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




 
                       A NATIONAL ENERGY POLICY

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

                           OVERSIGHT HEARINGS

                               before the

                         COMMITTEE ON RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                               __________

 March 7, 2001, The Role of Public Lands in the Development of a Self-
                       Reliant Energy Policy; and
                June 6, 2001, The National Energy Policy

                               __________

                            Serial No. 107-1

                               __________

           Printed for the use of the Committee on Resources



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                         COMMITTEE ON RESOURCES

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

Don Young, Alaska,                   George Miller, California
  Vice Chairman                      Edward J. Markey, Massachusetts
W.J. "Billy" Tauzin, Louisiana       Dale E. Kildee, Michigan
Jim Saxton, New Jersey               Peter A. DeFazio, Oregon
Elton Gallegly, California           Eni F.H. Faleomavaega, American 
John J. Duncan, Jr., Tennessee           Samoa
Joel Hefley, Colorado                Neil Abercrombie, Hawaii
Wayne T. Gilchrest, Maryland         Solomon P. Ortiz, Texas
Ken Calvert, California              Frank Pallone, Jr., New Jersey
Scott McInnis, Colorado              Calvin M. Dooley, California
Richard W. Pombo, California         Robert A. Underwood, Guam
Barbara Cubin, Wyoming               Adam Smith, Washington
George Radanovich, California        Donna M. Christensen, Virgin 
Walter B. Jones, Jr., North              Islands
    Carolina                         Ron Kind, Wisconsin
Mac Thornberry, Texas                Jay Inslee, Washington
Chris Cannon, Utah                   Grace F. Napolitano, California
John E. Peterson, Pennsylvania       Tom Udall, New Mexico
Bob Schaffer, Colorado               Mark Udall, Colorado
Jim Gibbons, Nevada                  Rush D. Holt, New Jersey
Mark E. Souder, Indiana              James P. McGovern, Massachusetts
Greg Walden, Oregon                  Anibal Acevedo-Vila, Puerto Rico
Michael K. Simpson, Idaho            Hilda L. Solis, California
Thomas G. Tancredo, Colorado         Brad Carson, Oklahoma
C.L. "Butch" Otter, Idaho            Betty McCollum, Minnesota
Tom Osborne, Nebraska
Jeff Flake, Arizona
Dennis R. Rehberg, Montana
VACANCY

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

                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on March 7, 2001....................................     1

Statement of Members:
    Calvert, Hon. Ken, a Representative in Congress from the 
      State of California, Prepared statement of.................    17
    Cubin, Hon. Barbara, a Representative in Congress from the 
      State of Wyoming, Prepared statement of....................    18
    Gallegly, Hon. Elton, a Representative in Congress from the 
      State of California, Prepared statement of.................    16
    Hansen, Hon. James V., a Representative in Congress from the 
      State of Utah..............................................     1
        Prepared statement of....................................     3
    McGovern, Hon. James P., a Representative in Congress from 
      the State of Massachusetts, Prepared statement of..........    21
    Pallone, Hon. Frank, Jr., a Representative in Congress from 
      the State of New Jersey, Prepared statement of.............    17
    Radanovich, Hon. George, a Representative in Congress from 
      the State of California, Prepared statement of.............    19
    Rahall, Hon. Nick J., II, a Representative in Congress from 
      the State of West Virginia.................................     3
        Prepared statement of....................................     4
    Rehberg, Hon. Dennis R., a Representative in Congress from 
      the State of Montana, Prepared statement of................    21
    Udall, Hon. Mark, a Representative in Congress from the State 
      of Colorado, Prepared statement of.........................    20

Statement of Witnesses:
    Bowles, Jim L., President, Americas Division, Phillips 
      Petroleum Company, on behalf of the American Petroleum 
      Institute..................................................    89
        Prepared statement of....................................    90
    Geringer, Hon. Jim, Governor, State of Wyoming...............    11
        Prepared statement of....................................    25
    Hocker, Christopher, President, National Hydropower 
      Association................................................   121
        Prepared statement of....................................   122
        Response to questions submitted for the record...........   133
    Hogan, Leland J., Rancher, Stockton, Utah....................   114
        Prepared statement of....................................   116
        Response to questions submitted for the record...........   118
    James, Leslie, Executive Director, Colorado River Energy 
      Distributors Association...................................   143
        Prepared statement of....................................   145
    Judd, Robert L., Jr., Executive Director, USA Biomass Power 
      Producers Alliance.........................................   138
        Prepared statement of....................................   139
    Knowles, Hon. Tony, Governor, State of Alaska................     5
        Prepared statement of....................................     9
    Martz, Hon. Judy, Governor, State of Montana.................    43
        Prepared statement of....................................    45
    O'Connor, Terry Vice President, External Affairs, Arch Coal, 
      Inc., on behalf of the National Mining Association.........    95
        Prepared statement of....................................    97
        Response to questions submitted for the record...........   106
    Stanley, Neal A., President, Independent Petroleum 
      Association of Mountain States.............................    79
        Prepared statement of....................................    80

Additional materials supplied:
    Alberswerth, David, Director, The Wilderness Society, Letter 
      submitted for the record by Hon. Donna Christensen.........    63
    Mason, Tad, Vice President, TSS Consultants, Letter submitted 
      for the record by Hon. Scott McInnis.......................   154


                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on June 6, 2001.....................................   159

Statement of Members:
    Flake, Hon. Jeff, a Representative in Congress from the State 
      of Arizona, Prepared statement of..........................   210
    Hansen, Hon. James V., a Representative in Congress from the 
      State of Utah..............................................   159
        Prepared statement of....................................   161
    Kind, Hon. Ron, a Representative in Congress from the State 
      of Wisconsin, Prepared statement of........................   208
    McInnis, Hon. Scott, a Representative in Congress from the 
      State of Colorado, Prepared statement of...................   207
    Rahall, Hon. Nick J., II, a Representative in Congress from 
      the State of West Virginia, Prepared statement of..........   163
    Solis, Hon. Hilda L., a Representative in Congress from the 
      State of California, Prepared statement of.................   210
    Udall, Hon. Mark, a Representative in Congress from the State 
      of Colorado, Prepared statement of.........................   209
     Udall, Hon. Tom, a Representative in Congress from the State 
      of New Mexico, Prepared statement of.......................   192

Statement of Witnesses:
     Norton, Hon. Gale A., Secretary, U.S. Department of the 
      Interior...................................................   164
        Prepared statement of....................................   168
        Response to questions submitted for the record...........   210

 
 OVERSIGHT HEARING ON THE ROLE OF PUBLIC LANDS IN THE DEVELOPMENT OF A 
                       SELF-RELIANT ENERGY POLICY

                              ----------                              


                        Wednesday, March 7, 2001

                       House of Representatives,

                        Committee on Resources,

                             Washington, DC

    The Committee met, pursuant to notice, at 10:02 a.m., in 
Room 1324, Longworth House Office Building, Hon. James V. 
Hansen (Chairman of the Committee) presiding.

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

    The Chairman. The Committee will come to order. We 
appreciate your presence. This very important meeting we are 
having today will be regarding energy policy. Between this 
Committee and the Commerce Committee, we hope to be coming up 
with a policy that will determine the energy policy of America 
for the next few years.
    Around the country this winter, Americans have opened their 
utility bills with dismay to see their costs double and 
sometimes triple from last year. Many Americans have written to 
ask, ``Who fell asleep at the switch? How can there be an 
energy shortage in one of the most prosperous and 
technologically-advanced countries in the world?''
    Our current situation is the direct result of the lack of a 
coherent national energy policy and policies that have 
restricted the development of our domestic energy resources on 
public lands, thereby increasing reliance on foreign energy. To 
keep our economy prosperous and reinforce our national 
security, we must have reliable energy supplies at a reasonable 
cost. We have called this congressional hearing to explore how 
we may structure natural resource policy to help achieve a 
sustainable and self-reliant energy policy.
    Over the last 150 years, the Federal Government retained 
land to hold in trust for the people. The principle guiding 
public land policy was multiple use and sustainable yield. 
Public land was a resource to be used in maintaining our 
national health, environment, and wealth.
    Some time ago, we lost that vision and today we are paying 
the price. Currently, while national energy costs skyrocket, 
billions of barrels of oil and natural gas are locked beneath 
public lands, including the Arctic National Wildlife Refuge. 
Using public lands responsibly includes environmentally 
sensitive resource extraction. These two goals are not mutually 
exclusive. We have produced more than 13 billion barrels of oil 
since 1977 from Alaska's North Slope in a manner that has 
allowed wildlife to thrive and the caribou herds to increase 
five-fold.
    Clean oil remains untouchable in many parts of the United 
States and hydroelectric generation has been reduced. In one 
case, generating capacity at a Federal hydropower facility was 
reduced by one-third to comply with environmental regulations. 
That is enough energy to power 400,000 homes.
    I recall the debate in Utah several decades ago when we 
first set out to develop resources on the upper Colorado River. 
After extensive study, the Bureau of Reclamation ultimately 
identified two sites that were most feasible-- Echo Park 
Canyon, in Dinosaur National Monument, and Glen Canyon.
    Once that was done, we went through months and months of 
additional study and debate. Strong feelings were expressed on 
all sides. Both sites proposed were beautiful, rugged, and 
largely unexplored, and yet both sites were unique in that they 
shared the geological characteristic that made it possible to 
build one of the largest man-made structures at the time, to 
harness one of the wildest and untamed rivers in the 
hemisphere. After a long period of debate and negotiation, 
Congress ultimately decided that Glen Canyon was the best place 
to dam the upper Colorado River.
    We used to hear former President Clinton say from time to 
time, ``you can't have mines everywhere,'' and I agree with 
that. You can only have mines where the minerals and resources 
are. Likewise with a dam, you can't have dams everywhere. You 
build dams on sites which are capable of accomplishing the 
purpose for which they are built.
    In this instance, Glen Canyon was designed for three 
purposes: water storage, flood control, and to generate 
electricity for the growing population in the Southwest. You 
know, it has got another one now; it is called recreation. In 
fact, more people go there for more than one day than probably 
any other place in our whole park system.
    Once the site was proposed, opponents of the project cried 
out and said, ``This dam is too big. We will never be able to 
use all that power. You will upset the laws of supply and 
demand,'' et cetera, et cetera. Besides, why do we need 
hydropower when we already have all of that great coal in the 
Kaparowits plateau?
    Thirty years later, when former President Clinton 
designated the Grand Staircase-Escalante National Monument, we 
were told that the Kaparowits coal would never be used, that 
markets would never be able to use all that coal, and that 
there was a glut of cheap power that would make the development 
of the coal resource uneconomical.
    My, how times have changed. Let's not repeat the short-
sightedness of the past. We have been given a sacred trust by 
the people to develop our natural resources wisely and maintain 
a healthy environment. It is time to return to the original 
concept of multiple use of access to our public grounds.
    I will look forward to hearing from our witnesses.
    [The prepared statement of Chairman Hansen follows:]

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

    Around the country this winter, Americans have opened their utility 
bills with dismay to see their costs double and sometimes triple from 
last year. Many Americans have Written to ask, ``Who fell asleep at the 
switch? How can there be an energy shortage in one of the most 
prosperous and technologically advanced countries in the world?''
    Our current situation is the direct result of (1) lack of a 
coherent national energy policy over the past eight years, and (2) 
policies that have restricted development of our domestic energy 
resources on public lands, thereby increasing reliance on foreign 
energy. To keep our economy prosperous and reinforce our national 
security, we must have reliable energy supplies at a reasonable cost. 
We have called this Congressional hearing to explore how we may 
structure natural resource policy to help achieve a sustainable and 
self-reliant energy policy.
    Over the last 150 years, the Federal government retained land to 
hold in trust for the public. The principle guiding public land policy 
was multiple use and sustainable yield. Public land was a resource to 
be used in maintaining our national health, environment and wealth.
    Some time ago, we lost that vision and today we are paying the 
price. Currently, while national energy costs skyrocket, billions of 
barrels of oil and natural gas are locked beneath public lands 
including the Arctic National Wildlife Refuge. Using public lands 
responsibly includes environmentally sensitive resource extraction. 
These two goals are not mutually exclusive. We have produced more than 
13 billion barrels of oil since 1977 from Alaska's North Slope in a 
manner that has allowed wildlife to thrive and the caribou herds to 
increase 5-fold.
    Clean coal remains untouchable in many parts of the United States 
and hydroelectric generation has been reduced. In one case, generating 
capacity at a Federal hydropower facility has been reduced by \1/3\ to 
comply with environmental regulations. This is enough energy to power 
400,000 homes.
    We have been given a sacred trust by the people to develop our 
natural resources wisely and maintain a healthy environment. It's time 
to return to the original concept of multiple use on our public lands.
    I look forward to hearing from our witnesses.
                                 ______
                                 
    I now recognize the distinguished gentleman from West 
Virginia, the ranking Democrat on the Committee.

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

    Mr. Rahall. Thank you very much, Mr. Chairman. I join with 
you in welcoming our distinguished Governors of Alaska, 
Montana, and Wyoming to the Resources Committee this morning 
for this very important hearing on the role of public lands in 
the development of a national energy policy.
    I approach this issue perhaps slightly differently, perhaps 
a lot differently than Chairman Hansen and our distinguished 
panel that is going to be testifying this morning. That is 
certainly no surprise to the Chairman. We have worked together 
on this Committee for a number of years, or decades perhaps.
    Certainly, Federal lands have a role to play in producing 
energy for our Nation. For instance, almost 23 million acres of 
these lands are currently subject to Federal onshore oil and 
gas leases. Now, this happens to be greater than the size of my 
home State of West Virginia. It is the size of Indiana and just 
slightly less than the size of States like Ohio, Kentucky, 
Tennessee, and Virginia. Now, when you toss in the geothermal 
and coal leases, well, you start to get to the size of these 
States.
    Acreage aside, energy production from Federal lands, both 
onshore and offshore, is making a sizable contribution to our 
energy needs. Oil production from Federal areas account for 27 
percent of the U.S. total, natural gas 38 percent of the total, 
and coal 23 percent of the total, to the pleasure, I am sure, 
of the governors from the Powder River Basin.
    And here is something I am sure that certain people do not 
want you to know, but it is worth stating today, and I am going 
to repeat it. Natural gas and coal production from Federal 
leases was at an all-time high during the Clinton 
administration, surpassing the amount produced during the 
Reagan years, let alone Bush the First. And let me repeat that. 
Natural gas and coal production from Federal leases was at an 
all-time high during the Clinton administration, surpassing the 
amount produced during the Reagan years, let alone Bush the 
First.
    With this noted, I become somewhat puzzled when I hear talk 
about opening more Federal lands to energy development. Now, 
which areas are we talking about here? The big production comes 
from offshore oil. Yet, exploration for new fields is 
constrained by drilling moratorium bans supported by the 
President during the campaign, as well as the governors of 
those coastal States. And when it comes to onshore, certainly a 
viable energy policy should not include opening Federal park 
and wilderness areas to new oil and gas drilling.
    So does it all boil down to little old Alaska, opening up a 
national wildlife refuge so that 10 to 15 years in the future 
oil may begin flowing to the lower 49 States, if it is not 
first exported to Japan, an undetermined amount of oil at that? 
Does that represent the hope and the salvation of our Nation's 
energy security? That, in my view, is quite a roll of the dice 
approach to addressing our energy needs.
    Certainly, Alaska has a role to play. An issue I intend to 
examine is whether we have fully explored the potential for the 
23-million-acre National Petroleum Reserve in Alaska to not 
only contribute to our energy needs, but to Alaska's thirst for 
shelling out a $2,000-per-year check out of its $27 billion 
North Slope oil kitty to every man, woman, child, and infant 
residing in the State, a State, I might add, with no income tax 
and no statewide sales tax. I notice there is a little rumbling 
in the audience. Everybody is trying to find out where to sign 
up for this check.
    But rather than becoming bogged down in controversy over 
the Arctic Refuge, I also think it would be constructive if we 
have more dialogue over the potential of constructing the North 
Slope gas pipeline already authorized by Federal law. We ought 
to examine more fully the contribution that that can make in 
providing a more immediate return in meeting America's energy 
needs.
    With that, I again welcome our Governors this morning and 
look forward to your testimony.
    [The prepared statement of Mr. Rahall follows:]

 Statement of The Honorable Nick Rahall, a Representative in Congress 
                    from the State of West Virginia

    Thank you, Mr. Chairman. I would like to welcome the distinguished 
governors of Alaska, Montana and Wyoming to the Resources Committee for 
today's hearing on the role of public lands in the development of a 
national energy policy.
    I approach this topic from perhaps a different perspective than 
does Chairman Hansen and the governors who are with us this morning.
    Certainly, Federal lands have a role to play in producing energy 
for our Nation. For instance, almost 23 million acres of these lands 
are currently subject to Federal onshore oil and gas leases.
    That is greater than the size of my home State of West Virginia. It 
is the size of Indiana, and just slightly less than the size of States 
like Ohio, Kentucky, Tennessee and Virginia. Toss in Federal geothermal 
and coal leases, and you start to get to the size of those States.
    Acreage aside, energy production from Federal lands, both onshore 
and offshore, is making a sizable contribution to our energy needs. Oil 
production from Federal areas account for 27 percent of the U.S. total. 
Natural gas, 38 percent of the total. And coal, 33 percent of the 
total...to the pleasure, I am sure, of the Governors from the Power 
River Basin.
    And here is something I am sure certain people do not want you to 
know: Natural gas and coal production from Federal leases was at an all 
time high during the Clinton Administration, surpassing the amount 
produced during the Reagan years, let alone Bush the First.
    With this noted, I become somewhat puzzled when I hear talk about 
opening more Federal lands to energy development.
    Which areas are we talking about? The big production comes from 
offshore. Yet, exploration for new fields is constrained by drilling 
moratoriums; bans which President Bush supported during his campaign, 
as well as by the governors of the coastal States. And when it comes to 
onshore, certainly a viable energy policy should not include opening 
Federal park and wilderness areas to new oil and gas drilling.
    So does it all boil down to little `ole Alaska, to opening up a 
national wildlife refuge so that 10 to 15 years in the future oil may 
begin flowing to the lower 48 unless it is first exported to Japan? An 
undetermined amount of oil at that. Does that represent the hope and 
salvation of the Nation's energy security?
    That, in my view, is a roll of the dice approach to addressing our 
energy needs. Certainly, Alaska has a role to play. An issue I intend 
to examine is whether we have fully explored the potential of the 23 
million acre National Petroleum Reserve-Alaska...to not only contribute 
to our energy needs...but to Alaska's thirst for shelling out a $2,000 
per-year check out of its $27 billion North Slope oil kitty to every 
man, woman, child and infant residing in the State. A State, I might 
add, with no income tax and no statewide sales tax.
    I notice the audience is getting restless, governor, they want to 
know where to sign up.
    Rather than becoming bogged down in controversy over the Arctic 
Refuge, I also think it would be constructive if we have more dialogue 
over the potential constructing the North Slope gas pipeline--already 
authorized by Federal law can make in providing for a more immediate 
return in meeting America's energy needs.
    With that, I welcome our witnesses and look forward to hearing the 
testimony. Thank you.
                                 ______
                                 
    The Chairman. I thank the gentleman from West Virginia.
    As you know, the policy of the Committee is if you are 
present when the gavel falls, you will be recognized by 
seniority and after that in the order in which you arrived. But 
in the interests of time, we are going to go straight to our 
three distinguished Governors. We are very honored to have you 
with us at this particular time.
    We understand that Governor Knowles, of Alaska, has an 
airplane to catch, and so we will go to you first, Governor, if 
that is all right.
    Governor Knowles, we will turn to you, sir.

   STATEMENT OF HON. TONY KNOWLES, GOVERNOR, STATE OF ALASKA

    Governor Knowles. For the record, I am Tony Knowles, the 
Governor of Alaska, and I welcome this opportunity to testify 
on the vital issue of developing a self-reliant national energy 
policy and the central role that America's public lands play in 
that effort. I applaud you and the national administration for 
focusing on this issue which is so important to America's jobs 
and families.
    I address you today in two capacities, first as Governor of 
a State which serves as America's energy storehouse. Since 
completion of the trans-Alaska oil pipeline nearly 25 years 
ago, Alaska has been supplying a significant portion of this 
nation's domestic oil production. And now, with development of 
our natural gas, North America's largest proven reserve, we 
will continue to help meet America's energy needs.
    Second, I represent my fellow governors of oil- and gas-
producing States as Chairman of the Interstate Oil and Gas 
Compact Commission (IOGCC). These 37 States produce more than 
99 percent of the oil and natural gas produced onshore in the 
United States, and are committed to the conservation and 
maximum utilization of America's oil and gas reserves.
    My message today is simple. To continue America's 
prosperity which I believe is threatened by a looming energy 
crisis, we must meet our nation's energy needs through a 
combination of conservation and increased supply. The key to 
increased energy supply is the environmentally-responsible 
development of this nation's enormous energy resources, most of 
which lie beneath our public lands. Our access to those lands 
obligates us to accept the profound responsibility for 
enlightened stewardship. No longer can access to public lands 
be an excuse for environmental destruction.
    As this Committee knows well, this country is suffering 
from a combination of high energy prices and energy shortages. 
We need to look no further than the news video of senior 
citizens being pried from stopped elevators during California's 
rolling blackouts or subsequent plant closures and layoffs to 
know that.
    New energy supplies will come from many sources, but our 
obligation for jobs and families of Americans is to look at 
home first. America's public lands hold the vast majority of 
those new energy resources. In my own State of 375 million 
acres, one-fifth of the land mass of the rest of America, we 
have no choice but to look to public lands, as they constitute 
88 percent of our land mass.
    Mr. Chairman, I submit that we need to look no further than 
the 49th State for a national model on how to find and produce 
energy resources on public lands, while protecting the wildlife 
and the environment. We in Alaska apply a simple standard to 
development issues, whether producing oil from a newly 
discovered reserve or harvesting America's best tasting wild 
organic salmon, and that standard is we do development right.
    By that, I mean development must be based on three 
principles: sound science and technology, enlightened 
stewardship, and a thorough, open public process. Using that 
standard, we have in Alaska supplied up to a quarter of 
America's domestic oil production from the nation's two largest 
oil fields. We have done so while protecting the nation's most 
pristine environment inhabited by more caribou, grizzlies, bald 
eagles, and mosquitoes than the rest of the country combined.
    Nationally, the vast majority of our energy resources are 
on public lands. The U.S. Geological Survey estimated that 67 
percent of the nation's undiscovered oil and 40 percent of its 
undiscovered natural gas resources lie beneath onshore public 
lands. And along our coastlines, only 2 percent of total 
Federal offshore acreage, including that in Alaska, has been 
leased for energy development. At the same time, the amount of 
public lands available for oil drilling has shrunk from 73 to 
17 percent in the past 25 years.
    The best promise for new natural gas development, which we 
know is the clean-burning fuel of the 21st century, is on the 
public lands in the Gulf of Mexico, the Rocky Mountains, and 
Alaska's Arctic Slope. As we seek to develop these energy 
resources on public lands, I believe those of us from Western 
public lands States have a special obligation to adhere to the 
``doing it right'' standard, and we are doing exactly that in 
Alaska.
    During my roughnecking days on the North Slope in the 
1960's, a drill pad could be as big as 65 acres. Today, they 
are a tenth that size. In using new technology, up to 50 wells 
can be drilled from the same smaller pad and tap into oil 
identified by 3-D seismic technology into oil 20,000 feet deep 
and 5 miles away, under sensitive areas such as ice-choked 
ocean or sensitive wildlife habitat. That is like running a 
well through this Committee room floor to Ronald Reagan 
National Airport and we could determine which gate the drill 
bit would emerge from.
    With this ``doing it right'' approach to development, we 
successfully convinced the Clinton administration to permit 
exploration and development in a portion of the 23-million-acre 
National Petroleum Reserve (NPRA), a promising Indiana-sized 
area to the west of Prudhoe Bay. We did so by imposing the 
strictest environmental constraints of any oil and gas lease in 
America or the world.
    These 79 conditions are specifically designed to protect 
caribou, polar bears, and birds particularly during sensitive 
periods of calving, migration, molting, denning, and 
hibernation. They were the result of a collaboration of world-
class experts in science and engineering from all levels of 
government and industry. This is the only acceptable way to 
combine the needs for jobs and energy development with the 
protection of the land and wildlife we love.
    To continue meeting this nation's energy needs, we urge the 
Congress to permit exploration in America's best prospect for a 
major oil and gas discovery in the Arctic National Wildlife 
Refuge (ANWR). Just a small portion of this South Carolina-
sized refuge is believed to contain up to 16 billion barrels of 
oil, enough to produce 2 million barrels a day for at least 25 
years, about a third of the current domestic production. In 
addition, it is believed to hold substantial new discoveries of 
natural gas.
    Environmentally-responsible development in the Arctic 
Refuge would be good for America, producing thousands of jobs, 
lessening our dependence on imported oil, reducing prices at 
the pump, providing environmentally-friendly natural gas to 
produce our nation's electric supply, improving our nation's 
trade deficit, and a host of other reasons.
    As enlightened stewards, we must and can take special 
precautions to protect caribou, musk ox, geese, polar bear, and 
other wildlife that inhabit the Arctic Refuge. As we did in the 
NPRA, we will work with the industry to mitigate impacts such 
as limited activity during the 6 to 8 weeks when the Porcupine 
caribou herd often uses the coastal plain for calving. We must 
be sensitive to the subsistence needs of Native people on both 
sides of the border whose culture, nutrition and economy are 
dependent on the area's healthy wildlife.
    To bring oil from ANWR and other North Slope development to 
American consumers, we are working with the Bush administration 
to reauthorize the right-of-way lease for the 800-mile trans-
Alaska oil pipeline. The Federal right-of-way administered by 
the Bureau of Land Management expires in 2004, but the 
environmental review and renewal process is projected to take 
at least 2 years. I welcome this Committee's oversight and 
encouragement of that process.
    Alaskans are working to continue as the nation's energy 
storehouse by delivering our enormous natural gas reserve to 
thirsty American markets. Alaska's North Slope has 35 trillion 
cubic feet of discovered natural gas, most of which is being 
reinjected to increase Prudhoe Bay oil production. Yet, 
geologists estimate we are sitting on perhaps triple what we 
have already discovered, more than 100 trillion cubic feet.
    The most viable way to get that gas to market is through a 
1,800-mile pipeline from Alaska's North Slope through Fairbanks 
and along the Alaska Highway into the North American gas 
distribution system. This route has already been approved by 
Congress in 1977 and international agreement. This development 
would be one of America's largest privately-funded construction 
projects, creating jobs and delivering environmentally-friendly 
energy for a generation or more. I am pleased that the nation's 
governors unanimously endorsed the Alaska Highway natural gas 
pipeline project at last month's National Governors' 
Association conference.
    In closing, Mr. Chairman, let me note that conservation 
must be a cornerstone of America's energy policy. It is not 
purpose here today to describe this critical component in 
detail, but I note that conservation alone cannot address the 
challenge before us. We must increase our supply to stabilize 
prices and prevent shortages. America's energy security depends 
on access to public lands.
    With new technology and strengthening our resolve to 
protect the environment, we can go beyond the old approach of 
either development or the environment to the 21st century 
paradigm of recognizing the necessity and interdependence of 
both.
    On behalf of the IOGCC, I recommend several steps to 
improve responsible access to our public lands: complete the 
inventory of oil and gas resources on public lands, as required 
in last year's Energy Policy Conservation Act; expedite 
processing of applications to drill and offers to lease; 
conduct extensive research on the technologies of extraction 
and alternative energy; repeal roadless plans and new roadless 
initiatives that should already be a part of comprehensive land 
use management plans; and streamline the National Environmental 
Protection Act process.
    Mr. Chairman and Committee members, Alaska, my 
administration, and the IOGCC stand ready to assist you and our 
national administration in crafting a sensible national energy 
policy that provides greater access to public land for domestic 
oil production and natural gas, that encourages conservation 
and recognizes the important partnership with our private oil 
and gas industry to get the job done.
    Thank you.
    [The prepared statement of Governor Knowles follows:]

   Statement of The Honorable Tony Knowles, Governor, State of Alaska

    Good morning, Chairman Hansen and distinguished members of the 
Committee. For the record, I am Tony Knowles, Governor of Alaska.
    I welcome this opportunity to testify on the vital issue of 
developing a self-reliant national energy policy and the central role 
America's public lands play in that effort. I applaud you and the 
national administration for focusing on this issue so important to 
American jobs and families.
    I address you today in two capacities: First, as governor of a 
state which serves as America's energy storehouse. Since completion of 
the trans-Alaska oil pipeline nearly 25 years ago, Alaska has been 
supplying a significant portion of this nation's domestic oil 
production. And now with development of our natural gas--North 
America's largest proven reserves--we'll continue to help meet 
America's energy needs.
    Second, I represent my fellow governors of oil and gas producing 
states as chairman of the Interstate Oil and Gas Compact Commission. 
These 37 states produce more than 99 percent of the oil and natural gas 
produced on-shore in the United States and are committed to the 
conservation and maximum utilization of American oil and gas resources.
    This time of year as the snow continues to fall across most of my 
state, I have a personal policy to try to stay within about a 10-degree 
temperature variation from the bulk of my constituents. I was looking 
forward to a real Alaska-style snowstorm, but am honored nonetheless to 
join you here in our nation's temperate capital.
    My message today is simple: to continue America's prosperity which 
I believe is threatened by a looming energy crisis, we must meet our 
nation's energy needs through a combination of conservation and 
increased supply.
    The key to increased energy supply is the environmentally 
responsible development of this nation's enormous energy resources, 
most of which lie beneath our public lands. Our access to those lands 
carries with it the responsibility for sound stewardship. That access 
can never be considered a green light for the irresponsible destruction 
of those lands.
    As this Committee knows well, this country is suffering from a 
combination of high energy prices and energy shortages. We need look no 
further than news video of senior citizens being pried from stopped 
elevators during California's rolling black-outs to know that.
    New energy supplies will come from many sources, but our obligation 
for the jobs and families of Americans is to look at home first. 
America's public lands hold the vast majority of those new energy 
resources.
    In my own state of 375 million acres, public lands constitute 88 
percent of our land mass, with 40 percent of our state in Federal 
forests, wildlife refuges and national parks. Development of the 
resources on public lands in Alaska is a critical part of our economic 
future.
    Mr. Chairman, I submit we need look no further than the 49th state 
for a national model on how to find and produce energy resources on 
public lands, while protecting the wildlife and environment.
    We in Alaska apply a simple standard to development issues, whether 
producing oil from a newly discovered reserve or harvesting America's 
best-tasting, organic wild salmon. That standard is--we do development 
right.
    By that, I mean development must be based on three principles: 
sound science, good stewardship and a thorough, open public process.
    Using that standard, we in Alaska have supplied up to a quarter of 
America's domestic oil production from the nation's largest oil fields. 
We've done so while protecting the nation's most pristine environment 
inhabited by more caribou, grizzly bears, bald eagles and mosquitoes 
than the rest of the country combined.
    Nationally, the vast majority of our energy resources are on public 
lands. The U.S. Geological Survey estimates that 67 percent of the 
nation's undiscovered oil and 40 percent of its undiscovered natural 
gas resources lie beneath on-shore public lands. And along our 
coastlines, only 2 percent of total Federal offshore acreage, including 
that in Alaska, has been leased for energy development.
    At the same time, the amount of public lands available for oil 
drilling has shrunk from 73 to 17 percent in the past 25 years. It's 
worse for natural gas development, which we know is the clean-burning 
fuel of the 21st century.
    A recent report by the National Petroleum Council showed that the 
most promising regions for future gas production in the Rocky Mountains 
and Gulf of Mexico are either closed to exploration or have significant 
access restrictions. And even if we can obtain access to these 
resources, public lands must be crossed by pipelines or other methods 
to deliver the energy to homes, power plants and factories.
    As we seek to develop these energy resources on public lands, I 
believe those of us from western public lands states have a special 
obligation to adhere to the ``doing it right'' standard.
    We're doing exactly that in Alaska. During my rough-necking days on 
the North Slope in the 1960s, a drill pad could be as big as 65 acres. 
Today, they're a tenth that size.
    And using new technology, up to 50 wells can be drilled from the 
same, smaller pad and tap into oil identified by 3-D seismic technology 
into oil 20,000 feet deep and five miles away, under sensitive areas, 
such as an ice-choked ocean or sensitive wildlife habitat. That's like 
running a well through this Committee room floor to Ronald Reagan 
National Airport and we could determine which gate the drill bit would 
emerge from.
    With this ``doing it right'' approach to development, we 
successfully convinced the Clinton administration to permit exploration 
and development in a portion of the 4-million-acre National Petroleum 
Reserve, a promising Indiana-sized area to the west of Prudhoe Bay.
    We did so by imposing the strictest environmental constraints of 
any oil and gas lease in America. These 79 conditions are specifically 
designed to protect caribou, polar bears and birds, particularly during 
sensitive periods of calving, migration, molting, denning and 
hibernation.
    They were the result of collaboration of world-class experts in 
science and engineering from all levels of government and industry. 
This is the only acceptable way to combine the need for jobs and energy 
development with protection of the land and wildlife we love.
    To continue meeting this nation's energy needs, we urge the 
Congress to permit exploration in America's best prospect for a major 
oil and gas discovery--in the Arctic National Wildlife Refuge. Just a 
small portion of this South Carolina-sized refuge is believed to 
contain up to 16 billion barrels of oil, enough to produce 2 million 
barrels a day for at least 25 years, about a third of the current daily 
domestic production. In addition it is believed to hold substantial new 
discoveries of natural gas.
    Environmentally responsible development in the Arctic Refuge would 
be good for America--producing thousands of jobs, lessening our 
dependence on imported oil, reducing prices at the pump, providing 
environmental friendly natural gas to produce our nation's electrical 
supply, improving our nation's trade deficit, and a host of other 
reasons.
    I believe we must, and can, take special precautions to protect the 
caribou, musk ox, geese, polar bear and other wildlife that inhabit the 
Arctic Refuge. As we did in the NPRA, we will work with the industry to 
mitigate impacts, such as limiting activity during the six to eight 
weeks when the Porcupine caribou herd often uses the coastal plain for 
calving.
    We must be sensitive to the subsistence needs of Native people on 
both sides of the border whose culture, nutrition, and economy are 
dependent on the area's healthy wildlife.
    To bring oil from ANWR and other North Slope development to 
American consumers, we are working with the Bush administration to 
reauthorize the right of way lease for the 800-mile trans-Alaska oil 
pipeline.
    The Federal right of way administered by the Bureau of Land 
Management expires in 2004, but the environmental review and renewal 
process is projected to take two years. I welcome this Committee's 
oversight and encouragement of that process.
    Alaskans are working to continue as the nation's energy storehouse 
by delivering our enormous natural gas reserves to thirsty American 
markets.
    Alaska's North Slope has 35 trillion cubic feet of discovered 
natural gas, most of which today is being re-injected to increase 
Prudhoe Bay oil production. Yet geologists estimate we're sitting on 
perhaps triple what we're already discovered--more than 100 trillion 
cubic feet.
    The most viable way to get that gas to market is through an 1,800-
mile pipeline from Alaska's North Slope, through Fairbanks and along 
the Alaska Highway into the North American gas distribution system.
    This development would be America's largest privately funded 
construction project, creating jobs and delivering environmentally 
friendly energy for a generation or more. I'm pleased the nation's 
governors unanimously endorsed the Alaska Highway natural gas pipeline 
project at last month's National Governors' Association conference.
    In closing, Mr. Chairman, let me address two issues: conservation 
and access.
    Conservation must be a cornerstone of America's energy policy. 
Improved mileage for vehicles, efficiencies in manufacturing and 
electricity use can substantially expand the efficiency in using our 
energy supply.
    Yet conservation alone cannot address the challenge before us. We 
must increase our supply to stabilize prices and prevent shortages. 
America's energy security depends on access to public lands.
    With new technology and strengthening our resolve to protect the 
environment, we can go beyond the old approach of either development or 
the environment, to the 21st century paradigm of recognizing the 
necessity and interdependence of both.
    On behalf of the IOGCC, I recommend three steps to improve access 
to our public lands which hold the key to our future energy 
independence.
    First, let's complete the inventory of oil and natural gas 
resources on public lands required in last year's Energy Policy 
Conservation Act. The BLM must have adequate resources to complete this 
study in a timely manner.
    Second, let's expedite action in the agency processes that will 
lead directly to exploration for energy resources, such as applications 
to drill and offers to lease.
    Third, let's better share with independent energy producers and 
others the results of state and Federal research so that resources 
developed on public lands are maximized. The Federal government could 
make a strong commitment to research by reinvesting a part of the 
revenue received from royalties on gas production.
    Mr. Chairman and Committee members: Alaska, my administration and 
the IOGCC stand ready to assist you and our national administration in 
crafting a sensible national energy policy that provides greater access 
to public land for domestic production of oil and natural gas; that 
encourages conservation; and that recognizes the important partnership 
with our private oil and gas industry to get the job done.
                                 ______
                                 
    The Chairman. Thank you, Governor Knowles. We appreciate 
your testimony.
    I recognize the gentlelady from Wyoming to introduce 
Governor Geringer.
    Mrs. Cubin. Thank you very much, Mr. Chairman. It is truly 
an honor for me to represent Governor Geringer. Governor 
Geringer has excelled nationwide in many, many areas since he 
has been Governor. He has led the country in many areas, as 
well, as far as taking his State forward is concerned--
telecommunications, the deployment of the infrastructure 
required for connecting every single school to computers. He 
has been in the forefront suggesting that we had an energy 
crisis long before other people recognized that we had an 
energy crisis.
    Governor Geringer represents the least-populated State in 
the country, but he also represents the only State in the 
country that has three Senators--they are all men; the Governor 
is a man--and one Congressman, a woman, but it really only 
takes one woman to do the work of those three guys.
    The Governor has always been on my side, so it is truly an 
honor to represent a man that I think has been one of the best 
governors that Wyoming has ever had, Governor Jim Geringer.

