----
    [Laughter.]
    Mr. Regula. George, you want that project funded?
    [Laugher.]
    Mrs. Cubin. I want George's project funded.
    Mr. Miller. I thought we could negotiate that plane flight.
    [Laughter.]
    Mr. Regula. Off the record, use land and water conservation 
money produced from offshore drilling.
    [Laughter.]
    Mrs. Cubin. Mr. Regula, Mr. Regula----
    Mr. Miller. You'd spend it all; we'd get you more.
    [Laughter.]
    Mrs. Cubin. I think you should fund George's project to 
whatever it was, because, as I recall, at the hearing he came 
right in and said he thought you should fund mine.
    [Laughter.]
    Mr. Regula. OK.

 STATEMENT OF HON. RANDY ``DUKE'' CUNNINGHAM, A REPRESENTATIVE 
            IN CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. Cunningham. Before I speak, I'm going to let him leave.
    Mrs. Cubin. Pardon me?
    Mr. Cunningham. Before I speak, I'm going to let him leave 
on that case.
    [Laughter.]
    Chairwoman Cubin, and members of the Committee, thank you 
for holding this hearing. I rise in strong support of the 
moratorium on oil and gas development of the OCS. I believe--my 
own personal opinion, and I think many agree--that these kinds 
of decisions should be based first on good science; second on 
peer review; and then the constituents of the State on how they 
feel about the issue.
    My friend just testified that there's a 3-mile limit, but 
if oil spills inside that 3-mile limit and damages--even if 
it's beyond there and it damages the environment--then I think 
we have a responsibility, even though it's on Federal land, 
inside that to protect our environment.
    Californians have made themselves very clear. And as we 
look at good science, the National Academy of Sciences study 
shows that there would be detrimental damage to the environment 
and to the seabed, if we drill on the OCS.
    The dumping of oil muds--I'm a diver, a scuba diver, and 
harvest abalone right off the coast of California. I've been up 
to Long Beach and I've seen the oil that's on the beaches up 
there; and I live right on the beach, and I sure don't want to 
see that in our community, or the wildlife that I harvest 
abalone and spearfish to be damaged as well.
    Every year I've offered H.R. 133, which focuses on the 
entire State of California. It prohibits the sale of new 
offshore oil leases in southern California and central 
California and northern Califor-

nia through 2007, or until they could prove that the problems 
of the 1989 National Academy of Science study were addressed 
and resolved. My legislation would ensure that no drilling or 
exploration along the coast until the most knowledgeable 
scientist peer review, and a vote of the constituents.
    I'd like to submit the rest of this for the record, but I 
rise in strong support of the moratorium. In many cases, I 
don't go along with extreme environmentalists agenda, but in 
this case, there's good science on it; there's peer review; and 
the constituents of California, I believe and support this 
legislation.
    [The prepared statement of Mr. Cunningham follows:]

   Statement of Hon. Randy ``Duke'' Cunningham, a Representative in 
                 Congress from the State of California

    Chairwoman Cubin, members of the Committee, thank you for 
holding this hearing. I rise today to speak in support of the 
moratorium on oil and gas development on the Outer Continental 
Shelf (OCS). This moratorium is vital to the environment of our 
coastal communities, and I believe Congress has a 
responsibility to ensure that it is maintained.
    The people of California have made it clear that they favor 
this moratorium. In fact, the State of California has enacted a 
permanent ban on all new offshore oil development in the 
State's coastal waters. The environmental sensitivities along 
the California coastline make the region an inappropriate place 
to drill for oil using current technology.

Academy Study

    A 1989 National Academy of Sciences (NAS) study confirmed 
that new exploration and drilling on existing leases and on 
undeveloped leases in the same area would be detrimental to the 
environment. In addition, offshore drilling can impact other 
parts of our communities. The visual impact of offshore 
platforms is a continuing concern among my coastal communities, 
especially those with a strong tourism economy.
    The dumping of drilling muds and cuttings could affect our 
recreational fishing industries and impact our marine mammal 
populations. Oil spills would threaten our beaches.
    All these impacts remain unresolved using current drilling 
technology. While I recognize that technological advances may 
alleviate some or all these concerns, at this time I believe 
that we must continue the current moratorium on offshore oil 
drilling and exploration.

Legislation

    For that reason, I have for the past three Congresses 
introduced legislation to address the offshore oil drilling 
issue for California. My bill, H.R. 133, focuses on the entire 
state of California. It would prohibit the sale of new offshore 
leases in Southern California, Central California, and the 
Northern California planning areas through the year 2007. New 
exploration and drilling on existing active leases and on 
undeveloped leases in the same areas would be prohibited until 
the environmental concerns raised by the 1989 NAS study are 
addressed, resolved and approved by an independent peer review.
    My legislation will ensure that there is no drilling or 
exploration along the California coast unless the most 
knowledgeable scientists inform us that it is absolutely safe 
to do so.
    H.R. 133 is currently pending before this Committee with 
eight bipartisan cosponsors. My legislation is supported by the 
Board of Supervisors for San Diego County and the City of San 
Diego. I have attached San Diego County's resolution supporting 
the moratorium.
    Passage of this legislation would be a vast improvement 
over the current annual process of enacting a moratorium as 
part of the Interior Appropriations legislation. A more 
permanent ban would provide our coastal communities more 
stability in managing their ocean resources.

Closing

    I believe Congress must operate in accordance with 
California's interests and respect the opinions of the people 
of California. I encourage this Subcommittee to maintain the 
current moratoria on offshore oil drilling, protect our 
beaches, and preserve our quality of life. Thank you.

                        Letter to Mr. Cunningham
The Honorable Randy Cunningham,
U.S. House of Representatives,
2238 Rayburn House Office Building,
Washington, DC
Dear Duke:
    Thank you for sponsoring H.R. 133 to enact a temporary moratorium 
on leasing, exploration, and development on the Outer Continental Shelf 
(OCS) land off the coast of California. I am writing to reiterate the 
County's support for your bill as expressed in my February 1997 letter 
to you. Your legislation would protect San Diego County and other 
coastal counties from potentially significant environmental hazards and 
serious risks to the public's health and safety related to the OCS 
activities mentioned above. Because five tracts off the San Diego 
coastline could become eligible for drilling within the next three to 
five years, County officials and the San Diego community are concerned 
that such activity may result in air quality degradation, potential oil 
spills, the presence of oil industry traffic, and support facilities 
along San Diego's scenic coastline. All of these would threaten public 
health and adversely impact our local economy.
    Please ask your colleagues on the committee to expedite action on 
H.R. 133 as soon as possible to protect San Diego and other coastal 
counties from potential significant environmental hazards, public 
health impacts, and economic risks associated with on leasing, 
exploration, and development on the Outer Continental Shelf (OCS).
            Sincerely yours,
                                        Roger F. Honberger,
                                          Washington Representative

    Mrs. Cubin. Thank you, Congressman.
    Senator Boxer.

 STATEMENT OF HON. BARBARA BOXER, A UNITED STATES SENATOR FROM 
                    THE STATE OF CALIFORNIA

    Senator Boxer. Thank you very much, Madam Chair----
    Mrs. Cubin. And welcome to our humble abode.
    Senator Boxer. Thank you. Well, you need to know that I've 
served in this very room on the then Merchant Marine and 
Fisheries Committee when I got to the Congress in 1983. And at 
that time, I teamed up with my friend George Miller who, when I 
walked in the door, said, ``Hurray, reinforcements in trying to 
ban offshore oil drilling in new areas off the California 
coast.'' We already have a large number of rigs off that coast, 
as Congresswoman Capps could tell you. So, I'm back here and 
it's very nostalgic, but it's also frustrating in another way 
that we haven't really resolved this issue because we lean on 
these yearly moratoria.
    I would like to just say to you that I'm glad you've given 
me this opportunity to testify today because I've introduced 
legislation, along with Congresswoman Capps and Congressman 
Miller, which essentially says this: When a State establishes a 
drilling moratorium on part or all of its coastal water, that 
protection should be extended to adjacent Federal waters. Then 
it goes to your comment, Madam Chair, that you made before in 
which you praised the fact that we would in fact defer to a 
State. I think when State does take a strong stand on the 
environment, such as our State has on State waters, that we 
ought to follow suit, because Congressman Cunningham is exactly 
right; the first three miles are fine, but if you're drilling 
five miles off there's not going to be any boundary between 
that demarcation and the State waters. You're going to foul 
State waters; you're going to go against the moratorium. I 
think because Congressman Regula reminded me, when I walked in, 
how many years we've been battling each on this, I wanted to 
respond to some of his points.
    Tourism is one of the biggest industries in my home State, 
and I'm sure many of you visited our State, and we pride 
ourselves on that tourist industry. The beauty of our coastline 
is of enormous importance, and is a huge draw to the tourist, 
not only from this country but from all over the world. So if 
you compare the economics of moving forward with offshore oil--
additional offshore oil drilling--versus the possibility of 
destroying this incredible ocean resources, the ocean resource 
comes out way on top. And the people have put a value on this 
that can't even be counted, and I think that needs to be taken 
into account.
    I would like to make a couple of other quick comments, and 
then I'll close.
    President Bush issued a statement directing his Secretary 
of Interior to cancel several existing leases and withhold any 
further leasing in California waters for 10 years; and that was 
shortly before he left the White House. So I think this is a 
real bipartisan issue. I think we have colleagues on both sides 
of the aisle that understand (a) the aesthetic value of this, 
(b) the real economic value of this and the importance of 
moving forward.
    Now, clearly, the strongest protection would be a permanent 
sanctuary off the coast. And someday, I hope I live long enough 
to see that we do that, because a value is a value and feel 
sure of this value. And we should make certain that our 
children and grandchildren can enjoy it as much as we have.
    I will close in telling you this: The oil companies--the 
oil companies hold out the whole fact that there could be so 
much more revenue coming into the Federal Government as a 
result of drilling. While as you'll hear from a many of us in 
another debate, they're not even paying us the royalties they 
owe us. We are in court this very day essentially fighting to 
get more than $200 billion--$200 million in payment; $200 
million. And a lot of that money goes straight into the 
classrooms. In our State of California that's where these 
royalties go.
    So it seems to me we ought to take a deep breath; we ought 
to look at the fact that they owe us all this money; we ought 
to look at what Congress did in the dead of night in stopping 
the Department of Interior from coming up with a fair rule to 
go after these royalties; and not even considering opening up 
this coastline--or I should say these magnificent coastlines.
    I wanted to point out to you that just in the one day I've 
introduced my bill, we already have on the Senate side, 
Senators Murray, Lautenberg, Graham of Florida, Robb, and 
Sarbanes on as co-sponsors in the Senate. That's pretty good 
without even a ``dear colleague'' letter going out. So I think 
there's a lot of support for this.
    I want to again thank Congressman Miller for his years and 
years of leadership. I want to thank Congresswoman Capps for 
being our reinforcement. And I want to thank you, Madam Chair, 
for giving me this opportunity.
    [The prepared statement of Senator Boxer follows:]

 Statement of Hon. Barbara Boxer, a Senator in Congress from the State 
                             of California

    Mr. Chairman, I want to thank you for this opportunity to 
discuss an issue which is so important to all of us here 
today--preservation of our ocean resources.
    After many years of hard work to prevent further oil 
drilling in the Outer Continental Shelf (OCS), I am very 
pleased to see the broad bi-partisan support that now exists 
for this issue. I began fighting for ocean protection on the 
Marin County Board of Supervisors, continued during my 10 years 
in the House of Representative, and as a United States Senator 
representing California.
    Today, I am introducing the Coastal States Protection Act--
legislation which I also introduced in the 104th Congress. This 
Act will provide necessary protection for the nation's Outer 
Continental Shelf (OCS) from the adverse effects of offshore 
oil and gas development by making management of the Federal OCS 
consistent with state-mandated protection of state waters. I am 
pleased that Representatives Capps and Miller are introducing 
the House version of this legislation.
    Simply put, our bill says that when a state establishes a 
drilling moratorium on part or all of its coastal water, that 
protection would be extended to adjacent Federal waters.
    It does a state little good to protect its own waters which 
extend three miles from the coast only to have drilling from 
four miles to 200 miles in Federal waters jeopardizing the 
entire state's coastline--including the state's protected 
waters.
    An oil spill in Federal waters will rapidly foul state 
beaches, contaminate the nutrient rich ocean floor upon which 
local fisheries depend, and endanger habitat on state 
tidelands.
    My legislation simply directs the Secretary of Interior to 
cease leasing activities in Federal waters where the state has 
declared a moratorium on such activities thus coordinating 
Federal protection with state protection.
    The bill has a very fundamental philosophy--DO NO HARM to 
the magnificent coastlines of America and respect state and 
local laws.
    But I am pleased to be here today not only to discuss my 
legislation, but to also express my strong support for the 
current protection of our precious marine resources.
    The major portions of fragile California coastline is 
currently protected from the dangers of oil and gas drilling in 
offshore waters by several provisions of law. The State has a 
permanent moratorium on oil and gas leasing, which covers state 
waters up to 3 miles out. U.S. waters, up to 200 miles out, 
have been protected by a succession of one-year leasing and 
drilling moratoria enacted by Congress each year since 1982.
    In addition, in 1990, President George Bush issued a 
statement directing his Secretary of the Interior to cancel 
several existing leases and withhold any further leases in 
California waters for 10 years. With this directive, President 
Bush showed his commitment to prohibiting offshore drilling in 
areas where environmental risks outweigh the potential energy 
benefits to the Nation.
    The strongest protection would be a permanent ban on 
further offshore oil and gas leases in California waters, and I 
have asked the President to consider this.
    California, and the rest of the nation, need a clear 
statement of coastal policy to provide industries, small 
businesses, homeowners and fishermen more certainty than can be 
provided by yearly moratoria. Annual battles over the moratoria 
make long-range business planning difficult, divert resources 
and attention from the real need for national energy security 
planning, and send confusing signals to both industry and those 
concerned about the impacts of offshore development.
    I understand that some feel that we are losing revenue 
because of these moratoria. I have two thing to say about that. 
First, the public strongly supports the moratorium. And second, 
if the oil companies paid the royalties that they currently owe 
the Federal Government we could make up for the so-called 
``lost revenue'' caused by the moratorium. Oil companies 
currently owe the Federal Government millions upon millions of 
dollars. It does not make sense to give oil companies access to 
more Federal oil when they are already cheating the American 
taxpayer out of millions of dollars.
    As we celebrate the United Nations Year of the Ocean, we 
have a prime opportunity to strengthen our commitment to 
environmental protection by giving Americans a long lasting 
legacy of coastal protection.
    We must recognize that the resources of the lands offshore 
California, and the rest of the country, are priceless. We must 
recognize that renewable uses of the ocean and OCS lands are 
irreplaceable elements of a healthy, growing economy. These 
moratoria recognize that the real costs of offshore fossil fuel 
development far outweigh any benefits that might accrue from 
those activities.

    Mrs. Cubin. Thank you very much for being here with us, and 
thank you for your comments.
    Congresswoman Capps, welcome. This is the first time you've 
been here and we're glad to have you.