   STATEMENT OF HON. JIM GERINGER, GOVERNOR, STATE OF WYOMING

    Governor Geringer. Thank you, Congresswoman Cubin, and 
thank you, Mr. Chairman, Ranking Member, and other members of 
the Committee for your invitation to address you today.
    Mr. Chairman, I ask that my written testimony that has been 
presented and the attachments that are included be made a part 
of the record.
    The Chairman. Without objection.
    Governor Geringer. I thank you for that. I will not provide 
all the testimony that is included there, but I ask that it be 
considered.
    As Congresswoman Cubin mentioned, Wyoming has the least 
population of all States. We are here as Western governors, and 
we particularly appreciate your invitation that the Western 
governors join you because of the mineral resource that is in 
the West and because so much of the public lands that will be 
debated and considered during this testimony are in the West. 
And you have heard a very vivid example of that in Alaska.
    In the Western Governors' Association, we have the least 
populated State in Wyoming; the most populated State is 
California; the largest States, Alaska and Texas. And as we 
consider the resources there and the huge numbers that are 
involved with the oil, gas, coal, hydroelectric power, wind 
energy, all the variety of renewable and non-renewable 
resources, we are first to point out that Wyoming had the first 
National Park in Yellowstone; the first National Monument, 
Devil's Tower; the first National Forest, the Shoshone.
    So we understand the environment and we understand the 
economy, and we are here to tell you that as we discuss the 
effect of becoming self-reliant in energy for America, we also 
understand the balance among environment, the economy, and 
community, because we as a community cannot ignore the impact 
that energy may or may not have on our States.
    Some of the discussion, I am sure, will center on whether 
or not something is broken. If it ain't broke, don't fix it, is 
the common term that is out there. But we ought to recognize 
that you ought to avoid breaking it. If you do preventive 
maintenance, you can avoid breaking it and you don't have to 
recover from a disaster.
    The model that we have developed in the West among our 
Western States is that we work together to prevent the crisis 
from happening rather than having to deal with recovering from 
a crisis. We almost didn't make it last year when the fires 
almost overwhelmed the West, and could possibly again this 
summer. But we developed a model among ourselves, Republican 
and Democrat. We don't even use the terms ``bipartisan'' or 
``nonpartisan.'' We just get the job done, as Governor Knowles 
said, because it is far better to have avoided the problem than 
to have been engaged in the recovery of a disastrous situation.
    Chairman Greenspan has addressed various members of 
congressional Committees over the last couple of weeks, and 
even the governors, as to what is happening with our national 
economy. Our national economy seems to have flattened out and 
the productivity gains seem to be declining. They don't have 
to.
    One of the things that can dramatically impact that is the 
availability on time of energy, because energy drives the 
economy today. The economy in America is referred to as the new 
economy, and the new economy with its technology base needs the 
electricity in a reliable, high-quality manner or it will not 
be able to sustain itself, nor will the productivity gains be 
able to sustain themselves.
    If there is one thing that we very vividly understand, 
whether you are a Member across the table in your position or a 
governor in our position, it is that our citizens want economic 
security. They want jobs, they want opportunity for their 
children. Their views are intergenerational, so as we debate 
energy, environment, and community, we deliberate that from an 
intergenerational perspective. And if we don't have the jobs in 
the economy, there will be far less that matters to our public.
    We learned from the current crisis that energy solutions 
involve diverse sources and technologies, varying from fossil 
fuels to solar, from wind energy to biomass, and that we can 
work on the demand side as well as the production side. But the 
new economy needs more energy in order to make it.
    On page 2 of my hand-out, there is a graphic that 
illustrates what is happening today in terms of California and 
how, because California has roughly 12 percent of the entire 
population pretty much represented by that graphic, the 
electricity crisis that began in California just recently has 
spread and has drained literally the entire Western power grid 
in many ways because the demand created in California has 
rippled through the rest of our States.
    We need to balance that out with supply, and ironically 
most of the supply is there. While it is not lying dormant, 
much of it could if we don't take steps today. The underlying 
imbalance of supply and demand has been exacerbated by the fact 
that California did not have a long-term contract approach to 
their electricity supply. But that is only on electric 
deregulation; natural gas, of course, has gone through the 
ceiling.
    As Congressman Tauzin said earlier today, with the high 
energy prices that have come about in natural gas, we are 
starting to see a rippling through our agricultural economy as 
well. The very people who put food on the table are going to 
pay extraordinarily high prices for nitrogen fertilizers this 
year, or may just choose not to even raise the crops at all, 
because in the Northwest, in States such as Washington, Oregon 
and Idaho, it is actually cheaper and more profitable for 
agriculture to take money to not use electricity to irrigate, 
to pump their sprinklers and wells, than it is to raise crops 
because of the high input costs. The same applies to the 
aluminum manufacturing industry, where selling already 
committed long-term energy commitments is far more profitable 
to aluminum manufacturers than it is to produce the aluminum.
    But what about the lady in Buffalo, Wyoming, who called her 
county commissioner who said, ``I don't know how to pay my gas 
bill. It is $500 this month and I only have $600 a month 
income.'' This isn't just about the economy and the 
environment. This is about people in our neighborhoods who 
don't understand why this developed as it did in the energy 
crisis.
    The Western Governors have worked long and hard to raise 
citizen awareness to how serious this problem is. We had 
several meetings, culminating in our Western Governors winter 
meeting last December where we adopted a call for an energy 
policy for the Americas. Much will be said about how much of 
America's energy is imported from other countries, but much of 
that is viewed as being from the Middle East.
    In fact, of the 4 primary countries who supply the United 
States with energy, 3 of them are in the Western Hemisphere--
Canada, Mexico, and Venezuela. We ought to be working with our 
neighbors rather than somebody so far away that we don't even 
know who they are or why they exist. With regard to oil from 
the Middle East, instead of sending our military men and women 
to die, send them into the wide-open spaces of the West so that 
we all might live.
    The Western Governors' Association hosted an energy policy 
roundtable in Portland, Oregon. We had participants from the 
Department of Energy, from the Federal Energy Regulatory 
Commission (FERC), from a variety of Federal and State agencies 
to discuss what we could bring to Vice President Cheney and 
President Bush to discuss what to do for Federal action. We 
have attached some of our recommendations to my testimony for 
your review.
    Mr. Chairman, just as you acknowledged in your opening 
remarks, our neighbors want to know who is in charge. Why 
didn't somebody wake up sooner so we wouldn't have this 
uncertainty? Who should be in charge, particularly as it 
relates to our Federal public lands and how they dominate in 
the West?
    In reality, no one person and no one agency should be in 
complete charge of production, of access, of distribution or 
consumption of our nation's energy supply. We are in this 
together. Partnerships are vital and beneficial. Mr. Chairman, 
your letter of invitation to me for my testimony asks for my 
perspective on the role that State governments would have in 
interacting with Federal land managers. Well, the key word is 
``interaction.'' In our view, interaction must be a full, 
participating partner.
    While partnerships in the legal sense may be limited 
partners or they may be general partners, we are asking for 
full general partner status. We have common interests, but we 
also have shared jurisdictions and shared responsibilities. If 
State government has a committed partnership with Federal 
agencies, we will produce the domestic supplies of energy in an 
environmentally safe manner. It is as simple as that.
    The history of energy policy in America has been 
fragmented, at best. The 25-year history of attempting to write 
an energy policy has been confused. It has been fragmented. Six 
attempts have been made formally in 25 years. None of them are 
comprehensive, particularly as it affects public land 
management, and not just the resource to be extracted but the 
other resources there as well for recreation, for wildlife, for 
clean air and clean water, and the amenities that the next 
generation ought to benefit from as well.
    In the past, policy has been more by paranoia than by 
purpose. We need to develop better management directives that 
foster cooperation instead of polarization. Much of the debate 
today will be over who is in favor of the environment and who 
is in favor of development. That is not the issue, Mr. 
Chairman. The issue is how will we assure the future not only 
of today's generation but the next generation.
    Over the last decade, management by litigation and 
intimidation has prevailed over management based on policy 
goals, and that has had far more impact on our national energy 
policy than it should have. The previous Chair of the Council 
on Environmental Quality, Katie McGinty, put in her 25th 
anniversary report, ``Our common ground, the environment, has 
become a battle ground. Somehow, nearly half of the 
Environmental Protection Agency's (EPA) work is not the product 
of our collective will on the environment, but rather it is the 
product of a judicial decree. Somehow, we have become a country 
in receivership, with the courts managing our forests, our 
rivers, and our rangelands.''
    It goes back even further. The former Chief of the Forest 
Service, Jack Ward Thomas, said in a speech in Wyoming 5 years 
ago that he took his appointment as Chief of the Forest Service 
believing that he was the chief resource manager of the 
nation's forests. But he said to us, ``I have the least control 
of anyone over resource management and allocation.''
    So who should manage the land and who does manage the land? 
If I talk first about the public lands, nearly 75 percent of 
all Bureau of Land Management (BLM) and Forest Service lands in 
the United States in total are located in the Western States. 
Our energy self-reliance through public lands will focus, then, 
on much of those public lands.
    But we, the States, have primary jurisdiction over many of 
the activities that take place on all lands, Federal, State and 
private. We have to work together because of those legal 
obligations, but we should work together because it is for the 
good of our people. So whether it be wildlife habitat, resource 
use, mineral extraction, water supplies, flood protection, 
hunting, fishing, ascetic values, tourism, or whatever, we 
should be partners. When you tinker with Federal land issues in 
the West, you affect the economy of all of America, but you 
particularly affect the livelihood of those people in our 
communities.
    I refer you now to the graphic on page 5 of my formal 
remarks because it gives a graphic display of the Federal and 
non-Federal land areas in the lower 48. For whatever reason, 
and with apologies to my fellow governor from Alaska, it didn't 
print Alaska's overlay. In Alaska, though, as Governor Knowles 
has indicated, 375 million acres total; 242 million are 
Federal. So picture in your mind much of the same pattern of 
integrated and interspersed and intertwined activities that you 
see on the rest of that map, but particularly as it affects the 
West.
    Let me illustrate even further the difficulty of 
management, and what your Committee can most enable all of us 
to do is graphically illustrated on page 6 of the hand-out, 
which is a map of the general area of Wyoming. It shows the 15 
ownership categories, each of which has a unique set of 
management procedures when it comes to developing the resources 
of energy in the West.
    I use Wyoming as an example because Wyoming is not as 
Federally dominated as some other lands, but yet is dominated 
enough by Federal agencies, many of whom don't even work 
together, that it will thwart any action that you might take as 
a Committee to understand how we might appropriately develop 
the land in the West. Even that band across southern Wyoming 
that shows rather hazily in the yellow portion--that is because 
every other section of land is private land originally 
developed when the Union Pacific Railroad was extended right-
of-way across the Western States and offered alternating 
sections of land for 20 miles on either side of the railroad 
right-of-way. The message in that map and the message in the 
previous map is we have to work together.
    As far as the environment goes, in Wyoming we produce, 
process, or transport all kinds of extracted minerals, but we 
also have renewable wind energy, hydroelectric power, and 
others as well. Our water is so clean that we are one of the 
few States without a fish advisory. We have the toughest clean 
air laws in the nation. We have proven that a clean environment 
and a robust energy sector are not at odds with each other 
because we as governors live where we govern.
    As far as the potential, you have heard from Governor 
Knowles and you will hear from Governor Martz and others about 
it is not just a matter of the energy that is there; it is how 
we get from there to where the energy is needed. The huge 
amounts of coal, natural gas, oil, uranium, and other energy 
sources that are available in the West are challenged by some 
of these situations.
    For instance, while Wyoming has enough coal reserves that 
if we were a country we would be the number three country in 
the world in coal reserves--not a State, a country --92 percent 
of all coal produced in Wyoming comes from Federal leases. 
Seventy-five percent of all natural or methane gas produced in 
Wyoming is from Federal ownership, and 60 percent of our oil. 
In other words, the Federal resource is a very considerable 
resource, and as the Ranking Member mentioned, much of that is 
already being produced.
    But today's energy production is not and will not be 
sufficient. America needs more energy. We are here to help that 
need be filled, and to produce it not just from our States but 
to distribute it where it is needed and consumed. Transmission 
lines, power lines, gas pipelines will be needed to connect 
supply with demand.
    Governor Hull of Arizona is frustrated with the most recent 
presidential declaration of yet another national monument in 
Arizona that appears to have eliminated a long-approved power 
transmission line that was scheduled to connect energy 
generated in Arizona with consumers in California. Monumental 
decisions in Washington have created political misery in the 
West.
    As far as the availability of products and energy in the 
West, we don't need Organization of Petroleum Exporting 
Countries (OPEC), we need each other. Just the Wyoming resource 
alone could totally supplant and replace the entire OPEC 
production for the next 41 years.
    The Chairman. Governor, may I suspend briefly? You may 
notice on the clock we have got two lights on. We have to run 
for a vote, and I apologize. Could we quickly have a recess? I 
would ask all Members to hurry back and then we will conclude 
with Governor Geringer.
    Would that be all right, Governor? I apologize for that.
    Let me ask unanimous consent that all opening statements be 
included in the record.
    Is there objection?
    Hearing none, so ordered.
    [The statements of Mr. Gallegly, Mr. Calvert, Mr. Pallone, 
Mrs. Cubin, Mr. Radanovich, Mr. Udall of Colorado, Mr. 
McGovern, and Mr. Rehberg, follow:]

Statement of The Honorable Elton Gallegly, a Representative in Congress 
                      from the State of California

    Mr. Chairman, I have concerns about the fairness of some of the 
studies that small hydro power plants have been asked to do in the 
midst of the current energy crisis.
    In my district, the operators of the Santa Felicia Dam and 
hydroplant near Piru Creek, have been asked to do a number of studies 
by various Federal agencies, including the Forest Service, before they 
can relicensed. It is estimated that the costs of the studies outweigh 
the costs of the hydro facility--the hydro facility cost is $1.2 
million, the studies are estimated to cost $2 million. Mr. Chairman, 
the dam currently provides clean hydro-electric power to an estimated 
1,500 homes in my district and operates at a profit of only $6,000 a 
year.
    Although some of the studies are worthy, many are burdensome and 
unrelated to the hydro facility--a study of noxious weeds, road and 
trail studies, and an impact study on the Arroyo Frog who's habitat, 
according to University of California at Santa Barbara Biology 
Professor Sam Sweet, is located more than three miles upstream from the 
Dam.
    Mr. Chairman, we ought to be aiding small hydro-electric power 
facilities, not putting them out of business with undue red tape. I 
urge the Committee to look into the fairness of the relicensing process 
on these small hydro-electric power plants that provide clean energy to 
communities throughout the United States.
                                 ______
                                 

 Statement of The Honorable Ken Calvert, a Representative in Congress 
                      from the State of California

    The Western States are currently faced with the challenge of 
striking a balance among the water needs of agriculture growers, urban 
and environmental communities, industry and hydroelectric power 
generation. As we have seen with the recent energy crisis in 
California, our energy and water systems, and therefore our economies, 
are interdependent.
    While hydroelectric generation comprises only 13 percent of the 
nation's total electricity supply, it is a vitally important component 
of the Western energy grid. Hydroelectric power is clean, efficient and 
necessary for maintaining electric transmission reliability.
    This important resource is currently being underutilized. For 
example, Bonneville Power Administration has lost approximately 10 
percent of its capacity due to environmental regulations. This is 
enough electricity to power 980,000 homes. Over the past years, the 
ability of non-Federal dams to generate power has been reduced by 
ambiguous mandatory conditions issued by Federal agencies for dam 
relicensing. Weather related factors have also decreased the Pacific 
coast hydro-system capacity. Reservoirs have been drawn down to 
dangerously low levels that may compromise fish flows and water 
deliveries.
    To prevent further erosion of potential Federal power generation, 
we must assure that any further reductions be subject to good science 
and peer review. We need to protect state water rights while improving 
hydroelectric generation capacity and efficiency. We cannot afford to 
accentuate one need to the detriment of the others. Instead we must 
strive for a balance that will guarantee a reliable energy and water 
supply.
                                 ______
                                 

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

    Thank you, Mr. Chairman. Let's be responsive to America's energy 
needs but let's make sure we are responsible when we discuss self-
reliant energy policy in the same sentence as public lands.
    Our public lands are not our energy solution; our public lands are 
recreational opportunities for countless families, habitat protection 
areas for numerous endangered species, and preservation areas for 
national historic sites, to note only a few. We must not jeopardize the 
well being of our public lands from the many functions they serve in 
the hope of solving our long-term energy needs.
    As we reexamine our nation's energy resources, we should begin by 
examining public lands that have already been designated as lease 
areas. Federal public lands now produce 26.6 percent of total U.S. oil 
production, and 37 percent of our nation's natural gas production. In 
the past eight years energy production on public lands has exceeded 
production levels of both the Reagan and Bush years.
    A realistic idea to explore--where we can work together for a 
common sense solution--is to expand production on Alaska's North Slope. 
Alaska's North Slope has been open for oil and gas exploration and 
drilling for years--to the tune of 23 million acres or more. 35 
trillion cubic feet of natural gas exist in Alaska's North Slope 
already available for exploration and development. We should find a 
viable pipeline route for making these resources available.
    Mr. Chairman, if we open new public lands for resource extraction, 
we run the risk of destroying our nation's greatest natural resources 
forever. The effects of improperly managed public land resources can be 
disastrous. We run the risk of surface and subsurface water pollution 
from toxic metals including mercury, lead and cadmium caused by 
drilling and mining operations. Contamination of this kind can continue 
for years without being discovered. Industry's improved drilling 
technology does not preclude the need for roads, drilling pads, 
housing, oil processing facilities and other infrastructure that 
inevitably impact the environment.
    It's time to fund common sense programs to conserve energy and 
develop alternative energy sources to reduce our reliance on polluting 
fossil fuels and oil imports from foreign nations. Instead of 
discussing only methods of supplying more fossil fuel energy, we have 
to develop ways to encourage renewable energy use and energy 
conservation. In the past thirty years technology has helped us place a 
computer in the palm of our hand, surely we can find ways for 
technology to provide us with clean, renewable energy that does not 
place our open spaces, our environment, our nation's public lands in 
jeopardy.
    Unfortunately, it seems the Republican Leadership is incapable of 
introducing measures that would conserve energy, promote our long-term 
energy security, develop alternative energy resources, and protect our 
environment, without sacrificing our economic growth. Instead, the 
Republican Leadership wants to drill the Arctic Refuge. They have cut 
funding for energy efficiency, renewable energy, and alternative fuel 
programs during the past several years and now want to disrupt the only 
true wilderness in America.
    We should support funding to advance our technological capabilities 
in the fields of energy efficiency and renewable energy and to advance 
our economic advantage in exporting these technologies abroad. If we 
undertake these proactive types of efforts, then we can tell our 
residents and our children that we're working to protect our nation's 
pristine resources for them their long-term enjoyment, not our short-
term solution.
    It's time to stop gutting our environment--time to stop destroying 
our forests, land, water and air quality. Most Americans want to know 
why we're not doing more to protect the environment. Most Americans 
indicate a willingness to pay more for energy efficient appliances and 
lighting. Most Americans don't want us to drill in ANWR.
    I agree that we need to examine the prospect of a more self-reliant 
energy policy but drilling in the Arctic Refuge will do nothing to 
increase our energy self-reliance.
                                 ______
                                 

Statement of The Honorable Barbara Cubin, a Representative in Congress 
                       from the State of Wyoming

    Thank you, Mr. Chairman, for holding this important hearing on the 
role of public lands in the development of a more self-reliant domestic 
energy policy. Over the past eight years we have seen what amounts to 
an ``anti-energy'' policy which has discouraged the exploration for and 
development of oil, gas, coal, and uranium on our public lands, and 
made coal-fired electricity generation anathema. At the same time, the 
past Administration was seeking to dramatically reduce 
hydroelectricity's function as the ``peaking power'' of choice.
    Collectively, it is a wonder the crisis we have seen in California, 
and to a lesser extent in the northwest, has not occurred sooner. 
Perhaps it is the ubiquitous ``on-line'' computer presence everyone 
seems to need these days that is the straw that broke the camel's back, 
but there simply is no doubt that domestic demand for electricity has 
risen significantly, despite ``energy star'' ratings on computers and 
other appliances. And, many experts suggest the real test will be when 
folks turn on the air conditioners this summer. Rolling black-outs may 
be back with a vengeance.
    Yes, conservation goals are laudable, but efficiency gains alone 
are insufficient. Our nation must meet the rising demand for energy 
with new domestic exploration and production. We must produce and 
conserve all forms of energy in America. And, we can do so in and 
environmentally sensitive way. Fortunately, we now have an 
Administration that recognizes our national security depends upon 
energy security. The Bush Administration, with Vice President Cheney in 
a leadership role, is working to propose a comprehensive national 
energy policy for Congress to act upon, as well as to formulate plans 
for taking administrative action where Congress isn't needed.
    My Subcommittee on Energy and Mineral Resources will be examining 
areas where public land reforms can make a difference in getting 
domestic energy supplies to market. We kick off this effort next week 
with an in-depth review of natural gas supplies and constraints. I look 
forward to working with the Administration and my colleagues here in 
Congress to begin the process of developing legislation which will help 
to set this country on a focused course, both increasing energy supply 
and increasing incentives for conservation.
    Again, Mr. Chairman, I truly thank you for convening this hearing 
today and look forward to hearing from our distinguished group of 
witnesses, especially the Governor of my home state of Wyoming, the 
Honorable Jim Geringer. Wyoming coal, oil, and natural gas (including 
coalbed methane) and uranium is a treasure trove of energy for our 
nation. I welcome Governor Geringer's remarks as to how to best utilize 
these resources.
                                 ______
                                 

   Statement of The Honorable George Radanovich, a Representative in 
                 Congress from the State of California

    Thank you Mr. Chairman for holding this hearing on the role of our 
natural resources in U.S. energy policy. Today, I will focus on two 
environmentally-friendly energy resources: biomass and hydropower, and 
discuss how we can better use them to provide more energy for 
consumers.
    My district includes three national forests as well as three 
national parks, all of which I am proud to represent. Over the past 
eight years, the previous Administration's policy of closing-off land 
for roadless areas, designating nineteen new national monuments--
comprising five million acres--and adding numerous wilderness areas has 
led to a decrease in the opportunities to utilize Federal lands to help 
meet our nation's energy needs.
    The Clinton roadless policy to lock-up over 60 million acres of our 
national forests, for instance, has led to a logging moratorium in many 
areas of the Sierra Nevada Mountains in California. Such action, 
combined with the Forest Service's ill-conceived Sierra Nevada 
Framework plan amendment, has forced the closure of biomass plants in 
the region. It is true that biomass comprises only about two percent of 
all energy in California, but amidst our current crisis, every megawatt 
counts. Biomass is a clean-burning method of producing energy, and it 
extends the life of our landfills by burning forest waste. I encourage 
the new Administration to reexamine the roadless policy and the Sierra 
Nevada Framework plan to allow for extraction of underbrush from the 
forests to generate green-powered biomass energy.
    On the issue of hydropower, I want to work with the new 
Administration to streamline the cumbersome Federal regulatory process 
that is denying us of the full use of existing hydro facilities. In the 
Pacific Northwest, 10 percent in hydro capacity on Federally-owned 
facilities is consistently lost due to Federal regulations. Also, Glen 
Canyon dam has lost a 1/3 of its own capacity ``enough to supply 
400,000 homes--because of strict regulations to protect fish. The 
Federal government last year released the Trinity River decision in 
California, which diverts 300,000 acre feet of water annually for 
environmental uses. This action is a great cause for concern since that 
water will be lost for hydro generation purposes.
    My own congressional district is home to about 2,000 megawatts of 
hydropower. To give you an idea of what this means, 2,000 megawatts is 
enough to serve approximately 2.8 million people. Long-term licenses 
for these privately-owned facilities are so difficult and arduous to 
complete that some facilities have been operating on yearly permits for 
over a decade. The tremendous red tape involved in relicensing the 
hydro facilities in the U.S. results in about an eight percent loss in 
power each year. Such an amount could provide a safety-net during a 
Stage 3 emergency and be used to help prevent blackouts like those 
California experienced in January. I will work with the Administration 
to facilitate a licensing process that works to benefit both the 
environment and consumers.
    As we all know, the U.S. is in dire need of a national energy 
policy, and our Federal resources must be managed in a manner to 
support a national energy policy. The Federal government's eight-year 
``hands-off'' policy regarding Federal land management has led to an 
increase in the Federal land base and a decrease in opportunities to 
meet our nation's energy needs. Our Federal lands must be managed in a 
reasonable, environmentally-sensitive manner that operates in concert 
with a national energy strategy. Such consistency will prevent various 
Federal agencies from implementing far-fetched policies that conflict 
with a national energy plan. I believe we can achieve balanced, common-
sense environmental goals as well as provide desperately needed energy 
for our nation's citizens.
    Mr. Chairman, thank you again for holding this important hearing. I 
look forward to working with you to further develop a role for natural 
resources in our national energy policy.
                                 ______
                                 

  Statement of The Honorable Mark Udall, a Representative in Congress 
                       from the State of Colorado

    Thank you, Mr. Chairman. I appreciate your scheduling this hearing 
on a most important topic. Unfortunately, the Science Committee is 
holding its organizational meeting this morning, so I will not be able 
to stay for the entire hearing.
    However, I will review carefully the testimony of all the 
witnesses, and will be particularly interested in Mr. Judd's testimony 
regarding biomass, an energy source that is of particular interest to 
me.
    I am not sure just what is meant by a ``self-reliant'' energy 
policy, Mr. Chairman, but I assume that it means a policy that would 
reduce our dependence on imported energy sources--particularly imported 
petroleum.
    I share the goal of reducing our dependence of imported petroleum--
in fact, I think we should reduce our dependence on petroleum, period.
    That is why, along with nearly 170 other members of the Renewable 
Energy and Energy Efficiency Caucus, I am working to promote 
development and use of alternative sources and to reduce inefficiencies 
and waste in the way we use energy.
    So I hope that in the Committee's discussions today there will be a 
recognition of the importance of agreeing on a long-term energy 
policy--one that requires us to think beyond today's oil and gas 
prices.
    I hope there will be discussion of the real crisis that will 
develop ten or twenty years from now when oil prices will probably go 
up permanently as a result of increasing global demand and of passing 
the peak in global petroleum production.
    We haven't done enough to prepare for this eventuality. We very 
much need to do more, beginning with the recognition that even opening 
all the public lands to energy development would not provide a long-
term solution--and, in areas that should remain offlimits, like the 
coastal plain of the Arctic National Wildlife Refuge, the costs would 
exceed the real benefits.
    We cannot just drill our way to a sound energy policy. We need 
balance. And, in particular, we need to recognize that increased 
efficiency and increased use of renewable energy are vital if we are to 
make progress in addressing environmental challenges as well as in 
reducing our dependence on foreign energy sources.
    In fact, by reducing air pollution and other environmental impacts 
from energy production and use, renewable energy and increased energy-
efficiency are the single largest and most effective Federal pollution 
prevention programs.
    And increased development of renewable energy has the potential for 
creating hundreds of new domestic businesses, supporting thousands of 
American jobs, and opening new international markets for American goods 
and services.
    We have already come a long way. Solar, wind, geothermal, and 
biomass technologies have together more than tripled their contribution 
to the nation's energy mix over the past two decades. But we need to do 
more, to build on this progress.
    All these technologies are very important for our country. But 
development of biomass-energy through the conversion of cellulosic 
biomass, which consists of any plant or plant product, is particularly 
important to Colorado and other western states.
    That is because the threat of extreme wildfires in the areas where 
our national forests are in close proximity to major population 
centers. To reduce and control this risk, there is a need to thin the 
fuel build-up. After it is cut, a good part of this underbrush and 
small-dimension material can and should be left to decompose on the 
lands. But some will have to be removed from the forests and there is 
now no effective use or market for much of it.
    As you know, Mr. Chairman, last year's Interior appropriations bill 
established a program for such fuel-reduction projects, and provided 
funding for it to get underway. That was a substantial appropriation, 
but the funds could go further and much more could be accomplished if 
there is a commercial market for this material. The Colorado State 
Forest Service, the Forest Service Research Laboratory, and the 
National Renewable Energy Laboratory have all begun to study the 
possibilities of developing ethanol or other bioproducts economically 
from this wood fiber.
    We need to support those efforts, as well as other efforts to 
increase the availability and viability of other renewable energy 
sources and to increase our energy efficiency. That is the best way to 
go if our goal truly is a ``self-reliant'' energy policy in the long 
run.
                                 ______
                                 

   Statement of The Honorable James P. McGovern, a Representative in 
                Congress from the State of Massachusetts

    Thank you, Mr. Chairman. I appreciate the opportunity to offer a 
statement at today's hearing on the ``Role of Public Lands in the 
Development of a Self Reliant Energy Policy''.
    In the interest of time I would like to get right to the point and 
say that I think that the issue of increasing oil and gas production on 
Federal public lands is a red herring. I honestly do not think that we 
can have a serious discussion about increasing production without 
addressing the underlying issue of fossil fuel consumption.
    According to the Department of Interior, the U.S. consumes over 19 
million barrels of oil a day or 7 billion barrels of oil a year. The 
Natural Resources Defense Council, using Energy Information 
Administration data, projects that this figure will almost double over 
the next 50 years. And yet, the U.S. has less than 3 percent of the 
world's known oil reserves. It just does not seem likely that we could 
produce our way to energy independence.
    Like most Americans, I am concerned with our reliance on foreign 
oil. But at the rate we are going, I am frankly more concerned about 
our reliance on fossil fuels period. Consumption is the long-term issue 
that we need to address, and I am not yet convinced that increased 
drilling on Federal lands is anything more than a temporary fix.
    The topic of drilling on Federal public lands should not lead the 
discussion of a long-term comprehensive energy policy. Eliminating the 
annual freeze on the Corporate Average Fuel Economy (CAFE) law should. 
If we are going to have tax cuts, lets have tax cuts that will provide 
incentives for commuters to use mass transit and tax credits to develop 
alternative energy sources.
    The fact is that production levels on Federal government operated 
oil, gas and coal leasing programs have increased over last eight 
years. Overall domestic production of oil on Federal lands increased 
from 13 percent in 1993 to 26.6 percent of all U.S. production in 2000. 
And Federal lands account over 37 percent of domestic natural gas 
production. And during that same period, total U.S. petroleum 
consumption increased by over 2 million barrels a day. Opening up our 
Federal lands to even more drilling will not solve the long-term 
national security and environmental problems caused by our reliance on 
fossil fuels.
                                 ______
                                 

Statement of The Honorable Dennis R. Rehberg, a 
          Representative in Congress from the State of Montana

    Thank you, Mr. Chairman. I also want to thank Montana Governor Judy 
Martz for being here this morning. Governor Martz has really taken a 
pro-active stance in dealing with the energy problems we are 
experiencing in Montana, and I thank her for her leadership on this 
issue.
    Mr. Chairman, it is no secret to most of us in this room that the 
United States does not have a coherent energy policy, either long-term 
or short-term. Today we are more dependent on foreign oil than ever 
before. In fact, 56 percent of our oil supply comes from foreign 
sources, which is a 20 percent increase over the 1973 Arab oil embargo 
levels. And the Department of Energy predicts that in less than 20 
years, America will rely on foreign countries for nearly 65 percent of 
our energy needs. This is not only a threat to our economy, it is a 
threat to our national security.
    Unfortunately, our energy problems are not confined to oil 
production. Despite growing demand, our natural gas production has 
fallen 14 percent since 1973. Yet, nearly 40 percent of our gas 
resources in the Rocky Mountains are off-limits to production and most 
of the submerged lands under our Federal waters are off-limits to gas 
leasing until 2012.
    The result: natural gas prices are 20 times higher in some parts of 
the country than they were just one year ago. This dramatic increase, 
while hitting all consumers, is hitting those of us in ag country 
particularly hard because higher natural gas prices mean increased 
fertilizer costs. So I think it's important that we all understand that 
this energy problem we are experiencing affects virtually every aspect 
of our nation's economy. We have got to get a handle on this problem.
    And, as if to add insult to injury, the water levels in the 
northwest are low--this frustrates our ability to generate hydropower, 
which provides enough electricity for 98 million homes. But our 
hydroelectric operations are facing more problems than just low water. 
Federal rules and regulations have made the process of relicensing 
these operations expensive and time-consuming, which in turn 
contributes to the rising cost of electricity in some areas.
    These energy problems have real life consequences. In January, the 
Bonneville Power Administration announced that it is projecting an 
average 60 percent rate increase over the next five years. And high 
energy costs have caused a number of Montana businesses to either shut 
down or cut back operations, which is costing Montana much needed jobs.
    And because of increased power costs, some Montana businesses have 
been forced to produce their own power in-house by using generators, 
which costs about 5 times the amount of what they used to pay for 
electricity, yet is still well below current prices on the open market.
    Mr. Chairman, the California situation--which we are all so 
familiar with and which has sort of become the poster-child for our 
energy problems--combines a lack of generation and transmission 
capacity with low water levels, and should serve as a real wake-up call 
to all of us. Consider this, in California--over the last 10 years--
generation capability decreased 2 percent while retail sales increased 
11 percent. So the current problem California is experiencing should 
not come as any great surprise.
    In short, Mr. Chairman, we must increase our power generation and 
transportation capabilities. And if we don't start developing some of 
our natural resources now, the California crisis of today will become 
the national crisis of tomorrow.
    America has the tools to confront our energy problems, and we must 
use them. While energy conservation is critical, the U.S. cannot 
conserve its way out of this energy crunch. It is vitally important 
that we take steps to increase domestic energy production through 
access to and exploration of oil and gas prospects such as ANWR, and 
through new and expanded energy delivery infrastructure, advanced coal 
technology, nuclear power, and solar and wind power. We also have to 
explore alternative renewable fuels, such as ethanol, which bums clean 
and supplies an important market for our agriculture products.
    America has huge deposits of natural gas, coal and oil. In Montana 
alone we have several hundred years worth of natural gas and coal 
deposits--the eastern front of the Rocky Mountains is rich in natural 
gas and clean burning coal.
    Any national energy policy must include the development of our 
domestic supplies of oil, such as our oil reserves in the Arctic 
National Wildlife Refuge, or ANWR. The vast oil reserves in ANWR could 
replace our Saudi Arabian imports, for example, for the next 30 years. 
That's why I am a cosponsor of Rep. Don Young's legislation to develop 
some of this domestic supply in ANWR.
    America also has large coal deposits--enough to last us nearly 300 
years. And Montana has more coal than any other state, holding 
approximately one-third of the total strip-mineable coal in the nation. 
Current estimates place coal resources for eastern Montana at about 50 
billion short tons, 34.5 billion of which is low-sulfur, clean-burning 
coal.
    Coal is America's largest and cheapest source of domestically 
produced energy accounting for nearly 60 percent of our nation's 
electricity and costing consumers about one-fifth the amount of oil and 
natural gas. And our abundance of coal includes coal bed methane, which 
is a source for natural gas. So clean burning coal and the development 
of coal bed methane as a natural gas resource must play a vital role in 
any national energy policy. This means we must invest in developing 
coal technology.
    It is also important to remember, Mr. Chairman, that while we need 
a national energy policy, we must also seek to include input from our 
state government officials at every step of the way--just like we are 
doing here today. This is especially important in Montana because of 
Montana's vast acreage of checkerboard ownership with the Federal 
government. So it is imperative the Federal government adopt a good 
neighbor policy that allows Montana to help solve the nation's energy 
shortage. Montana Governor Judy Martz has taken the bull by the horns 
at the state level by encouraging new energy production, streamlining 
regulations and building a better relationship with Federal land 
management agencies. Hopefully, today's hearing can allow us all to 
help improve this good neighbor policy so that we can work together 
with state governments to solve our current energy shortage.
    I guess for me, Mr. Chairman, the bottom line is that we have the 
natural resources to head off this problem before it gets even worse. 
But that means we need to develop a national energy policy that 
encourages the development of our resources in an energy efficient and 
environmentally friendly manner. And with the technological 
advancements we've made, I believe we can do it. But it is up to us as 
elected officials to come up with a plan and get the job done, and I 
thank you, Chairman Hansen, for holding this hearing today, and for 
your leadership on this issue, because this is an important step in the 
right direction.
                                 ______
                                 
    The Chairman. We will stand in recess.
    [Recess.]
    The Chairman. The Committee will come to order.
    Governor Geringer, we apologize for cutting you off, but we 
had no choice. Governor, we will turn to you again, sir.
    Governor Geringer. Let me just sum up with a few quick 
statements. First, to get our attention back to the issue at 
hand, much of the discussion today as we deal with energy self-
reliance from public lands will depend a lot on the deadlock, 
the gridlock, if you will, or headlock that pits environmental 
interests against those who would have economic interests. We 
don't view them as mutually exclusive; they are not and should 
not be. The interests are compatible and complementary in every 
sense. Energy policy cuts across so many different 
jurisdictions, as we illustrated in the graphics that I pointed 
out to you in my testimony, and it is time to stop litigating 
and start cooperating.
    The Western States have energy that America needs. As we 
were conversing during the break here, one of the members who 
is here from Wyoming made the comment, it is like we have an 
I.V. container. We have the transfusion that is necessary, but 
not the line to connect it when it comes to the transmission of 
the energy, whether it be in raw form or in converted form to 
electricity.
    Just let me illustrate a little bit of the challenge that 
you will face that we already face in the Western States in 
trying to deal with access to the energy that is in our public 
lands.
    Back in 1969, the National Environmental Policy Act (NEPA) 
was enacted with the purpose that we needed to recognize the 
profound impact that man's activity has on the natural 
environment. But in the purpose clause in the NEPA, as it is 
called, the National Environmental Policy Act, it declares that 
the policy of the Federal Government is to cooperate with State 
and local governments to create and maintain conditions under 
which man and nature can exist in productive harmony and still 
fulfill the social, economic, and other requirements of present 
and future generations.
    What has evolved from that Act, however, has been anything 
except that harmonious relationship. Implementation of what is 
a fairly short and relatively simple Act has resulted in such a 
myriad of regulations and processes that State and local 
authorities have little or no idea which way the whipsaw of 
Federal agencies will go next. There is tremendous 
inconsistency between and among Federal agencies as to how they 
implement this Act.
    What that opens the door to do is allow people to litigate 
or protest or appeal almost without end an infinite number of 
methods to avoid or to thwart better planning and better 
opportunities for energy development. We recommend as Western 
Governors that streamlining start with the adoption of 
management principles that we have developed as Western 
Governors over the years, and that is included as part of the 
testimony called ``Policy Resolution from the Western Governors 
99-13,'' sponsored by Governor Kitzhaber, of Oregon, a 
Democrat, Governor Leavitt, of Utah, a Republican, and endorsed 
in full not only by the Western Governors but by the national 
governors as well.
    It lists eight principles of environmental management that 
can be very effective in resolving the conflict between and 
among the advocates of whatever side you might feel that you 
are on. They reflect a practical, common-sense approach to 
environmental decisions, much along the lines of our native 
son, Dr. W. Edwards Deming's principles that were established 
for quality management that enabled a quality revolution for 
America on the industrial side.
    We have used these principles successfully on several 
difficult environmental issues, and the call is even greater 
today because we are in an age of litigation, with the courts 
not just directly managing our resources, but indirectly 
managing because of the fear of litigation.
    NEPA, in terms of the Act, is not the problem. It is the 
process. It takes too long; it costs too much; it spawns 
litigation; it is inconsistently implemented. Every Federal 
agency requires extra layers of management just for its own 
unique set of regulations. The difference just between the 
Bureau of Land Management (BLM) and the Forest Service is 
dramatic, and yet they are all part of one Government. If you 
would simply require the Federal Government to be consistent 
and speak with a unified voice, we would get a long way, and 
input the States in as partners.
    I want to leave you with the message that the current 
energy crisis is an opportunity to break through the often 
unproductive deadlock that pits energy needs against 
environmental protection. They do not have to be mutually 
exclusive; they should not be.
    The current electricity crisis in the West has awakened us 
as to how much we don't know about the energy resources of our 
nation and how little we have explored the opportunity to meet 
the energy needs of a growing economy and still yet protecting 
our environment. We can have both.
    Mr. Chairman, I have included several recommendations. 
Rights-of-way and transmission lines ought to be looked at. We 
cannot get the energy out of our States if we don't have the 
rights-of-way to deliver it, whether it be the pipeline from 
Alaska or whether it be a transmission line that takes 
generation from Wyoming to California or to Chicago.
    I recommend that this Committee urge the establishment of 
cooperating agency status for all States that are affected 
under any environmental policy review as a routine and regular 
matter, not just on the occasional basis that it has been doled 
out in the past. We can even generate more through renewable 
resources. We have tremendous wind generation capacity in 
Wyoming. Much of that is on Federal lands.
    One young lad from California dropped a note one day and 
said, "You know, you don't have to have all those signs warning 
about high winds the next 5 miles if you would turn off those 
giant propellers up on the hillside."
    Wind generation, hydroelectric generation; the 
hydroelectric that we currently have needs to have equipment 
replaced, replacing 40- to 60-year-old generators with more 
efficient generation, increasing generation, and certain 
minimizing the impact on endangered fish when California needs 
more of Oregon's power. The Bonneville Power Administration, 
the Western Area Power Administration, the Bureau of 
Reclamation, and the Corps of Engineers all need to look at 
opportunities to enhance electrical production even with 
existing activities.
    Ninety-two percent of all coal is taken from Wyoming lands. 
Wyoming is so good at reclamation that you are holding $3 
million of our money. From energy it came, to energy it should 
return. We would like to develop more effective ways to deliver 
energy from the West.
    Let me make one quick comment about the fires that occurred 
last year in the West. Those too, because of the lack of 
coordinated policy on forest health management, severely 
impacted, such as fires in New Mexico that knocked out a 500-
kilovolt transmission line, to fires in Montana that shut down 
a similar line going from Montana to Seattle. The implication 
of additional events this summer, with the drought that is 
already imminent, could lead to even further shortages of 
electricity.
    Thomas Jefferson maintained the solid belief that the 
success of our democracy lies in the ordinary citizen being 
vested with a sense of deep civic responsibility and citizens 
who would engage each other directly in pursuit of the common 
good.
    We in the American West believe that we should reject the 
last two decades of bitter debate among environmentalists and 
resource users that has so polarized us that we have gridlock 
rather than any public benefit from our public lands. As former 
EPA Director Bill Ruckelshaus said, "Business, governments and 
citizens are frustrated by years of litigation and stalemate. 
It is time to turn to the common good, and we are turning to 
that not just out of desperation but more frequently out of 
hope; hope that our decisions will yield less controversial and 
more durable results. Jointly-designed decisions will be better 
and more informed, and the hope that through this process we 
can actually regenerate public confidence in our institutions, 
especially government."
    Mr. Chairman, thank you, and I would be happy to answer 
questions.
    [The prepared statement of Governor Geringer follows:]

  Statement of The Honorable Jim Geringer, Governor, State of Wyoming

    Mr. Chairman and Committee Members, thank you for addressing the 
subject of how America might and should become energy self-reliant, and 
in particular what the role of Federal lands might be in that effort. 
Thank you also for asking for the views of Western Governors. The 
energy future of this nation is dramatically linked to the energy 
future of western states. More than that, we consider that the 
environment, the economy and community are a dynamic balance 
continually in the making.
Self-reliance is more than energy
    America's long term sustained growth in the economy has been jump 
started by increases in productivity fueled by innovation, risk and 
perseverance. We risk losing our economic momentum if we cannot 
literally provide the fuel for the new economy. Rising energy costs 
have been a major contributor to the recent slowdown in economic 
growth.
    The future of our national economy depends upon our sustainable 
energy self-reliance. Public lands are at the forefront in providing 
the potential to provide much in the form of raw energy or access to 
produce and deliver that energy. The development of the New Economy in 
America is heavily inter-dependent upon technology and reliable, high 
quality electric power. Beyond the new economy, agricultural production 
and processing, manufacturing, renewable resources, protection of 
endangered species, recreational opportunities all affect our economy 
and our society and each of them is affected in part by what happens on 
the resource of our public lands. Our economic and social opportunities 
are directly linked to energy solutions. We have learned from the 
current crisis that energy solutions involve diverse sources and 
technologies ranging from fossil fuels to solar, from energy production 
to demand-side management and efficiency.

Energy is affecting everyone, not just California
    The electricity crisis that began in California has spread 
throughout the western power grid, known as the Western 
Interconnection. See map.
    At its core, the crisis is a result of an imbalance of electricity 
demand and supply. Electricity demand has grown with the growth in 
population and a growing economy in the West. Few new powerplants have 
been built in the past decade in the West and energy conservation 
efforts declined. This underlying imbalance of supply and demand has 
been exacerbated by the structure of the electricity market in 
California that put extraordinary reliance on the spot market at the 
expense of more stable, long-term contracts. High natural gas prices 
and a drought in the Northwest are further exacerbating the crisis.
    This crisis reaches well beyond California. The Bonneville Power 
Administration is considering a 100 percent rate increase. Many 
utilities, such as the City of Tacoma, and industries, such as Phelps 
Dodge, are reeling from extraordinary wholesale electricity prices. 
From Montana to Arizona, plants and mines have shut down because of the 
high cost of electricity. The crisis may deepen with summer peak demand 
and continuing drought in the Northwest.
    The reality of the high energy prices was driven home last month 
when one of our county commissioners in northeast Wyoming received a 
phone call from an elderly lady who wanted to know how she was going to 
pay her $500 heating bill when her monthly income was just $600 per 
month.
    Last December when the price of natural gas hit $10 per MMBTU, 
almost half of the nation's nitrogen industry shut down for several 
weeks, since natural gas is the feedstock for nitrogen fertilizer. With 
significantly reduced supply, farmers this spring will be paying 
unusually high prices for anhydrous ammonia and other nitrogen assuming 
not only that it is available but that in the event they can get it 
they can actually afford it. Much of the manufacture of nitrogen has 
shifted off-shore and America is paying other countries to produce as 
much as one third of all our nation's nitrogen. The security and 
affordability of our food supply will be affected.
    I need not spend much time recounting the difficulties experienced 
by California citizens with electricity. Our northwest states of 
Oregon, Idaho and Washington are experiencing one of the driest winters 
on record which will manifest itself in lower than usual runoff, less 
hydroelectric power and serious impacts to endangered fish. This will 
be further exacerbated by the compounding economic effects caused by 
the shortage of electricity. Farmers can make more money by being paid 
for not using electricity than by raising crops and livestock. The same 
is true in manufacturing aluminum.
    Western Governors have worked long and hard to raise citizen 
awareness to the serious nature of the energy situation. On December 1, 
Western Governors adopted resolutions on energy policy, coal and 
natural gas. On December 20, Western Governors held an emergency 
meeting in Denver with and met with former DOE Secretary Bill 
Richardson and former FERC Chairman Jim Hoecker. By January 9, nine 
Western Governors approved a Short-term Energy Conservation Strategy 
aimed at coordinated action to dampen demand. On February 2, the 
Western Governors' Association hosted an Energy Policy Roundtable in 
Portland, Oregon. Joining us were Energy Secretary Abraham, all three 
FERC commissioners, and leaders from major utilities, natural gas and 
coal producers, environmental groups, academic experts, and small and 
large retail customers. We adopted several short- and long-term energy 
policy recommendations. On February 27, Western Governors met with Vice 
President Cheney to discuss the items requiring Federal action. We 
requested that an agreement be developed between Western States and the 
Cheney energy policy team to provide for collaboration on our mutual 
energy challenges. (See attached information given to the Vice 
President.)
    Finally, energy policy has become a high priority nationally. I 
commend you and the rest of the Resources Committee for recognizing 
that management of and access to our Federal public lands will play a 
pivotal if not critical role in developing energy self-reliance.

Who's in charge?
    Today's power shortages in California may only portend the 
aftershocks of even greater shortages in other states this summer and 
compounded next winter. New energy supplies are being developed at only 
one to two percent per year while energy consumption is forecast to 
grow at two to three times that rate. Who's in charge of our nation's 
energy situation? Why didn't someone wake up sooner so that we wouldn't 
have this uncertainty? We need to increase supply and an infrastructure 
to transport that supply. Part of the answer is that we have energy 
policy by default, not by design, policy that is confused rather than 
coherent. Who should be in charge? In reality, no one person or entity 
is or should be in complete charge of managing the production, 
distribution or consumption of our nation's energy supply. We are in 
this together. Partnerships are vital and beneficial. Your letter of 
invitation to me for my testimony asked for my ``perspective on the 
role of state government interacting with Federal land and mineral 
managers in developing a more self-reliant energy policy for the nation 
through increased utilization of domestic supplies in an 
environmentally sound manner.'' The key phrase in your invitation is 
``interaction with Federal land managers.'' Interaction must be as full 
partners progressing towards common goals. If state government has a 
committed partnership (or interaction) with Federal land managers we 
will produce domestic supplies of energy in an environmentally safe 
manner. It is as simple as that.

History of energy policy
    Until 1973, the Federal interest in energy policy and production 
was centered on the primary principle that energy should be cheap and 
plentiful. The Arab oil embargo reinforced the notion that energy 
policy was synonymous with oil policy. Conservation of the resource to 
prevent waste and environmental protection was left to the states, as 
it should be. The Federal policy by default today is that Americans 
should be induced to reduce consumption, especially through higher 
prices brought on by restricted access to production and distribution. 
This equates to an internal embargo. The current discussion and 
research concerning global warming has fostered the policy tenet that 
we should get rid of any fuel that contains carbon. This approach is 
certainly disjointed and confusing.
    The Federal government in the mid-70's began a series of efforts to 
write a national energy policy. Six attempts were made in 25 years with 
none being comprehensive, particularly as it would affect public land 
management. Any successful new attempt must cut across all resource 
jurisdictions, public and private, state and Federal. Likewise, any new 
policy must recognize the balance needed among the economy, the 
environment and the community. Again, give the states full partnership 
or ``interaction'' and we will produce energy.

Policy by purpose, not by paranoia--Develop management directives that 
        foster cooperation, not polarization
    Over the past decade, management by litigation and intimidation has 
prevailed over management based on policy goals and has helped define 
our national energy policy. As one previous chair of the Council on 
Environmental Quality put it, ``our common ground, the environment, has 
become a battleground. Somehow, nearly half of the EPA's work is not 
the product of our collective will on the environment, but rather the 
product of judicial decree. Somehow, we have become a country in 
receivership, with the courts managing our forests, our rivers and our 
rangelands.'' CEQ Chair McGinty, 1997.
    Former Chief of the Forest Service, Jack Ward Thomas, lamented 
during a speech in Wyoming five years ago, that he took his appointment 
believing that he was the chief resource manager of the nations' 
forests. But he said, ``I have the least control of anyone, over 
resource management and allocation. The Fish and Wildlife Service has 
more say over forest management and health than I, through the 
Endangered Species Act. Legal challenges consume the majority of my 
day.''

Who should manage the land?--Shared responsibility, concurrent 
        jurisdictions
    Energy self-reliance through public lands will focus on the West, 
since nearly 75 percent of all BLM and Forest Service lands in the 
United States are located in our Western states, particularly those 
that are rich in environmental as well as energy values. These lands 
are managed for the general national public benefit, but the laws, 
policies and management decisions and judicial direction for public 
lands most directly impact, both socially and economically, the people 
who live in the West. Our residents and communities depend upon the 
total resource for recreation, wildlife habitat, resource use, mineral 
extraction, water supplies, flood protection, hunting, fishing, 
aesthetic values, tourism and monuments. When you tinker with Federal 
land issues in the West, you not only affect the economies of all 
Americans but also the livelihoods of those people and communities 
living near and relying on our public lands in the west.
    As illustrated in the following figure, Federal land ownership in 
America is not collected all in one place. Much of it is intermingled 
with state and private ownership. Regardless of specific ownership, 
public or private, we must recognize that none of our natural resource 
decisions can be made exclusively and independently of other managers 
or owners in the vicinity of our public lands. Again, we must interact 
as partners. States and the Federal government have shared or 
concurrent jurisdictions over activities on our lands. We are both 
rooted as constitutional governments, the Federal with enumerated 
powers and the states with reserved and delegated powers. As a result, 
activities on Federal lands require state as well as Federal permits 
and permissions to be successful. Both must respect the rights of 
private property adjacent to or co-mingled with governmental ownership.
    States own and manage lands that are near, adjacent to, or 
intermingled with Federal lands. To illustrate, I refer to the next 
figure in this presentation that shows land ownership patterns just in 
the State of Wyoming. There are fifteen categories of land ownership, 
each with its own approach to resource management.
    Where Federal land ownership dominates, partnerships are a 
necessity, not just a nicety to be doled out by a patronizing Federal 
government.

Environment
    In Wyoming we produce, process and/or transport coal, oil, natural 
gas, wind generation, and uranium. We have some of the cleanest air in 
the nation. Our water is so clean that we are one of the few states 
without a fish advisory. We have proven that a clean environment and a 
robust energy sector are not at odds with each other.

Potential energy--It's not just a matter of physics, it's location, 
        location, location
    Energy in the West isn't just electricity. Energy takes many forms, 
but is most meaningful in generic terms of heat measurement, such as 
BTU's, or as electrons. Much of that energy is available in and under 
our Federal public lands. For example, there are 478 billion tons of 
Federal coal reserves in undeveloped portions of the Powder River Basin 
in Wyoming and Montana.\1\ There are another 362 billion tons of 
Federal coal reserves on the Colorado Plateau.\2\ Estimated oil in 
undiscovered conventional fields on Federal lands range from 4.4 to 
12.8 billion barrels. Similarly, estimates of technically recoverable 
gas in undiscovered conventional fields on Federal lands range from 
34.0 trillion cubic feet (TCF) to 96.8 TCF. Estimates of technically 
recoverable coalbed gas 3 on Federal lands range from 13.0 TCF to 19.6 
TCF.\3\
---------------------------------------------------------------------------
    \1\ 1999 Resource Assessment of Selection Tertiary Coal Beds and 
Zones in the Northern Rocky Mountains and Great Plains Region, October 
1999.
    \2\ Federally Owned Coal and Federal Lands in the Colorado Plateau 
Region, USGS Fact Sheet FS-145-99, September 1999.
    \3\ 1995 National Oil and Gas Assessment and Onshore Federal Lands, 
USGS Open File Report 95-5-N, January 1998.
---------------------------------------------------------------------------
    Wyoming has enough coal reserves that, if we were a country, we 
would be number three in coal reserves in the world. Ninety-two percent 
of all coal produced in Wyoming comes from Federal leases. Seventy five 
percent of methane gas produced in Wyoming comes from Federal 
ownership. Sixty percent of our oil production is from Federal lands. 
But we don't even come close to Alaska in terms of natural gas or 
petroleum. Highly effective wind generation in the West is situated on 
Federal lands as is much of the hydroelectric generation. But today's 
energy production is not and will not be sufficient. America needs more 
energy. We have the energy but we have a sharp imbalance between where 
energy can be produced and where it is needed or consumed. Transmission 
pipelines and power lines are needed to connect supply with demand. 
Acquisition of rights-of-way is necessary. Governor Jane Hull of 
Arizona is frustrated with the most recent presidential declaration of 
yet another national monument in Arizona that will likely eliminate a 
long-approved power transmission line that was scheduled to connect 
energy generated in Arizona with consumers in California. Monumental 
decisions in Washington have created political misery in the West. If 
we cannot transmit energy it has no utility. If it has no utility we 
have no incentive. If we have no incentive we have a continuing energy 
policy based on default.
    Over 70 percent of Wyoming's mineral estate is Federally owned. As 
with many western states, that amount of Federal domination could 
render us a third-world colony rather than the sovereign states that we 
are. Wyoming ranks first of all states in the production of coal and 
uranium. Our natural gas exploration and production has increased our 
known reserves significantly in recent years so that we now rank 
fourth, but a distant fourth behind Alaska. Our extractable reserves 
are equivalent to 374 billion barrels of oil. With OPEC currently 
producing approximately 25 million barrels of oil per day, Wyoming's 
energy potential could completely replace the entire OPEC production 
for the next 41 years.

We have it, America needs it
    With this world-class base of raw resources at our very feet, how 
come America is in such a critical situation of short supply? The 
answer is simple: access to the resources has become more difficult and 
the ability to transport the products in any form remains unpredictable 
and uncertain. In Wyoming almost any project to develop new production 
or to transport it to consumers involves a Federal action subject to 
the processes of the National Environmental Policy Act, or NEPA. The 
original intent of NEPA was admirable, but the immense body of 
activities developed in its implementation in particular over the past 
eight years has elevated process itself over results and has allowed 
opportunity for political control rather than public disclosure and 
real protection.
    To illustrate, the Bureau of Land Management has been developing an 
Environmental Assessment for an additional 2500 permits for Coal Bed 
Methane wells in Wyoming's Powder River Basin. If the wells are not 
developed on the Federal lands, production on adjacent state and 
privately owned lands will pull the methane gas out of the Federal 
ownership. Following its approved procedures, the BLM had completed its 
work and had given assurances to leaseholders that the additional 
permits would be available by March 1, 2001. At the last moment the 
U.S. Fish and Wildlife Service reported that it had not completed its 
required assessment of impacts and would delay the issuance of permits. 
The lack of coordination and cooperation between two divisions within 
the single Department of Interior will delay access to a much-needed 
supply of gas in a very attractive market. Federal activity is 
primarily focused on process rather than results and there is no 
accountability for improper decisions. You have asked for my views on 
interaction between state government and Federal land managers. One of 
my views is that as a start ``interaction'' must begin with and between 
Federal agencies.

What's a NEPA?--It's not the act, it's the actors
    The National Environmental Policy Act was enacted in 1969 with the 
stated purpose of ``recognizing the profound impact of man's activity 
on the interrelations of all components of the natural environment.'' 
Further on in the Purpose Clause, the act declares that ``it is the 
policy of the Federal Government, in cooperation with State and local 
governments and other concerned public and private organizations . . . 
to create and maintain conditions under which man and nature can exist 
in productive harmony and fulfill the social, economic and other 
requirements of present and future generations.''
    Implementation of this short and relatively simple act, NEPA, has 
resulted in such a myriad of regulations and processes, that state and 
local authorities have little or no idea which way the whip saw will go 
next. Inconsistency between and among Federal agencies is rampant.
    The Act is intended to require Federal, state and private actions 
that are comprehensive, elicit better planning, are inter-generational 
in their beneficial effect, and strike a wholesome balance between the 
environment and the economy.
    Federal regulations for the implementation of NEPA, must be 
streamlined and applied in a manner that reduces costs, eliminates 
interagency conflicts and inconsistencies, and is more efficient and 
timely. Western Governors recommend that streamlining start with the 
adoption of management principles such as the eight Enlibra principles 
we adopted in 1999. These principles, which are attached to my 
testimony, reflect a practical, common sense way to approach 
environmental decisions, just as Wyoming's native son, Dr. W. Edward 
Deming's principles of quality management enabled a quality revolution. 
We have employed these principles successfully on several difficult 
environmental issues.
    Earlier I referenced that we are in an age of litigation with the 
courts directing the management of our resources. But it's not just 
that the courts are directly managing many of our resources, they are 
indirectly managing public resources in our states because of the fear 
of litigation, not just because of actual litigation. Implementation of 
NEPA is not the problem. It's the process. It takes too long, costs too 
much, spawns unending litigation and is so inconsistently implemented 
that each agency requires extra layers of management for its own unique 
set of regulations. It's not the Act, Mr. Chairman, it's the Actors.
    You don't have to amend NEPA, Mr. Chairman, if you would simply 
require the Federal government to be consistent and speak with a 
unified voice of management. That should be among the first tasks that 
your Committee undertakes with Vice-President Cheney in his role as 
Energy Czar.
    Other specific actions that could and should be taken include 
reallocating Federal resources and personnel to activities that are 
focused on the near-term need for more energy. For example, Wyoming's 
Powder River Basin is the nation's largest deposit of clean-burning 
coal. Over 90 percent of current coal production is developed under 
Federal leases. More clean-air-compliant coal could be produced by 
simply increasing the number of LBA's (Leases By Application) from one 
per year to two per year. The processes do not need to be changed. 
What's lacking are the people resources needed for processing the 
applications. As today's coal prices continue to rise, increasing the 
pace of LBA's with competitive bidding would enhance bonuses paid as 
well as production bids. Federal agencies are waiting for direction and 
necessary resources to engage in strategic planning for the enhancement 
of energy supplies developed efficiently and in environmentally sound 
ways on public lands.
    Similarly, State resources for participation in and implementation 
of such activities could be enhanced through the release of the state-
share funds, which now total more than $400 million for the western 
states and energy tribes, from the abandoned mine lands program.
    In addition:
         The Clinton Roadless Policy threatens to strand over 
        55 million acres, some of which include significant potential 
        for energy development, both renewable and non-renewable. Four 
        Western Governors asked to ``interact'' by being granted 
        cooperating agency status. We were denied.
         The U.S. Forest Service has previously been directed 
        to adopt and revise individual forest plans in an accelerated 
        fashion that is hardly strategic and certainly exclusive of 
        energy development. The fast track plan revision coupled with 
        the Clinton Roadless initiative for 55 million acres is hardly 
        a sound strategy for resource management.
         The projected growth in natural gas demand will 
        necessitate a significant increase in pipeline and distribution 
        systems over the next decade, many of which will cross Federal 
        lands. Best estimates are that 38,000 miles of new gas 
        pipelines are needed. The Federal government will have to 
        facilitate this construction by working with each affected 
        state to coordinate rights of way and production.
         Natural gas is the fuel of choice for the near term, 
        since well over 90 percent of new electric power generation 
        will be gas fired, even though 60 percent of current generation 
        is from coal.
         Alternatives for construction and maintenance of 
        electric transmission grid must be encouraged. Today's problems 
        focus on California, but significant shortages are imminent in 
        the Midwest.
         A myriad of directives and solicitors' opinions which 
        flew out of Washington, D.C. on January 19th regarding multiple 
        use of our BLM lands needs to be reassessed for purpose and 
        benefit.
    The recommendation from the West, Mr. Chairman, is that we pursue 
solutions that focus on results, that symbolize balance and 
stewardship, that recognize states as partners and, above all, that you 
resist preempting state laws and jurisdictions. Energy is plentiful 
within the boundaries of public land jurisdictions.

The opportunities
    I want to leave you with the message that the current energy crisis 
is an opportunity to break through the often unproductive deadlock that 
pits energy needs against environmental protection. The western 
electricity crisis has awakened us to how much we don't know about the 
energy resources of the nation and how little we have explored 
opportunities to meet the energy needs of a growing economy while 
protecting our environment. We need to seek out opportunities to 
promote energy development AND environmental protection.
    Below I have outlined several subjects under this Committee's 
jurisdiction that warrant careful and thoughtful examination. There are 
undoubtedly other areas where progress can be made in promoting energy 
development and protecting the environment.

Rights-of-way and permitting
    Far fewer new power transmission lines and oil and gas pipelines 
have been built in the West in the past decade than are needed today. 
The permitting processes of Federal land management agencies and states 
are generally rusty and not capable of the rapid action required to 
meet the energy demands of the West. While some folks may call for the 
heavy hand of Federal preemption of existing state and Federal agency 
permitting processes, there is little reason for such draconian action, 
but much to justify new approaches to integrate and accelerate existing 
permitting process. For example, in the West we are unaware of any 
interstate transmission lines that have ever been blocked by lack of a 
state permit.
    We need to revive the permitting process from the past decade of 
dormancy. This needs to be done in a manner that reduces overall 
permitting time and improves the quality of project reviews. Tomorrow, 
members of my staff will be meeting with Staff of the Western 
Governors' Association and a major information technology firm to begin 
exploring how high performance computing can be employed to expedite 
project assessment and the NEPA review process. This kind of innovative 
activity needs to become the rule, rather than the exception in the 
thinking of our agencies: how can we do our jobs better, faster and 
cheaper without sacrificing the environment or the economy.
    I recommend that this Committee:
         Urge Federal permitting agencies to include states as 
        cooperating agencies under NEPA reviews of energy projects 
        whenever a state requests cooperating agency status;
         Encourage the BLM and Forest Service to work with 
        Western Governors to develop a process that coordinates and 
        synchronizes Federal and state reviews of proposed energy 
        projects; and
         Encourage Federal agencies, including the Department 
        of Energy, to work with the states to develop the information 
        necessary for the consideration of alternatives to energy 
        projects that are required under NEPA.

Enhancing electricity production from Federal dams
    In the West, two Federal power marketing administrations, the 
Bonneville Power Administration and the Western Area Power 
Administration, market electricity generated at dams operated by the 
Bureau of Reclamation and the Corps of Engineers. We are all familiar 
with the arguments over the impact of such dams on the environment. The 
ongoing western electricity crisis is also reminding us how critical 
the hydro-electric system is to meeting the electricity demand. Let's 
develop opportunities to use the hydro-electric system to generate more 
electricity AND protect the environment. For example, a re-regulating 
dam and reservoir downstream from Glen Canyon Dam could enable greater 
peak electricity production, protect downstream environmental resources 
from the problems created by rapid fluctuations in flows and mitigate 
environmental problems for native species. More effective use could be 
made of Federal dams for stored generation capacity to even out the 
power generated by intermittent wind power generation. The BPA in its 
recent announced solicitation of 1,000 megawatts of wind generation, 
may use this wind power to balance hydro-electric generation. There are 
opportunities to replace 40-60 year old generators with more efficient 
generators thereby increasing electricity generation from the same 
amount of water (e.g., rewinds and replacements at Bonneville Dam, The 
Dallas Dam, McNary Dam, Chief Joseph Dam) or build additional power 
plants at existing dams (e.g., Folsom, Anderson Ranch, Black Canyon, 
Lewiston, Grand Coulee. We could evaluate opportunities to modify 
irrigation practices to shift pumping loads off-peak, to use more 
efficient pumps and to improve the efficiency of water use.
    I urge you to direct BPA, WAPA, BuRec and the Corps to seek out 
opportunities to use their assets to enhance electricity production 
while protecting the environment. I recommend that you ask them to 
report in 10 months on measures to achieve this end and to consult with 
governors throughout their work.

Abandoned mine land funds
    In enacting the Surface Mining Control and Reclamation Act of 1977, 
a bargain was struck between coal producing states and Indian tribes 
and the Federal government under which the states and tribes would 
receive at least one-half of the abandoned mine land fee collections 
from coal mining within their borders. Over the years, this fundamental 
agreement has been undercut by limits on appropriations of the state/
tribal share of AML collections, and diversion of the funds to the U.S. 
Treasury and the health benefits of retired coal miners. The result is 
that nearly every coal mining state and Indian tribe is owed 
significant amounts of money. For example, the latest annual data (12/
31/00) from OSM shows: West Virginia is owed $95 million; Kentucky $101 
million; Pennsylvania, $47 million; Montana $36 million; Utah $11 
million; the Council of Energy Resource Tribes, $35 million; and for 
Wyoming, the largest coal producing state, the most recent estimate is 
nearly $300 million.
    As part of the bargain struck in 1977, states that completed their 
clean-up of abandoned mines could use the funds for other public 
purposes. Wyoming is in this position. So may be other states and 
tribes. At this point, our own money is being withheld from Wyoming 
when these needed funds could be put to work expanding our capability 
to develop our energy and related resources and enhance the environment 
of our beautiful state.
    I urge this Committee to enact legislation that will enable states 
and Indian Tribes to access and use the State-share monies they are due 
under the Surface Mining Control and Reclamation Act of 1977.

Energy and fires
    Until last summer, few made the connection between our forest and 
range fires and the reliability of the western electric power system. 
However, the fires of last summer drove home the connection as fires in 
New Mexico knocked out a 500 Kv transmission line from Four Comers to 
Albuquerque causing serious blackouts. In Montana, the major fires 
resulted in the shut down of a major 500 Kv transmission line that 
moves coal-generated power from eastern Montana to Seattle. You can 
imagine the implications of these events if they should recur during 
this summer's peak load.
    Last fall, Western Governors negotiated an agreement with then-
Interior Secretary Babbitt and then-Agriculture Secretary Glickman to 
correct the imbalance in land management decisions. The agreement, 
which the Congress memorialized in the Interior Appropriations 
Committee Report, makes the states full partners and requires that 
local expertise and understanding be incorporated into forest 
management decisions during the extensive forest restoration activities 
over the next ten years. While the issues addressed in this agreement 
extend beyond issues of energy, I commend this agreement to the 
Committee and urge you to support its implementation as a model of the 
right way to manage our public lands and resources.
    I understand that my colleague Montana Governor Judy Martz will be 
testifying tomorrow to the Forest and Forest Health Subcommittee on 
these important issues.
Royalty management and well inspection
    I want to thank you and the Congress for acting last year to remove 
a major irritant limiting state/Federal cooperation on royalty 
management and well inspection which was the deduction of unsupported 
Federal agency costs from the states' share of Mineral Leasing Act 
revenues. With this obstacle removed, we have an opportunity for the 
thoughtful examination of ways in which the states and Federal 
government might further cooperate in enhancing the efficiency of how 
we collect royalties and manage mineral leases, such as by taking 
royalties in-kind rather than in-cash.
    You should encourage new leadership at the BLM and MMS to seek 
greater efficiencies in the execution of their responsibilities through 
enhanced collaboration with states. Both BLM and MMS execute 
responsibilities that parallel those of state agencies. We ought to be 
able to take better advantage of the synergies between these Federal 
and state agencies to improve well inspections and simplify royalty 
management while reducing the burden on lessees.

National parks and gateway communities
    Many of the most spectacular lands and waters in the nation are 
under the jurisdiction of the National Park Service and other Federal 
land management agencies. The public's interest in experiencing these 
national treasurers is growing with the resulting increased pressure on 
the environment and gateway communities.
    We need to find and capitalize on opportunities to show how parks 
and gateway communities can work in harmony with the environment while 
meeting needs of visitors. We need to use the parks and gateway 
communities as educational models of our ability to meet our energy 
needs while protecting the environment.
    I understand that there are examples of steps that can be taken in 
this direction. For example, in the Chairman's state of Utah, the 
state, the local utility (PacifiCorp), and the National Park Service 
have collaborated to replace remote and polluting diesel generation at 
Lake Powell with photo-voltaic. Zion National Park's pressing need to 
reduce traffic in the inner canyon has been integrated with the 
transportation needs of the park's gateway community of Springdale. 
These types of innovations should be the norm, not the exception.
    I urge you to direct the National Park Service, the BLM, the Forest 
Service and the Fish and Wildlife Service to seek out opportunities 
with gateway communities and states to meeting the needs of visitors 
and the gateway communities while providing a showcase of how the needs 
for energy and environmental protection can be met. I recommend that 
you direct these agencies to come back with a plan in 10 months that 
identifies the opportunities for collaboration and necessary resources 
to implement the plan. These plans must be developed in cooperation 
with gateway communities and states.
    Thomas Jefferson maintained a solid belief that the success of our 
democracy lies in ordinary citizens vested with deep civic 
responsibility, citizens who engage each other directly in the pursuit 
of the common good. The American West can and should reject the last 
two decades of bitter debate among environmentalists and resource users 
that has become so polarized that we have gridlock rather than any 
public benefit from our public lands. Former EPA Director Bill 
Ruckelshaus has said ``business, governments and citizens, frustrated 
by years of litigation and stalemate, have begun to turn to the common 
good, sometimes out of desperation, but more frequently out of hope. 
Hope that the decisions they yield will be less controversial and more 
durable. Hope that jointly designed decisions will be better and more 
informed decisions. And hope that stakeholder processes could actually 
help to regenerate public confidence in our institutions, including 
both government and business.''
    Mr. Chairman, thank you. I would be happy to answer any questions.

Suggested Action Plan to Meet the Westerns Electricity Crisis and Help 
           Build the Foundation for a National Energy Policy

    1. Permitting energy facilities.--Direct Federal agencies to 
partner with Western states to expedite regulatory processes governing 
the operation of existing powerplants and the construction of necessary 
new energy infrastructure. This includes:
         EPA permits governing operation of existing 
        powerplants and new powerplants;
         Federal interface with states on fish management and 
        hydro operations;
         Interior Department and Forest Service on the 
        processing rights-of-way;
         FERC processing of natural gas pipeline applications.
    2. Reliability legislation.--Enact before summer Federal electric 
system reliability legislation, such as last year's Senate bill making 
reliability standards enforceable.
         Delegates to the West authority to devise standards 
        and allows Federal deference.
         Governors create state bodies to advise industry and 
        FERC on reliability standards.
    3. Low-income energy assistance.--Increase Federal funding for low-
income energy assistance and low-income weatherization.
         Increased natural gas and electricity prices have 
        caused major hardship.
         Expected high electricity prices this summer will 
        exacerbate hardship in the West.
    4. Energy production and efficiency tax credits and Federal R&D.--
Federal action is needed to encourage the development of cleaner, more 
efficient powerplants and more efficient use of energy.
         Adopt energy efficiency tax credits to complement the 
        Western state efforts to reduce demand this summer.
         Extend and expand wind production tax credit to 
        geothermal, solar, and biomass.
         Adopt tax incentives for advanced coal use.
         Expand Federal fossil and renewable energy R&D.
    5. Federal appliance standards.--Continue development of standards.
         Standards adopted by DOE in January (for clothes 
        washers, water heaters, residential air conditioning and heat 
        pumps) are a step in the right direction.
         Grant waivers for stronger state standards, such as 
        California's air conditioner and commercial appliance 
        standards.
    6. Administration.--WGA cooperative agreement.--Implement a multi-
year cooperative agreement with Western Governors.
         Agreement enhances Western states' standing with 
        Federal agencies and serve as a vehicle for Federal funding on 
        key energy issues.
         The cooperative agreement would include: expanding 
        electrical generations, building needed energy infrastructure, 
        and improving the efficiency of energy use.
         The cooperative agreement would extend to states 
        cooperating agency status for NEPA reviews on energy projects.
                                 ______
                                 

Western Governors' Association Policy Resolution 99-013--Principles for 
                  Environmental Management in the West

               Sponsors: Governors Kitzhaber and Leavitt

                             A. BACKGROUND
Vision statement
    1. The people of the West face a common challenge. The quality of 
life we cherish is threatened--in part by our own success--as our rapid 
growth impacts much of the environmental quality and many of the 
natural resource systems that characterize our region. A number of 
factors illustrate the change that is occurring.
         Throughout the 1990s, the population growth rate in 
        the Western United States has surpassed that of every other 
        region of the country, in part because of the draw of the 
        Western quality of life and magnificent landscapes. Population 
        mobility and growth and the resulting increased diversity in 
        values are changing both the political dynamics and the 
        region's economy.
         While its historic base of natural resource-related 
        industries, such as farming, fishing, mining, and wood 
        products, remains important, the West has diversified 
        dramatically and now counts telecommunications, tourism, 
        recreation services, transportation, information technologies, 
        software and entertainment companies among its larger 
        employers.
         Globalization of markets, changing preferences, 
        substitute materials, and availability of natural resources 
        have affected the competitiveness and resiliency of many 
        Western communities. Communities must work to retool, adjust 
        and diversify to remain competitive.
         At the same time, the nature of environmental and 
        natural resource problems is changing. As large, easily 
        identified sources of pollution are controlled, the threat to 
        the environment has shifted to diffuse, numerous, and smaller-
        scale sources. Our sheer numbers and consumption habits make 
        environmental progress increasingly dependent on the daily 
        behaviors and decisions made by every individual.
         Agricultural consolidation and dispersed development 
        have affected land-use patterns resulting in a wide range of 
        economic and environmental impacts. Impacts range from impaired 
        air quality from increasing numbers of commuters and miles 
        traveled, to fragmented habitats and disrupted migration routes 
        for wildlife. Good stewardship born of locally controlled and 
        economically sustainable agriculture may also suffer.
         New computer and communications technologies, as well 
        as new environmental monitoring and characterization 
        technologies, create opportunities for innovative solutions to 
        preserve and enhance the environment and communities of the 
        West.
    There is a lot at stake. Westerners enjoy majestic mountains, 
forests, streams and lakes, as well as beautiful deserts, plains and 
coastlines. This landscape includes the vast public lands--national 
parks and forests, wilderness areas and refuges, military bases, tribal 
lands, state and local public lands--and highly productive private 
lands. This landscape harbors a wide array of plant and animal life and 
nurtures a diverse population of people both physically and 
spiritually. The West's natural resource systems are a source of great 
wealth and beauty for the region, the nation and the world.
    Westerners desire to create a region that will provide our children 
an extraordinary quality of life. This future embraces a shared sense 
of stewardship responsibility for our region's natural and cultural 
assets. It strives to ensure for present and future generations clean 
water and air, open lands that are beautiful, life-sustaining and 
productive, and proximity to public recreational opportunities. Equally 
important is an economy where people of any background or age have 
opportunities for education and high quality jobs and the ability to 
contribute to the well-being of their families and fellow citizens.
    It must be clear that in implementing this vision, Westerners do 
not reject the goals and objectives of Federal environmental laws, nor 
the appropriate role of Federal regulation and enforcement as a tool to 
achieve those objectives. Westerners respect treaty rights, 
sovereignty, property rights and other legal rights, and recognize the 
responsibilities associated with those rights in addressing our common 
environmental challenges.
    Our future includes a belief that we are better off if we can 
redirect energy away from polarized battles and toward solving our 
common problems. It is a vision of rebuilding trust, partnerships and 
community; of better understanding the cumulative effects of our 
actions; and of enhancing individual and collective environmental 
understanding and its associated stewardship. It includes individuals 
being able to pursue their objectives in ways that build community 
rather than disrupt it, and commitment to looking for win-win solutions 
sustainable over time.
    2. During the 1990s, the Western Governors have experimented with a 
variety of ways to improve management of the environment of the West 
through collaborative processes. Valuable accomplishments have been 
achieved while lessons have been learned from development of the Park 
City Principles for Water Management, the High Plains Partnership, the 
Grand Canyon Visibility Transport Commission, The Oregon Plan for 
Salmon and Watersheds, the Texas Regional Water Supply Planning 
Process, Trails and Recreational Access for Alaska and the Wyoming Open 
Lands Initiative. These efforts have built on the collaborative process 
which has shown repeated promise, and have demonstrated that the 
environmental strategies that work best have strong commitment from 
state and local government, vested local support, and Federal 
collaboration.
    3. In summary, mindful of our rich Western heritage, recognizing 
the need to sustain a vibrant Western economy, convinced of the 
importance of protecting and enhancing the environment for the well-
being of present and future generations, and acknowledging the benefits 
of existing and new approaches to environmental management, Governors 
and other Westerners with diverse experience have agreed to the 
principles that follow.

                     B. GOVERNORS' POLICY STATEMENT

    1. The Western Governors commit to a new doctrine to guide natural 
resource and environmental policy development and decision-making in 
the West. The doctrine is based upon the principles below, each of 
which is dependent upon the others. The integration of these principles 
is critical to their interpretation and the success of the new 
doctrine.

National Standards, Neighborhood Solutions--Assign Responsibilities at 
        the Right Level
    There is full acknowledgment that there are environmental issues of 
national interest ranging from management of public lands to air and 
water quality protection. Public processes are used to identify and 
protect the collective values of the nation's public. No existing laws 
or identified legal rights and responsibilities are rejected. The role 
of the Federal government is supported in passing laws that protect 
these values as well as setting national standards and objectives that 
identify the appropriate uses and levels of protection to be achieved. 
As the Federal government sets national standards, they should consult 
with the states, tribes and local governments as well as other 
concerned stakeholders in order to access data and other important 
information. When environmental standards have not been historically 
within the Federal jurisdiction, non-Federal governments retain their 
standard setting and enforcing functions to ensure consideration of 
unique, local-level circumstances and to ensure community involvement.
    With standards and objectives identified, there should be 
flexibility for non-Federal governments to develop their own plans to 
achieve them, and to provide accountability. Plans that consider more 
localized ecological, economic, social and political factors can have 
the advantage of having more public support and involvement and 
therefore can reach national standards more efficiently and 
effectively.
    Governments should reward innovation and take responsibility for 
achieving environmental goals. They should support this type of 
empowerment for any level of government that can demonstrate its 
ability to meet or exceed standards and goals through locally or 
regionally tailored plans. The Federal government should support non-
Federal efforts in this regard with funds and technical assistance. In 
the event that no government or community is progressing toward 
specific place-based plans, the Federal government should become more 
actively involved in meeting the standards.

Collaboration, Not Polarization--Use Collaborative Processes to Break 
        Down Barriers and Find Solutions
    The regulatory tools we have been relying on over the last quarter 
of a century are reaching the point of diminishing returns. In 
addition, environmental issues tend to be highly polarizing, leading to 
destructive battles that do not necessarily achieve environmental 
goals. Successful environmental policy implementation is best 
accomplished through balanced, open and inclusive approaches at the 
ground level, where interested stakeholders work together to formulate 
critical issue statements and develop locally based solutions to those 
issues. Collaborative approaches often result in greater satisfaction 
with outcomes and broader public support, and can increase the chances 
of involved parties staying committed over time to the solution and its 
implementation. Additionally, collaborative mechanisms may save costs 
when compared with traditional means of policy development. Given the 
often local nature of collaborative processes, it may be necessary for 
public and private interests to provide resources to ensure these 
processes are transparent, have broad participation and are supported 
with good technical information.

Reward Results, Not Programs--Move to a Performance-Based System
    A clean and safe environment will best be achieved when government 
actions are focused on outcomes, not programs, and when innovative 
approaches to achieving desired outcomes are rewarded. Federal, state 
and local policies should encourage ``outside the box'' thinking in the 
development of strategies to achieve desired outcomes. Solving problems 
rather than just complying with programs should be rewarded.

Science for Facts, Process for Priorities--Separate Subjective Choices 
        From Objective Data Gathering
    Environmental science is complex and uncertainties exist in most 
scientific findings. In addressing scientific uncertainties that 
underlie most environmental issues and decisions, competing interests 
usually point to scientific conclusions supporting their view and 
ignore or attack conflicting or insufficient information. This 
situation allows interests to hold polarized positions, and interferes 
with reconciling the problems at hand. It may also leave stakeholders 
in denial over readily perceived environmental problems. This in turn 
reduces public confidence and raises the stridency of debate. Critical, 
preventive steps may never be taken as a result, and this may lead to 
more costly environmental protection than would otherwise be required.
    A better approach is to reach agreement on the underlying facts as 
well as the range of uncertainty surrounding the environmental question 
at hand before trying to frame the choices to be made. This approach 
should use a public, balanced and inclusive collaborative process and a 
range of respected scientists and peer-reviewed science. Such a process 
promotes quality assurance and quality control mechanisms to evaluate 
the credibility of scientific conclusions. It can also help 
stakeholders and decision-makers understand the underlying science and 
its limitations before decisions are made. If a collaborative process 
among the stakeholders does not resolve scientific disagreements, 
decision-makers must evaluate the differing scientific information and 
make the difficult policy choices. Decision-makers should use ongoing 
scientific monitoring information to adapt their management decisions 
as necessary.

Markets Before Mandates--Pursue Economic Incentives Whenever 
        Appropriate
    While most individuals, businesses, and institutions want to 
protect the environment and achieve desired environmental outcomes at 
the lowest cost to society, many environmental programs require the use 
of specific technologies and processes to achieve these outcomes. 
Reliance on the threat of enforcement action to force compliance with 
technology or process requirements may result in adequate environmental 
protection. However, market-based approaches and economic incentives 
often result in more efficient and cost-effective results and may lead 
to more rapid compliance. These approaches also reward environmental 
performance, promote economic health, encourage innovation and increase 
trust among government, industry and the public.

Change A Heart, Change A Nation--Environmental Understanding is Crucial
    Governments at all levels can develop policies, programs and 
procedures for protecting the environment. Yet the success of these 
policies ultimately depends on the daily choices of our citizens. 
Beginning with the nation's youth, people need to understand their 
relationship with the environment. They need to understand the 
importance of sustaining and enhancing their surroundings for 
themselves and future generations. If we are able to achieve a healthy 
environment, it will be because citizens understand that a healthy 
environment is critical to the social and economic health of the 
nation. Government has a role in educating people about stewardship of 
natural resources. One important way for government to promote 
individual responsibility is by rewarding those who meet their 
stewardship responsibilities.

Recognition of Benefits and Costs--Make Sure All Decisions Affecting 
        Infrastructure, Development and Environment are Fully Informed
    The implementation of environmental policies and programs should be 
guided by an assessment of the costs and benefits of different options 
across the affected geographic range. To best understand opportunities 
for win-win solutions, cost and benefit assessments should look at 
life-cycle costs and economic externalities imposed on those who do not 
participate in key transactions. These assessments can illustrate the 
relative advantages of various methods of achieving common public 
goals. However, not all benefits and costs can be easily quantified or 
translated into dollars. There may be other non-economic factors such 
as equity within and across generations that should also be fully 
considered and integrated into every assessment of options. The 
assessment of options should consider all of the social, legal, 
economic and political factors while ensuring that neither quantitative 
nor qualitative factors dominate.

Solutions Transcend Political Boundaries--Use Appropriate Geographic 
        Boundaries for Environmental Problems
    Many of the environmental challenges in the West cross political 
and agency boundaries. For example, environmental management issues 
often fall within natural basins. These are often transboundary water 
or air sheds. Focusing on the natural boundaries of the problem helps 
identify the appropriate science, possible markets, cross-border 
issues, and the full range of affected interests and governments that 
should participate and facilitate solutions. Voluntary interstate 
strategies as well as other partnerships are important tools as well.
    2. The Western Governors invite state, local and Native American 
leaders, environmental organizations, the private sector, Congress and 
the Administration to embrace these principles in their environmental 
and natural resources policy work and decision-making.

                   C. GOVERNORS' MANAGEMENT DIRECTIVE

    1. The Western Governors' Association (WGA) shall transmit a copy 
of this resolution to the President; Vice President; the Council on 
Environmental Quality; the Administrator of the Environmental 
Protection Agency; the Secretaries of Interior, Energy, Transportation 
and Agriculture; the chairmen and ranking minority leaders of the 
relevant Committees of Congress; the Western delegation to Congress; 
Western tribal leaders; state, municipal and county government 
associations; leaders of business associations and environmental 
institutions; and interested CEOs.
    WGA shall incorporate these principles into its projects and 
activities in environmental and natural resources policy development 
and shall work with the states to identify specific areas where they 
have been demonstrated and adopted or may be in the future.
    3. WGA shall communicate the commitment of the Governors to these 
principles to organizations, institutions and media concerned with 
environmental protection and natural resources management.
    4. WGA shall report to the Governors annually on input received on 
the content of the Shared Doctrine for Environmental Management. In 
conjunction with its Enlibra Steering and Advisory Committees, WGA 
shall use its limited resources to promote the doctrine, and to engage 
and evaluate appropriate projects that seek to advance its principles. 
To carry out these activities, WGA will prepare an implementation plan 
as part of the annual work plan submitted to the Governors.
    Originally adopted as Policy Resolution 98-001 in 1998.
                                 ______
                                 

  Western Governors' Association Policy Resolution 00-033--Natural Gas

                       Sponsor: Governor Knowles

                             A. BACKGROUND

    1. North America is dependent on reliable, reasonably priced energy 
supplies to support its economy.
    2. Demand for natural gas is growing faster than any other energy 
source. Higher than expected recent growth in natural gas use will 
fully utilize current North American gas production, creating the 
relatively high prices consumers are paying for natural gas this 
winter. U.S. natural gas use is currently 21 trillion cubic feet per 
year and is expected to grow to 30 trillion cubic feet by 2015. More 
than 90 percent of planned expansion of electric generation capacity in 
the U.S. is to be fueled with natural gas.
    3. Billions of dollars of investment in production, transmission, 
storage and distribution facilities will be required to ensure that 
North American natural gas consumers have access to an adequate supply 
of fuel.
    4. The Interstate Oil and Gas Compact Commission's recent 
Governor's Summit on Natural Gas concluded, with the support of natural 
gas experts from industry, regulatory and other government officials, 
that a functional marketplace is capable of delivering natural gas to 
North America at reasonable prices.
    5. The largest single untapped supply of natural gas available to 
North American is located in Alaska. 35 trillion cubic feet of gas are 
found in proven reserves. Additional exploration may discover total 
reserves of more than 100 trillion cubic feet.
    6. In the 1970's the United States and Canada agreed to transport 
Alaska natural gas to the rest of the continent via a pipeline from 
Prudhoe Bay through Alaska's interior along the Alcan Highway to the 
existing North American distribution system. This agreement constitutes 
a treaty-like international arrangement which was specifically 
authorized by Congress. Key rights-of-way and regulatory approvals are 
still valid allowing a project to deliver billions of cubic feet per 
day by 2006 or 2007. A pipeline along the Alcan Highway would parallel 
an existing highway corridor and would not cross any U.S. national 
conservation system units. Such a project would be the biggest private 
construction project in North American history.