STATEMENT OF HON. LOIS CAPPS, A REPRESENTATIVE IN CONGRESS FROM 
                    THE STATE OF CALIFORNIA

    Ms. Capps. Thank you very much for the welcome, Madam 
Chairwoman, and members of this Subcommittee. Thank you for 
holding this important hearing today. I appreciate the 
opportunity to testify on an issue of such importance to the 
residents of my district, and the State that I live in. I have 
written testimony that I have submitted for the record, and I 
would like to briefly summarize that for this Subcommittee 
today.
    As you know, today with my colleagues from California, Mr. 
Miller, Mr. Farr, and Mrs. Harmon, I am introducing the House 
version of Senator Boxer's Coastal States Protection Act. This 
Act will place a Federal moratorium on new offshore oil and gas 
development where there is an existing State moratorium in 
place. I want to commend Senator Boxer for her unflagging 
leadership on this issue for so many years. That is so 
important for all Californians.
    For me, this is an issue about local control. California 
residents have decided that they do not want new oil and gas 
development off of our beautiful coastline. We already have a 
State moratorium signed into law in 1994 by Governor Wilson, 
the California Coastal Sanctuary Act. I have oil drilling off 
the Coast of Santa Barbara, and this community does not want 
any new development.
    In San Luis Obispo County, there is no offshore oil 
drilling, and residents want to keep it that way. You know oil 
doesn't know boundaries, and the Federal law would put into 
place in a permanent way what the State has already decided. 
These positions are supported by environmental organizations, 
the county board of supervisors, and the Chamber of Commerce in 
both counties that I represent.
    California has a broad and varied economy. The tourism and 
recreation industry annually contribute more than $27 billion 
to the State's economy. And the California coastline is, as 
Sen. Boxer mentioned, a very big reason for this.
    We are also home to two of our Nation's national marine 
sanctuaries, one of them being the Channel Islands National 
Marine Sanctuary. This is in my district.
    Is it worth risking all of this for new offshore oil 
development? Obviously, the people of California do not think 
so. Very recently, San Luis Obispo County and Santa Barbara 
County, the Mineral Management Service conducted a study. The 
findings of this study were reported and hearings were held in 
San Luis Obispo and Santa Barbara counties. Overwhelmingly, the 
residents came out very strongly opposed to offshore oil 
drilling.
    Just by coincidence in the audience today is a resident of 
my district, Bob Sollen. He has written a book entitled, An 
Ocean of Oil: A Century of Political Struggle Over Petroleum 
Off the California Coast. I'm pleased that he could be here to 
hear this testimony with his wife Toni.
    The protection of the environment is critical for 
California's economy and the quality of life we all enjoy. I 
hope that this Subcommittee can help us do that and support 
this very important legislation. Thank you very much for your 
time.
    [The prepared statement of Ms. Capps follows:]

  Statement of Hon. Lois Capps, a Representative in Congress from the 
                          State of California

    I want to thank the Chairwoman for holding this hearing on 
the development of oil and gas leases in the Outer Continental 
Shelf (OCS). I appreciate the opportunity to testify on an 
issue of such importance to the residents of my district, the 
state, and the nation.
    I am pleased to announce that today, with my colleagues 
from California, Mr. Miller and Mr. Farr, I will be introducing 
legislation to protect America's precious coastline. Our bill, 
the Coastal States Protection Act, amends the Outer Continental 
Shelf Lands Act to direct the Secretary of the Interior to 
cease mineral leasing activity of the OCS that is adjacent to a 
coastal state that has a moratorium on mineral exploration, 
development, or production in adjacent State waters.
    The State of California leads the nation in coastal 
protection. We have in place a permanent moratorium on offshore 
oil and gas leasing, which covers state waters up to three 
miles out. However, at the Federal level, the coast has no 
permanent protection. Rather, we rely on successive yearly 
moratoriums. My legislation would make that protection 
permanent.
    Santa Barbara residents know too well the harmful effects 
of offshore oil. The City holds the unfortunate distinction of 
being the home of one of the worst oil spills in our nation's 
history, the 1969 oil well blowout in the Santa Barbara 
Channel. This event is often cited as the catalyst for the 
modern environmental movement. San Luis Obispo County residents 
also know the risks of offshore oil and have consistently 
opposed any efforts to open the coastline to development. This 
view is shared by the entire community, including environmental 
groups, the Chamber of Commerce, and the Board of Supervisors.
    One of my constituents, Robert Sollen, who has devoted his 
life toward protecting the coastline in Santa Barbara, recently 
gave me a copy of his book, An Ocean of Oil. This book depicts 
the continuous struggle over petroleum policy off the 
California Coast. Individuals like Mr. Sollen represent the 
strong voice of Central Coast residents who do not want to risk 
the protection of California's majestic coastline with further 
offshore oil development.
    California's coastline is a priceless treasure, enjoyed not 
only by our residents, but by tourists from around the world. 
Our economy depends on protecting this spectacular coastline 
because multimillion dollar industries such as recreation, 
fishing and tourism rely on this vital protection.
    The California coastline is home to a rich ocean species 
habitat, a migration route of the endangered Blue Whale. It is 
also home to two of our National Marine Sanctuaries, including 
the Channel Islands National Marine Sanctuary, which is in my 
district.
    I thank the Committee for working on such a critically 
important issue. I hope that you will soon conduct a hearing on 
this bill and that Congress will move quickly to enact a 
Federal moratorium on oil leases into law.

    Mrs. Cubin. Thank you for your testimony.
    Mr. Miller. Madam Chairman, might I ask permission to 
insert my record into the statement at this time?
    Mrs. Cubin. Your record into the statement would be great. 
Without objection.
    [Laughter.]
    Picky, picky.
    Mr. Scarborough. She's tough, George. I hope she'll be 
nicer to me.
    George, I've always been with you brother. Royalty relief, 
whatever, you name. Don't act shocked. You have a short memory. 
Don't remember royalty relief last year?
    Senator Boxer. The house has really changed since I left.
    [Laughter.]
    Mr. Scarborough. George and I are good buds.
    Mrs. Cubin. Will you get with it?
    [Laughter.]
    Mr. Scarborough. I'm waiting--Madam Chairwoman, George has 
taken over your Committee.
    Mrs. Cubin. Well, he's use to that.
    [The prepared statement of Mr. Miller follows:]

Statement of Hon. George Miller, a Representative in Congress from the 
                          State of California

    Today, I join Senator Barbara Boxer and Representative Lois 
Capps as a sponsor of their legislation to extend the moratoria 
on oil and gas leasing in the Outer Continental Shelf off the 
coast of California. These moratoria have been in place since 
1982 and should be made permanent. I congratulate Senator Boxer 
and Representative Capps for taking the lead in this important 
effort to safeguard California's coast.
    According to the Chair's letters of invitation to the 
Administration, the purpose of this hearing is to review 
existing moratoria and to investigate the revenue impacts of 
unrealized income to the Federal Treasury resulting from these 
actions.
    There is a wealth of information being disseminated to 
suggest that the areas barred from leasing under the moratoria 
cost the government significant amounts of money in lost 
royalties and other revenues. But, before this Subcommittee 
moves forward with any proposal to open the California coast to 
oil development, consider two facts.
    One, the overwhelming majority of citizens that would be 
directly affected by oil and gas development in these areas 
oppose such development.
    Two, it makes no sense to consider opening up new areas for 
oil and gas leasing--let alone open the California coast--when 
we have massive amounts of evidence that the oil industry is 
cheating the American people out of hundreds of millions of 
dollars on existing leases.
    It is to this second point that I will address my comments 
today.
    Last week Senator Boxer and I introduced legislation to 
repeal an eleventh-hour rider attached to the Emergency 
Supplemental Appropriations bill. This rider was an effort to 
further shield the oil industry from fair market value 
assessments of the oil and gas extracted from public lands. It 
was not passed by this Committee, which has jurisdiction. In 
fact, it was never considered by the House. It was sneaked into 
an emergency spending bill at the last moment, and that action 
has rightly been condemned by newspapers and media across this 
country.
    The provision stops the Interior Department from 
implementing plans developed over the past 2\1/2\ years to 
assess crude oil at fair market value rather than the 
undervalued assessment the industry has imposed on itself for 
years. The Department estimates that the rule would have 
increased revenues by $66 million a year. Our bill, H.R. 3820 
in the House, would repeal the rider and allow the Department 
to finalize the much needed regulation.
    The Emergency bill also includes report language relating 
to the issue of oil and gas extracted from deepwater reserves 
in the Gulf of Mexico. Congress was wrong in 1995 when we 
provided a royalty free-ride on the first 88 million barrels of 
oil and gas extracted from these so called deepwater tracts to 
spur development in the Gulf. As I pointed out at the time, the 
holiday was not needed since the boom was already on and the 
technology available to make the investment more cost-
effective.
    But, small consolation though it was, we were assured that 
if the holiday turned out to be too generous to the oil 
industry, the royalty rates could be adjusted so we could 
recoup some of the loss in the future. However, once it became 
known that the Department was considering raising those post-
holiday rates, the Congress quickly stepped up to protect its 
special interest supporters again by adding report language to 
the Emergency bill to prohibit the Interior Department from 
raising the rates on royalties from deepwater leases. Again, 
instead of looking at opening up areas off New Jersey, Florida 
and California, this Congress should be taking steps to assure 
that the American taxpayer is not cheated out of its fair 
share.
    But, so far, this Congress has chosen a different route. 
Critics of the current system assert that oil companies owe the 
American people more than $2 billion in underpaid royalties. 
The States of Alabama, Louisiana and Texas, along with a group 
of private citizens, have made such a compelling case against 
the major oil companies that the U.S. Department of Justice has 
intervened in their litigation. Some of the oil companies have 
already settled with the litigants, and one, ARCO, actually 
volunteered to correct their underpayments, offering up $524 
million.
    But, instead of supporting these efforts for the taxpayers, 
this Congress has spent its efforts looking for ways to shower 
additional public benefits on the oil industry. In addition to 
the Emergency bill's provisions, the fiscal year 1998 
appropriations bill also included a rider that prevented the 
MMS from requiring a minimum bid on offshore leases. And, as 
Senator Boxer, Representative Maloney and I work to make sure 
taxpayers receive a fair return on Federal oil and gas leases, 
the oil industry is pushing a bill in this Committee that will 
permanently reduce royalties. Under this plan, royalties would 
be paid ``in-kind'' instead of cash. So far, the States of 
Alaska, Texas and New Mexico have all voiced strong opposition 
to this bill. The Minerals Management Service says it would 
cost a minimum of $357 million per year.
    If this Committee wishes to investigate the revenue impacts 
of national policy toward the oil and gas industry, I would 
suggest we begin with correcting problems in the existing 
system and not promote opening the California coast to 
development. In addition to repealing the royalty rider, 
Congress should:

         Eliminate the percentage depletion allowance for 
        independent oil and gas companies. This will save about $2.4 
        billion over 5 years according to the Congressional Joint 
        Committee on Taxation.
         Repeal the 15 percent credit for ``enhanced oil 
        recovery'' and disallow expensing, or immediate write off, of 
        so-called tertiary injectants until proper environmental 
        regulations for the industry are adopted and the current waste 
        and inefficiency in the oil and gas industry are dramatically 
        curbed. These special tax breaks cost the treasury $500 million 
        over 5 years according to the Congressional Joint Committee on 
        Taxation.
         Repeal the tax provisions permitting oil and gas 
        producers to immediately deduct ``intangible'' drilling and 
        development costs (IDCs). Instead, require IDCs to be deducted 
        over time. This reform would raise approximately $1 billion 
        over 5 years according to the Congressional Joint Committee on 
        Taxation.
         Eliminate the ``passive loss'' tax shelter for 
        investors in oil and gas. This change would save $665 million 
        over 5 years according to the Office of Management and Budget.
         Disallow corporate income tax deductions for future 
        costs associated with illegally released pollution. Cleanup of 
        existing pollution or contamination should be exempted. This 
        reform could save taxpayers at least $1.5 billion over five 
        years.
    Instead of making it easier for oil companies to pay less 
than the fair market value of oil and gas extracted from public 
lands, and looking for new areas for oil companies to cheat the 
American taxpayer on, Congress should be assuring that the laws 
and regulations that govern these activities are effective and 
enforced. That job should begin in this hearing room, not on 
the California coast.

STATEMENT OF HON. JOE SCARBOROUGH, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF FLORIDA

    Mr. Scarborough. Thank you, Chairwoman Cubin, and members 
of the Subcommittee, and George, for your invitation for me to 
share my thoughts on such an important subject as oil and gas 
leasing and development issues.
    As George and the rest of you are well aware, offshore 
drilling in Florida is an issue of serious concern to me and 
has been a top priority of mine since coming to Congress a few 
years ago.
    I represent the First Congressional District of Florida, 
which prides itself in its beaches, its white sands and its 
crystal clear water. In fact, four of our Gulf Coast beaches 
have been ranked among the top 10 in the country. Tourism is by 
far the largest industry in Florida, and our coastline 
economies are dependent on the condition of our coastline. As a 
result, we are very concerned with efforts to develop the OCS 
in the Eastern Gulf.
    Congress in the last several administrations have 
understood our opposition to further leasing in the Eastern 
Gulf Planning Area off Florida's coast. Since the 1980's, 
Congress has passed, and the President has signed, a moratorium 
on leasing and pre-leasing activities within 100 miles of 
Florida's Western coast within the annual Interior 
Appropriations Bill. The entire Florida delegation, the 
Governor, the cabinet, the legislature, and virtually all other 
local governments in Florida support a drilling moratoria. As 
you can imagine, there are very few, if any, issues that elicit 
such broad support among such diversion segments of Florida's 
population. It transcends party, ideology, age, race, and 
economic status.
    In addition to the annual moratoria, Representative Goss 
and I have introduced legislation to reach a more permanent 
solution. I fully support Representative Goss's bill, H.R. 180, 
which would delay any drilling or leasing activities until 
adequate environmental analyses have been completed and would 
establish a joint Federal-State task force to fulfill this 
objective.
    Last summer, I introduced H.R. 1989 with the full support 
of the entire Florida congressional delegation, to address a 
pending threat to our no-drilling policy. The Florida Coast 
Protection Act, identical to a bill introduced in the Senate by 
Senators Mack and Graham, calls for a permanent moratorium on 
leasing activity within 100 miles off the coast of Florida, 
basically writing the annual moratorium into permanent law.
    It would have also canceled 6 leases just 17 miles off of 
Florida's Panhandle Coast and set forth a process to fairly 
compensate the lessees. We included this language in the bill 
to address an oil company's desire to sink an exploratory well 
on their block just 17 miles off the coast. Fortunately, they 
subsequently notified MMS that they did not intend to proceed 
with exploration and would instead allow the leases to revert 
back to the government.
    While this section of the bill is no longer relevant, we 
remain concerned with future exploration with Chevron's 
development of the Destin Dome. Chevron has discovered a large 
gas deposit just 25 miles offshore of Pensacola and are moving 
forward with a development plan. We in Northwest Florida remain 
concerned over this site, and certainly support the State of 
Florida in their challenge to Chevron's proposed plan under the 
Coastal Zone Management Act. Chevron has appealed the challenge 
which will ultimately be decided by the U.S. Department of 
Commerce.
    I share many of the concerns in this debate on the possible 
environmental threats of drilling just 25 miles off Pensacola. 
Florida is home to most unique and beautiful coastline in the 
country. And any threat to our coastal environment must be 
taken seriously. We in Florida maintain that there is 
inadequate scientific information available on the effects of 
drilling to warrant a change in our ``no drilling'' policy. In 
addition to the obvious concern of an oil spill, there are 
other pressures on the environment from both oil and gas 
development. As it's been stated previously, environmental 
studies are not complete and drilling effects on Florida's 
coastline are therefore not fully known. As the Florida 
delegation stated in a letter to Secretary Babbitt, ``Until 
these studies are completed and the scientific information is 
available and analyzed, no decisions on pre-leasing, leasing, 
and drilling should be made about Florida's waters.'' And we 
stand by that statement today.
    With the recent passage of the Royalty Relief Act, which I 
opposed, development in the Gulf of Mexico has exploded. Each 
new lease sale brings record bids, increases in the incentives 
to explore new areas, and puts increased pressure on the 
Eastern Gulf. And I may add right here that during the Royalty 
Relief debate last year, we were told time and time again that 
nobody would go into that area unless Royalty Relief was 
passed. And our lessons over the past year show that to be 
false.
    In closing, I urge the Committee to consider seriously more 
permanent legislative protection for Western Florida's coast. 
According to the Department of Interior's own estimates, the 
Eastern Gulf contains only a very small amount of the country's 
natural gas. I strongly believe that it would be foolish to 
jeopardize Florida's pristine coast, at least until the full 
effects of drilling are known. Writing the current moratorium 
on leasing in the Eastern Gulf into law, which my legislation 
would do, would offer a more permanent solution to the question 
of future leasing. We must also consider the options for 
dealing with the more urgent concern of the more than 150 
existing leases in the remaining Eastern Gulf of Mexico. 
Without any intervention, Chevron could be in production on the 
Destin Dome as early as the year 2000.
    I stand ready to work with the Subcommittee to address 
these matters of great importance to the State of Florida. I 
thank you, Chairwoman Cubin, for the opportunity to testify 
here today. I appreciate your holding the hearing and look 
forward to working with the Subcommittee in the future. Thanks 
a lot.
    [The prepared statement of Mr. Scarborough follows:]