                     B. GOVERNORS' POLICY STATEMENT

    1. Consistent with Federal and state environmental laws and with 
local community values, Western Governors:
          a. Believe Federal and state governments should endorse 
        policies that increase the availability of North American 
        natural gas at reasonable prices to residential, commercial, 
        industrial, and electric generation consumers,
          b. Call on Federal and state governments to work together to 
        allow for appropriate access to their public-owned lands for 
        natural gas exploration, production and transmission, while 
        protecting environmentally sensitive areas, and
          c. Endorse, pending completion of appropriate environmental 
        review, a project to bring Alaska gas to market via a pipeline 
        from Prudhoe Bay along the Alcan Highway through Canada to the 
        North American distribution system. Any such project must 
        ensure full pipeline safety to protect the public and 
        environment.
    2. Western Governors also believe that the nation must continue to 
identify and develop a full range of economic and efficient alternative 
energy sources, including energy conservation.

                   C. GOVERNORS' MANAGEMENT DIRECTIVE

    1. The Western Governors' Association (WGA) shall transmit this 
resolution to the President, elect, Secretary of Energy, Secretary of 
Energy designee, and members of the U.S. House and Senate Natural 
Resources Committees.
    2. WGA staff shall monitor developments related to the purposes of 
this resolution and report to the Governors as needed.
                                 ______
                                 

Western Governors' Association Policy Resolution 00-036--Energy Policy 
                            for the Americas

                       Sponsor: Governor Geringer

                             A. BACKGROUND

    1. The United States enjoys the strongest economy in the world and 
an increasingly clean environment both of which are made possible by 
abundant and affordable energy and improvements in clean energy and 
renewable energy technologies. To assure all Americans access to 
affordable energy, it is necessary to ensure that diverse energy 
supplies, including coal, hydroelectric, natural gas, petroleum and 
renewable resources such as biomass, ethanol, wind, solar, and 
geothermal, remain available, and that energy resources are used 
efficiently and in a manner that continues the trend to a cleaner 
environment
    2. Since 1973, the Federal Government has attempted, through at 
least six plans, to implement an effective national energy policy. 
Despite the Federal government plans, today we: (a) are increasingly 
dependent on imported energy supplies, particularly transportation 
fuels, from unstable regions of the world; (b) do not have in place 
adequate infrastructure necessary to provide our growing technology-
driven economy with reliable, high-quality and affordable supplies of 
energy; (c) have not adequately improved the efficiency with which 
energy is used or enabled the demand side of the market to more 
effectively respond to energy price increases; and (d) have flawed 
wholesale electricity markets in some areas. These shortcomings are 
particularly apparent in a year when energy prices dramatically 
increased and western electricity markets are in the midst of 
fundamental reforms.
    3. In order for the U.S. economy to be sustained and to grow, 
technologies and policies need to be developed to enable all energy 
resources to be developed cleanly, efficiently and cost-effectively and 
to efficiently use energy resources and enable demand responsiveness to 
energy prices.
    4. The West is particularly critical to the implementation of 
national energy policy because of the significant fossil energy and 
renewable energy resources of the region. The West already produces 
almost 65 percent of the nation's natural gas, 64 percent of the 
nation's oil, more than 50 percent of the nation's coal, and a major 
portion of the nation's renewable resources.
    5. The United States presently relies on fossil fuels (oil, gas, 
and coal) for approximately 85 percent of its total energy needs and 
almost 70 percent of its electrical power.
    6. Renewable energy should be developed and energy efficiency 
promoted to provide sufficient affordable and reliable energy as part 
of a diverse portfolio that includes fossil fuels as sources for 
electric power, transportation and heating. As efforts continue to 
develop technologies to enable a transition to renewable energy, it is 
important to ensure American consumers can reduce demand and utilize 
clean burning natural gas, oil and coal.
    7. In order for the U.S. economy to maintain sustained growth, all 
sources of energy should be developed cleanly, efficiently, and cost-
effectively through the development of a comprehensive energy policy. 
To accomplish this, an initiative must be developed and implemented to 
provide energy security, reliability, diversity, and affordability and 
to ensure environmental protection. Such an initiative must capitalize 
on current and future opportunities to improve the efficiency with 
which energy is used.

                     B. GOVERNORS' POLICY STATEMENT

    1. Western Governors' support a national energy policy that is 
guided by the goals of secure, reliable, diverse, affordable and 
environmentally-sound energy for all citizens. The Governors encourage 
cooperation among states to meet these goals.
    2. A national energy policy should be guided by:
          a. Effective and functional market-oriented approaches to 
        energy supply and use that enable the above goals to be met;
          b. Appropriate government support of energy research in the 
        development of new technologies and commercial applications, 
        with demonstrations by the private sector;
          c. Performance-based Federal and state environmental 
        standards implemented by the states;
          d. Strategic alliances with our international partners in the 
        Americas; and
          e. Conservation by end-users in the transportation, 
        industrial, residential, and commercial sectors.
    3. Western Governors believe that an Energy Policy Roundtable is 
needed to provide a forum for governors, members of Congress, the 
Federal administration, state agencies, and experts to examine issues, 
policies and programs necessary to assure secure, reliable, diverse, 
affordable and environmentally-sound energy into the future.

                   C. GOVERNORS' MANAGEMENT DIRECTIVE

    1. The Western Governors' Association shall transmit this 
resolution to the President, elect, the Secretaries or Secretaries-
elect of Energy, Agriculture, Interior and Commerce, the Administrator 
or Administrator-designee of the Environmental Protection Agency, 
appropriate members and Committees of Congress, the National Governors' 
Association, and the Interstate Oil and Gas Compact Commission and 
other concerned organizations.
    2. WGA staff shall monitor developments related to the purposes of 
this resolution and report to the governors as needed. WGA and 
affiliated organizations shall ensure that all WGA programs and 
initiatives that affect energy development and use incorporate the 
principles and program of this policy.
    3. WGA will work with other interested organizations to convene the 
first Energy Policy Roundtable prior to the WGA Annual Meeting in order 
to prepare a detailed approach to implement the policies in this 
resolution.
                                 _____
                                 

  Western Governors' Association Policy Resolution 00-037--Coal Policy

                       Sponsor: Governor Geringer

                             A. BACKGROUND

    1. Coal mining has a long and proud heritage in the western United 
States with today's coal-fired power plants generating 56 percent of 
the electricity in the United States and over 70 percent of the 
electricity generated in Arizona, Colorado, Montana, Nevada, New 
Mexico, Utah and Wyoming.
    2. The West now mines over half of the coal produced in the United 
States from less than 6 percent of the total coal mines in the United 
States. Western coal comprises approximately 55 percent of the nation's 
reserves and over 80 percent of the low sulfur coal reserves (defined 
as less than 1.67 lbs. SO2, per million Btu).
    3. As the nation's growth in energy demand continues, western coal 
development is an important part of the fuel mix necessary to assure 
that U.S. citizens' energy needs are met in an affordable, reliable and 
increasingly clean manner.
    4. Western and national coal-fired power generation is increasingly 
clean, with significant reductions in SO2, NOX, 
and particulate matter during a period of dramatic increase in the 
demand for electricity. For example, western coal-fired power plants 
currently produce 23 percent of the coal-fired electricity generated in 
the country but emit only 13 percent of the SO2 emissions 
from such plants.
    5. The western coal industry is among the safest in the entire 
world, and has consistently conducted successful reclamation of mined 
lands.

                     B. GOVERNORS' POLICY STATEMENT

    1. The Western Governors' Association acknowledges the significant 
contribution of the coal industry to many western states' revenues and 
local communities' economics. The Governors also strongly support 
public and private research to reduce emissions from coal-fired 
generation.
    2. Consistent with the Governors' general energy policy resolution 
00-036, Western Governors support the concepts for Federal legislation 
which:
          a. Accelerate technology research and development programs 
        for advanced clean coal technology for new and existing coal 
        based electric generating facilities.
          b. Encourages appropriate incentives for emission reductions 
        and efficiency improvements in existing coal based electricity-
        generating facilities.
          c. Encourages incentives for early commercial application of 
        advanced clean coal technologies for new generating capacity.
    3. Western Governors support the concept of a more comprehensive 
and coordinated approach to environmental regulation.
    4. Western Governors recognize that there are multiple sources of 
emissions that cause regional haze and an effective emissions-reduction 
program must treat all sources fairly.

                   C. GOVERNORS' MANAGEMENT DIRECTIVE

    1. WGA staff shall convey to the Administration, Congress and the 
U.S. Environmental Protection Agency that the Western Governors' 
Association supports the concepts of Federal legislation as outlined in 
Policy Statement No. 2.
    2. WGA staff shall convey to Congress and the U.S. Environmental 
Protection Agency the need to address the multitude of emission 
concerns in a comprehensive and coordinated approach.
    3. WGA staff shall convey this resolution to Mining Associations 
within the membership states of the Western Governors' Association.
                                   ____
                                 

    [Maps referred to in Governor Geringer's statement follow:]

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    The Chairman. Thank you, Governor Geringer. We appreciate 
your excellent remarks.
    I recognize the gentleman from Montana to introduce the 
Governor of Montana.
    Mr. Rehberg. Thank you, Mr. Chairman. It gives me a great 
deal of pleasure to draw attention to the last of the three 
panel members, a woman that I have worked with for many years. 
Twelve years ago, we began working with Senator Conrad Burns 
within the State operation.
    If the gentlelady from Wyoming were here, I would make some 
comment like "My governor can beat up her governor." She is a 
former Olympic speed skating champion. So, Jim, I wouldn't leg 
wrestle her if I were you; also a small businesswoman, very 
successful in that right as well. And in the true tradition of 
firsts in Montana, we were the first State to have a woman 
Congresswoman, Jeanette Rankin, and we now have our first woman 
governor, and we so dearly appreciate the things she is going 
to try and do to build energy independence for this nation.
    Montana's motto is ``oro y plata,'' ``gold and silver,'' 
and it is appropriate now at this time that we talk about coal, 
natural gas, and oil being able to free us from the dependence 
on sources of oil oversees.
    So without further ado, I want to introduce a very good 
friend of mine, a new Governor, Judy Martz of the State of 
Montana.
    The Chairman. Thank you. We appreciate the introduction.
    Governor, we will turn to you.

  STATEMENT OF THE HON. JUDY MARTZ, GOVERNOR, STATE OF MONTANA

    Governor Martz. Thank you. First of all, thank you, 
Congressman Rehberg. We are very proud to have you here 
representing Montana.
    Mr. Chairman, members of the Committee, for the record I am 
Governor Judy Martz, representing the Big Sky State of Montana. 
It is an honor to be here today to testify on the role of 
public lands in developing a self-reliant energy policy. I 
appreciate the efforts and interest this Committee has shown in 
our State and in this issue.
    As Governor Geringer mentioned, we also experienced last 
summer those horrific fires. We have closed down our only large 
aluminum plant, which is now selling back their power and 
closing their doors for the next year. Mines that produce much-
needed resources are at risk of closing because of energy 
prices, and one of our major cements plants. As we lose jobs at 
300 and 350 people a crack, that is a huge impact to the State 
of Montana.
    I ask for your consideration of my prior submission of my 
complete testimony for the record and for your review.
    Now, let me begin by putting into context the size of 
Montana. Overall, Montana has more than 93 million acres of 
land. That is more than 145,000 square miles. Of the 93 million 
acres, more than 19 million acres are managed by the United 
States Forest Service, 8 million by the Bureau of Land 
Management, and another 1.1 million by the National Park 
Service. Thirty-three percent of our land mass is managed by 
the Federal Government.
    We must start to utilize the resources that we have. We 
should not act surprised that after a decade of stopping 
natural resource development on public lands that we are 
suddenly faced with an energy shortage. Natural gas prices will 
continue to rise if we don't focus on the energy that we can 
provide as a nation. Electricity prices will continue to climb 
if we continue to say we can't develop clean coal to burn, we 
can't develop natural gas, and we have to blow up our 
hydropower dams. We can expand our natural resource development 
well into the context of environmental stewardship. This is not 
a zero-sum game.
    Montana has a wealth of natural resources, from vast super-
compliant coal fields in the east, to thousands of acres of 
timber land in the west. Montana can contribute to the economic 
health of this country through responsible and environmentally-
sensible development of our resources.
    Unfortunately, the Federal Government has systematically 
reduced the number of opportunities for reasonable development 
of our natural resources in the past recent years. At the end 
of the last administration's term of office, doors were closed 
on many opportunities to responsible management and development 
of natural resources. The past President's Roadless Initiative 
will lock up over 6 million acres of U.S. Forest Service land. 
Additionally, the Roadless Initiative will prohibit sensible 
and environmentally-sensitive exploration of natural gas and 
oil.
    Also, just days before leaving office, President Clinton 
designated nearly half a million acres of land along the upper 
Missouri River breaks as a National Monument. The past 
administration permanently set aside one of our State's 
greatest natural gas reserves due to concerns over a great 
influx of tourists.
    Last year, approximately 420,000 acres along the Rocky 
Mountain Front were withdrawn from mineral development for the 
next 20 years. The Rocky Mountain Front has untold reserves of 
natural gas. In fact, our Canadian neighbors to the north have 
been responsibly developing natural gas along the Front for 
years.
    But the news for us is not all bad. In fact, despite the 
previous attempts to lock up the West, we believe Montana still 
has tremendous potential to meet the demands of a growing 
nation. Montana anticipates the imminent transfer of Federal 
mineral rights in super-compliant coal reserves in southeast 
Montana. This area of land, known as the Otter Creek tracts, is 
the result of an exchange for the mineral development rights 
outside Yellowstone National Park.
    While I served as Montana's Lieutenant Governor with former 
Governor Marc Racicot, Montana successfully negotiated a deal 
with the Federal Government that resulted in a buy-out of 
mineral rights and an exchange for the lost economic 
development. Under the leadership of Senator Conrad Burns and 
former Congressman Rick Hill, H.R. 2107 was signed into law in 
1998 (P.L. 105-83), mandating the transfer of Otter Creek 
Tracts 1, 2 and 3 to the State of Montana.
    The former Secretary of the Interior ignored the law, 
refusing to make the transfer. I am pleased to say that, 
working with new Secretary of Interior Gail Norton, I am 
anticipating Montana will receive ownership of these tracts in 
the near future, a very important move for Montana. The 
development of over 533 million tons of super-compliant coal is 
at stake here. I call it super-compliant because it far exceeds 
the Federal clean air requirements for high btu values and low 
sulfur output.
    This high-quality coal will be in demand in the Midwest as 
power generating facilities struggle to improve air quality, as 
mandated under the Clean Air Act. The development of these 
tracts is also bringing increased interest from investors who 
recognize the need for additional power sources in the Western 
half of our country. We have already have several inquiries 
about potential coal development, but also coal-fired electric 
generating facilities that will fuel the power needs of Montana 
and the West.
    Along with the potential coal development, Montana has vast 
reserves of resources only recently acknowledged as a viable 
energy source: coal bed methane, or natural gas. Currently, 
Montana's Department of Environmental Quality and the BLM are 
working jointly to assess environmental impacts from the 
proposed development. Wyoming Governor Geringer has had 
tremendous experience in the development of coal bed methane, 
and we hope to learn from his efforts in Wyoming.
    Today, nearly 57 percent of our energy needs are supplied 
by foreign nations. Not only is that a national security risk, 
it takes good-paying jobs away from hard-working Americans, 
hard-working Montanans. I believe that is unacceptable.
    We have the resources to meet a greater portion of our 
country's energy needs, and we can do it in an environmentally-
sensitive manner. As a nation, we need to reevaluate the role 
of our public lands and how they can play a part in supplying 
this country with the energy it so desperately needs.
    We ask for every consideration to be allowed, with new 
technologies, to move forward in our State of Montana and the 
Western States of this country and to assist in the energy 
needs of this country. We want to be there. We want to see that 
environmentally-safe maneuvers or management practices will be 
used in conservation, in transmission lines or pipelines, 
regulation changes on the State and Federal level, increasing 
supply for generation plants, and our immediate long-range 
needs and our short-range needs would be met through those 
usages.
    We want to be a partner with the Federal Government. We 
want our opinions to be heard, as we have not had them heard, 
we believe, in the last 8 years. We appreciate the opportunity 
to be here with you and we appreciate what is going to be 
happening in the future.
    Thank you.
    [The prepared statement of Governor Martz follows:]

   Statement of The Honorable Judy Martz, Governor, State of Montana

    Mr. Chairman, Members of the Committee, for the record my name is 
Judy Martz and I am the Governor of the great state of Montana. It is 
an honor to be here today to speak on behalf of my state on the Role of 
Public Lands in Developing a Self-Reliant Energy Policy. I appreciate 
the efforts and interest this Committee has shown in this issue.
    Let me begin by putting into context the size of Montana. Overall, 
Montana has in excess of 93 million acres of land. That is over 145,000 
square miles. Congressman Rehberg, our states sole voice in the House 
of Representatives has a big job.
    Of the 93 million acres, over 19 million acres are managed by the 
United States Forest Service, 8 million by the Bureau of Land 
Management and another 1.1 million by the National Park Service.
    Adding these public land figures together, and you see that 33 
percent of our land mass is managed by the Federal Government.
    Montana has a wealth of natural resources. From vast super-
compliant coal fields in the east, to miles of timber land in the west, 
Montana has the natural resources to help quest the thirst for energy 
across our nation. Montanans are anxious for the opportunity to 
contribute to the economic health of this country through responsible 
and environmentally sensible development of our resources.
    Unfortunately, we have seen over the past decade, a continual move 
away from the responsible development of our natural resources. We have 
continued to increase our reliance on foreign nations to supply us with 
our energy needs. The result, foreign dependence on energy has reached 
all time highs, which in turn has led to rising energy costs and power 
shortages across the nation.
    And while Montana has the potential to help supply this nation with 
clean, affordable energy, we have seen our ability to responsibly 
develop those resources grind to a halt through Federal inaction and 
mismanagement. At the end of President Clinton's term in office, he 
forced many Federal land grabs through in an attempt to recreate a 
lasting legacy. In Montana alone, we protested to no avail, President 
Clinton's Roadless Initiative, which locked up over 6 million acres of 
U.S. Forest Service land. Never mind the fact that the smoke had barely 
cleared from devastating summer fires that reduced to ash over 900,000 
acres of forest land.
    Additionally, the Roadless Initiative will forever prohibit 
sensible and environmentally sensitive exploration of natural gas and 
oil.
    Also, just days before leaving office, President Clinton designated 
nearly half a million acres of land along the Upper Missouri River a 
National Monument. While the state has been promoting tourist activity 
in Montana in an attempt to replace revenues from resource industries, 
President Clinton and Secretary of Interior Bruce Babbitt permanently 
set aside one of our states greatest natural gas reserves due to 
``concerns over a great influx of tourists''.
    Last year, approximately 420,000 acres along the Rocky Mountain 
Front were withdrawn for mineral development for the next 20 years. The 
Rocky Mountain Front has untold reserves of natural gas. In fact, our 
Canadian neighbors to the north have been responsibly developing 
natural gas along the Front for years.
    But the news is not all bad. In fact, despite the previous 
Administration's attempt to protect the west from itself, we believe 
Montana still has tremendous potential to meet the demands of a growing 
nation.
    Montana is in the process of receiving the Federal mineral rights 
in super-compliant coal reserves in Southeast Montana. This area of 
land known as the Otter Creek tracts is the result of an exchange for 
the mineral development fights outside Yellowstone National Park. While 
serving as Montana's Lieutenant Governor under former Governor Marc 
Racicot, Montana successfully negotiated a deal with the Federal 
government that resulted in the buyout of mineral rights, and an 
exchange for the lost economic development. Under the leadership of 
Senator Conrad Burns and former Congressman Rick Hill, H.R. 2107 was 
signed into law in 1998, mandating the transfer of Otter Creek Tracts 
1, 2 and 3 to the State of Montana.
    However, always mindful of what was best for the citizens of 
Montana, former Secretary of Interior Bruce Babbitt refused to follow 
the Federal mandate and reneged on the Federal government's promise. I 
am pleased to say that working with the new Secretary of Interior Gale 
Norton, I believe Montana will receive ownership of these tracts in the 
near future.
    And at stake is the development of over 533 million tons of super-
compliant coal. And I call it super-compliant because it far exceeds 
Federal Clean Air requirements with high BTU values and low sulphur 
output.
    These tracts will most likely be included as part of our school 
trust land, thus the revenue's from development will add to our state's 
ability to fund public education.
    Additionally, this high quality coal will be in great demand in the 
Midwestern part of our country as power generating facilities struggle 
to improve air quality as mandated under the Clean Air Act.
    The development of these tracts is also bringing increased interest 
from investors who recognize the need for additional power sources in 
the western half of our country. We have already had several inquiries 
about the potential development of not only the coal, but also coal 
fired electric generating facilities that will fuel the power needs of 
Montana and the west.
    Along with potential coal development, Montana has vast reserves of 
a resource only recently acknowledged as a viable energy source. Coal 
bed methane. Currently, Montana's Department of Environmental Quality 
and the BLM are working jointly to assess environmental impacts from 
proposed development. Wyoming Governor Geringer has had tremendous 
experience in the development of coal bed methane and we hope to learn 
from efforts in Wyoming.
    In Montana, we have seen increased interest in utilizing 
traditionally under-valued or no-valued timber byproducts to produce 
electricity. And this prospect grows increasingly attractive as the 
United States Forest Service begins to implement The National Fire 
Plan, a plan that addresses the health of our forests that in part 
focuses on mechanical treatment of small trees and shrubs that 
contribute to catastrophic fires. With the General Accounting Office 
identifying over 40 million acres of interior west forestlands at risk 
for catastrophic fire, we have a tremendous potential energy resource 
at our disposal.
    We have a tremendous amount of energy reserves on our public lands. 
From coal to coal bed methane, from natural gas to timber byproduct co-
generation, we have the potential to be much more self reliant in terms 
of energy production.
    Today, nearly 57 percent of our energy needs are supplied by 
foreign nations. Not only is that a national security risk, it takes 
good paying jobs away from hard-working Americans. It is unacceptable. 
We have the resources to provide a much greater role in meeting our 
country's energy needs. And we can do it in an environmentally 
sensitive manner. As a nation, we need to re-evaluate the role our 
public lands can play in supplying this country with the energy it so 
desperately needs.
                                 ______
                                 
    The Chairman. Thank you, Governor Martz. We appreciate your 
excellent testimony.
    We will now turn to members of the Committee for questions 
for the governors. We will limit the members to 5 minutes each. 
We will start with the ranking member. Mr. Rahall, of West 
Virginia, is recognized.
    Mr. Rahall. Thank you, Mr. Chairman. I certainly don't 
anticipate taking my full 5 minutes. I know of the time 
constraints on the governors, but I want to ask a question of 
Governors Geringer and Martz before yielding to my colleague 
from Massachusetts, Mr. Markey, who just came in.
    Since I'm from West Virginia, it should come as no surprise 
that my first question involves coal, and I do direct it to the 
two governors I mentioned. I take it that you both support 
private property rights?
    Governor Geringer. Absolutely.
    Governor Martz. The same, absolutely.
    Mr. Rahall. Okay. That being the case, you may be 
interested to know that Federal coal leasing activities in the 
West are beginning to intrude on the private property rights of 
my constituents. I believe that Federal coal in the West should 
not be developed for the sole purpose of competing against coal 
production produced from private lands in the Midwest and the 
Appalachian region.
    Western coal serving Western markets is fine, certainly. 
But for publicly-owned resources to be produced simply to 
displace privately-owned resources--well, you can see I have a 
problem with that. Let me give you an example of what I am 
talking about.
    Recently, Morgan Stanley Dean Witter upgraded the two major 
Western railroads, Burlington Northern-Sante Fe and the Union 
Pacific, from neutral to out-perform, based on their potential 
to expand into new Eastern coal markets this year with Powder 
River Basin coal.
    My question is this: How do you reconcile this Federal 
intrusion into the marketplace through coal leasing activities 
that you apparently favor, with the fact that this Federal coal 
is displacing coal produced from private lands in electricity 
markets they have traditionally held?
    Governor Geringer. Mr. Chairman, I am not exactly familiar 
with the situation that Congressman Rahall is describing, but I 
would comment in this way. It is not one versus the other; it 
is both working together. There is enough demand currently 
today that both ought to be producing coal in an 
environmentally sound way.
    We are not about in Wyoming to dictate to West Virginia how 
you ought to manage for environmental considerations, or 
economic, and we would ask the same in return. I indicated that 
Federal lands are producing most of the coal from Wyoming. I 
believe you are correct in the statistics that you have used. 
In fact, Wyoming and the West, in fact, now out-produce the 
East in terms of total quantity of coal.
    Mr. Rahall. Displacing our traditional markets in the East.
    Governor Geringer. Well, with all respect, I don't believe 
it is displacing. I believe that the problem is not what 
Wyoming is doing. It is what is not happening in West Virginia, 
and I certainly invite your questions to someone who has coal 
production in both States; that is, Arch Coal. Terry O'Connor 
is here and will be on the next panel to discuss that. So 
perhaps he, because he has economic interests in both States, 
might be able to give you the very practical, common-sense 
approach to it.
    Let me illustrate it in another way. Nearly 60 percent of 
all generation today is from coal-fired generation. Yet, 
probably close to 90 or 95 percent of all new power generation 
going online is natural gas. Coal ought to be in the mix 
somewhere. We have a national energy policy by default that 
favors natural gas over coal. Yet, coal can be as energy-
compliant, as well as environmentally-compliant.
    Congressman Rahall, I would suggest that we ought to 
evaluate why coal is being displaced by national energy policy, 
not by Wyoming production on Federal lands. It is that lack of 
policy. And to give you a cost comparison, you can generate 
electricity from coal at about 20 percent the cost of 
generation from natural gas at today's prices. That ought to 
affect and benefit the members in your district, as well as 
those who produce the coal.
    So the issue is over the lack of a policy that would 
encourage the use of high-quality, clean-burning coal from 
whatever State it comes from, and we ought to work together.
    Governor Martz. Congressman, I am not so sure that I have a 
lot more to add. Coming from the Western States, we have a need 
out there and the coal is sitting there to be used. I think it 
is advantageous for us to do that, and I don't see it as a 
threat to any other State. This country needs the energy right 
now.
    Sometimes, it is not so popular to talk about the jobs 
involved, but in Montana it is very popular. We need those 
jobs. We also need to have the energy coming from the coal beds 
that are there. Coal beds are one of the least expensive ways 
to produce energy, in comparison to gas. So for that reason, we 
will continue to pursue this avenue.
    Mr. Rahall. Thank you. I am aware of the figures you all 
cited. It is just that overall philosophy that I have a problem 
with, being for property rights on the one hand, and yet, 
allowing Federal help and Federal policy to displace private 
property rights in the East and the production therefrom.
    Governor Martz. Could I just address that one time, too? In 
the particular area that I am talking about, the Otter Creek 
tracts that we are asking to be transferred as the law says 
they should be, former Governor Marc Racicot has visited most 
of the people in those areas and most all of them are amiable 
to having this kind of enterprise go on in that area. I am sure 
that a lot of the lands that you are talking about in your 
State are sitting--I shouldn't say I am sure of that, but I 
would guess some of that is on private property.
    Mr. Rahall. All of our land in West Virginia is private 
property.
    Governor Martz. Sure, and is developed, and that is what we 
want to do, also.
    The Chairman. The time of the gentleman has expired.
    On the Republican side, Mr. Duncan.
    Mr. Duncan. Thank you, Mr. Chairman, and thank you for 
holding this hearing and for your great leadership of this 
Committee.
    About 3 weeks ago, in the small town of Englewood, 
Tennessee, in my district, the mayor there told me that he had 
senior citizens who were having to choose between paying their 
utility bills or eating. And I noticed Governor Geringer 
mentioned something like that in his State.
    I can tell you that, first of all, this is not just a 
Western problem. All over this country, you have groups, 
usually of very wealthy environmental extremists, who protest 
anytime anybody wants to dig for any coal, drill for any oil, 
cut a single tree, produce any natural gas. What I think they 
are ignoring or they don't care about is that who they are 
hurting in that process are the poor and the lower-income 
people because they are destroying jobs and they are driving up 
prices, and I think it is very, sad.
    I read a few years ago that the average member of the 
Sierra Club had an income over four times that of the average 
American. And perhaps they are not hurt by some of these 
policies, but I can tell you a lot of people in my district 
are. So I certainly appreciate the testimony that each of you 
has given here today, and I hope that as you pursue these 
policies--I think people look at a map of the United States on 
one little page in a book and they forget how big this country 
is.
    I serve on the Forests Subcommittee and I was told that in 
the mid-1980's the Congress passed a law that was hailed by the 
environmentalists at the time that we wouldn't cut more than 80 
percent of the new growth in the national forests. Today, we 
are cutting less than one-seventh of the new growth. We are not 
even cutting half of the dead and dying trees. So what does 
that do? It destroys jobs and it drives up prices, and people 
wonder why houses and a lot of other things are costing so 
much.
    Governor Martz mentioned the dependence on foreign oil. 
That increases with each passing year, and I think money is 
behind it because I can tell you that the OPEC countries and 
many shipping companies--there are a lot of people with big 
money or companies with big money that benefit if we depend 
more and more on foreign energy.
    So I appreciate your coming here today, and with that I 
will yield back the balance of my time.
    The Chairman. I appreciate the gentleman.
    The gentleman from Massachusetts, Mr. Markey.
    Mr. Markey. Thank you, Mr. Chairman, very much.
    President Bush has made the Arctic Refuge the center of 
this debate. You can talk about all the environmentally-benign 
drilling rigs you want. We are supposed to conjure up in our 
minds Carl Sandburg and little cats' feet on the tundra. But as 
my mother used to say, the most important question in every 
situation in life is ``compared to what.'' So when you compare 
today's rigs to yesterday's rigs, you are missing the point.
    Here is the point: today, the Refuge is God-made, unique, 
roadless, untracked, and undisturbed by man. Nearby is one of 
the most environmentally-benign oil fields in the world, in 
Prudhoe Bay. They go as far as to put diapers on the trucks so 
the amount of oil that leaks from the pans is minimized. Now, 
that is impressive, but don't tell me it changes the fact that 
a huge industrial complex has grown up on the tundra on the 
North Slope that has changed the character of the wilderness 
forever.
    While the diaper catches drippings, the routine operation 
of the fields results in gallons of toxic fluids being spilled 
everyday. Exploring, drilling, producing, connecting, hauling, 
pumping--it is a very dirty business even when you are trying 
to be clean. Now, let me show you what I mean.
    Poster number 1. President Bush says ``. . . leaving only 
footprints.'' That is what he is talking about. That is Prudhoe 
Bay. You can just get an aerial view and just keep going in 
terms of the impact that the drilling has had on that area.
    Poster number 2. Here is the existing footprint. It sprawls 
over 1,000 square miles, permanently scaring the landscape and 
oozing ever outward. And, again, this is all permissible, all 
within the law right now. We are not debating this today.
    Poster number 3. This is what my mother was talking about. 
Right now, the black side is Prudhoe Bay. The Canning River is 
all that separates the protected area of the Refuge from the 
blight. On the black side, you have 1,000 square miles of 
development, 500 miles of roads, 3,893 wells drilled, 170 drill 
pads, 55 contaminated waste sites, 1 toxic spill everyday, 2 
refineries, twice the nitrogen oxide pollution as Washington, 
D.C., 114,000 metric tons of methane and 11 million metric tons 
of carbon emissions each year, $22 million in civil and 
criminal penalties, 25 production and treatment facilities, 60 
million cubic yards of gravel mined.
    On the other side, you have no industrial development, just 
as Congress declared in 1980, this Committee declared, Mo Udall 
and all the Republicans, unanimously in 1980, nothing.
    Now, there is no such thing as a wilderness oil field. It 
is an oxymoron. Jumbo shrimp, Chevy Chase night life, 
wilderness oil field--there is no such thing. The sooner that 
we declare the Refuge a fully protected unit of the Wilderness 
Act, the sooner we will turn our attention to producing energy 
such as natural gas, renewables, clean coal.
    Looking automobiles and SUVs, after all, we consume 20 
million barrels of oil each day, and 13.5 million of those 
barrels go into gasoline tanks. So is it really a great moment 
when Chrysler announced its Unimog last week that gets 10 miles 
a gallon, going further backwards in terms of energy 
efficiency, or do we really want an SUV to get 25 or 30 miles a 
gallon so that we don't have to drill in that wilderness? Where 
would we go first, to the God-made, beautiful Refuge or to the 
man-made problems of automobiles and SUVs and air conditioners 
and refrigerators, et cetera, that are increasingly fuel-
inefficient?
    Why doesn't it make sense, Governor, for us first to try to 
tap the natural gas in Prudhoe Bay and bring that down through 
a pipeline, to tap the National Petroleum Reserve in a way that 
it hasn't been yet? Why don't we first tap all the resources 
that are legally allowed to be tapped by Democrats and 
Republicans, and partner that with a deal on fuel economy 
standards and appliance efficiency standards before we take 
that pristine area and destroy it forever?
    The Chairman. The time of the gentleman has expired, and I 
assume the gentleman is going to ask unanimous consent that the 
Governor of Alaska can respond to your question. Is that 
correct?
    Mr. Markey. I actually need your permission alone, Mr. 
Chairman. I would ask that.
    The Chairman. The Governor of Alaska.
    Governor Knowles. Thank you, Mr. Chairman.
    Mr. Markey, in response to your question about why don't we 
look at other areas first, indeed we are looking at all of 
those possibilities. The infrastructure of the North Slope in 
developing oil and gas for America's needs will be utilizing 
all of the opportunities of where the oil is.
    Congress, in 1980, determined that in creating the 
wilderness, the Arctic National Wildlife Refuge, in creating 
that area, that there was a certain part of it that was going 
to be set aside for study because even at that time, with 
limited technology, they knew that it was probably one of the 
most promising areas for oil and gas development, and that 
remains today.
    So we do utilize the overhead of infrastructure that is in 
place as we reach out to the west to the National Petroleum 
Reserve. I would note that in today's technology, it is 
estimated there may be 5 billion barrels of oil and maybe 5 to 
10 trillion cubic feet of gas in an area that 20 years ago they 
quit holding leases on because no one was interested because 
they didn't think there was any more there.
    So we know today, just as we have reduced the size of the 
footprint by one-tenth of what it used to be 20 years ago, that 
we can go to these areas. We can do so in a way that does 
protect the environment. Nobody pretends that it would be a 
wilderness where there is development, but we can protect the 
environment. We can ensure the health of the wildlife and the 
fish and we can assure in those areas where we do have 
development that it is done right.
    Mr. Markey. But, Governor, it hasn't been economical to 
drill for the natural gas in Prudhoe Bay for 20 years even 
though there are 30 to 50 trillion cubic feet of natural gas 
there. What does that say about the economics of ANWR if the 
industry can't even figure out after 20 years, with Democrats 
and Republicans giving you approval--not giving you, but the 
industry--to bring down the natural gas from Prudhoe Bay? It 
has been uneconomical.
    Governor Knowles. Mr. Chairman and Mr. Markey, if I might 
respond, that has been a very interesting story because 
Congress again approved a gas pipeline in 1977 under the belief 
that at that time it was economical to bring it to the lower 
48. The market really wasn't there.
    At the same time, the gas was being used to repressurize 
the field to increase the recovery of oil in Prudhoe Bay, and 
so it has been hard at work. We reinject 8 billion cubic feet a 
day, recycle it into Prudhoe Bay to increase our recovery of 
oil. As that is winding down and as Prudhoe Bay is winding 
down, it truly is time to come and serve the energy market. The 
price has increased to where an investment in a $10 billion 
pipeline is economical and can meet and help stabilize the 
increased price of gas in America today. So it really works out 
in a win-win situation.
    Mr. Markey. I think it would be better for the industry to 
finish that project first, or at least begin it, and I want to 
help on that and prove that that is economical before we 
destroy the Refuge. I think that is something we could probably 
all agree to work upon, but right now no progress has really 
been made.
    Thank you, Mr. Chairman.
    The Chairman. Governor, if I may, I have got a little 
question here I am not sure of. According to this map, this 
area that they would like to drill in is not a designated 
wilderness area. Is that correct?
    Governor Knowles. Mr. Chairman, no, sir, that is not. That 
was designated as a study area which was set aside from the 
Wildlife Refuge in 1980. It was done as a study area to be 
determined later by Congress as to whether it would be open for 
development, and that is the question that we are coming 
forward with today.
    The Chairman. I appreciate that clarification.
    The gentleman from Maryland, Mr. Gilchrest, is recognized 
for five minutes.
    Mr. Gilchrest. I thank the Chairman. I ask unanimous 
consent for 15. Is there objection?
    The Chairman. Yes, there probably is.
    Mr. Gilchrest. Just kidding, Mr. Chairman.
    Governor Knowles, I crawled down in a grizzly bear's den 
one time in Alaska. The Governor from Wyoming, I once got a set 
of chains for my pickup in Buffalo, Wyoming, in November, in a 
pretty severe snowstorm. And the Governor from Montana, I used 
to live in the wilderness in northern Idaho and would come to 
Missoula once a month for supplies. So it is a beautiful State, 
it is a beautiful region.
    I would like to boil this down, at least in my terms, to 
something very simplistic, and that is lung tissue and mortgage 
payments. We all try to make sure we do both, that we have 
clean air to breathe and we don't exacerbate lung problems, and 
we provide safe and secure jobs for people to raise their 
families and live their lives.
    The issue of drilling for oil or mining in the West always 
arouses a division in the country between East and West. I, 
from Maryland, can recognize the need for employment and for 
jobs, and when I ride around the Washington Beltway or the 
Baltimore Beltway, or I look at places like Tysons Corner, I 
yearn for the open spaces. It is a necessity for me that I know 
still exists in the West.
    In Maryland, we used to have elk, we used to have wolves, 
we used to have salmon, we used to have bison, we used to have 
grizzly bears. We used to have an abundance of otters, of mink, 
of shore birds. Most of those are either diminished or gone. In 
Alaska, none of those are diminished or gone or threatened or 
endangered. They are still there.
    So I recognize that people in the West, when someone from 
the East Coast who drives everyday to work in an SUV on the 
Beltway and is looking for more jobs, and yet they are opposed 
to drilling for oil at ANWR--I find it a paradox, almost, if I 
may, an oxymoron. Even Democratic local elected officials in my 
district that will change the zoning or land use for an area 
that is tree-lined or wetlands or open space so they can add an 
addition to Wal-Mart or another shopping plaza--those people 
will vote against drilling for oil at ANWR. The governor from 
my State, the Senators from my State, pursue dredging at all 
costs, and the reason is for job security, for economic 
development.
    Governor Knowles, you made a comment about we need a 
combination of conservation and increase in supplies. Now, I 
would add one other thing to that list, besides conservation --
we need to aggressively pursue that--and increased supply. I 
understand that. I also understand the idea that jobs in a 
remote area are important for people, but we need to 
aggressively pursue alternative sources.
    It is my judgment that we cannot ever be energy-independent 
if we continue to rely on fossil fuels in the manner in which 
we have done under the present conditions. The cost of fossil 
fuel will probably never go down because the increased 
worldwide demand for fossil fuel is not at a level point. It is 
not going to decrease; it is going to dramatically increase. So 
our dependence on fossil fuel is to a large extent never going 
to enable us to be energy-independent.
    So what are the alternatives? I think we can pursue 
aggressively alternatives, and many of them were mentioned here 
today, whether it is nuclear power; solar power; wind power, 
which we can produce more efficient lines so the resistance is 
less and you get more of the electricity through; and fuel 
cells, what we have been powering our Space Shuttle on for 
decades now.
    I have talked to engineers. In less than 20 years, they say 
most of our automobiles can be running and operating on fuel 
cells, where the emission is pure water. Our power plants in 
about 20 years, a majority of them, if we aggressively pursue 
this, can operate under this technology.
    The last comment, Mr. Chairman, lung tissue and mortgage 
payments, the longing and the necessity for open spaces. And so 
after all that, Mr. Chairman, and my understanding for the West 
and the need for jobs, I would still oppose drilling for oil at 
ANWR.
    The Chairman. Let me ask this. Members of the Majority and 
Minority side, will you raise your hands if you have questions 
for the governors? If you do, then we will take you by 
seniority.
    We will go to Mr. DeFazio; on the Majority side, Mrs. Cubin 
and the gentleman from Indiana, Mr. Souder.
    Mr. DeFazio, you are recognized for 5 minutes.
    Mr. DeFazio. Thank you, Mr. Chairman.
    To Governor Martz, I have followed with concern the closing 
of the aluminum plants in Montana, the threat to the mining 
industry and forest, lumber and wood products industry because 
of sky-high electric prices. I would note that those sky-high 
prices come at a time when your State is generating as much 
electricity as it ever has. It is just under a different 
structure where you have deregulated electricity and you have 
deregulated the price that goes to large industrial consumers.
    Do you support a cap or temporary cap on wholesale energy 
prices in the West? The cause of your plants closing is not a 
shortage of energy, it is an artificial run-up in wholesale 
prices caused by the deregulation in California. Do you support 
the cap?
    Governor Martz. Congressman, no, I do not support capping 
them. We need to produce more generation.
    Mr. DeFazio. Thank you, Governor. Well, if you hadn't 
allowed Montana Power to sell all its generation to an out-of-
state company who is now shipping all the power out of State 
and marking up the price, you might have enough energy to run 
your own plants. I am getting tired of people using the energy 
crisis as an excuse to drill.
    There is a real energy crisis in the West. There is an 
electric energy crisis today. Governor Knowles referred to it, 
people trapped in elevators. But guess what? It has nothing to 
do with oil, it has nothing to do with drilling in ANWR. That 
is being used as a pretty limp excuse to deal with real 
problems while we ignore the real problem, which is speculative 
activity going on in California.
    California had a price spike and a crisis in their low 
season. They are a net exporter in the winter, and guess what? 
This year, they weren't. Guess what? 15,500 megawatts of 
generation was shut down, not because of clean air, not because 
of lack of gas, certainly not because of lack of oil, since 1 
percent of their energy is generated by burning oil, but 
because of a market gone nuts, with huge increases in profits 
for out-of-state energy companies, the same thing that has 
happened in Montana.
    Governor Martz, your own energy commission --you have an 
Advisory Council on Electricity Prices and they voted on Monday 
to keep alive a number of options for further study. Your 
Republican house majority leader has proposed a 3,300-percent--
he says here he wants to have an energy transaction tax paid by 
power companies, and increase the tax phenomenally to raise 
$116 million a year to help lower the rates for consumers.
    Isn't this kind of nuts? We have got a market where you 
allow speculators to gouge your consumers and then we are going 
to try and maybe tax them back to get the windfall. We have 
another proposal for a windfall profits tax of 45 to 50 
percent. Yet, you are coming in here and saying we need to 
produce more energy.
    Yes, there is a long-term energy problem in this country 
and in the Western United States, but today the crisis is 
artificially created. Natural gas prices followed electricity. 
I have met with the largest distributors of natural gas in the 
West and they have the graphs to prove it. The wholesale prices 
at the Canadian border didn't go up until the electricity 
prices went through the ceiling. If we don't deal with the 
underlying cause today--yes, 10 years from now you can have 
more energy production from fluid methane, or if Governor 
Knowles is successful at opening ANWR to add to the production 
from the National Petroleum Reserve and the natural gas that we 
can all agree on.
    But the point is people are going to go broke in the 
meantime. Businesses are going to close in the meantime. We 
need some leadership from Western Governors and other people to 
deal with this. Now, I know Alaska is not on our grid, so this 
doesn't directly impact you. But I would ask you to please 
don't use this and don't use the image of senior citizens 
trapped in elevators to justify drilling in ANWR. There is no 
relationship.
    Governor Knowles, do you support the continued export of 
oil from Alaska to China and Japan?
    Governor Knowles. Madam Chairman and Mr. DeFazio, there is 
no oil that is currently being exported from Alaska to Asia. At 
one time, there was a small amount, a relatively small amount, 
no more than 5 percent, that was exported, just like there is 
currently crude and crude oil products that are being exported 
from every other State in the Union.
    As this Congress and the administration and I also 
personally support many of the free trade aspects that have 
helped our economy, the fact of the matter is--
    Mr. DeFazio. Governor, if I could, we have documents 
showing that the major oil companies on the West Coast of the 
United States have internal documents showing that they only 
wanted to export oil from Alaska to drive up wholesale prices 
in the Western United States.
    Would you support reimposing a ban on the export of oil in 
the future from Alaska? If we are going to develop more oil 
resources in Alaska, would you agree that every drop of that 
oil should stay home?
    Governor Knowles. Madam Chairman, Mr. DeFazio, I believe 
that Alaska should be treated no different than every other 
State in the Union. There is no ban on oil exports from any 
State in the Union except for Alaska, and that was done away 
with, with bipartisan support, signed by President Clinton, 
sponsored by him several years ago.
    The fact of the matter is that there is no oil being 
exported today because the market clearly is in need of all of 
the oil that is had. It has never been a significant amount, as 
I say, never more than 5 percent when it was passed several 
years ago, as I say, with the support of President Clinton and 
bipartisan in Congress.
    Mr. DeFazio. Well, the oil company execs seem to feel that 
it got them two to three cents per gallon on the wholesale 
market in the West, which created a few hundred million dollars 
of illicit profits. So I would urge you to reconsider your 
position and perhaps we could support a ban on any oil exports 
from the United States. If we are in an energy crisis, let's 
put in place a ban before we find new resources and start 
exporting them.
    Thank you, Madam Chairman.
    Mrs. Cubin. [Presiding.] Are there any other Members on the 
Republican side that have questions?
    If not, I just wanted to--excuse me.
    Mr. Souder?
    Mr. Souder. You can go ahead, Madam Chairman.
    Mrs. Cubin. No. I would like you to.
    Mr. Souder. I thank you. I just have a simple question, but 
I wanted to make a comment that illustrates some of the 
frustration of the Western Governors and Western members.
    In my hometown, you can go 600 miles east without hitting 
Federal-owned land. You can go 1,000 miles west without hitting 
Federal land. You can go 250 miles north or 250 miles south. We 
don't have much public-owned land. We have lots of opinions on 
what we should do with your land.
    I have some sympathy with the argument that we messed up in 
the Midwest and the East and we need to figure out how to do a 
better job of environmentally managing. But sometimes the 
extremist rhetoric that we hear turns people who are looking 
for reasonable solutions into armed conflict again.
    One of the statements that I heard here--and I just wanted 
to sort this out for the record--I heard 1,000 square miles at 
Prudhoe Bay. Governor Knowles, I wondered how many square miles 
are in ANWR as a whole. Do you have any idea? When we hear a 
different figure like square miles, square miles is an 
algebraic number; it is a little misleading.
    Governor Knowles. Madam Chairman, in response to the 
question, I am not sure of the square miles. There are about 19 
million acres there. I will have to refer to my--
    Mr. Souder. Of the 19 million, how much is the area that 
was open for discussion as to whether it could be explored?
    Governor Knowles. It is approximately 1.5 million acres is 
the total acres that is left for study.
    Mr. Souder. So it is approximately--what is that, less than 
5 percent, 3 percent?
    Governor Knowles. Eight percent.
    Mr. Souder. Eight percent. Is there an argument that in 
that 8 percent, there isn't enough of a buffer between that and 
the rest of the 92 percent? In order words, would the 
development go right up to the edge of the 8 percent?
    Governor Knowles. Madam Chairman, no, sir. That is the area 
in the coastal plain that was believed in a broad-brush sense 
as to what might be the most probable for oil and gas 
development. Of that, there would be a relatively small part 
that was developed. But as I say, it would not encompass all of 
it.
    Mr. Souder. Is there an argument that the 8 percent, if it 
were all used--is that 8 percent more--and I apologize for my 
relative lack of knowledge in some of these questions, but it 
is hard to tell when people are going back and forth how to get 
the actual answers to some of these questions.
    Is this area more environmentally significant, and if so 
how did it not get designated in the beginning as wilderness?
    Governor Knowles. There is no question it is a unique part 
of the Wildlife Refuge. As the coastal plain, its primary 
environmental consideration for wildlife is that much of it is 
considered to be the core calving area of the Porcupine caribou 
herd. So there would have to be some very careful mitigations 
made to ensure the continued health of that herd. It goes there 
for approximately 3 to 4 weeks for calving, insect relief, and 
prior to their resuming their normal migration habits in the 
fall and winter.
    Mr. Souder. And, in general, are there other things in 
addition to the calving?
    Governor Knowles. There is polar bear denning which is of 
interest. There is also the snow geese, migratory water foul, 
which are also a point of concern. So those are the three 
primary concerns. There are also some musk ox, but they are not 
as environmentally sensitive as the polar bear and the snow 
geese.
    Mr. Souder. I appreciate that. Those of us who are trying 
to balance the needs for our energy consumption and 
environmental concerns are going to be interested in how we can 
address those types of unique questions, not big numbers that 
try to scare people, but how we can actually address the real 
substantive questions underneath that and not potential high-
risk variables.
    Governor Knowles. Madam Chairman, if I might just in 
response, painting a slightly different picture--and I do 
appreciate Mr. Markey's attempt to paint a picture of 
industrial development, but I think, in perspective and in line 
with the questions that were being asked of proportionality, I 
would note that in Alaska there are 53 million acres of 
national parks that will not be developed for oil and gas, and 
that is roughly the complete size of New York and Ohio 
combined.
    There are some 72 million acres of wildlife refuges, three-
quarters the size of the entire State of California, put aside 
that nobody is asking to be part of any oil and gas 
development. There are wilderness areas of some 58 million 
acres. So we are speaking of areas that are truly set aside to 
encompass the wilderness values that people yearn for to be 
part of our permanent national assets.
    The area that is being looked at in ANWR, the 1.5 million 
acres, is part of a geological structure that is the same 
called the Barrow Arch that goes across the entire North Slope 
from NPRA across there to the Canadian border, and is part of a 
responsible development of a significant part of our Nation's 
future. I would note it is not just oil, but there is 
considerable gas, just as there was in the Prudhoe Bay 
geological formation.
    I would say that the oil and gas development on the North 
Slope, with the figures that Mr. Markey has put forth, is the 
most environmentally responsible development anywhere in the 
world. It is the strictest, and it should be that way and it 
ought to be that way.
    Thank you.
    Mrs. Cubin. Because Mr. Rahall has to leave in just a few 
moments, I just wanted to make a comment on his behalf, as well 
as yours. He asked a question of Governor Geringer about 
Federal coal displacing private coal production. And Geringer, 
I understand, answered that very well, but there was a point 
that I wanted to add, also, and that is that that displacement 
occurred more because of the Clean Air Act Amendments and 
because of the court's ruling on mountaintop mining and valley 
fill than it did because of anything that was done Federally.
    Then I also know Mr. DeFazio has to go, and then Mr. Markey 
is moving right over here. President Bush already has the 
authority to reimpose the export ban.
    The Chair now recognizes Mr. Inslee.
    Mr. Inslee. Thank you, Madam Chair.
    I want to thank Governor Knowles for coming here. You have, 
as always, been an articulate, reasonable spokesperson for your 
State and we appreciate it. But in the spirit of candor, I want 
to tell you why so many thousands of my constituents are 
vigorously opposed to drilling in the Arctic Refuge.
    They respect and believe that there would be efforts to 
make small bulldozers that doze the roads and small injection 
facilities that inject product below ground and small buildings 
that emit nitrous oxide and the like. But I will tell you the 
way my constituents feel about it. They feel the same way about 
putting a small mustache on the Mona Lisa. Even though it was 
well-trimmed and well-dyed and well cared for, they think it is 
a major mistake. It is a major mistake because that is an 
international asset, as is the Arctic Refuge.
    Even though those same thousands of people I represent will 
never come to the Arctic Refuge, never even get close to the 
Arctic Refuge, may never go to the State of Alaska, they carry 
a piece in their hearts today, even though they have never been 
there. They feel so strongly about this that I predict this is 
not going to go through the U.S. Congress this year, not just 
in my State, but in all 50 States.
    I want to tell you the other reason they feel that way is 
not just based on emotion. It is based on practicality. I am 
going to ask you in a minute about the numbers, but as best as 
I understand it, under the optimistic projections there would 
be about 300,000 barrels a day, and that is likely not to 
really become economically productive for about 10 years. My 
constituents think that is too little and too late.
    They believe we need a solution today, tomorrow, and they 
recognize that if the U.S. Congress will get off the dime and 
pass some higher mileage standards to improve the efficiency of 
our vehicles, we can have equivalent savings next year. We 
don't have to wait 10 years. I am told that even a minimal 
increase of those mileage standards, of increasing it, say, 2.2 
miles per gallon for light trucks and SUVs, will save more this 
year and next year than what we get in 10 years out of the 
Arctic Refuge. So they believe that it is not just a value 
system in question here, but a practical system that we have a 
better solution today.
    So I want to ask all three of you, have you lobbied your 
Senators and Members of Congress to support higher mileage 
standards, and if so what has been their response?
    Governor Knowles. Madam Chair, Mr. Inslee, thank you for 
your comments. In direct answer to your question, I believe 
that conservation is an important part of the national energy 
policy, and certainly the reduction in the fuel use of 
automobiles is an important part of being able to stretch the 
efficiency and the use of our fuels. But it doesn't make the 
use of fuels obsolete; we still need those fuels.
    In regard to the question about ANWR, just like there may 
be controversy over the projection that we are going to have a 
$5.6 trillion surplus in America, it all depends on who is 
forecasting it. It is estimated that in the Arctic National 
Wildlife Refuge coastal plain study area that there may well be 
up to 16 billion barrels, which would mean approximately 2 
million barrels a day for 25 years, which would provide a third 
of our domestic oil production. That is not an insignificant 
part and I think is part of what could be carefully weighed in 
a judgment as to whether we can responsibly develop it.
    In reference to the portrait, if I might just note that we 
have, as I have explained, a vast number of areas as part of 
our national treasury of lands that are not being questioned 
for development, open for development. And that certainly can 
satisfy, just as when you make decisions in your States about 
what needs to be protected and what not, that balance of 
development and protected areas that we need to look for.
    Mrs. Cubin. The gentleman's time has expired.
    I understand that Governor Knowles--
    Mr. Inslee. The other two governors were not allowed to--
    Mrs. Cubin. I am sorry, Mr. Inslee. Governor Knowles has a 
one o'clock plane to catch.
    Mr. Inslee. I understand. Could you allow the two other 
governors to answer that question?
    Mrs. Cubin. That is what I was going to say.
    Mr. Inslee. Thank you.
    Mrs. Cubin. I would like to interrupt at this point and if 
anyone has a specific question for Governor Knowles, then fine.
    Mr. Calvert, do you have one?
    Mr. Calvert. I apologize that I wasn't here earlier. I was 
at another commitment.
    Governor Knowles, regarding the proposed drilling at ANWR, 
in relationship to the pipeline that already leaves Prudhoe and 
goes to Valdez, I understand right now there are about a 
million barrels a day being shipped down to Valdez in that 
pipeline.
    I also understand that at peak production during the Gulf 
War, they were transporting about 2 million barrels a day oil 
down to Valdez. Is that a correct number?
    Governor Knowles. Yes, sir.
    Mr. Calvert. I also understand that because of declining 
production within existing oil fields in Prudhoe, we may get to 
the point of marginal costs. In other words, it costs more to 
keep the pipeline open than it would to continue to move oil 
out of Prudhoe, and I understand that number is somewhere 
between 500,000 to 700,000 barrels a day. Is that the right 
number?
    Governor Knowles. I couldn't verify that number, but there 
is a point, yes, sir, that it would not be economical.
    Mr. Calvert. It is true, then, that oil coming out of 
Alaska has declined by 50 percent because we are unable to find 
additional supply to get into the pipeline? So at some point in 
the foreseeable future if additional supply is not put into 
that line, is it credible that that pipeline would be shut 
down?
    Governor Knowles. Yes, sir, it would be shut down and then 
it would be dismantled.
    Mr. Calvert. And then we would have no resources at all 
coming out of Alaska in any significant amount, to add to the 
oil supply of the United States?
    Governor Knowles. Yes, sir, unless there was a gas pipeline 
built that would bring that. But in terms of oil, after it 
would be dismantled, it would not be practical to ship any oil 
from the North Slope.
    Mr. Calvert. And at 2 million barrels a day, if we could 
get that back up, that would be a significant--you mentioned a 
third of the total U.S. production?
    Governor Knowles. Yes, sir.
    Mr. Calvert. Thank you.
    Mrs. Cubin. Thank you, Governor, and if the other governors 
have time, we would appreciate it if they would stay and answer 
the questions. But if you need to go, Governor Knowles, the 
Committee certainly understands that. We don't want you to miss 
your plane.
    Governor Knowles. Thank you very much, Madam Chairman and 
members of the Committee. Thank you.
    Mrs. Cubin. Thank you for being here.
    Mr. Inslee, would you like to restate your question?
    Mr. Inslee. Yes, just very quickly if the other two 
governors could let us know--nice to see you, Governor Martz--
has your congressional delegation supported increasing our 
mileage standards for vehicles in America as part of our energy 
strategy, and if not do you know why not and have you lobbied 
them to do so?
    Governor Geringer. Let me answer first by explaining what 
the Western Governors did on February 2nd when we met in 
Portland at the invitation of Governor Kitzhaber and Governor 
Kempthorne. We adopted several suggested actions that we asked 
everyone to consider within our States, as well as the Federal 
Government, including those activities that would enhance 
efficiency and conservation; in addition to automobile usage, 
efficiency tax credits to reduce demand in any form; to shift 
to any other kind of distributed generation where it could be 
done on an individual basis; Federal appliance standards such 
as adopted by the Department of Energy for all kinds of 
appliances.
    In other words, we are pursuing every form of energy 
conservation, whether it be specifically automotive or 
otherwise. Our goal is not to increase consumption. Our goal 
is, given the trends that there are in demand and consumption 
and the demands that will be placed on our States, that we not 
be treated like colonies, that we be evaluated as equal 
sovereign States, as each of your States are.
    Mindful of Mr. Markey's comments about Boston, whether it 
be the Boston Tea Party or the Boston Big Dig, each State does 
things a little bit differently. So when it comes to 
consumption, our goal in being here at this panel is to elicit 
partnerships with the Federal Government as we develop ways to 
better manage the resources and not waste them. So efficiency 
was at the top of our list on what actions could be taken by 
the States, by governors, by the Congress, or whoever it might 
be, automotive or otherwise. We have strongly advocated those 
and presented those to the energy task force chaired by Vice 
President Cheney.
    Mr. Inslee. Has your congressional delegation voted for 
increased Corporate Average Fuel Economy (CAFE) mileage 
standards in this country recently? Do you know?
    Governor Geringer. I am not familiar with their voting 
record on that.
    Mrs. Cubin. What am I, a potted plant?
    Governor Martz. Congressman, I am not familiar whether ours 
have voted in that manner, but I am visiting with all of our 
delegation in the morning and it is something we can talk 
about. I was at the meeting that we agreed on the same things 
that Governor Geringer talked about.
    I do want to say it doesn't matter whether you believe this 
is an artificial problem or not. It is real, and to the people 
that are dealing with it everyday it is very real. So with 
that, conservation with our entire State right now, we are 
asking people to conserve. We are coming up with a plan, taking 
it off of other States' plans who are already in the full mode 
of conservation to present a plan to entire State of Montana on 
how we can conserve. That is our first best thing we can do 
right now. Thank you for the question.
    Mr. Inslee. Do you know if your congressional delegation 
has voted--
    Mrs. Cubin. The gentleman's time has expired. You can ask 
the congressional delegation when you see them.
    Are there any other questions on the other side?
    If not, the Chair recognizes Mrs. Christensen.
    Mrs. Christensen. Thank you, Madam Chair. I want to say 
thank you to the governors for spending so much time with us 
this morning and answering the questions. I know you are very 
busy. I have one brief question and it was particularly 
directed to you, Governor Geringer and Governor Martz.
    Your testimonies are in support of opening up more Federal 
lands for leasing and drilling. Yet, the Department of the 
Interior reports that 95 percent of lands managed by BLM in 
several States--Colorado, Montana, New Mexico, Utah, and 
Wyoming--are currently available for leasing and drilling.
    You may or may not know, but if you do I am interested in 
knowing how much of the lands that are already available are 
leased and being drilled and have they been exhausted. If you 
don't know specifically, how do you reconcile asking for more 
Federal lands to be opened up when already 95 percent of the 
lands are available for leasing and drilling?
    Thank you. That is my only question.
    Governor Geringer. Madam Chairman, if I might respond in 
part, there seems to be confusion over whether we are asking 
for opening up more access or asking for greater cooperation on 
how we develop what is already open. The answer is both.
    I will illustrate by saying that in the Powder River Basin 
of Wyoming, which is one area that has been opened up for coal 
bed methane development, as I indicated, the Federal agencies 
cannot seem to understand how each other works. So whatever 
goals we might have for production, because America wants it, 
we are willing to help enable that. But in the process of doing 
that, we quite often run into--even though BLM and other 
Federal agencies might describe how the lands are open for 
energy production, in fact, they are not by the way the process 
seems to work out, by the appeals that are made, by the 
inconsistent regulations that are applied.
    The economic interest that we have in our States is that 
jobs depend on it locally, but so does the environmental 
appeal. We want to protect both. As we view what is happening 
in America, the demand is starting to draw on our resources. 
Our question is what is the best way we can enable that 
development so that we don't destroy jobs; we don't destroy the 
environment; we enable that on all sides.
    But the statistic that all these lands are open is very 
deceiving when you look at the practicality of how it is 
applied. In fact, most of those are thwarted in some fashion by 
those who, I think, simply for the sake of wanting to 
discourage any development or consumption, manipulate the 
system rather than engage in constructive and cooperative 
approaches. That is what we are asking for.
    Governor Martz. Congresswoman, I don't know if that 95 
percent pertains to Montana that you talked about. I don't know 
if it is 95 percent that is used in Montana, Federal lands, but 
I will know next time I see you. We do know we have 
opportunities there, and we are a State that needs those 
opportunities, and I think the country needs the opportunities 
we are looking for.
    We do know that we are asking for a say in how those lands 
are used in the State of Montana, other than just sitting 
there. With pure coal, very good, compliant coal, it seems 
unreasonable to not want to bring that out to do generation 
with that in an environmentally-sound way. So we are here to 
ask for those considerations and allow our voices to be heard 
in those considerations, as it has not been in the past.
    Mrs. Cubin. I would like to also ask the gentlelady if she 
would be willing to meet with me and we could discuss that 95-
percent issue of BLM lands because that seems extraordinarily 
unlikely to me based on the knowledge that I have of access to 
public lands, whether it is from the Endangered Species Act or 
the roadless areas in the forests, or whatever.
    So I just think that is a very unlikely figure, but we can 
talk about that.
    Mrs. Christensen. And perhaps we can ask for more specific 
information as it relates to the States. Is that 95 percent of 
all the lands and is it all of it in Wyoming or is it 
distributed across the States?
    Mrs. Cubin. Right, and I am sure the gentlelady remembers 
last year the amendment to the Energy Policy Act that asked the 
USGS to do an inventory of the fossil fuels under the public 
lands in the lower 48 States, and then do an overlay of all the 
laws, rules, and regulations that impede production of that 
energy source. Until we actually know what we are dealing with, 
I think it will be very difficult to set a figure like that.
    I know you governors have been very patient with us and we 
appreciate it very much. Thank you for your time and for your 
input. It is truly a pleasure for me to work with Governor 
Geringer, and I know that with Governor Martz in the future we 
will have a good working relationship. We really, really 
appreciate your being here.
    Mrs. Napolitano. Madam Chair?
    Mrs. Cubin. Yes.
    Mrs. Napolitano. May I have a comment or two?
    Mrs. Cubin. Certainly, Mrs. Napolitano.
    Mrs. Napolitano. Thank you. I apologize, like other 
Members, because we have conflicting Committee meetings.
    In listening to the testimony when I walked in of all three 
governors, but essentially yours--I haven't had a chance to 
look at your written testimony, but as a former elected 
official myself, I feel that we have a very grave 
responsibility that we do not abuse our land, and leave some of 
whatever treasure we have for the next few decades, for our 
children and our grandchildren and our great grandchildren.
    I am looking forward to that report Mrs. Cubin was alluding 
to because I think we need to take a good long look at how we 
can best ensure that we have the ability to have this planet 
continue on its course and not deplete ourselves of those 
beautiful natural resources we have within our reach.
    Thank you.
    Mrs. Cubin. Mrs. Christensen?
    Mrs. Christensen. Madam Chair, thank you. I see that the 
acreage is--there is a table in a wilderness report that was 
sent to Congressman Hansen. I would like to have it entered for 
the record because it states specifically how many millions of 
acres BLM is managing in each State and the areas that are open 
to leasing and the areas that are closed to leasing. Really, 
the areas closed to leasing are minuscule compared to the total 
acreage.
    Mrs. Cubin. Without objection.
    Mrs. Christensen. Thank you.
    [The information referred to follows:]

                                    The Wilderness Society,
                                     Washington, DC, March 7, 2001.
Hon. James V. Hansen, Chairman,
Hon. Nick Joe Rahall II, Ranking Member,
House Resources Committee, Longworth House Office Building, House of 
        Representatives, Washington, DC.

Dear Chairman Hansen and Representative Rahall: 

    The House Resources Committee is to be commended for initiating a 
review of the ``Role of Public Lands in the Development of a Self-
Reliant Energy Policy.'' It is our hope that in exercising its 
oversight role regarding this important matter, the Committee will seek 
to be as objective as possible in reviewing the nature and extent of 
fossil fuel resources on our public lands, and the environmental values 
that also reside on those lands that can be placed at risk by oil and 
gas exploration and development activities. For although the oil and 
gas extracted from our public lands are an important component of our 
nation's well-being, the environmental, wildlife, watershed, and 
wilderness values of those lands are equally important to Americans. We 
ask that this letter with attachments be placed in today's hearing 
record.
    One fact of central importance that we wish to draw to the 
Committee's attention is that the vast majority of public lands managed 
by the Bureau of Land Management (BLM) in the Overthrust Belt states of 
Colorado, Montana, New Mexico, Utah and Wyoming are presently open to 
leasing, exploration and development by the oil and gas industry. In 
fact, information presented to the Assistant Secretary for Land and 
Minerals Management by the BLM in 1995 indicated that over ninety-five 
percent of BLM lands in those states (including ``split estate'' lands) 
were available for oil and gas leasing. I have appended to this letter 
the BLM's synopsis of the availability of BLM lands in those states for 
oil and gas leasing, exploration and development.
    Other recent data made available by the BLM indicates that the 
agency has been carrying out a robust onshore oil and leasing program 
for the past decade. For example, the Clinton Administration issued oil 
and gas leases on more than 26.4 million acres of public lands during 
the last eight years (see attachment). According to the BLM 
publication, Public Rewards from Public Lands, there are nearly 50,000 
producing oil and gas wells on the public lands (see attachment). 
Thousands of new drilling permits have been issued during the past 
eight years--3,400 by the BLM in FY 2000 alone.
    Criticism by some that in recent years too much public land has 
been made unavailable for oil and gas activities is simply not 
supported by the facts. Upon close examination, industry criticism of 
``lack of access'' really falls into two categories: lands that are 
off-limits entirely to oil and gas development; and lands available for 
development if the industry takes special care of the environment. The 
former areas include wilderness areas, wilderness study areas, and/or 
areas such as steep slopes, karst areas, and areas where other mineral 
activities are taking place, in other words, places where oil and gas 
activities could pose extreme environmental hazards or be incompatible 
with other values. Currently, such areas comprise roughly 5 percent of 
BLM-managed lands in the five states.
    The latter category often encompasses areas where evidence 
indicates the presence of sensitive wildlife habitats, such as elk 
calving areas, or sage grouse leks, where operations at certain times 
of the year could pose severe threats to wildlife. In such cases, the 
BLM may require that operations only occur at certain times of the 
year, when such areas or not in use by wildlife. In some cases, the BLM 
imposes ``No Surface Occupancy'' leases, whereby the lessee is required 
to access the oil and gas resource from off-site. Such ``NSO'' 
stipulations are also designed to protect wildlife habitats, while 
making the resource available for extraction. (A fuller explanation of 
typical special stipulations BLM includes on oil and gas leases is 
found in the first appended document to this letter.)
    The imposition of special, seasonal, or NSO stipulations are an 
attempt by the BLM to balance the industry's desire for access to oil 
and gas deposits, while balancing the BLM's responsibility to manage 
other resources on the public lands. And although industry public 
relations campaigns frequently emphasize the benignity of contemporary 
exploration and development technologies, it is apparent that when 
required by the BLM to utilize these technologies to minimize 
environmental impacts, the industry is reluctant to do so.
    One of the most challenging environmental problems with oil and gas 
development relates to protection of water quality. Unfortunately there 
is very little baseline data on water quality in Wyoming, for example, 
that would allow the responsible agencies to understand the negative 
impact on water quality for downstream communities from oil and gas 
development. And since water flows across state lines, ranchers in 
Montana, for example, are concerned that the water flowing from Wyoming 
coal bed methane projects does not deteriorate in quality. Given the 
dramatic increase in drilling permits, the cumulative impacts on water 
quality have not been, but need to be, examined carefully through long 
term monitoring. If there is one resource more valuable in the west 
than oil and gas, it is water.
    The national forests currently supply 0.4 percent of total U.S. oil 
and gas production, half of which occurs on the Little Missouri 
Grasslands (Forest Service Roadless Area Conservation FEIS, 2000, pages 
3-312 and 3-316). The remaining national forest land account for less 
than 0.2 percent of total production in 1999 (Ibid.). The vast majority 
of roadless areas on the national forests subject to the new Forest 
Service roadless protection policy have been open to leasing for 
decades, and there has been little interest in exploiting potential 
resources, even though the real price of oil in the past was much 
higher than it is today.
    In conclusion, it is our hope that the Committee's enthusiasm for a 
``self-reliant'' energy policy will be tempered by the realization that 
a country that consumes 40 percent of the world's oil production, but 
harbors only two percent of the world's oil reserves, cannot be ``self-
reliant'' in energy--even if we make 100 percent of our public lands 
available to the oil industry and eliminate all environmental 
protection requirements on them. Instead, policy-makers would serve our 
nation's interest best by seeking ways to reduce our dependence, not on 
foreign oil, but on oil itself We cannot drill our way to ``energy 
independence,'' and we should not ruin the few remaining pristine wild 
places on our public lands in a vain attempt to do so.
            Sincerely,
                                         David Alberswerth,
                       Director, Bureau of Land Management Program.
    Attachments.

                      AVAILABILITY OF PUBLIC LANDS

    The vast majority of public lands are available for leasing. In the 
states with considerable production of 116.6 million acres only 2.9 
million acres are not open for leasing. In Colorado 16.2 million acres 
are open and 600,000 closed to leasing; in Montana out of 19 million 
acres 400,000 are closed; in New Mexico of 29.9 million acres of lands 
only 1.3 million is not open to leasing; in Utah 900,000 acres are 
closed to leasing leaving 21.2 million acres open; in Wyoming 700,000 
acres are closed out of 28.6 million.

                                 LEGEND

    Acreage data are estimates based on best available data.
Categories of stipulations
    1. Standard.--Lands available for leasing generally have no special 
stipulations, except any that may be included in standard lease terms 
regarding conduct of operations or conditions of approval given at the 
permitting stage such as: prohibitions against surface occupancy with 
500 feet of surface water and/or riparian area; on slopes exceeding 25 
percent; construction when soil is saturated; within 1/4 mile of 
occupied dwellings.
    2. Seasonal and Other.--Prohibits fluid mineral exploration and 
development activities for specific time periods, i.e., sage grouse 
strutting areas, hawk nesting areas or calving periods. These 
restrictions are generally for specific months during the year.
    3. No Surface Occupancy.--Prohibits operations because it has been 
determined that other resource values present on the lease cannot be 
managed to coexist with oil and gas operations. Operations may be 
conducted through directional drilling.
    4. Off Limits.--Lands that are statutorily unavailable for leasing, 
i.e., Wilderness Study Areas and Designated Wilderness Study Areas; 
lands within incorporated cities, towns, villages, and National Parks 
and Monuments; and areas prohibited temporarily by policy 
considerations pending analysis of various factors such as social, 
economic, environmental (Areas of Critical Environmental Concern--
ACECs, Wildlife Refuges) and safety concerns, i.e., special project 
areas, unstable soils. Some restrictions are discretionary and may be 
excepted by the authorized officer upon application by the operator.

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    Mrs. Cubin. Governors, please feel free to go. Thank you 
very much for being here.
    We do have a vote on the Floor. It is the ergonomics rule. 
We have 10 minutes left.
    The next panel will be Neal Stanley, testifying on behalf 
of the Independent Petroleum Association of the Mountain 
States; Jim Bowles, Vice President of Phillips Petroleum 
Company, who is testifying on behalf of the American Petroleum 
Institute; and Terry O'Connor, with Arch Coal Company, 
testifying on behalf of the National Mining Association.
    So if those gentlemen would please take their places at the 
table, we will run over and vote and be back here immediately. 
Thank you.
    [Recess.]
    Mrs. Cubin. I would like to welcome the panel, and I know 
other members of the Subcommittee will be coming in as they are 
available.
    So, first, I would like to call on Mr. Stanley, as I said 
earlier, on behalf of the Independent Petroleum Association of 
the Mountain States.

STATEMENT OF NEAL A. STANLEY, PRESIDENT, INDEPENDENT PETROLEUM 
               ASSOCIATION OF THE MOUNTAIN STATES

    Mr. Stanley. Thank you, Madam Chair, members of the 
Committee. I am Neal Stanley, Senior Vice President of Forest 
Oil Corporation, and President of the Independent Petroleum 
Association of the Mountain States, both based in Denver, 
Colorado.
    I would like to thank this Committee for focusing its 
attention on the significance of Government lands in developing 
a sustainable national energy policy. Policies that limit or 
encourage energy development on Government lands have very real 
consequences.
    The oil and gas industry can supply the nation's growing 
natural gas needs, but the costs of natural gas will be 
dependent upon a number of factors, most notably having 
adequate access to the land in a timely manner. Policies that 
promote reasonable access to the nation's abundant supplies of 
natural gas will bring more gas to market quicker, which will 
lower the price.
    Please turn to Exhibit #1 in my written testimony. This is 
a map showing Government lands. The various represent the 
agencies with surface management responsibility. Fifty-two 
percent of the land in the West is Government land.
    Exhibit #2 shows the total estimated natural gas resources 
in the lower 48 with the corresponding percentage of those 
resources that are subject to prohibitions on access. In the 
Rocky Mountains, where abundant supplies of natural gas exist, 
Federal policies limit access to an estimated 137 trillion 
cubic feet of natural gas. This is 6 years' supply at current 
rates of use. Also, in the eastern Gulf of Mexico, 24 trillion 
cubic feet of natural gas is restricted. Lease Sale 181 is 
scheduled for December 2001 and should stay on schedule.
    Impediments to gaining access for natural gas development 
come in many forms. Recent mining designations, road-building 
policies, and wilderness reviews prohibit access to some areas. 
Outdated resource management plans and overly restrictive 
surface use requirements are also preventing access.
    A natural starting point for looking at access is with the 
restrictions that effectively reduce access where oil and gas 
leasing has already occurred. In order to facilitate the growth 
of deer and elk herds, land managers prohibit drilling during 
winter months. My personal experience in over 20 years of 
sitting on many drilling rigs throughout the Rockies has been 
that these animals are not in the least bit bothered by our 
activity. Hundreds of wells could have been drilled this winter 
alone to help supply natural gas.
    For what purpose or benefit do land managers restrict 
drilling? So that the herd can increase in size, only to be 
hunted in the fall. So we must decide, should American 
consumers be paying a higher price for energy to subsidize the 
elk hunters?
    Examples like this point up an important shortfall in land 
management policy. There has been no clear direction with 
respect to energy development on Government land. Throughout 
the gas-rich basins of the Rocky Mountain region, backlogs 
continue to grow for permits to drill and rights-of-way for 
pipelines and roads.
    Exhibit #3 shows the surface use restrictions on a 
southwestern Wyoming Federal lease. Please notice the length of 
time associated with each restriction, and also note the amount 
of time required to drill an 8,000-foot well. As energy 
companies explore for natural gas, we have a very short window 
each year to drill our wells.
    My final point is that the employment of advanced 
technology must occur if we are to reach our goals. Research 
and development spending by the oil and gas industry has 
decreased from $10 billion to $2 billion per year over the past 
20 years as the large, integrated companies have shrunk in 
size. We know that past innovations from this R&D such as 
horizontal drilling and 3-D seismic have provided significant 
increases in the recovery of oil and gas. Federal efforts to 
aid the R&D effort by devoting a portion of Federal oil and gas 
royalties to a research fund would be a win-win program.
    In conclusion, it is important to remember that natural gas 
resources are not uniformly distributed in the landscape. We 
must be allowed to drill where the resources exist if we are to 
supply the maximum available energy. I view the balance between 
energy supply and its price and access to public land like a 
teeter-totter. If the industry is shut out from public land, 
then the price of energy will be much higher. If we have access 
to public land where the resource exists, then the price for 
energy will be much lower. The American people and this 
Congress must decide the balance between access to Government 
land and the supply and price of natural gas to meet the 
nation's energy needs.
    Madam Chair and members of the Committee, thank you for the 
opportunity to appear before you today.
    [The prepared statement of Mr. Stanley follows:]

 Statement of Neal A. Stanley, on Behalf of the Independent Petroleum 
Association of Mountain States and Independent Petroleum Association of 
                                America

    Mr. Chairman, members of the Committee, I am Neal Stanley, Senior 
Vice President of Forest Oil Corporation, and President of the 
Independent Petroleum Association of Mountain States (IPAMS). Both 
Forest Oil and IPAMS are based in Denver, Colorado. Today, I am 
testifying on the behalf of the Independent Petroleum Association of 
America (IPAA), and IPAMS. IPAA and IPAMS represent thousands of 
independent oil and natural gas producers across the nation. 
Independents drill 85 percent of the wells in the U.S., and produce 40 
percent of the oil and two-thirds of the natural gas.
    I would like to thank this Committee for focusing its attention on 
the significance of government lands in developing a sustainable 
national energy policy. Energy policy cannot be developed in a vacuum. 
Policies that either limit or encourage energy development on 
government land have very real consequences. As such, I imagine that we 
all desire land policies that will provide for human needs, contribute 
to the sustainability of communities, and concurrently help secure the 
health of the land for the benefit of current and future generations.
    Despite our best conservation efforts, electricity demand in the 
United States will continue to increase as a function of our growing 
population and the role of computers in our new economy. The role of 
natural gas in meeting this new demand cannot be understated. Ninety-
five percent of all the new power plants now scheduled to be built will 
run on natural gas. Electricity produced from natural gas fired 
generation will increase from 15 percent to 40 percent by the year 
2020. Reports from the Department of Energy, Gas Research Institute, 
National Petroleum Council and American Gas Association show natural 
gas consumption increasing from 22 trillion cubic feet (TCF) this year 
to 35 trillion cubic feet (TCF) in 2020.
    The oil and gas industry can meet the nation's growing demand for 
natural gas, but the price of natural gas will be dependent upon a 
number of factors, most notably, having adequate access to the resource 
in a timely manner. Policies that promote reasonable access to the 
nation's abundant supplies of natural gas will bring gas to market more 
quickly and also lower the price of this energy.
    Exhibit #1 is a map showing government lands. The various colors 
represent the different agencies with surface management 
responsibility. A map showing the Federal government's mineral interest 
in the western United States would encompass an even larger portion of 
the West than is depicted on this map. Fifty-two percent of the land in 
the western United States is managed by Federal and state governments.
    Exhibit #2 shows the total estimated natural gas resources in the 
lower 48 states, with the corresponding percentage of those resources 
that are subject to severe, if not outright, prohibitions on access.
    Developing the substantial domestic natural gas reserves in 
offshore areas of the Eastern Gulf of Mexico, Atlantic Ocean, and 
California is prohibited by moratoria. President Clinton extended these 
moratoria for another ten years in 1998 saying, ``First, it is clear we 
must save these shores from oil drilling.'' This is a flawed argument 
ignoring the state of current technology. It results in these moratoria 
preventing natural gas development as well as oil. In fact, both the 
Eastern Gulf and the Atlantic reserves are viewed as gas reserve areas, 
not oil. Those coasts are not at risk. Too often, these policies seem 
to be predicated on the events that occurred 30 years ago. Federal 
moratoria policy needs to be reviewed. New policies need to be based on 
a sound understanding, of today's technology.
    Offshore Lease Sale 181 is scheduled for December 2001 and is 
outside the areas covered by moratoria. The resources contained in this 
sale area, approximately 7.8 TCF of gas and 1.9 billion barrels of oil, 
are important to the nation and surrounding coastal states. We strongly 
recommend the sale stay on schedule. This sale includes much needed gas 
resources for the Gulf of Mexico to even partially meet this country's 
natural gas needs.
    In the Rocky Mountains, where abundant supplies of natural gas 
exist, Federal policies prohibit access to an estimated 137 trillion 
cubic feet of natural gas. Long-term sustainable gas production will be 
achievable only through the development of frontier areas such as the 
Rockies. Without access to such areas, industry will not be able to 
keep pace with steeper decline rates in the mature basins.
    Impediments to gaining access for natural gas development come in 
many forms. Recent monument designations, new policies prohibiting road 
construction, and continuous wilderness reviews prohibit access to some 
areas. Administrative withdrawals, inaction, and extensive delays work 
similarly to restrict access. Outdated resource management plans and 
overly restrictive surface-use requirements also prevent access. The 
constraints differ in severity, but in each case, these impediments 
work individually and cumulatively to prevent the development of 
natural gas.
    A natural starting point for looking at limits on access is with 
the restrictions that effectively reduce access where oil and gas 
leasing has already occurred. Take for example a common restriction on 
drilling during winter months to protect Big Game Winter Range. In 
order to facilitate the growth of deer and elk herds, land managers 
prohibit drilling during winter months. My personal experience of 
sitting on many drilling rigs throughout the Rockies has been that 
these animals are not the least bit bothered by our activity. 
Nevertheless, the impacts of this restriction are significant. Hundreds 
of wells could have been drilled this winter alone to help offset the 
expected shortages of natural gas that we will encounter this summer. 
And for what purpose, or benefit, do land managers restrict drilling? 
So that the herd can increase in size only to be hunted the next fall. 
If there is any real trade-off between closing an area or opening it to 
development, the tradeoff seems to be between energy development and 
hunting. And so we must decide, should American consumers be paying a 
higher price for energy to subsidize elk hunters?
    Examples like this point out an important shortfall in land 
management policy. There has been no clear direction for land managers 
with respect to energy development on government land. Accordingly, 
each land manager assigns a relative value to the development of energy 
with no sense of how his or her actions contribute to or detract from 
the nation's energy sustainability. Mixed messages and a lack of 
accountability have led to a situation where land managers focus 
entirely on process with no apparent regard for the outcome. If left 
unattended, this lack of direction will become even more disastrous.
    Another example that illustrates the BLM's failure to recognize the 
urgency to develop natural gas can be seen in a recent wildcat well 
Forest Oil drilled in southwest Wyoming. In this case, the BLM's 
interpretation of field rules ended up costing Forest Oil $120,000, and 
even more when you consider the opportunity costs associated with 
delays. The well site was six miles from an improved road with an 
existing two-track road that led to the location. The BLM required 
Forest Oil to design and construct an improved road to the location at 
a cost of $90,000, even though the well was only going to take 20 days 
to drill. If drilling proved it to be a dry hole, we would not need to 
continue to go to that location. Indeed, the well was a dry hole that 
cost the company $800,000 to drill. After we plugged the well, the BLM 
required Forest to either maintain the road forever, or reclaim the 
road to its previous two-track status. It will cost Forest another 
$30,000 to reclaim the road. The money wasted, $120,000, could have 
been spent drilling more wells.
    Natural gas companies rely on Federal land managers to process 
their permit requests in a timely manner. Without the necessary 
environmental studies, permits, and authorizations, access to drill on 
Federal lands is prohibited. Throughout the gas-rich basins of the 
Rocky Mountain Region, backlogs for issuing permits to drill and 
rights-of-way for roads and pipelines continue to grow. Many resource 
management plans are outdated and revisions are being required before 
any leasing and development can occur. Staffing is short in many 
offices and the problem seems to get worse with time. The use of 
sophisticated mapping tools and other technologies could ameliorate 
some of these problems but, as with many other issues, addressing 
agency priorities and goals is a necessary first step.
    Exhibit #3 shows the surface use restrictions and seasonal 
restrictions on a southwestern Wyoming Federal lease. Please notice the 
length of time associated with each restriction and also note the 
amount of time required to drill a typical 8,000-foot well and a 
horizontal well. Companies exploring for natural gas have a very short 
window to drill wells. If the BLM has not processed the permits in time 
to meet that window of opportunity, the company will have to release 
the drilling rig they have contracted and wait another year before 
drilling. Which brings me to my next point, which is the importance of 
agency readiness, staffing, and technological sophistication.
    Exhibit #4 demonstrates the time requirements associated with 
operating on private land and Federal land. The right side of the table 
shows the timeframe, to get a well permitted and drilled. The 
difference between drilling on private land and Federal lands is 3 
months versus 1-3 years.
    To further illustrate the pervasiveness of land access problems 
throughout the Rocky Mountain Region, the following three examples are 
provided.
    Exhibit #5 is a map of the newly designated Canyons of the Ancients 
National Monument in southwestern Colorado. Canyons of the Ancients 
encompasses McElmo Dome, one of the Rocky Mountain region's most 
significant sources of natural gas used for advanced oil and gas 
recovery in Colorado, New Mexico and Texas. On the map, of the 183,000 
acres within the Monument's boundary, there are nearly 155,000 acres of 
active Federal leases, 141,000 of which are held by production or are 
included in four Federal production units.
    When the monument was designated, the BLM proposed stringent 
surface use restrictions on 79,000 acres, including a No Surface 
Occupancy stipulation. Given the BLM's predilection for restricting 
access, the Resource Management Plan that will be developed for the 
monument creates even more uncertainty for producers.
    Exhibit #6 is a map of Jack Morrow Hills Resource Area in 
southwestern Wyoming. The Environmental Impact Statement for the Green 
River Resource Management Plan, which includes the Jack Morrow Hills 
area, was started in 1989, with the Record of Decision finally issued 
eight years later, in October 1997. The decision of whether to lease 
for oil and gas exploration and development in Jack Morrow Hills area 
was deferred in the ROD until a Coordinated Activity Plan for the area 
could be completed, which took another four years. When the Draft EIS 
for the CAP was issued, the preferred alternative was for ``staged 
leasing,'' effectively postponing leasing decisions indefinitely. On 
the map, areas designated as potential Wilderness Study Areas (WSA) are 
shown in light blue stippling. Note that there are active leases and 
leases held by production within the new WSAs.
    The attached map of the Jack Morrow Hills area shows the BLM-
managed mineral estate with active oil and gas leases in yellow. Of the 
623,000 acres within the red boundary of the Jack Morrow Hills area, 
there are 239,000 acres of active Federal leases, 36,000 of which are 
productive. Also note that within the CAP area, there are 137,890 acres 
recommended as Wilderness Study Areas.
    Exhibit #7 is a map showing the entire state of Utah. Current 
leases are shown in yellow, a total of 3,567 active Federal leases. 
Also shown on the map are the BLM's 1990 recommendations for three 
million acres of new Wilderness Study Areas, as well as former Interior 
Secretary Babbitt's reinventory of an additional three million acres, 
described in the map's legend as ``HR1500 Boundaries''. Note that the 
proposed Wilderness Study Areas include lands that are already leased, 
making development as difficult as the examples of Jack Morrow Hills 
and Canyons of the Ancients. Not shown on the Utah map are the nearly 
29,000 leases that were previously leased in the past but were not 
renewed as a direct result of administrative direction from Washington.
    These examples are only a few of many examples of the overzealous 
application of singular surface uses that preclude other resource 
development. Other examples, some even more egregious, would include 
the backlog of drilling permits and rights of way applications in 
northeastern Wyoming; de facto wilderness management of Wyoming's 
Bridger/Teton National Forest and Montana's Rocky Mountain Front; and 
excessively stringent application of NEPA planning documents and 
subsequent delays in Utah, Colorado, Montana, and the Dakotas.
    My final point is that the employment of advanced technology for 
both land managers and industry must occur if we are to reach our 
goals. Research and development spending by the oil and gas industry 
has decreased from $10 billion to $2 billion per year over the past 
twenty years as the large integrated companies have shrunk in size. Yet 
we know that past innovations from this R&D, such as horizontal 
drilling and 3-D and 4-D seismic, have provided significant increases 
in the recovery of oil and gas. Frontier areas like the Rocky Mountain 
region will require new and sophisticated technologies to develop a 
large portion of the unconventional gas resources found in the region. 
Federal efforts to aid the R&D effort by directing a portion of Federal 
oil and gas royalties to a research fund would be a significant win-win 
program. Increased R&D spending will increase oil and gas production, 
resulting in a commensurate increase in Federal royalties.
    In conclusion, I would remind the Committee that natural gas 
resources are not uniformly distributed across the landscape. Even so, 
natural gas development can coexist with other values. We do not need 
to choose between ``this or that'' use of public land. Responsible 
management can allow for ``this and that'' use. Responsible management 
can provide for human needs, contribute to the sustainability of 
communities, and concurrently help secure the health of the land for 
the benefit of current and future generations.
    I view the balance between energy supply, and hence, price and 
access to government land as a teeter-totter. If the energy industry is 
shut out from government lands, then the price of energy will obviously 
be much higher. If we have access to more land where the resource 
exists, then the price of energy will be much lower. The American 
people and this Congress must balance the perceived trade-offs of 
allowing reasonable access to government land with the tangible 
benefits of securing an adequate supply of natural gas to meet the 
nation's near-term energy needs.
    Mr. Chairman and members of the Committee, thank you for the 
opportunity to appear before you today.
                                 ______
                                 

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    Mrs. Cubin. Thank you, Mr. Stanley.
    The Chair now recognizes Jim Bowles, the Vice President of 
Phillips Petroleum Company, testifying on behalf of the 
American Petroleum Institute.