 Statement of Hon. Joe Scarborough, a Representative in Congress from 
                          the State of Florida

    Thank you, Chairman Cubin, and members of the Subcommittee 
for the invitation to share my thoughts with you on such an 
important subject as oil and gas leasing and development 
issues. As you are aware, offshore drilling in Florida is an 
issue of serious concern to me and has been a priority of mine 
since coming to Congress.
    I represent the First Congressional District of Florida, 
which prides itself in its pristine beaches, sugar-white sands, 
and crystal clear water. Four of our Gulf Coast beaches have 
ranked among the top ten in the country. Tourism is by far the 
largest industry in Florida, and our coastal economies are 
dependent on the condition of our coastline. Florida's beaches 
are its most valuable natural resource and the overwhelming 
majority of Florida's residents and tourists believe strongly 
that offshore drilling at this time is incompatible with an 
economy based largely on tourism, recreation, and commercial 
and recreational fishing. Florida's dependence on tourism and 
recreation cannot be overstated. As a result, we are very 
concerned with efforts to develop the OCS in the Eastern Gulf.
    Congress and the last several Administrations have 
understood our opposition to further leasing in the Eastern 
Gulf Planning Area off Florida's coast. Since the 1980s, 
Congress has passed, and the President has signed, a moratorium 
on leasing and pre-leasing activities within 100 miles of 
Florida's Western coast within the annual Interior 
Appropriations bill. The entire Florida delegation, the 
Governor, the Cabinet, the legislature, and virtually all local 
governments in Florida support drilling moratoria. As you can 
imagine, there are very few, if any, issues that elicit such 
broad support among such diverse segments of Florida's 
population. It transcends party, ideology, age, race, and 
economic status.
    In addition to the annual moratoria, Rep. Goss and I have 
each introduced legislation to reach a more permanent solution. 
I fully support Rep. Goss's bill, H.R.180, which would delay 
any drilling or leasing activities until adequate environmental 
analyses have been completed and would establish a joint 
Federal-state task force to fulfill this objective.
    Last summer, I introduced H.R. 1989 with the full support 
of the entire Florida Congressional delegation, to address a 
pending threat to our no drilling policy. The Florida Coast 
Protection Act, identical to a bill introduced in the Senate by 
Connie Mack and Bob Graham, calls for a permanent moratorium on 
leasing activity within 100 miles of the coast of Florida, 
basically writing the annual moratorium into permanent law.
    It would have also canceled six leases just 17 miles off 
Florida's Panhandle coast and set forth a process to fairly 
compensate the lessees. We included this language in the bill 
to address Mobil's desire to sink an exploratory well on their 
block just 17 miles off the coast. Fortunately, Mobil 
subsequently notified the Minerals Management Service that they 
did not intend to proceed with the exploration and instead 
would allow the leases to revert back to the government.
    While this section of the bill is no longer relevant, we 
are concerned with future exploration and with Chevron's 
development of the Destin Dome. Chevron has discovered a large 
gas deposit 29 miles offshore of Pensacola and are moving 
forward with a development plan. We in Northwest Florida remain 
concerned over this site and certainly support the State of 
Florida in their challenge to Chevron's proposed plan under the 
Coastal Zone Management Act. Chevron has appealed the challenge 
which will ultimately be decided by the U.S. Department of 
Commerce.
    I share the concerns of many in this debate on the possible 
environmental threats drilling just 29 miles off Pensacola. 
Florida is home to some of the most unique and beautiful 
coastline in the country. Any threat to our coastal environment 
must be taken very seriously. We in Florida maintain that there 
is inadequate scientific information available on the effects 
of drilling to warrant a change in our ``no drilling'' policy. 
In addition to the obvious concern of an oil spill, which does 
not apply to the Chevron site, there are other pressures on the 
environment from both oil and gas development. As has been 
stated previously, environmental studies are not complete and 
drilling's effects on Florida's coast are therefore not fully 
known. As the Florida delegation stated in a letter to 
Secretary Babbitt, ``Until these studies are completed and the 
scientific information is available and analyzed, no decisions 
on pre-leasing, leasing, and drilling should be made about 
Florida's waters.'' I stand by that statement today.
    With the recent passage of the Royalty Relief Act, which I 
opposed, development in the Gulf of Mexico has exploded. Each 
new lease sale brings record bids, increases the incentives to 
explore new areas, and puts increased pressure on the Eastern 
Gulf. While our moratorium passes each year with broad, 
bipartisan support, we need a more permanent solution. In 
addition, we must address efforts to develop and further 
explore pre-moratorium leases.
    In closing, I urge the Committee to seriously consider a 
more permanent legislative protection for the Western Florida 
coast. According to the Department of Interior's own estimates, 
the Eastern Gulf contains only a very small amount of the 
country's oil and natural gas. I strongly believe that it would 
be foolish to jeopardize Florida's pristine coast, at least 
until the full effects of drilling are known. Writing the 
current moratorium on leasing in the Eastern Gulf into law, as 
my legislation would do, would offer a more permanent solution 
to the question of future leasing. We must also consider the 
options for dealing with the more urgent concern of the more 
than 150 existing leases remaining in the Eastern Gulf of 
Mexico. Without any intervention, Chevron could be in 
production on the Destin Domes early as the year 2000. I stand 
ready to work with the Subcommittee to address these matters of 
great importance to the State of Florida.
    Thank you, Chairman Cubin, for the opportunity to testify 
here today. I appreciate your holding this hearing and look 
forward to working with the Subcommittee in the future.

    Mrs. Cubin. Thank you, Congressman Scarborough. Now I just 
want--your testimony was compelling, but I want to just put 
your mind at ease a little bit.
    You know that Chevron area is at least 20 miles out, that's 
gas. So if there's a leak, it'll be bubbles; it won't be a big 
gas spill or oil spill to come onto your shore. So, you can 
sleep better tonight, right?
    Mr. Scarborough. You know the fact that you, from the 
Chair, would make a statement like that is going to make me 
very nervous as I fly back to the pristine coastline of Florida 
this evening, but have a good weekend in Wyoming, or wherever 
you're going to be.
    [Laughter.]
    Mrs. Cubin. Congressman Pallone.

   STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. Pallone. Thank you, Madam Chairman, and members of the 
Committee. I know you've been listening to us for a while here 
and I appreciate the fact that you're willing to bear with each 
of us as we make a presentation. I'm going to try and summarize 
my statement--you know--if I can include the whole thing as 
part of the record, I'd appreciate it.
    I wanted to say that the first bill that I introduced when 
I became a Member of Congress back in 1988 was legislation to 
prohibit the Department of Interior from spending any funds for 
any activity related to mid-Atlantic OCS oil and gas lease 
sale. In fact, I framed the bill and I have it in my office on 
top of my bookshelf. I've once again joined with our Resource 
Committee colleagues, Mr. Jones and Mr. Hinchey, and with other 
members representing the mid-Atlantic States to introduce 
legislation establishing a mid-Atlantic moratorium on offshore 
oil and gas leasing. This bill, H.R. 2555, is similar to the 
legislation I first introduced 10 years ago.
    The bill prohibits the Department of Interior from spending 
any funds for any activity related to mid-Atlantic offshore gas 
or oil lease sales. It would protect waters offshore of 
Connecticut, New York, New Jersey, Delaware, Maryland, 
Virginia, and North Carolina. And I've also joined as an 
original co-sponsor of Mr. Riggs' legislation, H.R. 3074, which 
has the similar effect for both the entire east and west coast 
of the United States.
    I mention these because I think there are about 6 bills in 
the house that collectively would prohibit OCS oil and gas 
lease sales off all the 18 States coast lines, and these bills 
are supported on a strongly bi-partisan basis. It just 
basically show the adversity that exists to opening up our 
shores to drilling.
    Now, over the years a lot of us haven't been too concerned 
because, as you know, and I think Congressman Regula mentioned 
it earlier, every year there has been a moratorium in the 
Interior Appropriations Bill, and we all go and testify there. 
Even though he doesn't know he's agreed with it, we manage to 
get it into the bill. But I notice that he said that he is 
again against any permanent moratorium. I think that's 
unfortunate. I think that's in fact what we need and I would 
urge the Subcommittee to move in that direction.
    I'm not going to go into too many more details because it's 
in my statement. But I just wanted to say that they're really 
three reasons why I and, I think so many others continue to 
oppose these kinds of sales and leases. And one is that we 
really don't believe that the offshore drilling is necessary 
for reasons of national or energy security. Second, we oppose 
exploiting the OCS simply as a new source of revenue when we 
continue to give away our other natural resources through out 
of date sea royalty and leasing programs. And third, I believe 
that drilling off of our shores poses severe threat to our 
marine environment.
    I'm not going to get into points one or two. It's in my 
statement, and I know that Senator Boxer talked about that 
article in the Washington Post about the four oil companies 
that are being sued by the Federal Government. And I'm 
obviously concerned about that. I just wanted to say on the 
last point about the environmental and economic point of view.
    In New Jersey, we've learned very well, I think, that a 
healthy coastal environment also means a healthy coastal 
economy. New Jersey's coastal zone--I represent about a third 
of it, along with Jim Saxton and Frank LoBiondo. Our coastal 
zone as a whole contributes tens of billions of dollars to 
State coffers. About half of New Jersey's gross State products 
comes from the coastal zone. People don't usually realize that.
    I guess our concern is that all of this could be 
jeopardized by the environmental consequences of offshore 
drilling. We saw what happened back in the late 1980's when we 
had all the sewer, the washups of medical waste and dredge 
materials, and material that was coming from combined sewer 
overflow in New York. For years we lost billions of dollars in 
our State economy, and basically we feel that the risk of 
drilling off the mid-Atlantic coast far outweigh the benefits; 
that in the long run what would happen is that our State 
economy would suffer severely.
    I want to say in conclusion, it's not just an environmental 
concern. It's also an economic concern. I think the feeling--
the reason why so many of us from the coastal States would like 
to see permanent moratorium in effect is because of the impact 
not only on the environment, but also our fear about the impact 
on our economy. Thank you.
    [The prepared statement of Mr. Pallone follows:]

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

    Thank you, Madam Chairwoman and Mr. Romero-Barcelo, for 
holding this hearing and inviting me to testify today on the 
issue of Outer Continental Shelf (OCS) Oil and Gas Leasing.
    The issue of offshore drilling is one that has concerned me 
since I first came to Congress almost 10 years ago. In fact, 
the very first bill I ever introduced was legislation to 
prohibit the Department of Interior from spending any funds for 
any activity related to a mid Atlantic OCS Oil and Gas Lease 
sale.
    As you know, I have once again joined with our Resources 
Committee colleagues, Mr. Jones and Mr. Hinchey, and with other 
members representing mid-Atlantic states to introduce 
legislation establishing a mid-Atlantic moratorium on offshore 
oil and gas leasing. This bill, H.R. 2555, is the great, great 
grandchild of my original legislation.
    The legislation that we have introduced is simple. The bill 
prohibits the Department of Interior from spending any funds 
for any activities related to a mid-Atlantic off-shore gas or 
oil lease sale. The bill would protect waters offshore of 
Connecticut, New York, New Jersey, Delaware, Maryland, 
Virginia, and North Carolina.
    In addition, I have joined as an original cosponsor of Mr. 
Riggs' legislation, H.R. 3074, which would prohibit the 
Secretary of the Interior from issuing OCS oil and gas lease 
sales on both the east and west coasts of the United States, 
including New Jersey.
    In total, I believe that there are at least 6 bills in the 
House that collectively would prohibit OCS oil and gas lease 
sales off of all 18 states along the east and west coasts of 
the U.S. These bills are supported on a strongly bi-partisan 
basis and with significant geographic distribution as well. I 
think that this, in and of itself, clearly shows the adversity 
that exists to opening up our shores to drilling.
    Over the years, the Department of Interior's Minerals 
Management Service has made several proposals for a mid-
Atlantic OCS oil and gas lease sale. Each time, legislators 
from the mid-Atlantic states, regardless of party affiliation, 
have joined together to oppose these proposals.
    I have opposed, and will continue to oppose, any proposal 
of a mid-Atlantic OCS oil and gas lease for three main reasons: 
(1) I do not believe that offshore drilling is necessary for 
reasons of national or energy security, (2) I am opposed to 
exploiting the OCS simply as a new source of revenue, when we 
continue to give away our other natural resources through out 
of date fee, royalty, and leasing programs, and (3) I believe 
that drilling off of our shores poses a severe threat to our 
marine environment and therefore to the economies of our 
coastal states.
    With respect to our nation's energy security, I feel 
strongly that we need to focus more on diversifying our sources 
of energy, not just diversifying our sources of fossil fuel. We 
need to be actively developing alternative, renewable energy 
sources. A greater diversity in energy sources will reduce our 
need for off-shore drilling, decrease our dependence on fuel 
imports, and protect against future oil price shocks. Continued 
development of efficient and renewable energy sources also will 
free up capital for increased domestic investment that will 
spur economic growth, and ensure continued technological 
innovation and global competitiveness in these areas. In 
addition, technological development in these areas is necessary 
to make our current primary energy sources as safe as possible. 
Further, using renewable energy sources will reduce damage to 
natural resources and will result in fewer emissions of 
greenhouse gases and other pollutants.
    From the standpoint of creating new sources of Federal 
revenue, I feel that the American people would be better served 
by eliminating the natural resource subsidies that are still on 
the books, rather than initiating additional public resource 
giveaways and, increasing the drain on taxpayer dollars, and 
encouraging environmentally damaging development activities. 
Just two weeks ago, it was reported in the Washington Post that 
4 oil companies are being sued by the Federal Government, and 
10 other companies are under investigation, for understating 
the value of crude oil produced on Federal and tribal lands. 
According to the project on government oversight, the oil 
companies have shortchanged the U.S. Government to the tune of 
more than $2 billion in underpaid royalties.
    MMS is in the process of trying to resolve this problem, 
which the agency proposes to do by basing royalty fees on an 
independent measure: the world market price for oil. Yet 
language just included in the Emergency Supplemental 
Appropriations bill prohibits the Minerals Management Service 
from making these changes to the program, thereby allowing big 
oil companies to continue robbing the American people of 
billions of dollars in revenues. Before we open up new public 
natural resources to development, I think we should work on 
eliminating existing subsidies, including subsidies for mining, 
grazing, and logging on public lands as well as existing 
irrigation subsidies.
    And finally, I am opposed to offshore drilling from both an 
environmental and an economic standpoint. In New Jersey, we 
have learned very well that a healthy coastal environment also 
means a healthy coastal economy. New Jersey's coastal zone as a 
whole contributes tens of billions of dollars annually to state 
coffers--or about half our gross state product. Within that, 
coastal tourism accounted for more than $14 billion in 1997, 
over half of the state's travel and tourism revenues. In 
addition, an American sportfishing association study recently 
showed that in 1996, the total economic impact of angler 
expenditures in New Jersey exceeded $2 billion. Recreational 
fishing in New Jersey also supported almost 22,000 full-time 
jobs and generated $69.5 million in state revenues and $63.3 
million in Federal tax revenues. New Jersey's commercial 
fishing industry is estimated to add an additional $700 million 
to the economy as well as to support tens of thousands of jobs.
    Unfortunately, all of this could be jeopardized by the 
environmental consequences of offshore drilling. Put simply, 
Madam Chairwoman, the risks of drilling off the mid-Atlantic 
coast far outweigh the benefits. This is one of those unique 
facts that is recognized by all sides: commercial and 
recreational fishermen, environmentalists and business 
interests, Republicans and Democrats. We need to ensure all 
sectors of the coastal economy that are dependent on coastal 
environmental quality, both in my state and in other coastal 
states, that the government will not impose unwanted, unsound, 
and unneeded oil and gas development off our coasts.
    In conclusion, I again thank the Chairwoman for holding 
this important hearing, and strongly urge the Subcommittee to 
move H.R. 2555 and H.R. 3074. Thank you.