   STATEMENT OF JIM L. BOWLES, PRESIDENT, AMERICAS DIVISION, 
PHILLIPS PETROLEUM COMPANY, ON BEHALF OF THE AMERICAN PETROLEUM 
                           INSTITUTE

    Mr. Bowles. Thank you. My name is Jim Bowles. I am 
President of the Americas Division of Phillips Petroleum 
Company. I represent Phillips and the American Petroleum 
Institute, which has over 400 members engaged in every aspect 
of the oil and gas industry in the United States. I appreciate 
this opportunity to speak regarding access to Government lands 
underneath which much of the country's known reserves of oil 
and gas naturally lie. I ask that my full remarks be submitted 
for the record.
    Today, we import some 57 percent of our crude oil. While we 
cannot eliminate our dependence on imported oil, there are a 
number of things we can do to encourage greater domestic 
production. They all have to do with allowing our companies 
greater access to non-park Government lands to produce the 
great energy resources we have in an environmentally compatible 
manner.
    Today, I plan to focus on three regions where the access 
question is of the utmost importance--the Western United 
States, Alaska, and the Gulf of Mexico. Demand for natural gas 
in this country has never been stronger, and it will continue 
to grow along with the demand for electricity. We have a 
tremendous natural gas resource base in North America. However, 
since 1983, access to Federal lands in the Western U.S., where 
an estimated 40 percent of the natural gas reserves are 
located, has declined by 60 percent.
    Despite the industry's record of sound environmental 
stewardship, the previous administration barred exploration on 
vast regions of Government lands, including nearly 60 million 
acres in the forest system. In the lower 48, some 205 million 
acres of Federal lands in the Western U.S. are under the 
control of two Federal agencies with broad discretionary 
powers--the Bureau of Land Management, the BLM, and the U.S. 
Forest Service. They administer Federal non-park lands. Both 
are required to manage these lands under the congressionally-
mandated concept of multiple use. Yet, both have used 
discretionary actions to withdraw lands from leasing, and long 
delayed other leasing decisions and project permitting.
    There are vast reserves of natural gas in the form of coal 
bed methane beneath Western Federal lands. However, BLM's 
inability to grant timely permits because of understaffing has 
greatly hindered development of this gas.
    In Alaska, a new discovery of oil at Prudhoe Bay on the 
North Slope in the early 1970's offered a significant new 
source of competitive domestic supply. However, North Slope 
production has fallen by nearly 50 percent by the year 2000. 
Alaska still holds much promise for new energy development, not 
only in the much discussed Arctic National Wildlife Refuge, but 
also in NPRA, the National Petroleum Reserve-Alaska, that is 
west of Prudhoe Bay.
    Our industry has made great strides in developing fields in 
these Arctic areas, with less adverse harm to the environment. 
One of these areas, the Alpine field, is a great example of how 
technology has minimized any impacts of Arctic oil and gas 
development. Only 97 acres, an area smaller than the U.S. 
Capitol grounds, are needed on the surface to produce from 
40,000 acres, an area roughly the size of the District of 
Columbia.
    North Slope exploration takes place during the winter using 
ice pads and ice roads that melt in the spring, leaving no 
trace of exploration activity. New technologies developed from 
our experience in the Arctic have tremendously reduced the so-
called footprint of our activities and our operations. Despite 
these examples of the industry's environmentally-sound 
operations, Congress has refused to authorize exploration on 
the small section of ANWR that was specifically set aside by 
law for exploration in 1980.
    In the offshore Gulf of Mexico, production is expected to 
rise to nearly a third of our domestic oil and gas supply 
within a decade. There, too, new technologies have driven down 
the cost of finding oil and gas, with much less disturbance to 
the environment, and allowed us to drill and produce in deep 
waters off the Gulf.
    However, because reserves are being depleted at an ever-
increasing rate, this cannot continue to be offset by future 
development unless new areas are opened for exploration. We 
have the technology and the will to explore and produce in 
these sensitive areas, as is being done in Canada, where oil 
and gas activities in the Atlantic have been conducted 
successfully with environmentally-sound development.
    America will soon have a great opportunity to augment 
reserves. Federal Outer Continental Shelf (OCS) Lease Sale 181 
in the eastern Gulf of Mexico is slated for December 2001. It 
was proposed only after comprehensive environmental reviews and 
consultations with Gulf State governors. The Sale 181 area is 
estimated to contain 7.8 trillion cubic feet of natural gas and 
1.9 billion barrels of oil. Again, these reserves can be 
produced cleanly with advanced technology.
    One potential obstacle to the success of 181 is the Coastal 
Zone Management Act which has been used by States, contrary to 
Congress' intent, to cause serious and costly delays to Federal 
OCS leasing and production that would have no adverse 
environmental impact on coastal zones. We strongly support Sale 
181 to proceed as planned.
    To summarize, our industry can explore for and produce our 
country's reserves of oil and natural gas for national security 
purposes and family and personal security. We are willing to 
make enormous investments to meet these ends, but we must have 
access to our natural resources for exploration and production.
    Thank you.
    [The prepared statement of Mr. Bowles follows:]

  Statement of Jim L. Bowles, President, Americas Division, Phillips 
        Petroleum, on Behalf of the American Petroleum Institute

    My name is Jim Bowles. I am President, Americas Division, of 
Phillips Petroleum. I represent Phillips Petroleum and the American 
Petroleum Institute, which has over 400 members, engaged in every 
aspect of the oil and gas industry in the United States.
    While the U.S. oil and natural gas industry has long provided a 
reliable and affordable supply of energy, the Federal government has 
always played a pivotal role in determining how well our energy needs 
are met. And the increasing energy demands of our new economy make it 
imperative that government and industry work to put forth a new 
national energy policy.

A national energy policy
    A successful national energy policy must be comprehensive in order 
to be effective. It must seek to ensure enough energy to support 
economic growth by promoting responsible development of both domestic 
and foreign resources. It should recognize that sophisticated new 
technology developed by the oil and natural gas industry greatly 
reduces adverse impacts on the environment by exploration and 
production, both onshore and offshore.
    A successful national energy policy will recognize that there is no 
quick fix to our energy problems. It must reflect the reality that we 
need to increase supplies of all forms of energy to fully support our 
growing economy. It is important to encourage responsible use of energy 
and increase supplies of all fuels, including fossil fuels as well as 
alternative fuels.
    A successful national energy policy must be flexible to allow 
companies to adapt to new energy and environmental challenges. It 
should recognize that our refinery and delivery infrastructure 
continues to be stretched to its limit, restraining the industry's 
capability to meet new energy demands. It should remove unreasonable 
and complex regulations on cleaner energy production and transportation 
to accommodate growth and the continued high demand for energy--and to 
meet seasonal or unexpected requirements.
    A successful national energy policy must rely primarily on the 
private sector working through free markets, and it must recognize the 
value of diversified energy sources. To that end, it should encourage 
competitive trade practices and international investment.
    Finally, a successful national energy policy must create a 
predictable operating and investment environment for energy suppliers. 
The Department of Energy projects that producers will have to invest 
some $650 billion through 2015 to meet the growth in natural gas demand 
alone. That should tell us that government must work to create a more 
stable regulatory environment so that producers can invest with 
confidence that they will be able to get a fair return on their 
investment.

Access to government lands
    I am here today to speak to the Committee about access to the 
government lands that contain much of the country's known reserves of 
natural gas and oil.
    Today, the U.S. imports 57 percent of its crude oil. Last year's 
gasoline price volatility was due in part to a cutback in production by 
foreign oil producing countries. While we cannot eliminate our 
dependence on imported oil, there are many things that can be done to 
encourage greater production in this country.
    America has vast reserves to help it meet its future requirements. 
But we must have greater access to government lands to produce this 
energy in an environmentally responsible manner.
    Demand for natural gas in this country has never been stronger. The 
National Petroleum Council (NPC), a Federal advisory Committee of the 
Department of Energy, predicts demand, which is now at about 21 
trillion cubic feet (Tcf) per year, at about 29 Tcf by 2010. The Energy 
Information Administration (EIA) now estimates that, due to Clean Air 
Act requirements, and increased demand for electricity, we will need 35 
Tcf annually by 2015.
    We have a tremendous resource base of natural gas in North America. 
Estimates put it between 1,200 and 1,600 Tcf (including resources in 
coal seams and tight sands formations). But we have a significant 
problem due to two key factors.
    First, volatile energy prices inhibited drilling during the 1998-99 
time period. Second, significantly reduced access to some of the most 
promising areas has suppressed our ability to increase our proven 
reserves. This has resulted in today's high prices, as demand has 
continued to grow.
    With higher prices this year, oil and gas producers are making good 
returns on their investments, and plowing additional capital into new 
exploration. While some increase in supply has taken place, achieving 
the reserve growth needed to meet expected demand growth over the long 
term will require sustained growth in drilling activity.
    We recognize that this has been a costly and painful year for 
consumers. It is, therefore, critical to help consumers understand what 
the United States must do from an energy policy standpoint to ensure 
that the U.S. maintains and enhances its long-term supplies. Put 
simply, increased drilling and stable long-term prices are crucial to 
future supplies.
    Yet, many of the government's multiple use lands have been placed 
off-limits by the Federal government. Since 1983, access to Federal 
lands in the western United States-where an estimated 67 percent of 
conventional onshore oil reserves and 40 percent of our natural gas 
reserves are located--has declined by 60 percent. Equally important is 
the fact that discretionary land management policies often 
unnecessarily restrict or impede efforts to develop resources on public 
lands. Our ability to search for new domestic offshore oil and natural 
gas is limited to portions of the Gulf of Mexico and offshore Alaska 
waters because congressional moratoria have withdrawn most of the rest 
of our Federal Outer Continental Shelf from consideration.
    What is access to government lands? We do not request to drill on 
parklands or in wilderness areas set aside by Acts of Congress. Rather, 
we seek access to areas in the American West that have been designated 
as ``multiple use'' so that numerous activities can take place there.
    Most of these areas are simply vast expanses of non-descript 
Federal lands. However, because they lack the beauty and grandeur of 
the Grand Canyon or the Grand Tetons does not mean that we treat them 
with less respect than we do any other lands entrusted to us by the 
government, or by private landowners. Most people driving near or 
hiking in one of these multiple-use government land areas would be 
hard-pressed to locate one of our facilities once the drilling rig is 
removed. It has become fashionable for editorialists and others to 
refer to our industry as a ``dirty'' or ``messy'' business. Safety and 
environmental protection are critical concerns, regardless of their 
location, and where our contractual lease obligations with the 
government require us to return the land to its original condition once 
drilling and production cease.
    Yet, despite our record of sound stewardship, President Clinton 
used his executive powers under the Antiquities Act to bar oil and gas 
exploration and other activities on vast regions of government lands.
    For example, the designation of the Grand Staircase-Escalante 
Monument in Utah in 1996 summarily withdrew promising valid oil and gas 
leases on state lands without even notice or consultation with state 
and local authorities, or affected communities. Likewise, the U.S. 
Forest Service recently banned our companies from exploring for natural 
gas and oil on promising government lands when it published rules to 
bar road building on nearly 60 million acres in the Forest System.
    Offshore, the ``consistency'' provisions of the Coastal Zone 
Management Act (CZMA), under the guise of due process and consultation, 
have caused serious duplicative and incredibly costly delays to Federal 
OCS leasing and production activities that would have no adverse 
environmental impacts on states' coastal zones. And regulations issued 
by the National Oceanic and Atmospheric Administration (NOAA) in the 
last days of the Clinton Administration appear to add impediments to 
environmentally compatible energy development in the OCS, contrary to 
the balancing of competing interests directed by Congress when it 
enacted the CZMA. Both the summary withdrawal of multiple use 
government lands without stakeholder consultation under the Antiquities 
Act, and the endless due process used by opponents to block Federal 
offshore production that does not affect a state's coastal zone are 
extreme, and must be moderated.
    Further, Congress has refused to authorize exploration on the small 
section of the Arctic National Wildlife Refuge (ANWR) that was 
specifically set aside by law for exploration in 1980, after a 1987 
final environmental impact statement concluded that it could be safely 
developed.
    We respect, and strictly adhere, to all of the nation's 
environmental laws. However, many government lands offshore and onshore 
that should reasonably be open for leasing are, in fact, off limits, or 
severely restricted from responsible development.

Offshore lands
    Offshore, the OCS has assumed increasing importance in U.S. energy 
supply over the past half century. The Federal portion of the OCS now 
supplies 19 percent of the oil and 27 percent of the gas produced in 
the United States. Offshore production promises to play an even more 
significant role in the future. The Department of Energy forecasts that 
offshore production will rise to nearly a third of our domestic oil and 
gas supply within a decade.
    In recent years, exploration and development of the offshore has 
been a major factor contributing to domestic energy supplies. From 1993 
to 1997, new proven reserves replaced over 147 percent of offshore oil 
produced, and over 106 percent of gas produced. In 1997 alone, the Gulf 
of Mexico accounted for over 79 percent of the new field discoveries of 
oil in the United States.
    The relatively shallow shelf of the Central and Western Gulf was 
the focus of past development, and is the location of the majority of 
current oil production and the vast bulk of current gas production. It 
has been a source of growth in gas production in the United States for 
nearly three decades.
    Technological revolutions, such as 3-D seismic profiling of 
promising structures, coupled with astounding computer power and 
directional drilling techniques which allow numerous reservoirs to be 
accessed from one drill site have driven down the costs of finding oil 
and gas. And at the same time these technologies allow development with 
much less disturbance to the environment. Tremendous advances in our 
ability to drill and produce in the deep waters of the Gulf have also 
resulted in vast new reserves being added to our resource base. The 
Deepwater Royalty Relief Act developed by this Committee, and passed by 
Congress in 1995, has significantly aided that endeavor. Those in the 
Federal government who are most familiar with our industry have lauded 
our technological advances.
    A 1999 DOE report, Environmental Benefits of Advanced Oil and Gas 
Exploration and Production Technology, stated that, ``innovative E&P 
approaches are making a difference to the environment. With advanced 
technologies, the oil and gas industry can pinpoint resources more 
accurately, extract them more efficiently and with less surface 
disturbance, minimize associated wastes, and, ultimately, restore sites 
to original or better condition. . . . [The industry] has integrated an 
environmental ethic into its business and culture and operations . . . 
[and] has come to recognize that high environmental standards and 
responsible development are good business.''
    However, there is now accumulating evidence that resource depletion 
is overtaking the effects of technical advances on the cost structure 
of OCS development. The volume of reserves added per dollar of capital 
spent in the OCS has been falling steadily since the early 1990s. Due 
to increased demand, reserves are being depleted at an ever-increasing 
rate. Due to more efficient extraction technologies, the decline from 
new gas wells is now estimated to be as high as 40 percent per year.
    This does not suggest the imminent collapse of OCS production, but 
it does suggest that the drilling and capital expenditures required to 
replace and augment reserves will become increasingly important. We 
must increase deepwater development, and access to areas presently 
restricted. Currently, presidential moratoria, and annual Interior 
Appropriations bill riders preclude leasing in most of the Eastern Gulf 
of Mexico, the entire Atlantic and Pacific Federal OCS, and portions of 
offshore Alaska.
    As a result, only 200 million acres out of a possible 1.5 billion 
Federal OCS acreage is available for environmentally compatible 
exploration and production.
    The National Petroleum Council estimates that more than 76 trillion 
cubic feet of gas are off-limits in the Federal OCS as a result of the 
current moratoria. Twenty one Tcf are estimated to lie in the Federal 
waters beneath the Pacific, 31 Tcf beneath the Atlantic OCS, and about 
24 Tcf are projected to lie beneath the Department of the Interior's 
Eastern Gulf of Mexico Planning Area.
    Again, our companies have the technology, and the will to explore 
and produce in these areas in an environmentally compatible manner. It 
is already being done in Canada's OCS, where oil and natural gas 
activities off the Atlantic coast have been conducted successfully in 
recent years with environmentally sound developments. Those supplies 
are now becoming available for the energy needs of New England.
    America will soon have a great opportunity to augment its reserves. 
Federal OCS Lease Sale 181 represents a plan for leasing by the 
Department of the Interior in the Eastern Gulf of Mexico Planning Area. 
Scheduled since the mid-1990s based on comprehensive environmental 
reviews, and consultations between former DOI Secretary Bruce Babbitt 
and then Governors Chiles of Florida and James of Alabama, Sale 181 is 
slated to be conducted in December 2001. The area available in Sale 181 
is estimated by the NPC to contain 7.8 trillion cubic feet of natural 
gas and 1.9 billion barrels of oil. This means that natural gas from 
the Sale 181 area could satisfy the current natural gas needs of 
Florida's 5.9 million households for the next 16 years. Lastly, the 
crude oil from the Sale 181 area (which is expected to come from the 
deepwater areas, far removed from the coastline) could fuel 74,000 cars 
for 20 years.
    These potential reserves can be produced cleanly, for advances in 
technology have made offshore oil and natural gas exploration and 
production safer than ever. For the 1980-1999 period, 7.4 billion 
barrels of oil have been produced in the OCS with less than 0.001 
percent spilled--a 99.999 percent near perfect record.

Alaska's North Slope
    In the early 1970s, as petroleum production from the Lower 48 
states entered a decline, a new discovery of oil at Prudhoe Bay on the 
North Slope of Alaska offered the U.S. the promise of a significant new 
source of competitive domestic supply on a world-class scale. The 
discovery was initially estimated to be 9.6 billion barrels of oil, 
nearly double the size of the largest field ever previously found in 
North America. Despite high costs, a hostile climate and major 
environmental challenges, supply from Prudhoe Bay came online in 1977, 
offsetting much of the decline in Lower 48 production through the mid-
1980s.
    By the mid 1980s, Alaska's North Slope was supplying about a 
quarter of U.S. oil production. Meanwhile, as Prudhoe production grew, 
the estimated resource potential of the North Slope began to grow as 
well, as other finds occurred. However, North Slope production has been 
falling. North Slope production peaked in 1988, and by 1998 had fallen 
by nearly 40 percent.
    Phillips and other companies operating on Alaska's North Slope are 
actively exploring for new sources of oil in the areas that have become 
available for leasing. This includes the National Petroleum Reserve-
Alaska (NPRA) and the Alpine field, located in state lands west of 
Prudhoe Bay in an incredibly rich and diverse wildlife habitat. The new 
Alpine field is a great example of how technology has minimized any 
impacts of arctic oil and gas development. Only 97 acres, an area 
smaller than the area covered by the U.S. Capitol grounds, are needed 
on the surface to produce from an area of 40,000 acres, an area roughly 
the size of the District of Columbia.
    This winter Phillips will drill 12-15 exploratory wells. Today's 
North Slope exploration takes place during the winter using ice pads 
and ice roads that melt in the Spring, leaving almost no trace of the 
previous Winter's exploration activities. When oil and gas is 
discovered, new technologies developed from our experience in the 
Arctic have tremendously reduced the so-called ``footprint'' of our 
activities in our operations to extract these resources.
    The U.S. Geological Service estimates there to be more than 10 
billion barrels of oil recoverable from the coastal plain of ANWR, and, 
perhaps as much as 16 billion barrels. That is equivalent to the 
volumes we would import, at current levels, from Saudi Arabia for the 
next 20-25 years. If those volumes are found it would be the largest 
oil discovery in the world in the last 30 years.
    And due to technological advances, the ``footprint'' to develop 
ANWR, if exploration confirmed the vast reserves predicted there, would 
be only an estimated 2,000 total acres out of a total area of 19.8 
million acres, a tract roughly the size of South Carolina.

The Lower 48
    In the Lower 48 states, a 1997 study by the Cooperating 
Associations Forum found that Federal lease acreage available for oil 
and gas exploration and production in eight Western states (California, 
Colorado, Montana, Nevada, New Mexico, North Dakota, Utah and Wyoming) 
has decreased by more than 60 percent since 1983.
    Approximately 205 million acres of Federal lands in these states 
are under the control of two Federal agencies with broad discretionary 
powers. The Bureau of Land Management (BLM), whose land management 
planning authority is derived from the FLPMA of 1976, and the USFS, 
whose jurisdiction is derived from the National Forest Management Act, 
administer these Federal, non-park lands.
    Both agencies are required to manage lands they administer under 
the congressionally mandated concept of multiple use. Yet, BLM and USFS 
discretionary actions have withdrawn Federal lands from leasing, and 
long delayed other leasing decisions and project permitting.
    Congress has directed the BLM and the Forest Service to allocate 
non-wilderness lands for resource use, identify areas that are 
available for oil and gas leasing, and identify important wildlife 
habitat areas, and inventory wilderness candidate lands among other 
uses. Each agency has completed land use plans for the lands they 
administer, including lands that are candidates for wilderness 
designation. Yet, some lands found unsuitable for wilderness 
designation are, however, managed as ``wilderness study areas,'' 
effectively removing these lands inappropriately from consideration for 
resource development. Further, these agencies often dictate lease 
stipulations as conditions of approval for exploration and production. 
Stipulations are intended to protect resource values in conjunction 
with proposed projects, such as exploratory wells, yet many conditions 
required, such as ``no surface occupancy,'' essentially preclude 
exploration and production from occurring.
    The NPC study on natural gas referred to earlier also points out 
that vast reserves of natural gas in the form of coal bed methane (CBM) 
lie beneath Federal lands, especially in Wyoming and Montana. However, 
BLM's inability to grant permits in a timely manner has greatly 
hindered CBM development, and may contribute to further shortfalls in 
necessary future gas production. In some instances we recognize that 
individual BLM offices may be understaffed and therefore are simply 
unable to efficiently process permitting requests. We therefore support 
increased funding for BLM to adequately address these critical 
permitting backlogs.
    We applaud this Committee's involvement in legislation enacted in 
the last Congress directing the Departments of the Interior and Energy 
and the Forest Service to conduct an inventory of oil and gas resources 
on Federal lands and the restrictions that prevent access to these 
critical resources. We urge Congress to fully fund this inventory in 
the FY 2002 appropriations process so that adequate information will be 
available on resource availability.
    In conclusion, we must recognize that this industry in the 21st 
Century has the technologies, and sensibilities to explore for, and 
produce our nation's vast reserves of secure oil and gas--resources 
that keep factories and offices running, and our homes comfortable 
regardless of the weather. Oil and natural gas are the key ingredients 
in thousands of products that we use, from life-saving medical devices 
to fertilizers that help feed the world.
    I am grateful to the Committee for the opportunity to present our 
views on a national energy policy for the long-term health and 
continued prosperity of our nation.
                                 ______
                                 
    Mrs. Cubin. Thank you, Mr. Bowles.
    Mr. O'Connor?

STATEMENT OF TERRY O'CONNOR, VICE PRESIDENT, EXTERNAL AFFAIRS, 
 ARCH COAL, INC., ON BEHALF OF THE NATIONAL MINING ASSOCIATION

    Mr. O'Connor. Good afternoon, Madam Chairman. It is good to 
see you again. For the record, my name is Terry O'Connor. I am 
Vice President of External Affairs for Arch Coal, the second 
largest coal producer in the United States. We will produce 
about 115 million tons of coal this year, we estimate, and 
about 70 percent of those tons will come from Federal lands in 
the Western States of Wyoming, Colorado, and Utah.
    I am here also on behalf of the National Mining 
Association, and before commencing my testimony I just want to 
thank you and ask you to relay to Chairman Hansen our 
appreciation for both of you scheduling this all-important 
hearing.
    Most of us here in the room today are aware that coal is 
America's most abundant and reliable domestic energy resource. 
The coal produced in the United States is used to generate over 
50 percent of the electricity generated in this country. We are 
also probably all aware that coal represents somewhere between 
85 percent and 95 percent of the discovered and economically 
recoverable fossil fuel resources in the United States.
    Finally, it is generally known that the Western United 
States coal fields on Federal lands are blessed with an 
abundance with some of the lowest-sulfur coal in the United 
States, if not the world. Western coal, in particular, is quite 
low in inherent NOx when burned in U.S. power plants.
    What may not be quite as generally known is that today a 
majority of coal production comes from the Western United 
States. The bulk of that production is actually coming from 
Congresswoman Cubin's district or a portion of her district, 
the prolific coal-producing region of northeastern Wyoming and 
to some extent Montana, called the Powder River Basin, and 
referred to by many as the Saudi Arabia of coal. If Campbell 
County, Wyoming, in northeastern Wyoming, were a separate 
country, it would be one of the five largest coal-producing 
nations on Earth, with the United States being number two.
    Forecasts show that over 90 percent of expected new coal 
production in the United States likely will come in the next 20 
years from mines on Western Federal lands. However, a group of 
ominous clouds are on the horizon, in that numerous Federal 
policies now in effect discourage or in some cases prevent the 
exploration, development, and investment that will be required 
to bring additional Federal coal production online. This 
Congress has a unique opportunity to deal with some of these 
issues and help us contribute toward the goal of making our 
country less energy-reliant on unstable foreign sources.
    Madam Chairwoman, in the interests of time I will dispense 
with a discussion of most of the issues that are raised in our 
written testimony, but I would quickly like to address three of 
the most serious issues that we hope Congress will take an 
early look at.
    The first issue I would like to address today and take a 
moment or two on is the U.S. Forest Service Roadless 
Initiative. In addition to the much publicized restrictions on 
timbering, as a consequence of this initiative the coal mining 
industry will also be significantly and adversely impacted.
    I refer you to a statement in the Forest Service's own EIS 
which says that the initiative, quote, ``'will preclude further 
development of leasable mineral resources within inventoried 
roadless areas, which will result in decreases in jobs, income, 
and payments to States.'' My company, our employees, and the 
consumers of our coal will be ultimately adversely impacted by 
this Roadless Initiative unless it is somehow amended.
    For example, in Colorado we operate the West Elk 
underground mine, the second largest coal-producing mine in the 
State, where we employ 360 people with an annual payroll of 
over $26 million. An estimated 200 million tons of very low-
sulfur, high-Btu coal is adjacent to our West Elk mine. If this 
Roadless Initiative is not somehow changed, this will result in 
the premature abandonment of the mine and the loss of an over 
$100 million capital investment that we have made.
    Similarly, in Utah, we operate three large underground 
mines, and actually are the largest coal producer in the State. 
Our coal represents about 40 percent of the State's coal 
production. Our coal underlies a large forest service tract. I 
refer you to a map that is either in the back of the room or 
back in the Resources Committee room that identifies the 
enormity of the Roadless Initiative and what it will do.
    Ironically, as California attempts to dig out from its 
energy crisis, one of California's most viable, low-cost, 
lowest-hanging fruit is the construction of power plants to 
supply California much-needed electricity. This Roadless 
Initiative will put in harm's way their capacity to do so. We 
recommend that Congress, at a minimum, amend this Roadless 
Initiative somehow to exclude sub-surface leasable minerals, 
and that includes oil, gas, and coal.
    Secondly, and very quickly, an area I would like to address 
for just a second is an issue you are very familiar with, and I 
certainly thank you for your past efforts on this--the issue of 
conflict involving the simultaneous development of coal and 
coal bed methane in the Powder River Basin. This issue sits as 
a potential cloud that can impact far more than the very, very 
small, isolated areas of conflict, and we urge that Congress 
move quickly in order to free up the much needed coal bed 
methane, as well as low-cost, low-sulfur coal.
    Third, an issue that I would like to second Mr. Bowles, to 
my right, is the administrative backlog which is occurring in 
the Powder River Basin, in his case with regard to coal bed 
methane. In our case, it is the lease by application process 
for coal.
    Because of the dramatic increase in requirements for low-
sulfur coal in the West, BLM is simply not keeping up with the 
processing of lease by applications. If an application were 
submitted today, because they are only processing one a year, 
it would be probably 2009 before a lease sale was held, then 
another 3 years to permit it, another year after that to move 
the infrastructure. And we would be looking at 2012 before we 
could be in production on a new LBA. This cries out for 
congressional oversight.
    Finally, and in conclusion, as important as all of these 
issues are, the other side of the potentially even more 
leveraging portion of the energy coin is that as a nation we 
must authorize the construction of additional coal-fired 
generation facilities, as well as the equally essential 
transmission lines to be able to move electricity to places 
where it is needed.
    The United States and the Western United States must escape 
the banana syndrome, which many of you are familiar with as the 
next step beyond NIMBY; it is build absolutely nothing anywhere 
near anything. If the next generation of lower-emitting, 
higher-combustion-efficiency coal-fired plants are not allowed 
to be built, constructed and operated, any additional Federal 
coal which is produced in the West will not be able to help 
reduce our nation's reliance on unstable foreign sources of 
energy or to prevent the spread of the California syndrome 
nationally.
    Thank you very much for your time.
    [The prepared statement of Mr. O'Connor follows:]

  Statement of Terry O'Connor, Vice President, External Affairs, Arch 
        Coal, Inc., on Behalf of the National Mining Association

    Mr. Chairman, my name is Terry O'Connor. I am Vice President of 
External Affairs for Arch Coal, Inc. I am appearing here on behalf of 
the National Mining Association (NMA) to testify on the important role 
that energy resources on Federal lands, specifically coal resources, 
have in the development of strategies and policies to take the United 
States closer to the goal of being self-reliant for energy supply. 
Thank you for the opportunity to present the mining industries views on 
this subject.

Summary
    Affordable, reliable energy is a necessity for economic growth. 
Domestic, affordable and increasingly clean coal provides over 20 
percent of all the energy that is used in the United States and is the 
fuel of choice for over 50 percent of the electricity generated in our 
nation today. Nearly 40 percent of our coal production is from mines 
located on Federal lands. Over one-third of the nation's coal reserve 
is found on lands owned or controlled by the Federal government. 
Forecasts show that over 90 percent of new production expected to come 
on line over the next 20 years will be from mines on Federal lands. 
However, policies now in effect discourage, or prevent the exploration, 
development and investments that will be required to bring this new 
production on line. This Congress has an opportunity to change current 
policy direction to ensure that the vast resources on Federal lands can 
contribute towards the goal of energy self-sufficiency while at the 
same time ensuring that both the environment and the economies of the 
regions in which these resources are located are protected and 
advanced.

General introduction
    Arch Coal, Inc., headquartered in St. Louis, is the second largest 
coal producer in the United States. In 2000, our operating subsidiaries 
mined more than 107 million tons of coal--nearly 10 percent of the 
nation's production--from surface and underground mines in Wyoming, 
Colorado, Utah, Illinois, West Virginia, Kentucky and Virginia. Arch 
shipped coal to approximately 140 power plants in 30 states providing 
the fuel for 6 percent of the electricity used by Americans last year. 
Arch owns or controls approximately 3.2 billion tons of coal reserves 
including reserves on Federal lands.
    In 2000 our company mined nearly 65 million tons of low-sulfur, 
sub-bituminous coal from our two large surface mines in the Powder 
River Basin (``PRB'') of Wyoming, Black Thunder and Coal Creek mines. 
We also produced 3.4 million tons in our West Elk Mine in Colorado and 
9.4 million tons in three mines in Utah. This coal is almost 
exclusively mined on Federal lands. One of Arch Coal's highest 
priorities is to operate safe and environmentally responsible mines. 
Our production and reclamation experience on our mines on Federal lands 
are prime examples of the way that our priorities are met.
    The National Mining Association represents producers of coal, 
metals and non-metal minerals, as well as manufacturers of processing 
equipment, machinery and supplies, transporters, and engineering, 
consulting and financial institutions serving the mining industry. The 
members of National Mining Association produce over 80 percent of 
America's coal, a reliable, affordable, domestic fuel choice used to 
generate over 50 percent of the electricity used in the nation.

A balanced national energy strategy is a basic element of our nation's 
        economic future
    Mr. Chairman, we would like to commend you for holding these 
oversight hearings on the need for a balanced national energy strategy. 
Energy, whether it is from coal, oil, natural gas, uranium or renewable 
sources, is the common denominator that is imperative to sustain 
economic growth, improve standards of living and simultaneously support 
an expanding population. Affordable and reliable energy--much of it 
from coal produced on Federal lands--has made the last decade of 
expansion possible. The recent sharp increase in the overall cost of 
energy along with concerns over current and future supplies together 
remind us of the importance of affordable energy as these factors are, 
in part, behind the downturn in the economy that is now occurring.
    The policies of the past eight years have actively discouraged and 
even prevented investments in domestic energy supplies and in the 
energy delivery infrastructure on both public and private lands. As a 
result no energy source be it petroleum, natural gas, coal or uranium 
is in a position to quickly increase output, to even to meet the new 
demands that are forecast. Our energy supply industry has not been able 
to make the investments or develop and maintain the infrastructure that 
is necessary for the future. The policies that have discouraged or 
outright prevented development must be identified and reversed. The 
United States is fortunate to have a large domestic energy resource 
within our borders but, to even approach energy self-sufficiency our 
policy direction must be returned to one that encourages 
environmentally sound development and use of our nation's vast energy 
resource base.
    Forecasts of future energy demand all consider technological 
advances, conservation and increased efficiency. But all forecasts also 
point to an increase in energy demand. For example, the Energy 
Information Administration (EIA) is predicting that energy use will 
increase by over 32 percent by 2020. Meeting this demand with reliable 
affordable energy while maintaining our high environmental standards 
will be a challenge, but a challenge that can be met with the correct 
policies that consider and enhance the role of all energy sources, 
including those sources found on Federal lands.

The role of coal in U.S. energy
    Coal reserves, which are geographically distributed throughout the 
US, comprise the greater share of the nation's energy resource base. 
The demonstrated coal reserve is over 500 billion tons, a reserve large 
enough to support a growing coal demand for over 200 years. In 2000, 
1.1 billion tons of coal were produced in mines located in 26 states. 
Coal, or electricity generated from coal is used in all 50 states. The 
coal industry contributes some $161 billion annually to the economy and 
directly and indirectly employs nearly 1 million people.
    Last year 1.026 billion tons of coal were used to generate over 50 
percent of all electricity used in the US. Although this is more than 
triple the amount of coal used for electrical generation in 1970, 
emissions have declined by over one-third. The Energy Information 
Administration forecasts show that electricity use will increase by 
another 35 percent by 2020 and that coal use for electricity will total 
at least 1.25 billion tons in 2020, some 250 million tons or 20 percent 
more than is currently burned. Meeting electricity demands will require 
construction of new power plants including coal fired power plants. 
Although beyond the scope of this hearing, a national energy strategy 
must include provision for incentives that allow companies building 
these new plants to assume the risks of commercializing new advanced 
clean coal technologies. The mining industry supports legislation 
designed to provides a measure of burden-sharing to cushion the cost of 
improving the environmental performance of existing coal-based 
generating facilities and to stimulate deployment of advanced 
technologies to further reduce emissions and improve efficiency in new 
generating facilities.
    Coal fired electricity is and will remain the most affordable 
electricity available. Electric rates in regions dependent upon coal 
for electricity average at least one-third lower than rates in regions 
dependent upon other fuels for electricity. Forecasts show that these 
differentials will remain in place over at least the next twenty years.
    Because coal is a domestic energy resource that is reliable, 
affordable and, with new advanced clean coal technologies, increasingly 
clean, coal can and should continue to play a major role in meeting the 
energy needs of our nation in the future. Coal production will increase 
and nearly all this new coal will be from reserves located on Federal 
lands.

Coal on Federal lands
    Coal mined on Federal lands provides a vital portion of the 
nation's domestic energy supply. In 2000 approximately 405 million tons 
of coal, 37 percent of national production, were mined on Federal 
lands. Considering western production only, a full 80 percent came from 
mines on Federal lands and, considering that the majority of privately 
held western reserves are on lands that are effectively controlled by 
Federal land policies one can assume that 85 percent or more of the 
growing western coal industry depends upon Federal land management 
policies. Coal mines on Federal lands are found in Colorado (89 percent 
of production within the state), Montana (46 percent), New Mexico (24 
percent), North Dakota (7 percent), Oklahoma (35 percent), Utah (88 
percent), Washington (33 percent) and Wyoming (92 percent). Less than 
0.1 percent of coal production on Federal lands--365,000 tons--were 
from lands located in the Appalachian states (Alabama and Kentucky).
    Coal produced on Federal lands contributes directly to local 
economies in a positive way. In 2000, this coal was worth an estimated 
$3 billion. Production activities provided high paying jobs for over 
15,000 workers in 2000, paying wages in excess of $600 million. 
Considering both direct and indirect economic benefits, coal produced 
on Federal lands provided employment for nearly 150,000 workers with 
wages of over $3.5 billion dollars.
    Coal produced on Federal lands contributed nearly $400 million to 
state and local tax revenue. Royalties paid to the Federal Government 
were an estimated $330 million in 2000.
    The benefits of coal mined on Federal Lands do not remain within 
the region as this coal is shipped to electric generators in 30 states. 
Major destinations outside the western region include generators in 
Michigan, Minnesota, Illinois, Indiana, Iowa, Wisconsin, Texas, Kansas, 
and Arkansas with some being shipped as far as Alabama, Mississippi and 
Georgia. Taken as a whole, coal mined on Federal lands is used to 
generate nearly 40 percent of all electricity generated from coal, or 
approximately 20 percent of all electricity produced in the US. This is 
not an insignificant amount being enough to supply electricity to the 
entire South Atlantic census region or to all the customers in the East 
North Central and West North Central states combined or to 3.2 
Californias.
    The Federal Government owns about one-third of the nation's coal 
resources, which are located on approximately 76 million acres of land 
principally in the Western United States. Western Federal lands contain 
approximately 60 percent of the total western coal reserve base. An 
additional 20 percent of the coal resources in the West are managed or 
impacted by the Federal Government by virtue of (1) the commingling of 
State and private coal reserves with Federal leases and (2) trust 
responsibilities for Indian lands.
    It is important to note that the enormous coal reserves on Federal 
lands include some of the best coal from an environmental standpoint. 
Many of the reserves, especially those located in Wyoming and Montana, 
are low in sulfur and also low in inherent NOX when burned 
in power plants. These coals are ideally suited to meet the 
increasingly stringent emission requirements of the Clean Air Act 
Amendments of 1990 and the regulations that EPA has promulgated.
    Whether viewed as an environmental, an economic or as a domestic 
energy security and reliability issue, continued coal production from 
reserves on Federal lands is critically important to the economy and 
the well being of the United States. Energy, especially electricity 
would not be as readily available or as affordable if it were not for 
coal from Federal lands.
    Coal from Federal lands is projected to increase over the next two 
decades. The EIA Annual Outlook 2001 forecasts shows that over 90 
percent of the expected 250 million tons increase in U.S. coal 
production will come from coal reserves located on Federal lands. If 
this forecast is to be realized policy changes must occur.

Policies should encourage, not discourage or prevent responsible 
        development of coal resources on Federal lands
    Interpretations of legislation over a long period of time added to 
the policies of the previous Administration over the last eight years 
have acted to discourage or actually prevent responsible development of 
coal resources on Federal Lands. There are several issues that need to 
be considered the first of which is access to the resources located on 
Federal lands for responsible exploration and development activities. 
Large reserve blocks have already been effectively removed from 
development by actions by the Federal Government. To cite just two 
examples:
         According to the U.S. Geological Survey, the 
        unsuitability provisions under SMCRA (the Surface Mine Control 
        and Reclamation Act of 1977) and land use planning policies 
        under FLPMA (the Federal Land Policy Management Act) have 
        removed some 53 billion tons of Federal coal from future 
        leasing which in effect reduces the National surface mineable 
        reserve base by almost 25 percent.\1\
---------------------------------------------------------------------------
    \1\ W.D. Watson, Opportunity Costs of Federal Land-Use Restrictions 
for U.S. Coal Markets (1992).
---------------------------------------------------------------------------
         The previous Administrations use of the Antiquities 
        Act to create National Monument designations removed additional 
        blocks of reserves from development. In 1996, this Act was used 
        to create the Grand Staircase-Escalante National Monument 
        removing 23 billion tons of mineable coal reserves in Utah's 
        Kaparowits coalfield.
    Pending actions, such as the Forest Service Roadless Area 
Conservation Rule will remove even larger portions of the coal reserves 
located on Federal lands from responsible development.

Forest service roadless conservation areas
    This Committee, and its members who serve on the Forest and Lands 
Subcommittee in particular, know well the history and the effects of 
the last administration's Roadless Area Conservation rule that was 
published on January 12, 2001. The lack of available information 
regarding affected areas of Forest Service administered lands made it 
extremely difficult for mineral developers to determine the impacts of 
the rule. Since the Forest Service did not identify or consider mineral 
resources in its draft environmental impact statement, industry had to 
create its own maps by identifying proposed roadless areas and areas 
containing known mineral resources on a forest-by-forest basis. The 
results of this exercise were particularly staggering, especially for 
leasable Federal minerals such a coal. In fact, the implementation of 
this rule could sterilize over 40 percent of the coal production in 
Colorado and Utah.
    According to the Department of Energy:

         The roadless initiative will have an impact on coal 
        reserves in Colorado and Utah, including both the expansion of 
        existing mines and tracts of coal of near-term commercial 
        interest. While these resources are recovered using underground 
        mines, roads are needed to build ventilation shafts and for 
        safety, e.g., to fight underground fires. The mines would not 
        be built or expanded if roads cannot be constructed.
         Existing leases may also be affected . . .\2\

    \2\ Department of Energy Report to the Forest Service, William 
Hochheiser (November 2000).

    In Colorado, one of the mines in the Grand Mesa-Uncompahgre Forest 
is my company's, Arch Coal, West Elk Mine where 200 million tons of 
coal could become unrecoverable because of the rule. This loss of 
reserves will result in the premature abandonment of the mine and its 
$100 million infrastructure. The DOE report predicts that over $10 
billion economic activity would be lost as a consequence.
    The Bowie Mine in the Grand Mesa-Uncompahgre Forest will be blocked 
from developing 50 million tons of high quality coal reflecting over 
2.5 billion in economic activity. The Oxbow Mine, adjacent to the Bowie 
leases is surrounded on the east and north by roadless areas. These 
roadless prohibitions will thwart future development at this operation.
    The Forest Services Final Environmental Impact statement for the 
roadless rule declares that in Utah's Manti-La sal Forest three tracts 
alone account for 185 million tons of high Btu coal that are prejudiced 
by the rule. Further investigations of coal resources in the area 
indicate the impact could be much greater.
    The Forest Service chose to accept these severe prescriptions even 
though mine roads are temporary and the Surface Mining Control and 
Reclamation Act (SMCRA) mandates that these roaded areas be reclaimed 
to a condition as good or better than they were before mining. It 
should be noted that surface coal mines cannot be permitted on Forest 
Service administered lands unless the Secretary of Interior ``finds 
that there are no significant recreational, timber, economic, or other 
values which may be incompatible with such surface mining operations . 
. .'' In other words, the values the rule is supposed to safeguard have 
already been considered and protected by an existing statute. Yet, 
millions of tons of low sulfur coal have been sterilized by this 
needless and unlawful regulation.

Federal leasing
    In August 1976, the Federal Coal Leasing Amendments Act (``FCLAA'') 
was enacted. FCLAA's imposed for the first time a series of radically 
more stringent requirements upon Federal coal lessees, the compliance 
with which forced such lessees to make a host of major financial and 
operational commitments, many of which made good policy sense but 
others were counterproductive. Over the past 25 years, those Federal 
coal lessees who have managed to stay in business have fully complied 
with both the rational and the questionable requirements.
    Federal coal lessees are not today calling for major reform of the 
FCLAA program, although over time certain of FCLAA's provisions 
ultimately may need to be revisited and modified. Even where 
modifications ultimately may be needed, in most instances, the debate 
on such modifications can be deferred to a later time when adverse 
impacts become more focused and imminent. There are two areas that need 
attention however.

            1. Advanced royalty provisions
    The first issue that must be addressed is a segment of FCLAA's 
current ``advanced royalty'' provisions, which call for early 
legislative reform by Congress. The current advance royalty provisions 
provide, among other items, that:
          Advance royalties may not be paid for more than an aggregate 
        of 10 years,
          Advance royalties paid during the initial 20 year term of a 
        lease may not be carried over past the 20th year, and
          The Secretary of Interior may unilaterally cease to accept 
        advance royalties.
    With the progressive deterioration of U.S. coal market prices, 
several Federal coal lessees have been forced temporarily to curtail 
production or to idle uneconomic mines.
    We recommend that narrowly drafted, surgical changes be made to 
FCLAA's advance royalty provisions which would:
          Extend the aggregate entitlement to pay advance royalty in 
        lieu of continued operations from 10 years to 20 years;
          Delete the current prohibition on the carry-over of advance 
        royalty payments made during the initial 20-year period of the 
        lease;
          Delete the current authorization for the Secretary 
        unilaterally to cease to accept advance royalties in lieu of 
        continued operations; and
          Delete the last sentence of Section 39 of the MLLA of 1920 
        (Section 14 of FCLAA) prohibiting the waiver, suspension, or 
        reduction of advance royalties.

            2. Address the need to move expeditiously on lease-buy 
                    applications
    The Federal Coal Leasing Amendments Act of 1976 (``FCLAA'') 
requires that all leases for Federal coal be conducted by a competitive 
leasing process. One of the mechanisms for initiating competitive 
leasing is through a lease-buy application (``LBA'') procedure, which 
allows an existing coal mining operation to nominate a tract for the 
expressed purpose of prolonging the life of the existing mine. The LBA 
process has been effectively used in Utah, Colorado and Wyoming for 
over a decade now. In the Powder River Basin (``PRB'') of Wyoming, 
which is called by many the ``Saudi Arabia of coal'', since that area 
is producing in excess of 1/3 of all U.S. coal, the LBA process has 
been critical to the orderly development of Federal coal reserves.
    As pointed out, coal production in the PRB has jumped dramatically 
since the Clean Air Act Amendments of 1990 primarily because western 
coals are typically very low in sulfur and also very low in inherent 
NOx when burned in power plants. With this dramatic increase 
in demand for low sulfur western coal has come the need for continued 
access to Federal coal reserves. Western coal producers clearly 
recognize this need and make their leasing plans accordingly. 
Unfortunately, the Bureau of Land Management now is only processing and 
holding one Federal coal lease sale per year in the Wyoming PRB. Thus, 
the most recent coal lease applications filed may not be offered for 
sale for eight years. Permitting requirements will then add another 
approximately three years. As a consequence, it is readily apparent 
that there is an excessive backlog of Federal coal lease applications 
on file and that the timeframe for processing LBAs and issuing leases 
has become unacceptable to orderly development of this most important 
domestic energy resource.
    There are several administrative opportunities to address this 
backlog. The first opportunity is to consolidate the NEPA process 
instead of conducting separate EIS's for each lease application. 
Several LBAs should be combined into one document. Second, and even 
more importantly, the Department of Interior expeditiously should 
evaluate the workload of other BLM offices to determine if there are 
any personnel available to help work through this backlog. Finally, and 
of relevance to this hearing, Congress should give favorable 
consideration to supporting additional Federal funding for the 
processing of these lease applications in order to short the 
intolerable backlog.

Coal/coal bed methane conflict in the Powder River Basin
    The Powder River Basin of Wyoming and Montana is one of the world' 
richest energy resource regions and includes the largest reserves of 
low sulfur coal in the United States. Virtually all of the coal and 
about 50 percent of the oil and gas reserves in the Basin are owned by 
the Federal government and managed by the Bureau of Land Management 
(BLM) under the Mineral Leasing Act of 1920. Problems have arisen, 
because BLM has issued Federal coal leases and Federal oil and gas 
leases for the same locations in the Basin. In many cases when these 
oil and gas leases were issues coal bed methane resource development 
was not contemplated.
    In those areas leased both for coal and oil and gas, disputes over 
timing of mineral development have arisen. The sequence of development 
frequently becomes a critical issue, because the production of any one 
of the minerals can result in the loss of another. For safety and 
operational reasons, concurrent development typically is impossible. No 
clear statutory direction exist to resolve disputes over the sequence 
of mineral development in these areas where the Federal government has 
``double leased' its minerals. BLM has not provided effective guidance 
or included conditions in its leases that would provide a resolution to 
these disputes.
    In order to achieve optimum recovery of the Basin's energy assets, 
legislation that would provide the missing statutory direction to 
resolve these mineral development contests should be enacted. 
Legislation should be used only in the conflict areas of the Powder 
River Basin and only as a last resort if private negotiations and BLM 
administrative policies fail.

Mineral management service administrative appeals process
    Under Department of Interior (DOI) rules promulgated in 1973, the 
Minerals Management Service (MMS) is the only DOI agency with an 
intermediate appeal to the director of the agency. All other DOI agency 
appeals go directly to the Interior Board of Land appeals (IBLA). The 
principal purpose of the MMS administrative appeals process should be 
the expeditious and independent review of cases involving disputed 
facts, legal issues, or policy upon request of the adversely affected 
party. This two-stage process can extend 5 to 7 years, even before the 
controversy can enter the courts.
    In spite recommendations from a Federal Advisory Committee urging 
Secretary of Interior Babbitt to direct MMS develop a one-stage process 
for all MMS appeals, the Secretary decided to retain the current two-
tier process. He made this decision even though he stated in the 
decision document that he agreed with the Advisory Committee's report 
in support of its recommendation.
    The current unwieldy appeals process needlessly ties up what may be 
considerable industry resources with no competing benefit. The 
Department should revisit Secretary Babbitt's ill-advised decision and 
implement a streamlined appeal process like that used by all other DOI 
agencies. This action would save the agency and the industry time and 
resources.

Revitalizing the abandoned mined lands program
    The 1977 Surface Mining Control and Reclamation Act, SMCRA, 
mandates that lands disturbed by coal mining be restored to their pre-
mining conditions. Inactive mines are addressed through the Abandoned 
Mine land, AML, provisions which require coal operators to pay at fee 
to the Office of Surface Mining's AML fund of 35 cents per ton for 
surface mined coal and 15 cents per ton for underground mined coal. The 
funds are used to clean up pre-SMCRA abandoned sites. The fee has been 
extended twice and is currently set to expire at the end of FY-2004.
    To date $5 billion in contributions have been paid by the coal 
industry into the fund but only $1.3 billion in Priority 1 and 2 
reclamation work has been completed. Approximately $2.5 billion in work 
remains to be completed and the AML fund currently has an 
unappropriated balance of $1.5 billion. This has occurred because 
annual appropriations have been significantly less than the fees paid 
by industry and the distribution formula is out-of-date and does not 
reflect significant increases in western production. Further, the fund 
is paying for excessive Federal and state administrative costs of 
approximately $45 million annually.
    The coal industry believes that 2001 provides a unique opportunity 
to reform the AML program. The coal industry would support an extension 
of the AML program if additional funds are dedicated to clean up of the 
remaining Priority 1 and 2 areas and IF the current fee structure is 
reduced beginning in FY-2002. Suggested program reform should include a 
major reduction in administrative costs and a freeze on the inventory 
of eligible reclamation projects. These actions would give long-term 
financial stability to the various state AML programs and would ensure 
that the Surface Mining Acts original environmental goals are achieved 
and that reclamation is completed more quickly and effectively.

The Thunder Basin National Grasslands
    There is a goal that is stated in the Thunder Basin National 
Grasslands (TBNG) Draft Management Plan that purports to: ``conserve 
air quality-related values over Class I and Class II airsheds.''
    The U.S. Forest Service claims additional responsibility and 
authority with respect to air quality-related values on all Federal 
lands (Class I and Class II) via broad interpretation of the Organic 
Administration Act of 1897, Wilderness Act of 1964, the Forest and 
Range Renewable Resources Planning Act as amended by the National 
Forest Management Act of 1976. Additionally, The Federal Land Managers' 
Air Quality-Related Values (AQRV) Work Group (FLAG) published a 
``guidance document'' on December 29, 2000. This guidance seeks to 
identify AQRV's and define adverse impacts in Class I areas. This 
document also purports authority for Class II areas under management by 
USFS, U.S. Fish and Wildlife Service and the National Park Service via 
broad interpretations of various Acts delegating authorities to the 
aforementioned Federal Land Managers.
    Currently, the Wyoming Air Quality Division does not evaluate the 
effect of new or expanding surface coalmines on Class I (or II) areas 
with respect to Air Quality-Related Values. This is mainly because 
these particular facilities do not meet the criteria of major 
facilities under the Prevention of Significant Deterioration sections 
of the state or Federal air quality rules and regulations.
    However, the Federal land managers have recently begun to require 
an evaluation of cumulative impacts to air quality-related values 
(specifically visibility) in Class I and selected Class II areas as 
part of the NEPA process for Federal actions such as leasing Federal 
coal. This action is out of the State of Wyoming's direct jurisdiction, 
as opposed to the permitting program where the Wyoming Air Quality 
Division is the lead agency.
    This practice is especially concerning in light of the fact that 
six (6) new ``Special Interest Areas'' are being proposed as part of 
the Thunder Basin Grasslands Draft Management Plan. These areas were 
originally proposed for ``Wilderness'' designation in the draft plan 
and are also considered ``roadless''. These areas are located from six 
to thirty (6) to (30) miles from five (5) existing surface coalmines. 
Each of these mines has a history of continued leasing interest for 
Federal coal reserves located adjacent to the existing operations. The 
additional leases serve to allow the continuation of these operations. 
Each of these five (5) mining operations submitted applications for 
additional leases in the year 2000. Representatives of the USFS Douglas 
Ranger District have noted in past discussions that these Class II 
``Special Interest Areas'' would likely be reference points in computer 
modeling evaluations of Air Quality-Related Value impacts during the 
leasing process. There is very little doubt that significant impacts 
will be predicted considering the vicinity of the proposed special 
areas to the mining operations and the highly conservative nature of 
the modeling tools used for these purposes.
    Risks: The possibility exists that predictions of significant 
impacts from existing and expanding coal mine operations within the 
general area of these proposed ``special'' areas could negatively 
affect the ability to continue leasing Federal coal reserves.
    Five (5) large surface coalmines are located either wholly or 
partially on the Thunder Basin National Grassland, which is located in 
the southern Powder River Basin and is managed by the U.S. Forest 
Service. These five (5) mines produce Federally owned coal with the 
lowest sulfur content of any coal mined within the Powder River Basin 
and the United States. Of the 316 million tons of coal produced in the 
Powder River Basin of Wyoming in 1999, 178 million tons or fifty-six 
percent (56 percent) were shipped from these five (5) mines. In 1999, 
these five (5) mines provided over sixteen percent (16 percent) of all 
U.S. produced coal.
    In 1999, the average production rate of the five (5) mines on and 
adjacent to the Thunder Basin National Grassland was approximately 36 
million annual tons each. At these production rates, the mines must 
periodically replenish reserves by applying for and purchasing new 
Federal coal leases through the Bureau of Land Management's (BLM) 
Lease-by-Application, (LBA) process. Historically, the mines on and 
adjacent to the Thunder Basin National Grassland have applied for new 
Federal coal leases through the LBA process every five (5) years 
beginning in 1989 to present.
    Impacts: Currently, applications for coal leases in the Powder 
River Basin filed with BLM and pending sales total nearly 2.3 billion 
tons of mineable reserves. The pending lease reserves represent one-
hundred forty percent (140 percent) of the coal lease sales that 
occurred for the five (5) years of very active coal leasing from April 
1995 through the end of 2000. This indicates the strongest interest in 
coal leasing in the region since initial establishment of extensive 
mining operations in the late 1970's and early 1980's.
    The pending lease reserves represent an amount equal to 86 percent 
of the total Federal reserves of coal leased in the Powder River Basin 
from 1991 through 2000. The coal volumes in the pending lease 
applications represent approximately $560 million in bonus bids alone, 
to be shared equally by the Federal treasury and the state where the 
lease is located.
    The $560 million in potential bonus bids does not take into 
consideration 12.5 percent production royalty payments. Another $1.1 
billion will be generated (assuming an average prices of coal over time 
of $4.00 per ton). These royalty payments are fifty-fifty (50:50) 
between the Federal treasury and the appropriate state.
    Five (5) of the pending eight (8) Federal leases will be located on 
or immediately adjacent to the Thunder Basin National Grassland. Future 
coal lease applications can and will involve USFS managed surface.

Regional haze
    EPA's Regional Haze rule has the potential to impact energy 
production and generation on Federal lands in several different ways:
          Siting--modeling of new state-of-the-art sources can show an 
        impact on Class I Areas (national parks, wilderness areas, 
        etc.). This modeling effort can have the result of denial of a 
        permit and force the abandonment of the project.
          The Federal Land Managers will have two bites at the apple 
        under the Regional Haze Rule: the first is regional haze Best 
        Available Retrofit Technology (BART) in which targeted emission 
        reductions are met based upon overall technology assumptions in 
        a region. This approach allows for the regulated community to 
        have flexibility in meeting the reductions by over complying in 
        one area to meet the reduction goals. The second bite is 
        reasonably attributable BART, in which an impact in a Class I 
        area is tied to a specific source (based upon modeling). The 
        dual regulatory program virtually eliminates any flexibility 
        and cost effectiveness achieved through a market based program.
          As an example, the western United States is far ahead of the 
        rest of the country in addressing Regional Haze. The modeling 
        analysis showed that throughout the range of potential emission 
        reductions (moderate to extreme), there is no perceptible 
        improvement in visibility.
          A review of assumptions made in the western plans needs to be 
        initiated. The plan was developed at a time of low natural gas 
        and oil prices, and at a time when it was believed that 
        virtually all new electric generation plants would be fired by 
        natural gas. Assumptions regarding fuel price and the demand 
        for electricity (growth) need to be reevaluated to ensure that 
        the proposed caps on SO2 do not inadvertently impact 
        the development of new sources.

Electric power plants built near western coal fields can help solve 
        electricity shortfalls, but changes need to be made in 
        permitting transmission lines
    An electric transmission system providing operational and 
investment certainty is a key element in a coherent and effective 
energy policy. For companies to invest in new power plants providing 
affordable energy, there must be significant reform of permitting and 
siting regulations not only for the plants, but for the transmission 
lines and facilities that follow. The lengthy and uncertain permitting 
process is the problem, not the environmental protection required. We 
would recommend Federal action reducing the permitting and review 
timeframes required. We would further recommend a Congressional or 
Executive directive fashioned along the lines of the Executive Order 
addressing California's energy needs. That order gave DOE lead 
responsibility in ensuring priority focus on siting and permitting 
action by the various Federal agencies involved, and facilitating those 
actions with the appropriate state authorities. We also encourage the 
Congress to put in place an expedited and simple permitting and siting 
processes for the vast areas of Federal Lands in the West, which need 
to be crossed by transmission lines.
    In addition to permitting and siting reform, uniform and 
enforceable rules governing the operation of the transmission system 
are needed. Our current and arguably antiquated power grid was designed 
for localized demand and reliability. Electricity today must be wheeled 
between states and regions. Given the interconnected nature of the 
nation's transmission system, it is critical to optimize system 
reliability and consumer benefit by ensuring that the state and Federal 
governments enter into an effective regulatory partnership. However at 
present, it is still uncertain who will own or operate the lines, what 
rate of investment return will be allowed, and what will be the 
transmission charge. The absence of uniform and enforceable rules has 
delayed investment in improvements to the grid. The grid must be 
operated as an integrated entity, not a balkanized confederation.
    Mr. Chairman, this concludes my comments. I would be happy to 
respond to your questions.
                                 ______
                                 
    [The response to questions submitted for the record by Mr. 
O'Connor follows:]

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[GRAPHIC] [TIFF OMITTED] T0888.028

    Mrs. Cubin. I thank the panel for their testimony. I have a 
few questions.
    Mr. Bowles, in your oral testimony you said that 
understaffing of BLM was the problem for permitting coal bed 
methane drilling, and I think you were talking about in the 
Powder River Basin area. The Congress got special 
appropriations for funds on permitting coal bed methane 
production, for wells and for drilling.
    It is my understanding, and it could be wrong--we tried to 
verify this and didn't follow through on it--that a lot of that 
money that we got to hire personnel to do permits was spent on 
12 pickup trucks. Another problem that has occurred, at least 
in that area, as you know, was the cumulative effects of all of 
the wells having been built.
    So I guess what I want to know is are you saying--I know 
Mr. O'Connor said that Congress needs oversight of this, and I 
absolutely agree that we do. Are you saying that the Congress 
needs to appropriate more money to hire more people to permit 
this, or are you saying that the administration needs to get 
involved and make sure that the money is spent the way it is 
intended to be?
    After all, the Interior Department really is one of the 
only, if not the only agency of Government that produces 
revenue for the Government, and you have to have the permitting 
done in order to do that.
    Mr. Bowles. For one, BLM does not have a very responsive 
way of permitting. Whether or not the money has been made 
available or they have aggressively tackled the problem head-
on, we have not seen permits issued in a timely manner.
    I might say that in one State that is outside of Wyoming, 
in Utah, where we do business, we see a State application going 
through in 30 to 45 days to drill a new well. That same State 
in BLM applications is taking upwards of 240 days to drill a 
well. So there is not only a possible manpower issue that is 
out there, there is also what might be considered a mandate to 
the BLM as far as their role in handling oil and gas activities 
for multiple use.
    Mrs. Cubin. So then your answer would be both?
    Mr. Bowles. Yes, ma'am.
    Mrs. Cubin. Mr. O'Connor, you heard Governor Geringer's 
testimony, and a lot of your written statement and your oral 
statement focuses on the problem with the Forest Service's 
roadless policy and the management of the Thunder Basin 
National Grasslands.
    What do you think of the governor's approach to State and 
Federal partnerships in that regard? Do you think his ideas 
will work to undo a lot of the permitting complications that we 
have now?
    Mr. O'Connor. Madam Chairwoman, I philosophically and 
strongly believe that the people closest to the issues are the 
people who should be empowered and sought out in a 
collaborative manner to work closely with the State as well as 
the Federal Government in seeking solutions to these problems.
    I think it is inappropriate for the Federal Government to 
take a one-size-fits-all approach to problems that are regional 
or local in scope, and I think it is appropriate and necessary 
and just flat the right thing to do to empower States and to 
empower communities and the citizens of those communities to be 
able to work with all levels of State and Federal Government in 
order to seek out these solutions.
    Mrs. Cubin. You also referred to the problem that you are 
having with the Forest Service roadless rule at the West Elk 
mine in Colorado. I wondered, was there any attempt by your 
company to work with the previous administration, interact with 
them, or the National Mining Association about the concerns 
before the rule was promulgated?
    Mr. O'Connor. One of the major difficulties we had was when 
the roadless environmental impact statement and the rules came 
out last fall, they were so vague and so difficult to 
comprehend that we had a hard time really identifying with any 
specificity what areas in the Western United States would be 
impacted and which areas would not be.
    On a number of occasions, we formally as well as informally 
requested maps of areas in order to make a determination of 
potential areas of impact, and we were told by the Forest 
Service that no maps existed. It was not really until the very 
end of the process, really when the comment periods were over 
and the initiative was about to be implemented, that we were 
able to go back and on our own initiative put together maps 
based upon indirect data that we had gotten through the EIS 
that would be able to identify specifically what lands would be 
covered.
    We have asked the Forest Service to advise us if they 
believe that these maps that we have done have been incorrect, 
and so far all indications are that in almost all cases what we 
have done appears to be correct. But we had to put it together 
ourselves. There were no maps by the Forest Service done, and 
we think that this really did a disservice to the potentially 
impacted citizens around the area who were not able to really 
identify during the comment period what might or might not be 
happening in their areas.
    Mrs. Cubin. So it sounds to me like the rules and 
regulations--that input didn't really happen or they just 
rushed it through without considering fully input from the 
public and from you and from other folks as well.
    Mr. O'Connor. I agree.
    Mrs. Cubin. My time is up, but I do have one other question 
that I wanted to ask Mr. Bowles.
    What is the Cooperating Associations Forum? I wonder, is it 
possible to make a copy of their study available to the 
Committee?
    Mr. Bowles. We would be pleased to do that.
    Mrs. Cubin. Would you tell me what it is?
    Mr. Bowles. Well, that was a group that--I think you see 
that in written testimony that listed 7 States that actually 
did a study to look at what has happened in land access over 
the course of years. That is one of the unfortunate things that 
we have in many of our Western State resources, is really 
getting our hands around what kind of available resource is 
there. This group did take a stab at that and I would be 
pleased to make it available to the Committee.
    Mrs. Cubin. Thank you. I would like that for the record.
    Mrs. Cubin. I have quite a few other questions that I 
wanted to ask the panel, but time is wearing on and I do need 
to go to another meeting. So I will submit the questions in 
writing, if you would be so kind as to answer them.
    Mrs. Cubin. At this time, I recognize Mrs. Napolitano for 
questions.
    Mrs. Napolitano. Thank you, Madam Chair.
    This question is for Mr. Stanley, and one of the things you 
referred to in your hand-out, in the map, was the Rocky 
Mountain area, that it is closed to industry. I wonder if you 
can provide a more detailed explanation of what you mean by the 
restricted areas.
    The Department of the Interior has given us information 
that shows 95 percent of the those lands have been open, and 
you indicated on this map only 40 percent, because it is 
restricted. Could you explain or even give us in writing what 
your industry is referring to so that we can better understand 
specifically what you are referring to, and also to see how we 
can understand your claim from the industry that this is 
happening?
    Mr. Stanley. Yes. The 40 percent is the total restriction 
from many different sources of restrictions. There are roadless 
policies, there are the restrictions during the year, there 
are--
    Mrs. Napolitano. Of what kind, sir?
    Mr. Stanley. We are not really talking about national parks 
and wilderness areas. We are talking about other general 
restrictions within this. I will be happy to submit in writing 
the documentation for this. I don't have that with me.
    Mrs. Napolitano. Would you, please, sir? I would really 
like to have it entered into the record so that we have that 
clarification.
    Mr. Stanley. Yes, ma'am.
    Mr. Calvert. [Presiding.] The Chair will keep the record 
open for any additional information to satisfy the gentlelady 
from Southern California.
    Mrs. Napolitano. Thank you.
    [The information referred to follows:]
    Mr. Calvert. Any additional questions?
    Mrs. Napolitano. No, thank you.
    Mr. Calvert. I just have one quick question for Mr. Bowles, 
representing API. I understand you are also with Phillips 
Petroleum.
    Mr. Bowles. Yes, sir.
    Mr. Calvert. For the interest of the Committee, at what 
capacity are the West Coast refineries operating right at 
present? I know that is not your--
    Mr. Bowles. It really is not my area.
    Mr. Calvert. Do you have any information that leads you to 
believe that are operating pretty close to 100-percent 
capacity? That is what I understand.
    Mr. Bowles. Generally, in the U.S., refinery capacity is 
running at or close to maximum capacity.
    Mr. Calvert. At maximum capacity?
    Mr. Bowles. Yes, sir.
    Mr. Calvert. This is really outside the jurisdiction of 
this Committee, but it does have an interrelationship to supply 
because as we increase the supply of domestic production in the 
United States, obviously we want to move that domestic 
production to refiners. If we increased our domestic production 
by a particular amount, say 10 percent--and oil is a fungible 
commodity--what we don't produce domestically we will import, 
and vice versa.
    Do you foresee additional refining capability coming online 
in the foreseeable future to take care of that increased 
supply?
    Mr. Bowles. Well, I would say in the near term more likely 
what you would see is the displacement of the import of foreign 
crude into the West Coast markets.
    Mr. Calvert. Now, are more and more of the imports coming 
into the United States refined elsewhere prior to entry into 
the United States?
    Mr. Bowles. I don't have any good statistics on that, 
Congressman.
    Mr. Calvert. I bring that up because obviously the energy 
issue is beyond just the supply issue. I know in our State of 
California a significant amount of the refining capability went 
away when we put in a clean air standard to lower sulfur 
content in oil, which is a good thing. And now we are doing it 
nationally. In my previous Committee Chairmanship we wanted to 
make sure we maintained refining capability in order to make 
sure we don't have an increase in gasoline prices nationally as 
we have seen in California. So that is the reason I brought 
that subject up for the Committee's edification.
    Mrs. Napolitano?
    Mrs. Napolitano. Mr. Chairman, thank you for recognizing 
me. There was one question that I neglected to ask.
    Mr. Calvert. The gentlelady is recognized.
    Mrs. Napolitano. Thank you.
    I believe it was Mr. O'Connor who made the statement that 
somehow California would be hurt in its ability to recover. I 
wonder if you would elaborate on that statement. I think you 
mentioned something to the effect that if production is 
curtailed, it would hurt California's recovery.
    Mr. O'Connor. I am sorry that I am unfamiliar with what 
your reference is. Could you restate it?
    Mrs. Napolitano. There was a statement earlier, I believe, 
when I walked in that you were speaking to it. I unfortunately 
didn't continue to make notes on it because I was trying to 
catch up.
    Mr. O'Connor. Perhaps it was reference to a large 
underground coal mine that we have in Colorado that could be 
adversely impacted by the Roadless Initiative. It is called the 
West Elk mine. It is the second largest coal mine in Colorado. 
It is a very high-Btu, very, very low-sulfur coal that is 
supplying energy into the Midwest.
    The Roadless Initiative stands the prospects of preventing 
us from moving our existing operations into an adjacent 200-
million-ton reserve that is adjacent to our existing reserves. 
And if we are not able to do so, the 360-some employees, the 
$100 million investment, and the annual payroll of $26 million, 
as well as the major impacts that would occur in west central 
Colorado, would be drastically impacted as a result of our 
premature closure of this mine because of our inability to move 
into an adjacent reserve.
    Mrs. Napolitano. How would that affect or impact 
California?
    Mr. O'Connor. Now, I understand the question.
    Mrs. Napolitano. That is what your statement included.
    Mr. O'Connor. I am sorry for the redundancy.
    With all of the controversy and publicity that has occurred 
in California in the last 6 months involving high energy and 
high electricity prices, ironically there is a small island 
within the southern part of the State that is enjoying 
inexpensive electricity and very reliable electricity, and it 
is 6 million people in the Los Angeles area.
    The reason they are is because the Los Angeles Division of 
Water Power many years ago went to Utah and built a large coal 
generation plant and they are bringing in their electricity 
from Utah to California. That electricity is very inexpensive. 
It is reliably priced and reliable long term. Mayor Riordan has 
called for the construction of an additional power plant in 
Utah in order to meet Los Angeles' long-term needs.
    The point of my testimony was that because of this Roadless 
Initiative, as much as 40 percent of the unleased Federal coal 
in this area will not be able to be developed, and that puts 
into harm's way the city of Los Angeles' ability, and in a 
broader sense California's ability to be able to pluck out this 
very low-hanging energy fruit and take advantage of it because 
of its growing electrical needs.
    Mrs. Napolitano. Okay, I get your point. The thing that 
puzzles me, though, is that the city of Los Angeles is fueled 
by the California Department of Water and Power, which so far 
has not been impacted because they stayed out of the 
deregulation. They have apparently been able to supply enough 
to its over 11 million customers so that they are staying 
afloat very well.
    I just did not correlate what you were talking about 
because Los Angeles is being taken care of. It is the northern 
part of California, and to some lesser degree the rollouts are 
starting to affect mid-California and Southern California. So 
it just does not correlate. I think it is kind of stretching it 
a little bit to say that our ability to be able to produce in 
that area is going to have a tremendous impact or will be a 
significant change for us in California.
    Mr. O'Connor. Certainly, the impacts are not going to be 
immediate. But in the longer-term scheme of things, not just 
for the city of Los Angeles but for California itself, these 
Utah coal reserves stand available to be a major low-cost, 
reliable and affordable energy supplier, and this Roadless 
Initiative is a major impediment to that potential.
    Mrs. Napolitano. Well, hopefully, California will be found 
in a situation where it will not have to rely on outside help. 
The fact that the governor has promoted 6 new generation plants 
and has--actually, 3 being built, 3 on the books, and 6 more or 
7 more, should be able to take care of the futuristic needs of 
California without having to rely on outside interests of any 
kind, and I am looking forward to that.
    Mr. O'Connor. I honestly hope you are right.
    Mrs. Napolitano. Well, add to that the use of other kinds 
of power producers that are beginning to become more viable. At 
one time they were dormant and now they are becoming more 
interested in providing energy for those of us in California. 
So while I understand and I thank the State for its interest 
and for being there when we need them, I don't think that our 
reliance is going to be something they can count on.
    Mr. Calvert. I am going to wrap it up.
    I am just curious. The coal that was mentioned in Utah is 
the cleanest coal that is available in the continental United 
States, as I understand it, or amongst the cleanest coal in the 
United States?
    Mr. O'Connor. It is among the cleanest coals.
    Mr. Calvert. Right. How many megawatts is that power plant 
that you mentioned producing in Utah?
    Mr. O'Connor. I don't recall exactly, but I think it is 
about 3,500 megawatts.
    Mr. Calvert. 3,500 megawatts.
    Mr. O'Connor. There are three units there and Mayor Riordan 
has called for a fourth unit.
    Mr. Calvert. And the expansion is for an additional 1,000-
megawatt plant?
    Mr. O'Connor. Yes.
    Mr. Calvert. So bringing that up to 5,000, which is about 
10 percent of the total load in the State of California. Is 
that a correct statement?
    Mr. O'Connor. Yes.
    Mr. Calvert. Thank you, and this panel is excused. Thank 
you for coming out and attending today.
    We are going to bring up our last panel as the gentlemen 
are leaving. I would like to recognize the people we have on 
our panel: Mr. Leland Hogan, a rancher from Utah; Mr. Chris 
Hocker, President of the National Hydropower Association; Mr. 
Robert Judd, Director of the USA Biomass Power Producers 
Alliance; and Ms. Leslie James, Executive Director of the 
Colorado River Energy Distributors Association.
    With that, I would recognize Mr. Hogan for 5 minutes. 
Please limit your testimony to 5 minutes so we will have some 
time for questions.
    Thank you.

          STATEMENT OF LELAND J. HOGAN, STOCKTON, UTAH

    Mr. Hogan. Thank you very much. It is a pleasure to be 
here, Mr. Chairman and Committee members. I am a rancher and a 
farmer from Stockton, Utah, which is about 50 miles west of 
Salt Lake City.
    My other credentials are in my written statement. I won't 
take the time to go through that and I will try and talk about 
things that are pertinent to our specific operation rather than 
to reiterate those things that are in the written comments.
    My brother and I run a diversified farm operation, as I 
said, about 50 miles west of Salt Lake City. We have to pump 
our water in order to gain the water that we need in order to 
irrigate our crops. We are about fourth generation in this 
country. We came from the Scandinavian countries to this 
country, and we have been in agriculture back as long as our 
history records.
    We are in agriculture for the long term, and our contracts 
that we sign or the indebtedness that we take on indicates that 
we are there for the long term. In order to accomplish that, we 
need power that is affordable and also available in order to 
continue farming as we have in the past.
    The data that has been collected by a magazine that is 
circulated through the industry called Irrigation magazine that 
gathers data from land grant colleges across the country 
indicates that a continued rise in irrigated crop land is 
happening across the country. In order for us to continue to be 
as productive as we have in the past and increase our 
production, irrigation seems to be the way that it is headed. 
With irrigation comes more consumption of power.
    Where we live, it seems as though coal-fired power plants 
have produced power the most economically; it produces the most 
economic power that is available. If there is a better economic 
way to do it--and some of those things have been discussed 
today--I hope that those things are explored and that we insert 
them into our national energy policy.
    I have seen and participated in this cycle as it has gone 
on over the past 30 years--an abundance of power, a shortage of 
power, a decrease in prices, an increase in prices. That really 
hurts us as individuals being on the farm. Our net income is 
affected directly. We are a taker of prices and not a setter of 
prices. Because our markets are national and international, we 
take prices that are set a long way away from where we produce. 
We have to fit within those categories or we go out of 
business. As prices escalate and we see these things happening, 
it is very disturbing to us.
    With the stroke of a pen, the Grand Staircase-Escalante 
National Monument was created, engulfing approximately 2 
million acres of land. Under that land lies a great coal 
reserve; no one knows exactly, but perhaps enough coal to last 
the area that it is producing for for maybe hundreds of years.
    As I said before, an affordable and available, consistent, 
readily usable amount of electricity is so important. Our 
production cycle is very short. We produce what we produce in 
approximately 6 months of the year. If we miss any portion of 
that time, our production decreases. Our ability to stay 
financially viable also decreases. So we are locked into a 
situation where we can't change things too much. We have to use 
the power.
    It was alluded to this morning in some of the discussion 
that large users of power in the agricultural industry will not 
produce this next year. Well, that break-off is about at 4 
megawatts. I don't think there is a producer in the State of 
Utah that uses 4 megawatts. There are those in Idaho, and there 
probably will be some who won't produce this year, but they 
will take a payment instead of production. That will cause a 
ripple effect throughout the whole agricultural industry 
because the feed or the commodities that would have been 
produced by those people will be minus from the equation this 
next year. Therefore, we are going to see ripple effects 
through the whole agricultural economy because of this isolated 
situation that is taking place this year. It will be very 
interesting to watch.
    As a farmer, as a former elected official, a parent and as 
a grandfather, I plead with the members of the Committee to 
move toward a national energy policy that puts us in a position 
that we do not find ourselves today, a position where we have 
what we need in order to continue the standard of life that we 
have set for ourselves.
    I thank you very much for the opportunity to be here today.
    [The prepared statement of Mr. Hogan follows:]

              Statement of Leland J. Hogan, Stockton, Utah

    My name is Leland J. Hogan. I am a fourth generation farmer. My 
brother and I operate a diversified ranch and farming operation, which 
includes 600 acres of alfalfa hay and grain crops in Stockton, Tooele 
County, Utah. In my area, as is true with much of the farmland in the 
West, crops must be artificially irrigated by pumping underground water 
or pressurizing surface water for sprinkler systems. I have served as a 
member and chairman of the Utah Committee of Consumer Services, an 
agency of Utah state government responsible for analyzing economic 
impacts of utility pricing on consumers. I have also served as chairman 
of the Tooele County Commission, a member of the Utah Quality Growth 
Commission, vice president of the Utah Farm Bureau Federation, and 
chairman of that organization's irrigation pumpers' committee. I am 
particularly pleased to appear before this Committee, because Chairman 
Hansen is my congressman.
    Energy costs comprise a major, and rapidly growing segment of the 
cost of producing food and fiber for America's consumers. From the fuel 
for our farm implements, to the irrigation pumping costs, to the 
processing and transportation of this food and fiber, the impact of 
these skyrocketing energy costs is placing farmers in a serious 
economic squeeze.
    The agriculture industry's ability to directly pass on these 
increases in energy costs is limited or non-existent. Due to the highly 
competitive national and international market for agricultural 
products, the price for our products is set by market forces and not by 
producers. As ``price takers,'' producers and processors must absorb 
increased costs resulting in the higher threat of widespread business 
failure. Moreover, in the long-run, increased energy costs to 
agriculture producers will ultimately be passed on to American 
consumers through higher retail pricing of goods.
    There are roughly 3,500 agriculture producers in Utah who rely on 
electricity to irrigate crops. Approximately 1,300 of these irrigators 
are customers of Utah Power, Utah's only investor-owned electric 
utility company. Last June, these regulated customers used 54 megawatts 
of power on the company's peak load, which, to put in perspective, is 
enough power to provide electricity for 30,000 homes for one month. The 
collective annual cost for electricity to these 1,300 irrigators was 
$7.2 million. However, these irrigators, along with all customer 
classes of the company, will be facing a 9.5 percent increase in their 
utility rates due to a recent interim rate adjustment ordered by our 
Public Service Commission. A rate case recently filed by Utah Power to 
adjust rates even higher is also pending.
    To top it off natural gas pricing to Utah retail customers is up 50 
percent from a year ago. While natural gas generally does not play as 
big a role in the cost of production for agriculture in Utah as 
electricity, it still takes a significant toll on residential cost of 
living.
    So what can be done about these rapidly rising costs? While 
conservation and more prudent use of the energy we have is always a 
good idea, the current situation cries out loudly for the Bush 
Administration, working with congress, to develop a sensible energy 
policy. May I assure the Committee that this comment is not a call for 
nationalization of our energy production in any form. Rather it is a 
call for a new commitment to development of existing known reserves of 
crude oil, natural gas and other fuels in the carbon-based family. It 
is also a plea for the United States government to devote far more 
funding and other incentives to foster development of alternative 
energy sources, including plant-based sources.
    As a Utahn I cannot fail to again point out that in our state there 
is a vast supply of high grade, low sulphur coal. And perhaps hundreds 
of years' supply of it was locked up with the sweep of a presidential 
pen when the 1.7 million acre Grand Staircase-Escalante National 
Monument was declared in Southern Utah four years ago. Indeed, there 
are within that monument some important and apparently rare plant 
species and some rare, even spectacular scenery. As a farmer I am 
vitally interested in identification and preservation of endangered 
plants species. Future commercial agriculture plant genetics may depend 
on it. But there are vast acreages of that monument underlain by this 
high quality coal that could be harvested with very little surface 
disturbance. Isn't it time that we start to make the connection between 
the light switch on the walls of our houses and the coal mines of 
America?
    In Utah most of the natural gas wells are on land managed by the 
Bureau of Land Management. The permitting process to gain access to 
these lands for energy development is daunting. Although I will defer 
to those who are experts in this area, surely this process can be 
streamlined and our government can encourage energy production rather 
than impede it. These are public lands. The resources they hold should 
benefit the public--all the public! We have learned much about more 
environment-friendly energy exploration and restoration of disturbed 
areas. I urge this Committee to move our government back towards 
multiple use of these lands.
    Some of my farm and ranch colleagues have visited Alaska's Prudhoe 
Bay oil fields. Then, after flying directly over the Arctic National 
Wildlife Refuge while in that area, they came back convinced that with 
modern technology and the existing commitment to environmental 
protection while harvesting energy, there is no real reason to deny 
ourselves the vast quantities of recoverable high quality crude oil 
available within that refuge.
    As a citizen, farmer, former elected public official, a parent and 
a grandfather, I plead with the members of this Committee to move this 
nation away from an ever-growing dependence upon foreign sources of 
energy supplies. I believe we can do it, and I believe we must do it. 
If the recent escalations in energy costs, including the manipulated 
oil prices by the cartels don't make us understand this, I am at a loss 
as to what will.
                                 ______
                                 
    [Mr. Hogan's response to questions submitted for the record 
follows:]

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[GRAPHIC] [TIFF OMITTED] T0888.024

[GRAPHIC] [TIFF OMITTED] T0888.025

    Mr. Calvert. I thank the gentleman for his testimony.
    Next, Mr. Chris Hocker, President of the National 
Hydropower Association.