    Mrs. Cubin. Is Mr. Whitfield here? Would you like to just 
come forward and join the last witness? Congressman Nick 
Lampson, I'd like to recognize you for your testimony.

 STATEMENT OF HON. NICK LAMPSON, A REPRESENTATIVE IN CONGRESS 
                    FROM THE STATE OF TEXAS

    Mr. Lampson. Thank you, Madam Chairwoman. I hate to sit 
here and follow my very good friend, Mr. Pallone, and take a 
little bit of a different view, but that's what I'm getting 
ready to do.
    The gas and petroleum reserves under ultra deep water on 
the continental slopes of the Gulf of Mexico have demonstrated 
in the past several years to be of absolute enormous economic 
and strategic significance to the United States. The rising 
interest is evidenced by the recent offshore natural gas and 
oil lease sale in the Western Gulf of Mexico in which the 
Minerals Management Service received some $800 million in high 
bids. There are currently over 150 companies with over 3,800 
producing platforms active in the Gulf of Mexico.
    As industry moves into deeper water, new technology, 
safety, and environmental challenges will need to be met by the 
Mineral Service in its role of supervising the exploration, 
development, and production of gas, oil, and minerals on the 
Outer Continental Shelf.
    Oil and gas operators are subject to the highest standard 
of environmental regulations. The Federal Government's 
stringent environmental regulations on the oil and gas industry 
are protecting the quality of our waters, coastal areas, and 
marine life. Offshore drillers are required to obtain 17 major 
permits and follow 90 sets of Federal regulations. The 
Department of Interior's Mineral Management Service says that 
since 1975, when current Federal offshore safety regulations 
went into effect, the industry has had an environmental record 
that is 99.999 percent safe.
    The implementation of further restrictions, and their 
minimal impact on the environment must be balanced against 
their potential harm to our economy and national security.
    Today, over half of the petroleum products we use come from 
abroad. Bans on the Outer Continental Shelf operations mean 
that the United States increases on foreign oil. That increases 
our dependence on foreign suppliers, giving them added powers 
and added incentives to interrupt our supplies and to affect 
our prices. Making our country more vulnerable to foreign 
suppliers could add to our defense burdens and put our national 
security at risk.
    Restrictions also stop new revenue from coming into the 
Treasury while we are trying to end decades of damaging budget 
deficits. Offshore leasing in Federal waters has been highly 
productive for the Federal Treasury. Since the offshore leasing 
program began, offshore oil and gas activities have generated 
over $117 billion in revenues to the Federal Government. A 
continuing stream of revenue is needed to keep the Federal 
budget balanced.
    Offshore operations afford American workers and American 
companies in virtually every State an essential opportunity for 
jobs and economic growth. A 1996 study by the American 
Petroleum Institute found that companies involved in the 
exploration and production of oil and gas in the Gulf of Mexico 
spent almost $6 billion with 6,000 vendors in 49 States. While 
much of that $6 billion was spent in States adjacent to the 
Gulf, tens of millions of dollars, and sometimes hundreds of 
millions, were spent with vendors as far away as New York, 
Pennsylvania, Illinois, and California. Offshore drilling 
produces jobs, paychecks, and benefits for American families.
    In summary, Madam Chairman, we must balance further 
restrictions on oil and gas operations and their environmental 
impact against economic growth. Restrictions endanger our 
energy security and could add new burdens to maintaining our 
national security. They close off opportunities for new revenue 
to help balance the Federal budget, and they restrict 
opportunities for working people in 49 States. We must take a 
closer look at greater regulation.
    I think as we go through all of this, there are ways that 
we can find to increase greater benefits to the coastal regions 
who are willing to be involved in these kinds of businesses. 
There is a sacrifice; and there is always the potential of a 
danger. But there's also a danger in many, many other ways in 
our life every day. So there's hope on my part that we will be 
able to go forward with a good balance and look for the ways 
as, even Mr. John and others are working on in the State of 
Louisiana and other coastal States, particularly on the Gulf of 
Mexico, to make this work and to make other areas of our 
coastal needs work, and work very efficiently.
    Thank you.
    [The prepared statement of Mr. Lampson follows:]

 Statement of Hon. Nick Lampson, a Representative in Congress from the 
                             State of Texas

    Mr. Chairman, the gas and petroleum reserves under 
ultradeep water on the continental slopes of the Gulf of Mexico 
have demonstrated in the past several years to be of enormous 
economic and strategic significance to the United States. The 
rising interest is evidenced by the recent offshore natural gas 
and oil lease sale in the Western Gulf of Mexico in which the 
Minerals Management Service received $800 million in high bids. 
There are currently over 150 companies with 3,800 producing 
platforms active in the Gulf.
    As industry moves into deeper water, new technical, safety, 
and environmental challenges will need to be met by MMS in its 
role of supervising the exploration, development and production 
of gas, oil and minerals on the Outer Continental Shelf.
    Oil and gas operators are subject to the highest standard 
of environmental regulations. The Federal Government's 
stringent environmental regulations on the oil and gas industry 
are protecting the quality of our waters, coastal areas, and 
marine life. Offshore drillers are required to obtain 17 major 
permits and follow 90 sets of Federal regulations. The 
Department of the Interior's Mineral Management Service says 
that since 1975, when current Federal offshore safety 
regulations went into effect, the industry has had an 
environmental record that is 99.999 percent safe.
    The implementation of further restrictions and their 
minimal impact on the environment must be balanced against 
their potential harm to our economy and national security.
    Today, over half the petroleum products we use come from 
abroad. Bans on OCS operations mean that the United States 
increases its dependence on foreign oil. That increases our 
dependence on foreign suppliers, giving them added powers and 
added incentives to interrupt our supplies and affect our 
prices. Making our country more vulnerable to foreign suppliers 
could add to our defense burdens and put our national security 
risk.
    Restrictions also stop new revenue from coming into the 
Treasury while we are trying to end decades of damaging budget 
deficits. Offshore leasing in Federal waters has been highly 
productive for the Federal Treasury. Since the offshore leasing 
program began, offshore oil and gas activities have generated 
over $117 billion in revenues to the Federal Government. A 
continuing stream of revenue is needed to keep the Federal 
budget balanced.
    Offshore operations afford American workers and American 
companies in virtually every state an essential opportunity for 
jobs and economic growth. A 1996 study by the American 
Petroleum Institute found that companies involved in 
exploration and production of oil and gas in the Gulf of Mexico 
spent almost $6 billion with 6,000 vendors in 49 states. While 
much of that $6 billion was spent in states adjacent to the 
Gulf, tens of millions of dollars, and sometimes hundreds of 
millions, were spent with vendors as far away as New York, 
Pennsylvania, Illinois, and California. Offshore drilling 
produces jobs, paychecks, and benefits for American families.
    In summary, Mr. Chairman, we must balance further 
restrictions on oil and gas operations and their environmental 
impact against economic growth. Restrictions endanger our 
energy security and could add new burdens to maintaining our 
national security. They close off opportunities for new revenue 
to help balance the Fed-

eral budget. And they restrict opportunities for working people 
in 49 states. We must take a closer look at greater regulation.

    Mrs. Cubin. Thank you for your testimony, spoken like a 
true Republican.
    Mr. Lampson. Give me a break.
    [Laughter.]
    Mrs. Cubin. I just couldn't help myself. I really do agree 
with your testimony. You know my State of Wyoming, while it is 
a different kind of beauty, certainly is a spectacular place to 
live and to visit, and tourism is an extremely important 
industry there. As Chairman Regula brought forward, we do allow 
drilling in the forest, and on the BLM lands, and it can and is 
done in a balanced manner. So I think we need to keep our minds 
open. Thank you.
    Mr. Lampson. We even create greater opportunities for 
people to enjoy the good things that are going out there 
because of much of this activity that is going on. If we can 
find ways to use some of those resources, ultimately, to help 
protect the coastal wetlands, which is something that is 
dramatically important for all of the whole United States--even 
though the great predominance of those wetlands fall in the 
States of Louisiana and Texas, and even Florida. If we can 
begin to use some of those resources to address the national 
assets that we have along there that we are rapidly losing, 
then I think that we gain tremendous amount for our 
environment. And again, it's a matter of balance, it's not a 
matter of going so far one way or the other that we lose the 
opportunities that we might create for ourselves along the way.
    Mrs. Cubin. That's right. I don't think anyone would argue 
that there are areas where there should be no drilling. 
Absolutely, those need to be reserved and maintained, but we do 
need to keep an open mind about it, I think. Thank you for your 
testimony.
    Mr. Lampson. You're very welcome.
    Mrs. Cubin. I see Mr. Goss just came into the room. Now if 
you would prefer, Mr. Whitfield can go first while you gather 
your thoughts. But if you'd please just take a seat at the 
table. Or you can go first because you're the man.
    Mr. Goss. He's been waiting, thank you very much.
    Mrs. Cubin. Thank you. I'd like to recognize now Mr. 
Whitfield, the Environmental Advisor, the Office of the 
Governor of Florida.

STATEMENT OF ESTUS WHITFIELD, ENVIRONMENTAL ADVISOR TO GOVERNOR 
                    LAWTON CHILES OF FLORIDA

    Mr. Whitfield. Thank you, Madam Chairman, members of the 
Subcommittee. I appreciate the opportunity to come and testify 
on behalf of Governor Lawton Chiles. With your permission, I'll 
submit a written statement and make some comments orally.
    We wish to voice concerns about the negative effects of oil 
and gas development, particularly off the coast of Florida. 
These concerns come from across the broad spectrum, citizens 
interest, elected officials, and the scientific community. And, 
I want to lend support to H.R. 180 by Congressman Goss.
    Florida has three Outer Continental Shelf areas. Two of 
these, South Atlantic and the Straits of Florida, that 
basically cover the eastern and southern part of the State. 
There are no leases scheduled during the 1997-2002 program, and 
there are no active leases in these areas. So these two areas 
are not under immediate threat. However, the panhandle, which 
is the eastern Gulf of Mexico, the potential remains high. 
There are 150 leases which cover 864,000 acres off Florida that 
have been leased. In fact, there's one that has been referred 
to earlier, about 25 miles off the coast of Pensacola, by 
Chevron, it's a major production proposal that is currently 
under appeal by Chevron under the Coastal Zone Management Act 
Consistency Program.
    The environmental and economic importance of Florida's 
marine and coastal habitats is extraordinary. And these areas 
are pristine, basically, off the entirety of Florida. These are 
the habitats of many species of both ecological, endangered and 
threatened, and economic importance. For example, 90 percent of 
the reef fish, mostly snapper and grouper, of the Gulf of 
Mexico are caught off the coastline of Florida. And there are 
over 50 State and national recreation areas along this area of 
Florida, including the Gulf Island National Seashore.
    Over 70 percent of Florida's population lives and works in 
the coastal zone. We're second only to California in 
recreational and tourism expenditures. In 1996, the cities of 
Panama City, Pensacola, and Fort Walton realized a $1.5 billion 
taxable sales in tourism and recreation.
    Oil spills and blowouts are the obvious major visible 
concern that a State has with oil and gas drilling. But it's 
the every day adverse effects of chronic pollution from 
effluent discharges and pipeline installation and operation 
that we really worry about; it's the chronic effects.
    The environmental studies and analyses are not yet 
complete. The environmental impact statement on the precedent 
setting development and production operation of the Chevron 
proposal off the coast of Pensacola is not yet complete. And 
yet the State of Florida has been required by Federal law to 
take the position on consistency. And the Federal coastal zone 
consistency is the strongest legal measure a State has in 
trying to affect a decision on oil and gas, and we are required 
to do that prior to the completion of an environmental impact 
statement. We think that H.R. 180 will help us in that regard.
    H.R. 180 will not allow oil and gas activity in Florida 
until all of the studies are complete, and by the Mineral 
Management Services' own admission and data and information, 
they're not complete. There are lots of studies that need to be 
done, not to mention the Environmental Impact Statement.
    So these kinds of things need to be completed prior to a 
decision. H.R. 180 will help that--help us avoid the adverse 
consequences.
    Thank you very much.
    [The prepared statement of Mr. Whitfield may be found at 
end of hearing.]
    Mrs. Cubin. Thank you for your testimony.
    Congressman Goss, welcome. I understand you were here a 
couple of times earlier. Sorry we weren't on time. Welcome.

STATEMENT OF HON. PORTER J. GOSS, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF FLORIDA

    Mr. Goss. Thank you, Madam Chairman. It's a pleasure to be 
back again. And, in fact, I spent many happy years in this room 
as part of my time in Congress, and it's particularly nice to 
be back among familiar faces and familiar places. So thank you 
for the welcome, and I'm sorry the schedule put me elsewhere. I 
appreciate the accommodation to be here today, and I very much 
appreciate you having this hearing.
    Mr. Whitfield has made a lot of good points that I wanted 
to make, so I would ask that my formal statement be accepted 
without objection in the record. Thank you. And I would then 
like to just make a couple of brief points.
    Primarily, on H.R. 180, and why H.R. 180 even exists. I 
think that back in 1983, the annual moratorium that was put in 
place to deal with this question that we have wrestled with in 
Florida about what's the right way to approach oil exploration 
off our coast in Federal waters. The moratorium was put in to 
buy time; well we bought 15 years. And it seems to me that 
after 15 years, we ought to be making some progress on setting 
up a policy. So H.R. 180--which had predecessors in previous 
Congresses--was trying to sort of jolt us away from the annual 
moratorium process, and we had a lot of encouragement from the 
Appropriations people to do that and come up with a better 
approach than the annual moratorium.
    So that's way we put H.R. 180 in, and we've refined it 
considerably over the years. There have been a lot of 
interested parties, of course--State, Members of Congress, 
appropriate committees, people in the oil and gas industry, a 
lot of the environmentally concerned people, and business 
communities, chambers of commerce, local government as well. 
And virtually everybody agrees that Florida has a special case 
and we need to do something special. But if we're going to make 
a decision, we've got to make it on the basis of good facts--
scientific facts hopefully--and we've got to come up with 
something that's fair for everybody because there's a lot of 
players. So we want a comprehensive plan that's based on good 
information, and that's what H.R. 180 is designed to get us.
    The concerns that we have in Florida--I would just 
underscore again what Mr. Whitfield has said that the 
devastating impact of an oil spill on our Mangrove forest is 
regrettably a known fact. It's something we can't tolerate; it 
effects our economy very badly, and I'm certainly not one to 
say that just because you have oil and gas industry, you're 
going to have leakage; or you're going to have a spill or 
anything like it. But the possibilities are there--and I want 
to understand what the consequences are before we go much 
further down the road--on the oil and gas exploration that's 
already there. And I believe everybody feels that way because 
we have had a couple of incidents and it's been very unhappy.
    The second thing is from the oil and gas perspective. I 
think we owe the private property owners some certainty in what 
they do here. I think that the idea of doing a study based on 
what the exact scientific data in the Eastern Gulf primarily is 
will benefit and give certainty, and give us a way to go 
forward and allow business people to make sound business 
decisions.
    I think finally we've got to recognize that in southwest 
Florida, taking care of the environment is a very important 
requirement for political service. It is expected of you in 
government there. People recognize, as in your own State Madam 
Chairman, what a wonderful place it is. We just don't have 
anything that goes that far above sea level in Florida. And in 
fact, the highest point in my home town is 14 feet above sea 
level, and that's a very short stretch of beach indeed. We have 
a wonderful place also, but it is very sensitive to the 
vicissitudes of Mother Nature and things like oil leaks.
    We've worked very closely with the State of Florida, and a 
whole lot of other people. We think we've got a good plan under 
H.R. 180. We've brought, I think, a good joint Federal/State 
proposition to the floor. We certainly have the representative 
agencies. We've got the Governor; we've got National Academy of 
Sciences; and if we've got it wrong, we certainly welcome any 
advice or guidance that the Committee or anybody else would 
like to make. We don't claim full wisdom on this. We felt we've 
done it fairly and wisely.
    What we have planned to do is to take advantage of the 5-
year lease period and basically extend a moratorium through 
that period--and do our study work at that time, and then go 
forward once we have some good information. I think everybody 
comes out ahead if we do it this way rather than the annual 
moratorium, which is solving nothing, and causing some 
consternation because it is a Catch 22 for the business 
interest; and it's also an uncertainty and an annual chore for 
those of us in government. We would rather do a study and know 
what we're talking about rather than putting a hold on things 
saying we're not sure. As I say, 15 years is enough in that 
mode.
    The questions that have been asked of us before by the 
Resources Committee are very fair questions. I'm sure these and 
others are questions we're prepared to answer. Why do we need 
to do something. I think I have given you some indication that 
both the business community and the stewards of the State's 
responsibilities of our environment would like to be dealing 
with better information. That's why I think the study is very 
important. We would like to have some certainty.
    Secondly, we've been asked the question, what's the effect 
of H.R. 180 on funding for the Land and Water Conservation 
Fund, a question that I know is dear to everybody's heart. And 
the answer is, I suspect if we stay in the annual moratorium 
mode, we aren't getting anywhere on that. If we come up with a 
plan, we may have more, we may have less, but at least we'll be 
dealing on the basis of good fact. And I firmly believe that we 
are going to have an oil and gas industry, but I want to have 
it on a sensible terms. Rather than being unfair to the people 
who have invested now in the oil and gas industry with the 
moratorium, and allowing for no further progress one way or the 
other on it--either buy-back or any other of the schemes that 
we've talked about--it seems to me that we ought to open up the 
whole subject because the Land and Water Conservation Fund 
contribution question is a totally legitimate question for the 
U.S. Congress, and I think we're going to get it on the base of 
fact through the proposals of H.R. 180, and I don't see any 
other alternatives out there to deal with the subject. But I 
think we'd all like to deal with it.
    Finally, the third question we've been asked is the make-up 
of the task force. We are trying to provide a scientific panel 
that has all the necessary interest on it. If we haven't got it 
right, as I say, we'll look at a different way. We have the 
Federal agencies represented, the State represented, obviously 
responsibly, and what I think is a group of good qualified 
scientists.
    So we think we've come up with a pretty good solution. 
We've had a couple of hearings on it over the years. We've 
moved it along, and I think now is the time that we could move 
it even further.
    I thank you very much for your attention.
    [The prepared statement of Mr. Goss follows:]
    Mrs. Cubin. Thank you for your testimony.
    Do any members of the panel have any questions of all of 
these witnesses? OK, thank you very much.
    Mr. Goss. Thank you very much; thank the panel.
    Mrs. Cubin. Next witness we'll call is Cynthia Quarterman, 
the Director of the Minerals Management Service. And thank you 
for being with us as well. We do appreciate it.
    Ms. Quarterman. Good afternoon. Thank you. Madam 
Chairwoman----
    Mrs. Cubin. It's not you; and we're not insane--with 
everyone leaving.
    Ms. Quarterman. I'm sorry. I'll get some water then.
    Ms. Christian-Green. Madam Chair, Madam Chair. While we're 
waiting, may I ask unanimous consent to enter my opening 
statement to the record as well?
    Mrs. Cubin. Without objection, so ordered.
    [The prepared statement of Ms. Christian-Green follows:]
    Mrs. Cubin. We're not timing you, Ms. Quarterman, so you 
can just begin whenever you want.

    STATEMENT OF CYNTHIA L. QUARTERMAN, DIRECTOR, MINERALS 
         MANAGEMENT SERVICE, DEPARTMENT OF THE INTERIOR

    Ms. Quarterman. Madam Chairwoman, and members of the 
Subcommittee, I appreciate the opportunity to appear before you 
today to discuss the issue of OCS moratoria. As you may recall, 
I appeared before your Subcommittee almost two years ago and 
presented testimony on the same issue. My testimony at that 
time described in some detail the history of Federal offshore 
oil and gas activity, and the associated conflicts and 
controversies that lead to moratoria. I also described the 
Department's approach to managing the OCS program and resolving 
some of the problems that we inherited.
    Today, I'd like to discuss the Department's approach to 
moving the OCS program from conflict toward consensus--
including the role of OCS moratoria in that approach--and to 
update you on the progress of some of our efforts.
    As the Subcommittee is well aware, the OCS program provides 
significant energy and economic benefits to the Nation. These 
benefits go hand-in-hand with an excellent offshore safety and 
environmental record. And MMS has made safety and environmental 
protection its No. 1 priority for the offshore program. This 
emphasis will help ensure that the benefits the OCS program 
provides will continue.
    These benefits notwithstanding because of the way the OCS 
program was managed in the past, it led to conflict, 
controversy, and ultimately moratoria. I will not detail the 
history of moratoria. Instead, I would commend to you two 
reports that our OCS Policy and Scientific Committees put 
together to document this history. One is Moving Beyond 
Conflict to Consensus, which they put together in 1993, and the 
other is the Environmental Studies in OCS Areas Under 
Moratoria, which was put together in 1997.
    The first report has played a significant role in the 
Department's approach to managing the OCS; and the second 
report, which is more recent--I'd like to submit for the record 
today, since it contains information pertinent to our 
discussion----
    Mrs. Cubin. Without objection, so ordered.
    [The information referred to may be found at end of 
hearing.]
    Ms. Quarterman. When this administration assumed management 
of the OCS program in 1993, there were substantial problems 
facing it. For example, there were congressional leasing 
moratoria on the Atlantic and Pacific coasts, Eastern Gulf of 
Mexico, and North Aleutian Basin off Alaska. There were also 
congressional drilling bans on previously issued leases in the 
southeastern part of Eastern Gulf of Mexico, and the North 
Aleutian Basin, and offshore North Carolina. And there was 
litigation pending regarding those leases. There were also 
leases issued in areas currently under leasing moratoria off 
the Florida Panhandle, and off California that demanded our 
attention.
    Finally, there were lease sales scheduled around the coast 
that were generating controversy. The Department knew that if 
the OCS program was to remain viable, it would have to rethink 
its approach to managing the program.
    Therefore, we undertook several steps. First, we undertook 
the challenge of resolving existing controversies as a way of 
setting the stage for consensus building. One of the tools that 
we employed in that approach was to endorse the existing annual 
congressional moratoria as a way of ensuring our stakeholders 
that the status quo would be maintained while discussions 
ensued. We believe strongly that it was important to ensure 
that no new leasing occurred in areas where we were attempting 
to resolve intense disputes concerning already existing leases, 
as well as some controversial areas where leasing was 
contemplated.
    The annual congressional moratoria helped us to do several 
things, including settling litigation concerning leases in the 
North Aleutian Basin and the Eastern Gulf of Mexico, which 
resulted in their relinquishment; settling litigation on the 
majority of leases offshore North Carolina, which resulted in 
their relinquishment, while still preserving the promising 
``Manteo Unit'' for possible exploration; canceling proposed 
lease sales in the Atlantic and Eastern Gulf that were 
precluded by moratoria, thereby allowing us and our 
stakeholders to concentrate on resolving issues related to 
potential exploration and development of the remaining existing 
leases; and focusing efforts off California on discussing the 
possible development of existing leases without the 
distractions that proposals for new leasing would engender.
    In short, annual moratoria and the actions we were able to 
take with them in place, helped us to begin the difficult 
process of building trust and making strides to put the OCS 
program on firm footing. We also decided to cancel three lease 
sales off Alaska, since there was low industry interest and 
some concerns were expressed concerning other resources there. 
However, the sales were canceled with the knowledge that this 
administration would soon have the opportunity to formulate its 
own 5-year program, and could consult further with stakeholders 
to reach consensus on future sales proposals.
    Our second challenge was to develop an OCS 5-Year Oil and 
Gas Program for 1997 through 2002. They was both consensus 
based and met the requirements of the OCS Lands Act. During the 
2-year process of developing that program, we consulted with 
and listened closely to our stakeholders. As a result of that 
process, we decided on the following.
    In the Pacific Region, we ultimately decided not to 
schedule an OCS sale. After extensive discussions, we believed 
that such a sale was premature. Especially in light of the 
challenges posed by the existing, but undeveloped leases. I 
believe that this decision was the correct one; it has enabled 
us to work with our stakeholders on important development 
issues. As a result, production from existing developed leases 
has increased significantly to about 150,000 barrels a day.
    In the Atlantic Region, we decided not to propose a lease 
sale for the area, given the ongoing litigation and 
controversy. Instead, we are using this time to talk to and 
work with constituents. For example, we have been working 
closely with the State of North Carolina concerning possible 
development of the ``Manteo Unit'' by Chevron. We recently held 
a workshop on environmental issues associated with possible 
exploration. There is still much work to be done but 
discussions to date has been fruitful.
    In the Alaska Region we established the Alaska Regional 
Stakeholders Task Force to facilitate stakeholder participation 
in developing the current OCS 5-year program. Based on their 
recommendations, the new program proposes consideration of 
leasing in some of the areas that had previously been deferred, 
as well as Cook Inlet and the Beaufort Sea.
    We're also continuing to consult closely with the State, 
native organizations and others concerning several Beaufort Sea 
development projects. Those projects, and the plan lease sales, 
point to a vibrant future for the program in that area.
    In the Gulf of Mexico Region, we focused our efforts on the 
Eastern Gulf of Mexico, an area that had been under leasing 
moratoria for 8 years. Because of our efforts, we were able to 
identify a part of the planning area that lies more than 100 
miles offshore Florida, and more than 15 miles offshore Alabama 
for possible lease in 2001. This solution for the Eastern Gulf 
of Mexico perhaps best exemplifies our approach to the OCS 
program. The area to be considered for possible lease is an 
area that was carved out based on consensus and science, and 
promises to make natural gas resources available to the Nation. 
Thus, the current OCS 5-Year program is a program that helps 
return predictability back to the OCS program, while ensuring 
that stakeholder concerns are addressed.
    It's also important to know that Congress has agreed with 
this approach. After the secretary approves the current 5-year 
program, the administration sought, and Congress accepted, 
annual moratoria provisions that reflected the consensus 
achieved. Therefore, the current program and annual moratoria 
provisions included in the Department's fiscal year 1998 
Appropriations Act are now in harmony with our fiscal year 
1999. The Department has again proposed to carry forward that 
language from fiscal year 1998. We believe this rollover will 
be useful to us as we continue to work with our stakeholders 
and attempt to resolve issues of concern.
    As we look to the future of the OCS program, it is possible 
that advancing technology, coupled with our acquisition of 
sound scientific information, our continued diligent 
administration of effective environmental and safety practices, 
and our willingness to work with our stakeholders can go a long 
way toward challenging existing perceptions and attitudes; and 
help us forge more widespread consensus concerning the OCS 
program.
    However, we must have all of those ingredients if we are to 
progress further. If we do not, we are likely to repeat the 
mistakes of the past.
    This concludes my opening remarks. I'd be happy to answer 
any questions the Subcommittee might have.
    [The prepared statement of Ms. Quarterman may be found at 
end of hearing.]
    Mrs. Cubin. Thank you for your testimony.
    Are there any questions on the Committee? If not, this is 
the easiest day you've ever had here, isn't it?
    [Laughter.]
    Ms. Quarterman. I appreciate that.
    Mrs. Cubin. And we'll see you back here in one week. Thank 
you.
    I saw Congressman Taylor come in, and I understand he'd 
like to testify for the Committee.

STATEMENT OF HON. GENE TAYLOR, A REPRESENTATIVE FROM THE STATE 
                         OF MISSISSIPPI

    Ms. Taylor. Thank you.
    Mrs. Cubin. Welcome, Congressman Taylor.
    Mr. Taylor. Thank you very much. As a former member of the 
House Merchant Marine Committee, it's great to be back in here. 
Chairwoman, I'm going to submit some remarks for the record and 
try to be as brief as possible.
    I was a member of this Committee when we did two 
significant things. No. 1, and I think of the most importance 
as far as this is concerned, was the passage of the Oil 
Pollution Act of 1990. The Oil Pollution Act of 1990 raised the 
cost of making a mistake for those people who transport oil and 
explore for oil so high, that I think they have seen to it that 
they don't make a mistake. And therefore, it was a good thing. 
It called for double hulls on vessels that transport oil and 
chemicals. It has already been implemented as far as barges; it 
will be implemented as far as offshore ships by the year 2015. 
I think it was an excellent piece of legislation and it has had 
excellent results.
    I was also part of this Committee when we voted, I believe, 
unanimously to allow the Floridians to ban drilling within 50 
miles of their shore. I wish I had that vote back, because I 
know I cast--I made a mistake that day. I think the States 
ought to have absolute sovereignty in what they do within their 
State territory waters, but in Federal waters, I think Federal 
law should apply.
    I happen to believe that offshore exploration can take 
place and protect the environment. I think we have seen to it 
with the Oil Pollution Act of 1990 that the penalty for making 
a mistake is so high that they just won't let that happen, and 
haven't let that happen.
    I would encourage those of you who are concerned about this 
issue, not only from an environmental standpoint, but from a 
national security perspective, to read an excellent book by 
Stephen Ambrose, the author of Undaunted Courage and 
Eisenhower. But before those two books became famous, he wrote 
book called ``A Rise to Globalism'' which he compares America 
in 1988 to America in 1939. In 1939, we produced all of our own 
oil; we produced all of our own automobiles, all of our own 
electronics. We had a minuscule-standing army, and yet when we 
were called to the task in World War II, the fact that we had 
this incredible industrial base enabled us to rise to the 
occasion to defeat Nazi Germany and Imperial Japan. Compare 
that to 1988 when we had the undisputed greatest military force 
on earth, but half of the fuel that military uses comes from 
some place else.
    Electronics that make our electric gadgetry in smart bombs 
in our planes work so well come from some place else. It 
creates in turn an incredible military vulnerability for our 
Nation.
    Any step that we take to deprive this Nation of the ability 
to have energy independence is a mistake. We have seen to it 
that the oil companies, and those people who explore for oil 
are not going to pollute. It is ludicrous to take the 
additional step of depriving them of the opportunity of even 
searching for oil. Therefore, I would rise in opposition to any 
postponement on the further leasing of the offshore continental 
shelf. I think it would be counterproductive militarily; 
counterproductive economically; and I think it would be 
counterproductive ecologically because I can tell you as 
someone from a Gulf Coast State, the most sought after fishing 
spots off the Gulf Coast States are indeed the oil platforms 
and the associated structures that are placed out there by the 
oil companies. Additionally, several of the companies have an 
excellent program that when a rig outlives its useful life, it 
has been donated to create habitat for fish in the Gulf of 
Mexico.
    So for a number of reasons, I think it would be a mistake 
for our country to put a moratorium on the leasing of the Outer 
Continental Shelf.
    [The prepared statement of Mr. Taylor follows:]

 Statement of Hon. Gene Taylor, a Representative in Congress from the 
                          State of Mississippi

    Mr. Chairman, thank you for allowing me the opportunity to 
testify before your Subcommittee today regarding the issue of 
oil and gas operations under the waters of the Outer 
Continental Shelf (OCS). Our nation has a growing need for oil 
and natural gas. That is why I must oppose restrictions on the 
development of domestic resources of the OCS. Restrictions on 
OCS oil and gas operations threaten the jobs of many of my 
constituents in Mississippi jobs and the jobs of working people 
across our nation. Equally important, OCS restrictions endanger 
the nation's energy security.
    When jobs are created offshore, other jobs are created 
onshore. The OCS Policy Committee, part of the OCS Advisory 
Board that was established some years ago by the Department of 
Interior to advise the secretary, estimated that in addition to 
the jobs created offshore, ``OCS activities indirectly provide 
about 2.5 jobs for every person directly employed by 
industry.'' Those jobs are created in Mississippi and across 
our nation. In 1996, exploration and production companies 
active in the Gulf of Mexico spent almost $6 billion with 
vendors in 49 of our 50 states. Over $33 million in sales were 
generated for Mississippi alone. Mr. Chairman, I believe 
Congress should enact legislation that helps the private sector 
create jobs. Restrictions on the exploration and production of 
oil and natural gas on the OCS destroys jobs. Offshore 
operations on the OCS means paychecks and benefits for people 
from Mississippi to California.
    Mr. Chairman, restrictions on OCS operations also endanger 
our energy security. As a member of the House National Security 
Committee, I realize that energy security is a critical 
component of national security. I am concerned that our nation 
imports over half of the petroleum products we consume. 
Restrictions on OCS operations turn us away from domestic 
energy sources in favor of foreign sources. That increases our 
dependence on and vulnerability to those suppliers. It gives 
them powers and the opportunity to interrupt our supplies and 
affect our economy.
    OCS leasing is an important source of revenue for our 
nation. Annually, the Minerals Management Service (MMS) 
collects in excess of $4 billion in OCS lease payments from the 
offshore industry. According to the MMS, OCS leasing is the 
greatest source of non-tax or tariff revenue for our nation. In 
these tight fiscal times, the importance of the OCS generated 
revenue to our nation's treasury cannot be overstated.
    Finally, Mr. Chairman, because Mississippi is on the Gulf 
Coast, I want to say a word about protecting the environment. I 
know that exploration and production activities offshore, as 
onshore, are managed with the highest regard for the air, the 
land and the water. Offshore operations are one of the most 
tightly regulated environmental activities in our nation. There 
are laws, rules and regulations to protect the waters, to 
protect marine life and to protect our shores. The Minerals 
Management Service says that since 1975, the offshore industry 
has an environmental record that is 99.999 percent safe. That 
is a record that has earned the right to new opportunities, not 
more restrictions.
    Those of us who live in the Gulf states want to protect the 
quality of our water and marine resources. As a Member of 
Congress who voted for the Oil Pollution Act of 1990 and the 
Air Act Amendments of 1990, I am proud of my record in support 
of strong environmental laws. The offshore industry has made 
environmental protection a fundamental part of its business 
plan. Even during Hurricane Andrew, the offshore industry's 
safety devices worked, shutting down production. Major spills 
were avoided, contrary to predictions of catastrophic spills 
from Gulf hurricanes. The offshore industry also is a key 
participant in the Rigs to Reefs Program. This program converts 
non-producing oil and gas platforms to reefs which provide 
critical habitat for finfish and other marine organisms. Since 
1991, 112 rigs in Alabama, Florida, Louisiana and Texas have 
been converted to reefs as part of this program. Off the coast 
of Mississippi, there are currently seven OCS structures. These 
rigs, although in service, attract plenty of fish and are 
accessed by both recreational and charter boat fisherman.
    In summary, Mr. Chairman, restrictions on the OCS are not 
needed. They will not significantly improve the environment. 
Instead, they restrict government revenues and economic 
opportunity. Additionally, it would increase America's 
dependence upon foreign oil and gas and endanger our nation's 
energy security.

    Mrs. Cubin. We certainly appreciate your testimony, and I 
know the people that are left in the audience appreciate that 
you gave the last word.
    Are there any questions from the panel? Thank you very much 
for being here; we appreciate it.
    [The prepared statement of Mr. Riggs follows:]

Statement of Hon. Frank D. Riggs, a Representative in Congress from the 
                          State of California

    Madam Chair, members of the Subcommittee, thank you for the 
opportunity to testify today.
    I appear before you to speak on behalf of the constituents 
of my congressional district and the many other Californians 
who are concerned about the expansion of oil and gas 
development on the Outer Continental Shelf (OCS).
    Since 1982, Congress has recognized the importance of our 
shores and beaches, and placed a nationwide ban on oil and gas 
drilling on the OCS. Additionally, in 1990, President Bush 
issued an Executive Statement calling for a moratorium on oil 
and gas leases off the coasts of California and Florida until 
the year 2000.
    OCS moratorium language has been added annually to the 
Interior Appropriations Act. However, a permanent moratorium on 
OCS leasing activities has never been enacted. In fact, 
moratorium legislation has never gotten past the hearing stage. 
Without a permanent, comprehensive moratorium, the coastal 
communities from California to Washington, and from Florida to 
Maine, that rely upon the fishing and tourism industries will 
never be safe from an attempt to lift the ban.
    In order to ensure that these resources are protected, I 
have introduced two bills, H.R. 3073 and H.R. 3074, that will 
effectively and permanently resolve this issue.
    H.R. 3073 will codify President Bush's 1990 Executive 
Statement, permanently protecting the two continental states 
with the longest coastlines--California and Florida. As a 
complement to H.R. 3073, H.R. 3074 would institute a nationwide 
ban on future oil and gas leasing programs on the entire outer 
continental shelf, permanently authorizing the current 
moratorium found in the Appropriations Act.
    As the representative of 300 miles of the North Coast of 
California, I am keenly aware of the importance of an OCS 
moratorium to coastal communities. The fishing and tourism 
industries in my district are dependent upon a healthy and 
vibrant seashore. With unemployment along much of the north 
coast in the double digits, the OCS moratorium helps to ensure 
the protection of a natural resource that provides a steady 
stream of jobs.
    California's tourism and recreation industry is the state's 
largest employer. Coastal tourism generates over $27 billion 
annually and accounts for thousands of jobs. Additionally, the 
fishing industry is the primary employer for many small 
communities up and down the state. The commercial value of the 
fisheries of Alaska, Washington, Oregon and California is too 
great to put at risk for the small amount of estimated 
recoverable oil in the protected areas.
    The effects of oil spills and the crippling damage to the 
delicate balance of wildlife are of great concern to all 
Californians and me. Furthermore, the ecosystem degradation 
caused by additional oil and gas development could impact 
protected marine areas in both state and Federal waters, 
including sanctuaries, seashores, reserves, preserves, refuges, 
underwater parks, and areas of special biological significance.
    The current leasing restrictions have been in place without 
any perceptible impact on national energy security. Existing 
leasing restrictions leave more than three-quarters of the 
nation's undiscovered, economically recoverable offshore 
reserves open to exploration and development. These 
restrictions affect less than one-half of one percent of total 
world oil reserves. In fact, proven reserves in the California 
moratorium areas would only last the nation about 41 days at 
current rates of consumption.
    I believe it is time to permanently institute Federal 
policy protecting environmentally sensitive coastal areas from 
the impacts of increased offshore oil development. My bills are 
a bipartisan effort to preserve one of the most economically 
viable and pristine natural resources the United States has to 
offer.
    Thank you.

    Mrs. Cubin. The Subcommittee on Minerals and Energy--leave 
the record open for 2 weeks for any additional comments, and we 
are now adjourned.
    [Whereupon, at 3:41 p.m., the Subcommittee adjourned 
subject to the call of the Chair.]
    [Additional material submitted for the record follows.]
  Statement of William Holman, Assistant Secretary for Environmental 
   Protection, North Carolina Department of Environment and Natural 
                               Resources

    Good Morning Chairman Cubin and Members of the 
Subcommittee. I am Bill Holman, Assistant Secretary for 
Environmental Protection of the North Carolina Department of 
Environment and Natural Resources.
    On behalf of the State of North Carolina I want to thank 
you and Congressman Walter Jones for the opportunity to 
participate in this hearing and to comment on some of the Outer 
Continental Shelf issues which you are considering here today.
    I am here to deliver two basic messages: First, it is 
critically important that states have a strong and clearly 
defined role in the management and stewardship of our offshore 
resources. Second, it is both essential and possible for the 
energy and mineral resources of the OCS be managed in a 
coordinated and progressive manner that maximizes benefits to 
both the nation's economy and the marine and coastal 
environment.
    Mr. Jones asked that the State of North Carolina 
participate here today to convey our views on his legislation, 
the Outer Banks Protection Act, which would require the 
concurrence of the Governor of North Carolina as a condition 
for exploratory drilling off the Outer Banks. We appreciate the 
recognition that this bill embodies of the responsibility that 
states must have for safeguarding their marine and coastal 
environment. We are in fact gratified that by its very title as 
well as content, the bill makes a strong statement that the 
Governor's role is central in making decisions aimed at 
protecting the many resources represented by our Outer Banks.
    As members of the Subcommittee know, the current process 
for state review of offshore energy exploration proposals is 
based on the states' coastal protection planning 
responsibilities under the Coastal Zone Management Act. Through 
a consistency review and determination by the state, the 
exploration plans are examined by the state for consistency 
with its approved coastal zone management plan. If the state 
finds the plan inconsistent, no permits can be issued unless 
the Secretary of Commerce overrides the state's determination 
that the project is inconsistent with its approved coastal zone 
plan.
    We appreciate Mr. Jones' concern that this may not provide 
a sufficiently strong voice for states in reviewing drilling 
proposals. We are currently awaiting detailed proposals 
regarding proposed exploratory drilling on the OCS off the 
Outer Banks, in an area known as ``The Point'' for its geologic 
structure.
    The Committee may be aware that The Point is also currently 
under consideration for designation as a ``Habitat Area of 
Particular Concern'' under the Essential Fish Habitat 
provisions of the Magnuson Stevens Fisheries Management Act. 
This area has become recognized as a unique mixing zone. Larvae 
of some 300 fish that are native to coastal waters, the 
Labrador Current and the Gulf Stream are found at The Point--
all in one place.
    I am told that this is far higher than might be found in a 
typical OCS area, and it again reinforces the importance of 
assuring that both economic and environmental values are fully 
evaluated in assessing any drilling proposal. This is new 
information that must be considered by both the state and the 
nation in making appropriate decisions on whether and how to 
proceed with the pursuit of energy resources in this part of 
the OCS.
    It is part of the duty and responsibility of the State of 
North Carolina to assure that if such drilling is to occur that 
it will be done in a manner that is sensitive to and protective 
of this unique marine environment and our coast. We do not yet 
have firm word from MMS that they will in fact grant us the 
consistency review that we strongly feel is our right.
    The reason is that in 1982, when much less was known about 
the environmental characteristics and significance of this 
area, the state made a determination that a previous, different 
exploration proposal was consistent with our coastal management 
plan. But that exploration proposal was never carried out. 
Unless MMS finds that the potential environmental impact of the 
new exploration plan is significantly greater than the prior 
proposal, and that new permits are required, then under MMS 
rules the state will not be granted a new consistency review.
    The legislation proposed by Mr. Jones assures a state voice 
in a project proposal that is 16 years old, in the context of 
substantial new uses of the resources in the area by the state 
and its citizens.
    We are working cooperatively with MMS, and I want to say to 
you and to them here today that we appreciate the collegial 
approach that they have taken up to this point in our 
discussions. However, we do feel that a firm commitment is 
needed to the concept of a strong state role in this decision 
process. We see Mr. Jones' bill as a constructive part of this 
ongoing dialogue.
    Let me conclude by stating for the record that the State of 
North Carolina has in no way reached any predetermined decision 
on the proposed exploratory well off the Outer Banks. We are 
eager to have as much information as possible to reach a 
conclusion that will reflect and balance the many issues that 
are presented by the preliminary proposal we have seen with 
regard to such drilling.
    We need a full proposal. We need as much information as can 
be gained on the particulars of the plan and the emerging 
importance of The Point as fisheries habitat. We need to 
carefully and vigilantly assess potential impacts on our famous 
Outer Banks and our coastal communities. We also need a 
continued recognition and commitment to the role of the state 
in this decision process.
    Thank you again for having us here today. I will be pleased 
to respond to any questions you may have.
                                ------                                


Statement of Estus Whitfield, Environmental Advisor to Governor Lawton 
                           Chiles of Florida

    Thank you for the opportunity to present testimony on 
behalf of Governor Chiles and the citizens of the State of 
Florida regarding outer continental shelf (OCS) oil and gas 
leasing and development. Our concerns about negative effects of 
offshore oil and gas development cannot be overstated. These 
concerns are expressed by a range of people--from our elected 
officials to scientists to citizens enjoying the white sands 
and clean waters of Florida's beaches. While there is no 
immediate threat of oil and gas activities in the South 
Atlantic and Straits of Florida Planning Areas off the east, 
south and southwest Florida coasts, the potential for damage to 
our coastal and marine resources from these activities in the 
Eastern Gulf of Mexico off the northwest Florida Panhandle 
remains high. Should future activities be proposed for the 
other areas off of Florida, the concerns addressed below would 
also apply.
    With the support of Governor Chiles and the Florida 
Cabinet, our Congressional Delegation has been successful over 
the last several years in securing protection by implementing 
moratoria on additional leasing off the west Florida coast. The 
Department of the Interior, in its Outer Continental Shelf Oil 
and Gas Leasing Program: 1997-2002, continued the ``leasing 
moratorium'' by not proposing any new leasing within 100 miles 
of Florida in the Gulf of Mexico, or in the South Atlantic and 
Straits of Florida. However, approximately 150 active leases or 
864,000 acres (1,350 square miles) remain in the eastern Gulf 
of Mexico and development and production has recently been 
proposed just 25 miles off the coast.
    Florida's west coast provides an array of marine and 
coastal habitats from the offshore fishing grounds and 
bountiful estuaries, to the sandy white beaches and barrier 
islands, including the Gulf Islands National Seashore. The 
seagrasses, marshes and other coastal areas provide habitat for 
a variety of wildlife, including many threatened and endangered 
species. Offshore marine habitats are critical to many life 
stages of marine flora and fauna. Nearly 90 percent of the reef 
fish resources (primarily groupers and snappers) of the Gulf of 
Mexico are caught on the West Florida Shelf and contribute 
directly to Florida's economy. The environmental and economic 
importance of the area is reflected in the vast number of state 
and Federal holdings in designated environmental preservation, 
conservation, and recreation areas including over 50 such areas 
along a coastal area of about 175 miles in the Florida 
panhandle.
    The economy of Florida's northwest coast, like the 
remainder of the state, is directly tied to our warm climate, 
clean waters and unspoiled natural resources. Recreation, 
tourism, retirement and commercial and recreational fishing are 
major economic activities of the area bringing in billions of 
dollars annually to state and local economies. Florida ranks 
second only to California in tourism expenditures. Visitors 
rank parks, preserves and natural areas as the second major 
attraction bringing them to Florida. The five western counties 
of the Florida panhandle brought in over $8 million from 
tourist development tax (bed tax) in 1996. Three cities in this 
area, Panama City, Pensacola and Fort Walton Beach, recorded 
over $1.5 billion in tourism and recreation taxable sales 
during the same period.
    With a majority of the state's population living in and 
deriving income from jobs related to our rich and diverse 
marine and coastal resources, we remain very concerned about 
the vulnerability of our state to the potential impacts and 
changes that offshore oil and gas activities can bring. These 
coastal and marine resources are the foundation of Florida's 
economy and quality of life. In a healthy condition, these 
self-sustaining resources will continue to provide benefits to 
people who live in and visit Florida. Otherwise, the ecology 
and economy of the state is doomed.
    With the potential for damage to Florida's resources and 
economy, we remain concerned about having oil and gas developed 
off our coasts. Oil spills remain the most visible of these 
concerns, however, there are other detrimental environmental 
effects that these activities could have on the shallow, clean 
water marine communities found on the Florida outer continental 
shelf. Physical disturbances caused by anchoring, pipeline 
placement and rig construction, the resuspension of bottom 
sediments, and the chronic pollution from discharges of 
drilling effluents, production effluents, and possible 
accidental releases of oil or other toxic material can be very 
destructive, especially when considering long-term and 
cumulative effects. Notwithstanding the potential impacts of a 
catastrophic event, many scientists believe that the marine 
communities off west Florida are not well adapted to withstand 
the expected adverse impacts associated with large scale 
development and production.
    Environmental studies and analyses, including comprehensive 
studies on the long-term and cumulative effects of these 
activities, are not yet complete. The Minerals Management 
Service's Northeastern Gulf of Mexico Physical Oceanographic 
Program and the Coastal and Marine Ecosystem Program are still 
ongoing. Some of the studies planned for these two programs are 
not likely to be completed before 2002. For example, the study 
entitled ``Ecosystem Monitoring, Northeastern Gulf of Mexico 
OCS'' is not scheduled to begin until fiscal year 1999 with 
completion in 2002. Objectives of this study include providing 
descriptive and process data which will be used to estimate the 
level of potential impacts of oil and gas activities. Results 
will serve as a basis for leasing decisions on the Florida 
panhandle OCS and as noted in the MMS studies plan, information 
from this study will be useful as soon as available to review 
planned and ongoing activities. In addition, the MMS is 
currently planning a joint ecological and physical 
oceanographic workshop for August 1998, which will help in 
identifying and designing additional environmental studies 
necessary for (1) contingency planning, (2) risk assessment, 
(3) the preparation of NEPA documents, and (4) review of 
development and production activities. Without completion of 
these studies, Florida has no assurances that OCS oil and gas 
activities can take place without causing irreparable harm to 
our ecological and economic resources. It is critical for 
Florida, as well as other coastal states, to have adequate 
information for and a pivotal role in decisions regarding oil 
and gas activities off their coasts.
    Congressman Goss has introduced H.R. 180 to prohibit any 
additional leasing, exploration or development until adequate 
environmental studies and analyses can be identified and 
completed. While the Department of the Interior, Minerals 
Management Service has been working to rectify deficiencies in 
the Environmental Studies Program identified by the National 
Academy of Sciences and scientists from state and Federal 
agencies and academia, much remains to be done. Primarily 
because the environmental studies program funding remains low, 
progress has not been rapid. Therefore, it is premature to 
consider additional oil and gas activities, especially 
precedent setting development and production in previously 
undeveloped areas such as offshore the Florida panhandle, until 
adequate environmental studies can be completed. This 
legislation would allow the MMS to complete studies necessary 
to better understand the environmental risks associated with 
OCS decisions.
    In addition, a delay in proceeding with any oil and gas 
activity off Florida would allow time to address an issue 
critical not only to Florida, but to the Nation as well. 
Currently a state's review of development and production plans 
pursuant to the Federal Coastal Zone Management Act (CZMA) must 
be completed prior to the reviewing state having all 
information necessary to adequately assess environmental 
impacts and determine consistency of the activity with the 
state's coastal management program. Specifically, a state's 
coastal zone management consistency review precedes review of 
environmental impact statements (EIS) which are developed to 
analyze primary, secondary and cumulative effects of proposed 
OCS development and production projects. States are not allowed 
to delay, beyond the predetermined timetable, a coastal zone 
management consistency decision. The two review processes are 
backwards.
    Further, states are not allowed to review, for coastal zone 
management consistency, other significant activities associated 
with OCS development and production such as detailed 
information included in pipeline installation applications. 
This type of information is vital for states to adequately 
assess potential impacts. Delaying final consistency decisions 
until all analyses in an EIS and associated information are 
completed and reviewed would enable states to make more 
informed decisions. Florida continues to work with our 
Congressional delegation on legislation which would allow 
states the same opportunity for a full review of all relevant 
information, as the Minerals Management Service and other 
Federal agencies are allowed under current Federal regulations.
    Chairman Cubin, thank you for the opportunity to provide 
comments during this oversight hearing on the outer continental 
shelf (OCS) oil and gas leasing and development issues.
                                ------                                


Statement of Hon. Porter J. Goss, a Representative in Congress from the 
                            State of Florida

    Madame Chairman, I appreciate the opportunity to appear 
before you this afternoon. I commend the panel for taking up 
the issue of outer continental shelf oil and gas exploration 
moratoria--it is a vital one for Florida and many other coastal 
states. I would like to discuss this issue from Florida's 
perspective, and make the case for H.R. 180, a bill that I have 
again introduced as a proposed solution to the existing Florida 
OCS stalemate. I am particularly pleased that the Committee has 
invited Mr. Estus Whitfield, Environmental Advisor to the 
Governor of Florida, to testify about this proposal. I look 
forward to his testimony.
    As you know, each year Congress enacts restrictions on oil 
and gas activities in the eastern Gulf of Mexico as part of the 
Interior Appropriations bill. Florida's OCS moratorium was 
instituted in 1983, by our colleague, Rep. Bill Young, and it 
accomplished its goal as a short-term fix to protect the 
Florida coastline from a possible expansion of oil and gas 
exploration. I would note that this moratorium has enjoyed 
unanimous support from Florida's Congressional delegation. 
However, it was never intended to be a long term solution and I 
believe it fails to satisfy the interests of both parties to 
this debate: Florida is only protected against new oil and gas 
leases, while the oil industry is left holding several existing 
leases but without the ability to make any long-term 
exploration and development plans in the Eastern Gulf. I think 
that, fifteen years later, everyone realizes we need to find a 
better way to do business.
    Floridians oppose offshore oil drilling because of the 
threat it presents to the state's greatest natural and economic 
resources: our coastal environment. Florida's beaches, 
fisheries, and wildlife draw millions of tourists each year 
from all over the globe, supporting our state's largest 
industry. Tourism supports, directly or indirectly, millions of 
jobs all across Florida, and the industry generates billions of 
dollars every year. A 1990 study by Lee County estimates that a 
major blowout/oil spill could cost the economy of Lee County 
alone some $590 million in lost revenue. This translates into a 
loss of 12,300 jobs. Also, the on-shore facilities required to 
process the oil would likely change the character of the 
Florida coast, possibly contribute to the pollution of the 
environment, and pose serious problems for Florida's tourism 
and real estate industries.
    Concern about this issue is not limited to our business 
community--there are several grass-roots groups who are 
dedicated to preserving and protecting our coastline. There is 
a petition and letter writing campaign in my district run by 
Marge and David Ward of the Citizens Association of Bonita 
Beach. The Wards' tireless efforts have yielded over 28,479 
signatures opposed to drilling off Florida's coast, and they 
have generated letters of support from local chambers of 
commerce, government, and elected officials.
    The Florida coastline boasts some of the richest estuarine 
areas in the world. These bracken waters, with their mangrove 
forests and seagrass beds provide an irreplaceable link in the 
life of many species, both marine and terrestrial. Florida's 
commercial fishing industry relies on these estuaries because 
they support the nurseries for most commercially harvested 
fish. Perhaps the most environmentally delicate regions in the 
Gulf, estuaries could be damaged beyond repair by a relatively 
small oil spill.
    H.R. 180 was developed after extensive consultation with 
the state of Florida and enjoys the Governor's support, as well 
as a wide range of support among both the public and private 
sector in the state. I am particularly pleased to report that 
every member of the Florida Congressional delegation has 
cosponsored H.R. 180.
    This legislation was introduced to provide for a ``time 
out'' period during which no new leasing or drilling could take 
place in Federal waters off Florida's coast. During this 
period, a joint Federal-state task force would review the 
available scientific and environmental studies and (if 
necessary) recommend further ones. Once the joint task force 
determines that an adequate base of data exists, it would 
recommend what areas (if any) off Florida could safely sustain 
oil and gas exploration and production.
    The benefits of this approach include:

         the opportunity to develop a more precise policy than 
        afforded under the current moratorium, which must be renewed by 
        Congress each year. This should provide the oil industry with 
        greater certainty and an ability to plan in the context of a 
        long-term strategy; and
         a central role for the State of Florida in a decision 
        with great impact on our state--even though that decision would 
        apply to waters under the jurisdiction of the Federal 
        Government; and
         a decision that accurately reflects scientific rather 
        than political pressures.
    I recognize that some concerns have been raised about this proposal 
and I would like to take a moment to discuss some of those issues. 
First, the question I hear most often is why do we need to pass this 
legislation, when it is very likely Congress will continue to enact the 
annual moratorium, as it has for fifteen years. As I mentioned earlier, 
I believe the moratorium provides a short-term way to deal with this 
issue, but, in the long-run, it shortchanges both the State of Florida 
and the oil industry. I believe both parties would benefit from a 
scientifically crafted long-term approach to management of the Eastern 
Gulf. In addition, from a process perspective, I would prefer not to 
address substantive legislative issues through ``riders'' to an 
appropriations bill.
    In addition, I have also heard concerns about the effect of H.R. 
180 on revenues for the Land and Water Conservation Fund (LWCF), the 
principal source of Federal funds for land acquisitions by the National 
Park Service, the Bureau of Land Management, the U.S. Fish and Wildlife 
Service and the U.S. Forest Service. The LWCF is funded by revenues 
from Federal outdoor recreation user fees, the Federal motorboat fuel 
tax, property sales and from oil and gases leases on the Outer 
Continental Shelf. As the Subcommittee is well aware, OCS revenues have 
accounted for more than 90 percent of the deposits in the LWCF, and, in 
some years, almost all deposits to this fund. I agree that the effect 
of H.R. 180 on revenues for LWCF is a critically important question, 
particularly given Federal land acquisition in Florida. Since the 
current moratorium prohibits any new leases, it effectively forecloses 
the possibility of future contributions to the fund from OCS activities 
in the Eastern Gulf of Mexico. If we continue our current approach--
adopting the moratorium each year--that won't change. The joint-task 
force created by H.R. 180 would be charged with making a scientific 
decision on OCS activities in the Eastern Gulf and their 
recommendations would effectively address the LWCF issue.
    Finally, I have heard concerns about the make-up of the joint task 
force provided for in H.R. 180. As drafted, the bill would create a 
task force consisting of one representative each from the Environmental 
Protection Agency, the Minerals Management Service, the National 
Oceanic and Atmospheric Administration, and the U.S. Fish and Wildlife 
Service; four representatives from the State of Florida appointed by 
the Governor; and three members appointed by the Secretary of Commerce 
based on nominations from the National Academy of Sciences who are 
professional scientists in the field of physical oceanography, marine 
ecology, and social science. Clearly, the intent is to provide a 
scientific panel while allowing input from the State of Florida. If the 
Subcommittee wants to reconsider this makeup, I would be happy to 
discuss that issue further.
    Finally, let me thank the Subcommittee for its indulgence in 
holding this hearing. I look forward to working with you on moving this 
proposal forward.
    Thank you again.
                                 ______
                                 

   Statement of Cynthia L. Quarterman, Director, Minerals Management 
                  Service, Department of the Interior

    Madam Chairwoman and Members of the Subcommittee, thank you 
for the opportunity to testify on the Department of the 
Interior's Outer Continental Shelf (OCS) oil and gas program 
and the issue of moratoria. As you may recall, I appeared 
before your Subcommittee almost two years ago and presented 
testimony on the same issue. My testimony at that time briefly 
cited the economic and environmental benefits of the OCS 
program; described in some detail the history of Federal 
offshore oil and gas activity and the associated conflicts and 
controversies that led to moratoria; and outlined the 
Department's approach to managing the program and resolving 
some of the problems we inherited. I also related to the 
Subcommittee a number of difficult issues we were confronting 
and gave several examples that demonstrated varying degrees of 
success for our efforts.
    Today, I would like to take the opportunity to describe 
further the Department's approach to moving the OCS program 
from conflict to consensus--including the role of OCS moratoria 
in that approach--and to update you on the progress of some of 
our efforts. However, as a preface to those remarks, I would 
first like to briefly note the significant benefits associated 
with the OCS program.
    First, the OCS program is a major source of energy for the 
Nation, currently providing about 18 percent of our total 
domestic production of oil and 27 percent of our production of 
natural gas. Hand in hand with this much needed energy 
production, the program generates substantial national and 
regional economic benefits. Those benefits come in the form of 
bonus, rent, and royalty payments to the Federal Treasury 
(almost $5 billion in 1997 and over $120 billion to date)--a 
portion of which is distributed to coastal States under section 
8(g) of the OCS Lands Act--as well as income and taxes 
generated by petroleum companies and a host of manufacturers 
and other firms located throughout the country. Furthermore, 
OCS revenues are the major funding source for both the Land and 
Water Conservation Fund (LWCF) and the Historic Presentation 
Fund (HPF)--programs that benefit all Americans. To date, over 
$18.8 billion and $2.6 billion have gone into the LWCF and HPF, 
respectively. Finally, the OCS program has an excellent safety 
and environmental record.
    These benefits notwithstanding, the OCS program and the way 
it was managed in the past led to conflict, controversy, and--
ultimately--moratoria that have been in effect for many years 
for certain areas of our Nation's OCS. I do not plan to detail 
the history of moratoria as I did in my previous testimony. 
That history is well documented in two reports produced by 
Committees of the Minerals Management Advisory Board--Moving 
Beyond Conflict to Consensus (OCS Policy Committee--April 1993) 
and Environmental Studies in OCS Areas Under Moratoria: 
Findings and Recommendations (OCS Scientific Committee--May 
1997). The former had a significant influence on the 
Department's development of its management approach, and the 
latter was a project I mentioned in my previous testimony that 
had not yet been completed. The OCS Scientific Committee has 
now completed its report, and I would like to submit it for the 
Subcommittee's consideration.

THE DEPARTMENT OF INTERIOR'S APPROACH TO THE OCS PROGRAM

    When this Administration assumed management of the OCS 
program in 1993, there were substantial problems facing the 
program--congressional moratoria were in effect for both the 
Atlantic and Pacific coasts, the Eastern Gulf of Mexico, and 
the North Aleutian Basin off Alaska; there were lease sales 
scheduled in the Atlantic and Eastern Gulf of Mexico areas 
under leasing moratoria; there were drilling restrictions on 
previously issued leases in the southeastern part of the 
Eastern Gulf of Mexico, in the North Aleutian Basin, and off 
North Carolina; and there was breach-of-contract/takings 
litigation that had been filed by the companies holding those 
leases. In addition, there were existing leases in the areas 
subject to leasing moratoria off the Florida Panhandle and off 
California that demanded our attention, and there were proposed 
lease sales off Alaska that were generating controversy. For 
this hearing, I would like to explain the Department's general 
approach to managing the OCS program and dealing with these 
issues. In doing so, I will cite some specific examples of 
where we have been able to resolve or reduce conflicts and 
controversies.

Resolving Existing Controversies to Set the Stage for Consensus 
Building

    First, the Department recognized that conflict resolution 
would have to be a high priority and that the best way to 
proceed would be to consult with, and listen very carefully to, 
the OCS program's stakeholders. We endorsed the existing annual 
congressional moratoria as a way to assure stakeholders that 
the status quo would be maintained while discussions ensued. We 
felt that it was extremely important to ensure that no new 
leasing occur in areas where we were attempting to resolve 
intense disputes concerning already existing leases as well as 
some controversial areas where leasing was contemplated. The 
annual moratoria that were in effect proved to be a very useful 
tool that we believe helped us:

         settle litigation concerning the leases in the North 
        Aleutian Basin and in the southeastern part of the Eastern Gulf 
        of Mexico, which resulted in their relinquishment;
         settle litigation on the majority of leases off North 
        Carolina, resulting in their expiration or relinquishment, 
        while preserving the promising ``Manteo Unit'' for possible 
        exploration;
         cancel proposed lease sales in the Atlantic and in the 
        Eastern Gulf off Florida that were precluded by moratoria, 
        thereby allowing us and the stakeholders to concentrate on 
        resolving issues related to potential exploration and 
        development of remaining leases; and
         focus efforts off California on discussing the 
        possible development of some 40 existing leases without the 
        distractions that proposals for new leasing would engender.
    In short, annual moratoria and the actions we were able to take 
with them in place, helped us to begin building trust with our 
stakeholders and make strides in putting the OCS program on firmer 
footing in those controversial areas. At the same time, we took under 
careful consideration the sales off Alaska that had been proposed in 
the OCS 5-Year Oil and Gas Program for 1992-1997 that had been approved 
by the previous Administration. After consulting with stakeholders, we 
made the decision to:

         cancel sales in the Chukchi Sea, Hope Basin, Gulf of 
        Alaska, and St. George Basin Planning Areas based on a 
        combination of low industry interest and some concerns for 
        other resources that were expressed by Native groups and 
        others; and
         proceed carefully and deliberately in the presale 
        processes for Beaufort Sea Sale 144 and Cook Inlet Sale 149, 
        which resulted in successfully conducting those two sales after 
        a 5 year hiatus in Alaska OCS leasing.
    Our decisions to cancel three proposed Alaska sales--as well as 
cancellation of the Atlantic and Eastern Gulf of Mexico sales--were 
made with the view that this Administration would soon have the 
opportunity to formulate its own OCS 5-year program and could consult 
further with stakeholders to reach consensus on any future sale 
proposals for those areas and others.

Developing the OCS 5-Year Oil and Gas Program for 1997-2002 by 
Consensus

    The Department developed the current OCS 5-Year Oil and Gas Program 
(1997-2002) based on the substantive and procedural requirements of 
section 18 of the OCS Lands Act and three general guiding principles 
endorsed by the Secretary: (1) consensus-based decisionmaking; (2) 
science-based decisionmaking; and (3) the use of natural gas as an 
environmentally preferred fuel. We consulted with and listened to our 
stakeholders from start to finish of the 2-year preparation process. At 
this time, I would like to highlight some of our experiences in that 
process and give you a summary of the program we produced, as well as 
accounts of other related issues in each region.

Pacific OCS Region

    Our attention in this region focused on the Santa Barbara Channel 
and Santa Maria Basin, where there were both existing producing leases 
and existing undeveloped leases. We consulted closely with the three 
counties located adjacent to those areas (through a body known as the 
Tri-County Forum) as we considered proposing a small, focused lease 
sale after 2000. Although it appeared initially that two of the 
counties did not oppose such a sale, we consulted further with them and 
other stakeholders, including the State of California. We concluded 
from those consultations that scheduling a Pacific sale in the 1997-
2002 timeframe was unwarranted. In retrospect, I believe the absence of 
a scheduled lease sale in this area has enabled us to work undistracted 
with stakeholders to resolve issues concerning existing producing 
leases. As a result, production from those leases has been increased 
significantly--to about 150,000 barrels per day.
    We are continuing to work closely with the Tri-County Forum and 
other stakeholders in the ``California Offshore Oil and Gas Energy 
Resource Study.'' The study is intended to frame better the issues and 
potential impacts associated with additional development, thus 
contributing a good scientific foundation to continuing discussions 
with our stakeholders.

Atlantic Region

    In this region, we looked at the vicinity of the ``Manteo Unit'' 
off North Carolina and the Hudson Canyon area off New Jersey as 
possible candidates for lease sales. We decided not to propose a sale 
off North Carolina due to ongoing litigation and controversy concerning 
the existing leases there. We also decided, after consulting with state 
and local officials and other stakeholders, that scheduling a sale in 
the Hudson Canyon area would be premature and that we would need more 
time for outreach and conflict resolution. Again, I believe that our 
decision not to schedule a lease sale off North Carolina enabled us to 
focus on working toward an appropriate and acceptable resolution 
concerning existing leases. We have been consulting with state 
officials, and our Gulf of Mexico Regional Office held a North Carolina 
Offshore Workshop in Raleigh in February 1998 to discuss environmental 
issues associated with possible exploration of the ``Manteo Unit.'' 
There is still much work to be done, but discussions so far have been 
fruitful.
    Technological advances, especially those associated with deepwater 
operations in the Gulf of Mexico, may be applicable to the Atlantic, 
where most of the more promising hydrocarbon prospects are farther from 
shore and in the deeper waters. We also have been monitoring closely 
developments affecting the Canadian waters of the Atlantic. Canada is 
poised to reconsider its Georges Bank moratorium which is due to expire 
on January 1, 2000. Based on the success of existing Canadian OCS 
production projects off Nova Scotia and Newfoundland and their 
demonstrated compatibility with fishing and other uses of the sea, 
Canada may not renew the ban and may allow oil and has leasing/
development to proceed in its waters. If so, the Department will 
consider carefully any ramifications such a decision may have with 
respect to managing the resources on our side of Georges Bank. In 
addition, MMS has received an application for a pipeline right-of-way 
and related permits for a segment of a pipeline that is planned to 
transport natural gas from reserves off the coast of Newfoundland to a 
landfall on the coast of New Hampshire.

Alaska OCS Region

    As I mentioned before, the Administration canceled Alaska sales in 
four areas that were on the schedule for 1992-1997 with an eye toward 
revisiting the areas when we developed our own OCS 5-year program. In 
order to facilitate stakeholder participation in the consideration of 
those and other Alaska planning areas, we established the Alaska 
Regional Stakeholders Task Force, as recommended by the OCS Policy 
Committee. Based on the findings and recommendations of that task 
force, the new program proposes consideration of leasing in three of 
the areas that had been deferred previously--Gulf of Alaska, Chukchi 
Sea, and Hope Basin--as well as in Cook Inlet and the Beaufort Sea.
    We have continued to consult with the Alaska OCS Region Offshore 
Advisory Committee, which was established as a successor to the 
Stakeholders Task Force, on individual Alaska sales included in the 
current OCS 5-Year Oil and Gas Program. Presently, we are proceeding 
toward consideration of an August 1998 sale date for Beaufort Sea Sale 
170. We also are continuing our consultations with Alaska Native 
organizations, the State of Alaska, and other stakeholders concerning 
several Beaufort Sea development projects. Those projects and the 
planned lease sales point to a vibrant future for the OCS program in 
that area.

Gulf of Mexico OCS Region

    Based on the strong consensus of stakeholders supporting the OCS 
program in the Central and Western Gulf of Mexico planning areas, we 
decided to continue the practice of holding annual areawide lease sales 
in those areas during the 1997-2002 period. We are continuing to 
consult with the States and other stakeholders in those areas, and the 
program is thriving, as evidenced by the most recent lease sale results 
and numerous recent discoveries.
    After consulting with the Governors of Florida and Alabama, our 
focus in the Eastern Gulf of Mexico turned to that part of the planning 
area located off Alabama and more than 100 miles off Florida, which 
both governors indicated would be acceptable for an OCS lease sale in 
2001. As consultation with stakeholders continued, we learned that 
industry wanted access to more deepwater blocks in that area and that 
coastal residents of Alabama had concerns about possible negative 
visual impacts of nearshore oil and gas development. The final 
configuration of the lease sale area that we established accommodated 
both industry and State concerns--384 blocks in deep water were added, 
and 22 blocks within 15 miles of the Alabama coast were excluded. I 
think this solution exemplifies our approach to the OCS program, since 
it is based on consensus and science and promises to make 
environmentally preferable natural gas resources available to the 
Nation. I am extremely proud that we were able to come up with a 
reasonable and acceptable proposal for leasing in an area of the OCS 
that had been subject to congressional leasing moratoria since 1990. I 
firmly believe that we could not have consulted meaningfully and gained 
the acceptance of a consensus of the stakeholders if we had decided to 
pursue additional nearshore leasing off the Florida Panhandle or if the 
annual leasing moratorium in that area had been lifted during the 
process.
    Currently, we are continuing to attempt to resolve conflicts 
concerning the existing Florida Panhandle leases. Again, as in other 
areas, the absence of a controversial proposal for additional leasing 
off the Florida Panhandle has enabled us to concentrate on analysis and 
consultation related to the development and production plan filed by 
Chevron USA for its natural gas discovery in the Destin Dome Block 56 
Unit. We have begun the process of preparing an environmental impact 
statement (EIS) for the project and have held five public scoping 
meetings. We plan to issue a draft EIS in November of this year and 
hold public hearings on it in January 1999. Just recently, the State of 
Florida officially objected to Chevron's certification that the 
development and production plan is consistent with Florida's federally 
approved coastal zone management program, and Chevron has filed a 
formal appeal with the Department of Commerce.

Results of Consensus Building--The OCS 5-Year Oil and Gas Program and 
Congressional Moratoria Are Now Consistent

    After the OCS 5-Year Oil and Gas Program for 1997-2002 was approved 
by the Secretary, the Department proposed amendments to the Fiscal Year 
(FY) 1998 budget that were designed to conform the annual congressional 
moratoria provisions to the new leasing program. The amended language 
proposed to delete drilling restrictions in both the North Aleutian 
Basin and in the Eastern Gulf of Mexico south of 26 degrees North 
Latitude since these restrictions were no longer necessary. More 
importantly, the proposed language also reconfigured the existing 
Eastern Gulf of Mexico leasing moratorium so that it would not apply to 
the area proposed for possible lease in 2001 in the current OCS 5-Year 
Oil and Gas Program. Congress ac-

cepted the proposed language. Therefore, the current OCS 5-Year Program 
and the annual moratoria provisions are now consistent, i.e.; all areas 
included in the congressional restrictions are excluded from leasing 
consideration. Thus, for the first time since OCS moratoria were 
enacted in the early 1980's, we have a OCS 5-year program that does not 
propose leasing anywhere that opposition and controversy led to those 
restrictions. As part of its FY 1999 budget request, the Department has 
again proposed to carry forward the language enacted in FY 1998.

LOOKING TO THE FUTURE

    It is possible that changing international conditions or evolving 
domestic conditions and attitudes eventually could result in future 
consideration of leasing in areas currently under moratoria. However, 
as experience has shown us, any such consideration should be based 
firmly on science and consensus or we will likely repeat the mistakes 
of the past. As I have stated previously, our support of moratoria and 
our focus on resolving issues related to existing leases before 
conducting more leasing in certain areas has been designed to build 
public trust and set the stage for a rational and civil discussion of 
possible future courses of action.
    We also realize that prior to considering leasing in areas under 
moratoria, as part of this effort we must first identify scientific 
information needs, and that is why we requested a joint subcommittee of 
the OCS Policy and Scientific Committees to conduct a review of such 
needs and report to the Secretary. The report was finalized in May 
1997, and its recommendations were unanimously approved by the group 
(which represents a wide range of stakeholders). In addition to 
providing an excellent account of the OCS program's history that I 
mentioned earlier, their report presents a great deal of information 
that is useful for future planning.
    One important point that can be gleaned from the Policy/Scientific 
Committee report is that times--and more importantly, technology--have 
changed dramatically since OCS moratoria first were enacted. Tremendous 
advances have resulted in:

         cleaner and less toxic drilling fluids and associated 
        discharges;
         cleaner and less intrusive offshore structures, 
        including zero discharge rigs;
         safer and more efficient drilling and monitoring 
        systems, including Measure While Drilling and Logging While 
        Drilling, and faster blowout preventers;
         better seismic data gathering and interpretation 
        techniques that lead to fewer wells being drilled than in the 
        past,
         better oceanographic and meteorological forecasting 
        and earlier response;
         cleaner and less toxic produced water;
         smaller and fewer platforms;
         better and faster communications equipment;
         better and faster oil spill response and cleanup; and
         safer and more efficient pipelines and pipeline burial 
        techniques.

SUMMARY AND CONCLUSION

    In summary, I believe we have made significant strides in building 
public consensus concerning the OCS program in the past several years. 
As I have stated previously, we have found moratoria to be a useful 
tool that enabled us to address and resolve specific difficult 
conflicts that we inherited with the OCS program as well as develop a 
OCS 5-Year Program that is consensus based. As a result, moratoria 
language in the Department's FY 1998 Appropriations Act and areas 
considered for possible lease in the Department's OCS 5-Year Oil and 
Gas Program for 1997-2002 are now consistent.
    Madam Chairwoman, this concludes my prepared remarks. However, I 
will be pleased to answer any questions Members of the Subcommittee may 
have.
                                 ______
                                 

 Statement of Hon. Owen B. Pickett, a Representative in Congress from 
                         the State of Virginia

    Thank you for the opportunity to offer remarks before this 
Committee today regarding the Minerals Management Service (MMS) 
policy of assessing a tax against state and local governments 
for the use of Outer Continental Shelf (OCS) sand and gravel. 
During the 103rd Congress, Public Law 103-426 was enacted that 
removed procedural obstacles and allowed government agencies to 
negotiate and obtain OCS sand and gravel. This law specifically 
exempted the Federal Government from being assessed a tax for 
OCS sand, gravel, and shell resources. In October 1997, MMS 
formalized its guidelines regarding the tax for OCS sand, 
gravel, and shell resources when used in shore protection and 
beach restoration projects by state and local governments. In 
this new policy, MMS decided to assess state and local 
governments a tax for OCS sand and gravel used in shore 
protection projects, even in those cases where the projects are 
authorized by Federal law.
    Although the costs involved for OCS sand and gravel may not 
be significant when compared to the overall cost of a shore 
protection or beach restoration project, they are significant 
and will make such projects more costly and less attractive 
when undertaken by state and local governments. Even worse, a 
local government in my Congressional District recently paid MMS 
over $200,000 for 1.1 million cubic yards of OCS sand for a 
federally authorized project that had already been planned, 
approved, and funded. Due to this increase in the project cost 
for the fee to MMS, the only option for the local government 
was to reduce, by 400,000 cubic yards, the quantity of 1.5 
million cubic yards of sand required by the engineers in the 
original plans and specifications for this project. This 
project will now have a shorter useful life and will require 
the local government to replace the project earlier than 
planned at a much higher cost.
    As the Administration seeks to change the nation's shore 
for OCS sand and gravel will continue to rise dramatically 
unless this ill-advised tax law is changed. Historically, the 
Federal Government has entered into 65/35 costshare agreements 
with local governments for federally authorized shore 
protection projects. A recent proposal by the Administration, 
if adopted, will reverse this cost share ratio upon completion 
of the initial construction with the local sponsor paying 
almost double the share of the project maintenance. The typical 
MMS tax to the local government sponsor will double for OCS 
sand and gravel. This excessive and inequitable tax will become 
a serious and insurmountable burden for struggling local 
governments. It is clearly another unfunded mandate on state 
and local government, and it should be eliminated here and now.
    I strongly urge the Committee to adopt the amendment, 
restore equity among Federal, state, and local governments and 
eliminate this unfair tax.
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