   STATEMENT OF CHRIS HOCKER, PRESIDENT, NATIONAL HYDROPOWER 
                          ASSOCIATION

    Mr. Hocker. Thank you, Mr. Chairman. My name is Chris 
Hocker. I am President of the National Hydropower Association, 
and I appreciate this opportunity to talk about hydropower, 
which is the number one renewable resource in the U.S.
    Hydropower is the leading renewable. It represents about 10 
percent of the nation's electricity overall and about 80 
percent of its renewable energy overall. 98,000 megawatts of 
clean hydropower is produced, which is enough for about 98 
million homes. But as was alluded to earlier today, hydro's 
contributions are beyond energy. They include irrigation, water 
supply, and recreation. They also contribute to clean air and a 
safe, reliable transmission system.
    Despite all that, I would like to call your attention to 
two troubling facts. First, hydropower is on the decline. 
Second, there is quite a large amount of untapped hydropower 
that is being ignored. At a time when hydro should be most 
valuable, it is waning, and this is due to a regulatory scheme 
and actions by resource agencies who hold the upper hand in the 
licensing process. These are the same problems, frankly, that 
play a large part in why the development of new hydro capacity 
is being neglected. These problems can be fixed, but the time 
to do so is running short.
    Hydropower is losing capacity due to FERC's hydro licensing 
process. We strongly believe the process is broken and badly in 
need of repair. In fact, the Energy Information Administration 
(EIA) said for the first time last year that hydro capacity 
will decline due to regulatory constraints. This demands urgent 
attention, as half of the licensed capacity in the U.S. must be 
relicensed in the next 15 years, and over half of that is 
located in the West, where the energy crisis is paramount.
    The licensing process is exceedingly complex, needlessly 
fragmented, excessively costly, and frustratingly inefficient. 
It fails to fully weigh the benefits of hydropower and often 
results in extended litigation, which costs both the project 
and the environment.
    What can be done to fix this? Enact legislation this 
Congress which requires a more balanced review by resource 
agencies such as the Departments of Interior, Commerce, and 
Agriculture in their mandatory conditioning authority. We 
support legislation action because we honestly believe that our 
largest concern, which is balancing energy and non-energy 
values, can be achieved only through legislation. 
Administrative reform efforts that have already taken place 
have been helpful. We encourage them to continue, but we don't 
believe that administrative reform alone is enough. The problem 
must be addressed legislatively.
    We must develop a process that permits agencies to consider 
non-resource issues in their review and conditioning authority. 
They should also be required to consider the economic effects 
of resource protection and bring balance and certainty to the 
process. Otherwise, we will continue to lose hydropower.
    We must also act to encourage undeveloped hydropower. We 
have an impressive amount of potential. A Department of Energy 
(DOE) study shows that there are 21,000 megawatts of potential 
at existing dams. There are over 4,000 megawatts available at 
existing hydro facilities, and again much of this potential 
capacity that is being undeveloped is in the West.
    Again, this is undeveloped because of the complex 
regulatory scheme, and also because there are no incentives for 
producers to bring new generation online. Therefore, we 
strongly support production incentives that would encourage new 
hydro capacity at existing sites; that is, without the need to 
build new dams.
    As I conclude, I want to leave you with a few final 
thoughts. First of all, the hydro industry takes very seriously 
its role as stewards of the rivers that we are privileged to 
use. We strongly believe that healthy rivers and hydropower can 
coexist. Resource agencies need to develop a better 
understanding that we can do both. We can achieve both 
environmental and energy goals, and we should all be in the 
direction of pursuing policies that recognize this.
    Second, as we look for solutions to our energy problems, it 
is without question in our greatest interest to expand the use 
of our domestic renewable resources such as hydro. It is 
important for fuel diversity, energy security, reliability, and 
clean air.
    Finally, I want to emphasize that the time is running 
short, with 20,000-plus megawatts being relicensed in the next 
15 years. As we look to self-sustaining energy strategies, now 
is the time for policymakers to better incorporate hydro into 
the nation's energy mix. We can no longer afford to encourage 
energy policies that ignore this extremely valuable resource. 
We should no longer contribute to its decline.
    Thank you, and I look forward to your questions.
    [The prepared statement of Mr. Hocker follows:]

 Testimony of Chris Hocker, President, National Hydropower Association

    Good morning Mr. Chairman, members of the Committee. My name is 
Chris Hocker. I am the President of the National Hydropower Association 
(NHA). I appreciate the opportunity to appear today to talk about 
hydropower--the nation's most valuable domestic renewable resource--and 
its relationship with Federal resource agencies.
    As you may know, hydropower is the nation's leading renewable. It 
represents about 10 percent of the nation's electricity and about 80 
percent of its renewable energy. Overall, 98,200 Megawatts (MW) of 
clean and efficient power is produced from hydro facilities--enough 
electricity for 98 million homes.
    While these are impressive facts, hydro's contributions go well 
beyond energy. These benefits include irrigation, transportation, water 
supply, recreation, and invaluable contributions to cleaner air and a 
safe, reliable transmission system. De spite these benefits, today I 
bring to your attention two troubling facts I believe deserve policy 
consideration.
    First, hydropower is on the decline. And second, there is a large 
amount of untapped hydropower that has been ignored for too long. I 
find it somewhat ironic that at a time when hydro should be most 
valuable, it is waning due to an arcane regulatory scheme and actions 
by resource agencies who hold the upper hand in the licensing process. 
These problems also play a large part in why development of potential 
new capacity is neglected. These problems can be fixed, however, but we 
need your help, and that of the Administration, to resolve them. And 
quite frankly, time is running short.
    Hydropower is losing capacity and operational flexibility due to 
the Federal Energy Regulatory Commission's (FERC) hydropower licensing 
process. We strongly believe the process is broken and badly in need of 
repair. In fact, the Energy Information Administration (EIA) said for 
the first time last year that hydro capacity will decline due to 
``regulatory constraints.''
    This problem demands urgent attention as half of licensed 
capacity--28,784 MWs--must to be relicensed by 2016, and over 52 
percent of it is located in Western states where energy supply and 
reliability issues have already reached a critical stage, and water 
resource issues are paramount.
    The licensing process is exceedingly complex, needlessly 
fragmented, excessively costly and frustratingly inefficient. Further, 
it fails to fully weigh the benefits of hydropower and often results in 
extended and contentious litigation, costing both the project and the 
environment.
    Attached to my written statement, you will find a document that 
shows case after case where the process has failed, strongly 
highlighting the need for reform. I encourage you to carefully review 
it.
    What can be done to fix a process all stakeholders agree needs 
improving? Enact legislation this Congress which requires a more 
balanced review by resource agencies such as the Departments of 
Interior (DOI) and Commerce (DOC) in their mandatory conditioning 
authority under Section 18 of the Federal Power Act, as well as the 
Department of Agriculture (USDA), under Section 4(e). We support 
legislative action because we honestly believe our largest concern, 
balancing energy and non-energy values, can only be achieved through 
legislation.
    This is not to say that administrative reform efforts over the last 
18 months have been useless. They have been very helpful, in fact, and 
we encourage these efforts to continue. We hope Congress will provide 
support and encourage agencies to continue efforts devoted to 
administrative solutions in the areas that are most appropriate. We 
also commend the resource agencies for their efforts as progress has 
been made. The fundamental problems with licensing, however, must be 
addressed legislatively.
    We must develop a process that permits agencies to consider non-
resource issues in their review and conditioning authority. By 
requiring agencies to consider the economics effects of resource 
protection on other project values, we will bring balance and certainty 
to the process that is desperately needed. In addition, we ask that the 
process allow licensees to review and comment on mandatory conditions 
during the process, limit conditions to project-induced impacts, 
enforce process deadlines, and improve the collaboration amongst 
agencies and stakeholders. Otherwise, we will continue to lose clean, 
reliable hydropower.
    While we must act to stop the bleeding of lost hydro capacity due 
to licensing, we can also act to encourage undeveloped, 
environmentally-sound hydropower. The U.S. has an impressive amount of 
new hydropower potential. A Department of Energy (DOE) study shows 
there are approximately 21,000 MWs of potential capacity at existing 
dams. Over 4,300 MWs are available at existing hydro facilities alone. 
More importantly, much of this potential--over 10,000 MWs--is located 
in the capacity-hungry west.
    This hydro capacity sits unused largely because of the complex 
regulatory scheme I already mentioned. But, it is also undeveloped 
because there are no incentives for producers to bring new generation 
on-line, a process that is more expensive and complicated than ever.
    Providing production tax credits for new hydropower capacity at 
existing sites will help resolve this problem. Production credits 
already exist for wind and biomass, why not hydro? Several proposals 
have been circulated this Congress to extend the credit to other 
renewables. NHA strongly supports the tax credit expansion to include 
hydro at existing facilities and non-hydro dams. Without it, 
development will not occur and we will fail to gain the benefits of 
additional hydro. Further, we will fail to replace capacity already 
lost.
    Before I conclude my remarks, I want to leave you with a few final 
thoughts I hope you will remember as you examine policies regarding our 
natural resources and energy strategies.
    One, the hydropower industry takes very seriously its role as 
stewards of the rivers we are privileged to use. We strongly believe 
that healthy rivers and hydropower can coexist. Resource agencies need 
to develop a better understanding that we can achieve both and they 
should be directed to pursue policies that recognize this.
    Our attempts to reform the licensing process will not remove the 
conditioning authority of the agencies or undermine existing 
environmental laws designed to protect our resources. NHA believes in 
both resource protection and the pursuit of effective and meaningful 
energy strategies that include hydropower.
    Two, as we look for solutions to our energy problems, it is without 
question in our greatest interest to expand the use of our domestic 
renewable resources such as hydropower. It is important for fuel 
diversity, energy security, reliability and clean air.
    Finally, time is running short. As we look to self-sustaining 
energy strategies, now is clearly the time for policymakers to better 
incorporate hydropower into the nation's energy mix. It behooves us all 
to craft energy policies that embrace this extremely valuable resource, 
not further contribute to its decline.
    Thank you. I look forward to your questions.
                                   ____
                                 

          What's Wrong With the Hydropower Licensing Process?

                           Real-Life Examples

    Roughly half of all Federally-regulated hydroelectric capacity--240 
projects in 38 states, representing 28,784 megawatts of electricity 
generation--is due to be relicensed by FERC in the next fifteen years. 
An inefficient licensing process that is time-consuming, arbitrary, and 
costly places all of these projects, and the future of hydropower as a 
clean, renewable energy source, at risk. The following examples, taken 
from hydro projects around the nation, illustrate some of the many 
problems associated with the current hydropower licensing process.
 arbitrary and unilateral exercise of mandatory conditioning authority
    On February 23, 2000 FERC rescinded a license previously issued for 
the 4.1 MW Enloe Dam Project in, Okanogan County, Washington. Although 
FERC was in the process of engaging all parties in addressing fish 
passage issues at the dam, the National Marine Fisheries Service (NMFS) 
challenged that process as encroaching its unilateral conditioning 
authority under Section 18 of the Federal Power Act. NMFS insisted on 
imposing a fish passage requirement in the project license despite (i) 
opposition to such passage by the Washington Department of Fish and 
Wildlife, the Okanagan Indian Nation, and the Canadian government; and 
(ii) the desire of the Congressionally authorized Northwest Power 
Planning Council to assign financial responsibility for fish passage at 
Enloe Dam to regional entities.
    NMFS had stated that its preferred position in the proceeding was 
license denial and dam removal. By insisting on fish passage as a 
condition of the license and at the licensee's expense, NMFS not only 
acted, in the words of FERC Commissioner Massey, ``out of sync with 
regional planning,'' but ultimately prevailed in gaining denial of the 
license application. As FERC Commissioner Hebert explained in his 
concurring opinion:

          Unfortunately, the Commission's hope that this protracted 
        dispute could result in a mutually-acceptable agreement has 
        been undermined by the recalcitrance of a single agency. . . In 
        today's order, the Commission states that it no longer has the 
        discretion to continue to resist NMFS' overtures. . .
          One party, carrying mandatory conditioning authority, and 
        focusing myopically on its own particular interest, can upset 
        the collaborative process if so inclined. To a party opposing 
        licensing, stalemate may mean victory for one party and defeat 
        to the rest of America. . .
          I view this process, where some participants, bearing veto 
        power, have more negotiating authority than others, if indeed 
        inclined to negotiate at all, as absurd. As a result, I am 
        encouraged by pending legislative efforts to rationalize this 
        process, by requiring a greater level of cooperation among 
        Federal and state resource agencies. Such reform would benefit 
        consumers by forcing all parties to the table in an effort to 
        resolve such disputes in a fashion that is best suited for the 
        benefit of all Americans.

    ARBITRARY NATURE OF PROCESS/INAPPROPRIATE APPLICATION OF AGENCY 
                              AUTHORITIES

    PacifiCorp is currently seeking a new FERC license for its eight-
dam, 185 MW North Umpqua project in Douglas County, Oregon. PacifiCorp 
initiated the process in 1992 and went far beyond the normal 
requirements for public involvement and science collection in the hope 
that the North Umpqua licensing process would become a model of how a 
utility could work collaboratively with all stakeholders.
    After submitting its relicense application in 1995, PacifiCorp 
initiated the North Umpqua cooperative Watershed Analysis to identify 
and address specific resource concerns that emerged during the 
relicensing process. The watershed analysis was the first-of-its-kind 
for a hydro project and involved PacifiCorp, Federal and state resource 
agencies, academic institutions and interested members of the public. 
PacifiCorp and other interested parties then entered detailed 
settlement discussions in 1997.
    After two years of discussions, yielding little consensus, the U.S. 
Forest Service (USFS) insisted--without providing an adequate 
scientific explanation--that Soda Springs Dam (one of the eight dams on 
the project) be removed as a condition of settlement to meet objectives 
contained in the President's Forest Plan. This, despite the fact that 
removal of Soda Springs Dam would put the viability of the entire 
project at serious risk, from both an operational and economic 
standpoint, and despite there being other mitigation alternatives 
available. This also represents the first time that the Forest Service 
has indicated it intends to use its 4(e) conditioning authorities under 
the Federal Power Act to require a dam removal. This would create a 
broad, adverse precedent for other hydroelectric projects in the West 
located wholly or in part on Forest Service lands.
    PacifiCorp had recently agreed to remove its Condit Dam in south 
central Washington because compelling reasons existed. By contrast, no 
compelling reason exists for removal of Soda Springs. Citing an 
unreasonable bargaining position by USFS, and concerns over the 
precedential nature of the removal requirement, PacifiCorp walked away 
from settlement negotiations in November, 1999.
    PacifiCorp remained interested in achieving a settlement that 
balances the need to mitigate for project impacts with the need for 
cost-effective renewable resources. The company and other stakeholders 
have been able to restart settlement negotiations and those discussions 
continue. But the North Umpqua experience points to significant flaws 
in the current law. If the Federal Power Act required conditioning 
agencies to take a balanced approach in setting their demands and 
included some accountability over them, the settlement negotiations 
might have been conducted more smoothly and efficiently in this case.

 EXCESSIVE LENGTH OF PROCESS/JUDICIAL CALL FOR LEGISLATIVE IMPROVEMENTS

    In March, 1997, the Eugene Water & Electric Board (EWEB) received a 
new FERC license for two projects (23.2 MW combined) on the McKenzie 
River in Oregon. In the license, FERC incorporated certain fishery 
conditions prescribed by Federal resource agencies under Section 18 of 
the Federal Power Act (FPA)--at a cost to EWEB of $14,000,000--but 
rejected several conditions because they did not meet the requirements 
of the FPA for ``fishway prescriptions.''
    Despite the $14,000,000 of project improvements, several interest 
groups and agencies requested an administrative rehearing of the 
license before FERC; upon denial of the requests, the parties 
challenged the license before the U.S. Court of Appeals for the Ninth 
Circuit. Among other claims, the parties contended the FPA does not 
authorize FERC to refuse to accept any condition prescribed under 
Section 18. In other words, the parties asked the court to rule that 
the resource agencies had absolute power to dictate license conditions 
under the FPA whether they met the intent of the FPA for a fishway 
prescription or not.
    In its August, 1999 decision, the court did just that--concluding 
the FPA denied FERC the authority to modify, reject, or reclassify 
prescriptions submitted by resource agencies under Section 18, even 
while noting FERC's observation that the resource agencies ``do not 
concern themselves with the delicate economic versus environmental 
balancing required in every license.'' The court went on to acknowledge 
Congressional ``failure'' to require agencies to develop improved 
``regulations, procedures or standards for implementing Section 18.'' 
The court noted that, absent Congressional action, the court was 
powerless to rewrite the statute. ``Our task,'' the opinion stated, 
``is to apply the statute's text, not to improve upon it.'' The court's 
decision means that currently only a Federal court of appeals has the 
authority to determine whether a fishery condition offered by a Federal 
resource agency and required to be included in a license meets the 
requirements for a ``fishway prescription'' under the FPA.
    With its hands thus tied, the court's decision will mean a remand 
of the license back to FERC to be re-written once the appeal is 
completed--8 years after EWEB first submitted its license application; 
with only the Ninth Circuit then having the authority to decide whether 
any condition prescribed by a resource agency meets the FPA 
requirements for ``fishway prescriptions.''

   CONDITIONS MAKING PROJECT UNECONOMIC/ARBITRARY NATURE OF PROCESS/
                      INSUFFICIENT IMPACT ANALYSIS

    In 1996, during the relicensing of the Edwards Dam near Augusta, 
Maine, the U.S. Fish and Wildlife Service (USFWS) and the National 
Marine Fisheries Service (NMFS) prescribed a fishway system on the dam 
to safeguard a few species of fish. The fishery agencies estimated this 
fishway system would cost approximately $9 million while the licensee 
estimated the cost at $12 million--both of these estimates effectively 
rendered the project uneconomic. Lacking the authority to amend the 
prescription or otherwise balance it against the energy or other 
resource values of the project, FERC instead ordered the removal of the 
dam in November 1997.
    During the relicensing process, the USFWS and NMFS also recommended 
that flows of 4,500 cubic feet per second be released annually in July 
into a deep hole below the dam they determined was a spawning and 
nursery habitat for the Atlantic sturgeon. This flow recommendation had 
severe economic implications on the project since it would force the 
project to forgo power generation completely in July most years. This 
deep hole was located just below the area where the dam was eventually 
breached and this once-important spawning and nursery habitat is now 
assumed to be filled with rubble.
    The U.S. Department of Interior and segments of the environmental 
community have hailed FERC's decision as a means of restoring a 17-mile 
stretch of the Kennebec River to its ``natural condition''. Moreover, 
certain environmental groups are now claiming that the simple act of 
removing the dam has successfully restored this section of the river 
yet no comprehensive studies are being planned to actually measure the 
success of this dam removal on the restoration of the river ecosystem.

              ARBITRARY NATURE/EXCESSIVE LENGTH OF PROCESS

    In an ongoing relicensing of a 35.5 MW facility in New York State, 
arbitrary fishway prescriptions have been proposed by the USFWS, at a 
cost of over $2 million. Why arbitrary?
          The blueback herring, the primary species on which the 
        prescriptions were premised, is not native to the river where 
        the project is situated.
          With an 80-foot waterfall, blocking upstream fish passage, 
        there would be no migration without the man-made lock system 
        adjacent to the project.
          The project (and other hydro facilities on the river) have 
        operated without fishways for several decades and during that 
        time the fish population has grown to over 100 million 
        annually.
    Pre-filing consultation started on this project in 1986, and a 
final license order still has not been issued. If the fishway 
prescription is included in the license along with other resource 
protection measures, the project would become economically unviable.

 ARBITRARY NATURE OF PROCESS/FERC APPROVAL OF INAPPROPRIATE CONDITIONS

    In a recent relicensing of a Western project, the U.S. Forest 
Service imposed numerous conditions, including one that required the 
project owner to annually send the Forest Service a set payment, 
expected to cover all operation and maintenance costs associated with 
existing campgrounds in the project vicinity. The owner pursued an 
administrative appeal of this condition at the Forest Service, arguing 
that the Forest Service failed to demonstrate that most of the 
campgrounds' use was related to the project. Furthermore, the Forest 
Service did not attempt to justify the amount of the annual payment for 
the operation and maintenance costs it sought from the licensee.
    Nonetheless, FERC included the condition in the project license, 
concluding that it lacked the authority to even consider if a 
relationship between the condition and the project justified the Forest 
Service condition. Similarly, FERC was unable to reject an instream 
flow release imposed upon the project by the Bureau of Land Management, 
even though FERC summarily dismissed as inappropriate and unsupported 
the same exact amount of instream flow release recommended by the 
California Department of Fish and Game.
    After FERC issued the new license for the project, containing the 
contested condition, the owner challenged the condition at FERC and 
took the case before the U.S. Court of Appeals. Just prior to the case 
being heard and five years after the first of the two administrative 
appeals were filed with the Forest Service, the Forest Service decided 
that the operation and maintenance costs were indeed inappropriate and 
accepted an owner-proposed method for reimbursement of only those 
campground operation and maintenance costs related to the project--
approximately 1.25 percent of the amount originally demanded by the 
Forest Service.

FERC APPROVAL OF CONDITIONS THAT RESULT IN ``NO QUANTIFIABLE BENEFIT''/
                      EXCESSIVE LENGTH OF PROCESS

    After FERC asserted jurisdiction over a 70 year old, 1.2 MW project 
in New England, the project owner reached agreement with one state 
agency on the level of minimum flows to be released from the project. 
However, a resource agency from an adjacent state and the USFWS 
prescribed a minimum flow that was nearly twice the agreed upon level. 
In its final environmental assessment for the project, FERC concluded 
that the owner's minimum flow could be provided with existing project 
equipment and that there was no ``quantifiable benefit'' from requiring 
the USFWS flow level rather than the level proposed by the owner.
    However, because the recommendation was made under section 10(j) of 
the FPA, and because the recommendation appeared ``consistent with the 
FPA,'' FERC incorporated the higher minimum flow requirement in the 
license. FERC's rubber stamp approval of the USFWS 10(j) 
recommendation, along with other conditions imposed on the project, had 
the effect of reducing net revenue from the project by 60 percent, 
making the project economically marginal at best. (Note: Issuance of 

THE LICENSE FOR THIS SMALL PROJECT TOOK MORE THAN 8 YEARS.)
                     DUPLICATIVE NATURE OF PROCESS

    The Energy Policy Act of 1992 specifically prohibits Federal land 
managing agencies from requiring an existing hydropower project to 
obtain a Special Use Permit. However, in a number of licenses, the 
Forest Service has taken the standard Special Use Permit terms and 
included them in the conditions submitted to FERC under section 4(e) of 
the Federal Power Act. In turn, FERC has had no choice but to impose 
these conditions on the project license. These Special Use Permit 
conditions are designed to allow the Forest Service to regulate the 
project in the same manner that FERC administers the licensed project. 
Thus, despite the Energy Policy Act prohibition, the Forest Service is 
duplicating FERC's legislative mandate to administer Federally licensed 
hydropower projects.

                  CONDITIONS MAKING PROJECT UNECONOMIC

    In 1997, six years after the licensee filed its initial plan, FERC 
issued an order approving a mitigation and management plan for the 170 
MW Kerr Project in Montana. The FERC plan incorporated conditions 
submitted by the Department of the Interior requiring a variety of non-
operational measures, including: a fish and wildlife implementation 
strategy to be funded through a one-time payment of $12.5 million and 
annual payments of $1.27 million, a fish stocking plan, the acquisition 
of 6,800 acres to serve as replacement wildlife habitat, the 
construction of five islands to serve as waterfowl habitat and 
construction of erosion control structures.
    The FERC environmental impact statement (EIS) on the mitigation and 
management plan concluded that the conditions imposed by Interior would 
``eliminate the project's positive economic benefits.'' The EIS found 
that the project's current annual net benefits were approximately $9 
million, but that with Interior's conditions, the annual net benefits 
would be a negative $2.7 million. Not even Interior disputed that the 
conditions would reduce the project's net annual benefits by many 
millions of dollars. However, the Commission noted that ``any economic 
analysis of the impact of Interior's conditions is of at best 
tangential relevance to our decision,'' since FERC was obligated to 
impose the Interior conditions.

  CONDITIONS MAKING PROJECT UNECONOMIC/INSUFFICIENT IMPACT ANALYSIS/ 
        ARBITRARY NATURE OF PROCESS/LITIGATION AS ONLY RECOURSE

    The 700kW Yaleville project in upstate New York is one of the 
smallest hydro facilities operated by Niagara Mohawk Power Corporation. 
In pre-filing consultation in connection with the 1988 licensing of the 
project, the USFWS raised the issue of fish passage. The agency 
recommendation was to provide for downstream passage of freshwater non-
migratory resident species, namely bass and walleye. This, despite:
          Spillage over the dam provided natural passage of fish at 
        least 85 percent of the time;
          Despite decades of hydro project operation, an abundance of 
        bass and walleye was evident on the river both above and below 
        the project; and
          The $400,000 price tag for the agency-recommended fishway was 
        prohibitive for such a small project.
    Niagara Mohawk disputed the agency recommendation in its license 
application and FERC, in its 1991 draft Environmental Assessment (EA) 
for the project, agreed with the owner and recommended a lower cost 
fish protection alternative. USFWS, after failing to sway FERC away 
from its position in dispute resolution proceedings, responded by 
prescribing the downstream passage fishway under its Section 18 
mandatory conditioning authority.
    FERC denied the fishway prescription in its 1992 license order 
because it did not meet the day's definition of ``fishway'' [at the 
time, a fishway had to serve the purpose of passing fish whose life 
cycle depended entirely on migration past the hydro facility--which was 
not the case with the Yaleville bass and walleye]. A broader 
``fishway'' definition was established with the passage of the Energy 
Policy Act of 1992; accordingly, FERC had to rescind its prior denial 
and require Niagara Mohawk to install the fishway--despite the lack of 
biological basis and the fact that its cost would negate the economic 
operation of the project.
    Niagara Mohawk promptly appealed the FERC order. Negotiations with 
USFWS ultimately led to an agreement to install a less expensive 
fishway design (at a cost one tenth of that originally prescribed). If 
the owner had not pursued an aggressive litigation action, USFWS would 
likely never had agreed to negotiate. Litigation, in this case, spawned 
reason; but only after more than 8 years of licensing process and a 
cost to the owner of nearly $300,000.

                  CONDITIONS MAKING PROJECT UNECONOMIC

    In 1997, FERC issued a license for a 70 MW project in Washington 
state. In the text of the license itself, FERC noted that the 
prescribed resource agency conditions would result in a yearly 
operating loss of over $6.5 million for the project owner. Indicating 
that the project as licensed would not be ``economically beneficial'', 
FERC issued the license with the conditions, leaving it to the owner to 
``make the business decision whether [to operate the facility] in view 
of what appear to be the net economic costs.''
                                 ______
                                 

      National Hydropower Association--Sustaining Hydropower: How 
  Policymakers Can Reverse the Decline of America's Leading Emissions-
                        Free, Renewable Resource

    Hydropower is our largest renewable resource--accounting for about 
ten percent of the nation's electricity and over 80 percent of its 
renewable energy. It is an emissions-free, clean, reliable source of 
domestic energy which possesses many valuable benefits beyond power 
supply. Among its benefits are transmission system reliability, water 
supply, irrigation, flood control, recreation and transportation. More 
importantly, as an emissions-free power source, hydropower helps our 
nation meet its clean energy goals and reduces the number of health 
problems associated with air pollution.
    Supply of hydropower is waning, however, and America is in danger 
of losing significant hydropower capacity at a time when it is most 
needed. As we face rising energy prices, increased levels of pollution, 
energy shortages and reliability concerns, now is clearly the time for 
policymakers at the Federal level to better incorporate hydropower into 
the nation's long-term energy strategy.
    As we devise a clear long-term energy strategy, there are steps 
policymakers can take now to address the decline of hydropower. What's 
more, steps can also be taken to encourage development of additional 
hydropower capacity at existing sites, allowing the country to increase 
its use of renewable, emissions-free generation and strengthen the 
reliability of the transmission system.
    What can be done to reverse the decline of hydropower and bring new 
growth to an industry that is crucial to the nation's energy strategy? 
The National Hydropower Association (NHA)1 suggests the 
following:
---------------------------------------------------------------------------
    \1\ NHA is the only national trade association committed 
exclusively to representing the interests of the hydroelectric power 
industry. Our members represent approximately 60 percent of domestic, 
non-Federal hydroelectric capacity and nearly 80,000 megawatts overall. 
Its membership consists of more than 140 companies including public 
utilities, investor owned utilities, independent power producers, 
equipment manufacturers, engineers, consultants and law firms.
---------------------------------------------------------------------------

Hydropower relicensing reform
    First and foremost, the hydropower relicensing process needs to be 
reformed. Over the next 15 years, two-thirds of all non-Federal 
hydroelectric capacity--nearly 29,000 MW of power (enough to serve six 
million retail customers)--must undergo the Federal Energy Regulatory 
Commission's (FERC) relicensing process. This includes 284 projects in 
39 states, much of it in western states where power supply is a major 
concern.
    While there are many perspectives, all stakeholders agree that the 
relicensing process is in need of improvement. A multitude of statutes, 
regulations, agency policies and court decisions has made the process 
time-consuming, costly, contentious, duplicative and generally 
frustrating for all. Federal agencies are allowed to set conditions on 
licenses without regard to their effects on project economics, energy 
benefits and values protected by other statutes or regulations. Many 
times, agencies fight agencies and conflicting demands are issued. 
Worse, conditions are placed on a license that have little to do with 
project impacts.
    Hydropower licensees have no recourse to appeal, or even question, 
the basis of mandatory conditions set by the agencies, except through 
litigation. Further, a typical hydropower project can take eight to 10 
years to weave its way through the process--some have taken more than 
20 years--and cost up to a million dollars a year. The end result of 
this broken process is the loss of operational flexibility and 
generation capacity--on average 8 percent per project--possibly putting 
at risk system reliability and clearly resulting in the loss of clean, 
renewable power.
    Enacting legislation, such as bills offered in the 106th and 107th 
Congresses--Congressman Joe Barton's substitute amendment to 
Congressman Ed Towns' H.R. 2335, or Senator Larry Craig's S. 71--would 
give Federal resource agencies the responsibility to consider and 
document the power, economic, and other impacts of their mandatory 
conditions before imposing them on a hydro license. The bills would 
also impose deadlines on Federal resource agencies for submission of 
final conditions. Reform legislation will not change or modify any 
existing environmental laws, nor will it eliminate mandatory 
conditioning authority of Federal resource agencies. What legislative 
reform will do is bring a much needed balance and certainty to the 
relicensing process and help stop the decline of hydropower, all while 
protecting the river resource.
    Properly developed and implemented administrative remedies can 
certainly help on a number of fronts and should be encouraged as well. 
Taken alone, however, administrative reforms can not fully address the 
substantive problems with the process. In some instances, 
administrative reform can actually complicate matters. For example:
    In January of 2001, the U.S. Departments of Interior (DOI) and 
Commerce (DOC) proposed a new policy regarding Section 18 fishway 
prescriptions. The proposed policy serves to define ``fishways'' 
broadly to include virtually any project structure or operational 
measure related to fish and would redefine the term ``fish'' to include 
virtually every form of water-related animal life other than mammals 
and birds. Further, it would give the agencies virtually unbounded 
authority to prescribe new or modified fishways, throughout the term of 
a license. This will result in further overlapping and conflicting 
Federal roles in the relicensing process and will exacerbate the 
uncertainties for licensees and other stakeholders that currently 
plague the relicensing process.
    Also in January, DOI and DOC implemented a new policy for 
administrative review of mandatory conditions and prescriptions 
developed by the departments under the authorities in sections 4(e) and 
18 of the Federal Power Act. Despite agency intention to ``improve'' 
the hydro licensing process, the new policy fails to define substantive 
standards for review of mandatory conditions and to detail procedures 
for the development of an administrative record. While the proposal 
does represent a good faith effort to improve the process within the 
confines of current law, it does not resolve industry's concerns and it 
fails to address the fundamental problems with the process.
    Again, NHA believes that legislative fixes are necessary to reform 
the relicensing process in a manner satisfactory to most stakeholders.
Market incentives for hydropower development
    Although maintaining a strong and viable hydropower industry is a 
critical component of the nation's long-term energy strategy, 
hydropower development has been stagnant--almost nonexistent--for a 
long period of time. Yet, most legislative proposals that address 
renewable energy ignore hydropower and its increasingly marginal 
economic state due to regulatory costs and capacity restrictions. This 
misguided omission threatens to jeopardize our country's most 
successful renewable energy resource as competition, and serious 
concerns over reliability and power supply, comes to the electric power 
industry.
    NHA forecasts that 21.3 GW of additional power from hydroelectric 
resources could be developed by 2020--none of which would require the 
construction of a new dam or impoundment. In terms of greenhouse gas 
reductions, this would equal displacing 24 million metric tons of 
carbon emissions. Of the 21.3 Gigawatts (GW), over 4,000 Megawatts (MW) 
can be developed at existing hydroelectric facilities alone.
    Bringing new hydro generation on-line, however, is increasingly 
difficult and expensive. While not the same disadvantages as those 
encountered by other renewable industries, hydro's disadvantages hold 
equal merit and demand similar counter-measures in policies designed to 
encourage the development of renewable sources of power. Providing 
financial incentives for hydro producers--such as those proposed in the 
106th Congress by Congressmen John Shadegg and Albert Wynn, or 
proposals in the 107th Congress that expand the Section 45 production 
tax credit to include all renewables, including hydropower--will 
encourage hydropower development at existing sites, allowing the United 
States to rely more on a clean, domestic resource.
    In the west, for example, 45 percent of hydro capacity in 
California, and 73 percent of Northwest capacity, faces the gauntlet of 
relicensing in the next 15 years. Given the current trend in 
relicensing, California and the Pacific Northwest might retire 1,200 or 
more megawatts of generation capacity. On the other hand, with changes 
to the process, and the proper financial incentives described above, 
another 8,800 MW of new capacity could be developed without building a 
single new dam. Given the current state of affairs in this region of 
the country, it is hard to imagine why we would not pursue policies to 
encourage additional clean, renewable hydropower capacity.
Dam decommissioning and removal
    Hydropower dams have been a rich and vital part of our American 
history and continue to be an important part of our American landscape. 
Many of their benefits play a crucial role in regional economies and in 
national energy policy. Dams are not simply a remnant of our past, they 
continue to play an important role for our future.
    Despite this importance, there are some dams that have outlived 
their usefulness when considered within the context of rigorous new 
environmental standards. NHA recognizes the fact that maintaining some 
hydro dams, once their full public benefit is weighed against 
environmental and other social needs, may no longer be prudent. In 
these cases, decommissioning and removal may be the most appropriate 
course. However, we believe that when all benefits are considered, dam 
removal will occur only in rare instances. The real issue in dam 
removal is whether all of the benefits of a dam are appropriately 
weighed against the real, not subjective or hopeful gains.
    There is a movement, mostly an ideologically driven one, to remove 
many of the dams in the country. As we consider all the aspects of dam 
removal, we must remember that this infrastructure is not easily 
replaced. Smart policy dictates that dam removal should be considered 
as a last resort when there is no other means to address the 
environmental consequences of the impoundment and all of the project 
benefits have been appropriately considered. Obviously, the growing 
interest in dam removal stems from our common concern over the health 
of our nation's rivers. The fact remains, however, that dams and 
healthy rivers can coexist. As a nation, our goal should be the 
preservation of both.
    In those cases where prudence dictates removal, the hydropower 
industry believes that all stakeholders must be in common agreement. 
Removal should be a collaborative effort. FERC does not have the 
authority to unilaterally order removal of a facility, and the owner of 
the facility must be made whole in the process.
    Hydropower owners and operators are good stewards of our waterways. 
Dam removal is a major issue of concern, not only to the industry, but 
also to the nation. Working with all stakeholders, policymakers can 
develop a rational national policy that can both protect and preserve 
our waterways and the infrastructure within them.
Actions needed in the 107th Congress
    1. Enact hydro relicensing reform legislation as soon as possible 
and continue to pursue administrative reform efforts where helpful.
    2. Enact incentives legislation such as tax credits or incentives 
payments for capacity upgrades and efficiency improvements at existing 
hydroelectric facilities, and for new development at existing dams.
    3. De-politicize the debate over dam decommissioning and dam 
removal and pursue national policy based on sound science with full 
consideration of all project benefits.
    By focusing on the three areas NHA has discussed, Federal 
policymakers have an opportunity to not only protect our hydropower 
resource, but to also promote modest growth of a clean, renewable, 
domestic energy resource that is crucial to meeting long-term energy 
strategies.

 National Hydropower Association--Hydropower Licensing Improvement: A 
     Balanced Approach to Preserving Our Nation's Leading Renewable

Overview
    In the wake of ongoing energy supply shortages and reliability 
concerns in California, the Pacific Northwest and throughout the 
nation, it is crucial that existing sources of energy--especially those 
that are clean, low-cost, reliable and efficient--remain in abundant 
supply. Yet, domestic generation of hydropower, our nation's leading 
emissions-free, renewable energy resource, is waning as a result of a 
Federal Energy Regulatory Commission (FERC) licensing process that all 
parties agree is in need of repair. It is indeed ironic that our 
nation's hydro supply is in decline when our nation needs it most.
    Hydro licensing improvement legislation introduced in the 106th 
Congress (H.R. 2335/S. 740) gained strong bipartisan support in both 
Chambers and was approved by the House Commerce Subcommittee on Energy 
and Power. With energy policy concerns taking center stage in the 107th 
Congress, Congress has an opportunity to build on this momentum and 
enact meaningful hydro licensing process improvements this year to 
ensure that crucial megawatts (MW) of hydropower are preserved for 
current and future generations.

Background
    Since 1986, FERC has been required, under the Federal Power Act, to 
give ``equal consideration'' to a variety of factors when issuing hydro 
project licenses and relicenses. This balancing authority requires FERC 
not only to consider the power, economic, and development benefits of a 
particular hydro project, but also to consider energy conservation and 
the protection, mitigation of damage to, and enhancement of fish and 
wildlife. In other words, under Federal law, FERC has the 
responsibility and authority to strike a balance between power and 
environmental values.
    The courts, however, have interpreted the Federal Power Act so as 
to prevent any balancing from taking place. The courts, in effect, have 
given Federal resource agencies the authority to set ``mandatory'' 
conditions on FERC licenses--conditions that are automatically attached 
to a final license. This means that FERC has no opportunity to question 
the basis of mandatory conditions set by the agencies.
    This would not be a problem if Federal resource agencies, when 
imposing a mandatory condition, considered the various factors that 
FERC is required to examine pursuant to the Federal Power Act. However, 
this is simply not done. The net result is that no one is balancing. No 
one has the authority to look at the big picture of how hydro fits into 
our national energy policy.
    The implications are significant. Hydro project owners are facing 
higher costs, loss of operational flexibility, and lost generation due 
to new constraints imposed on operations. A typical hydro project can 
take from eight to 10 years to weave its way through the licensing 
process, at an average cost of $1 million per year. In its Energy 
Outlook 2000 Report, the Department of Energy's Energy Information 
Administration (EIA) for the first time forecasted decreased 
hydroelectric capacity as ``regulatory actions limit capacity at 
existing projects.''

The urgency
    Over the next 15 years, more than half of all non-Federal 
hydroelectric capacity (nearly 29,000 MWs of power--enough to serve six 
million retail customers) must go through the FERC licensing process. 
This includes 284 projects in 39 states. What's more, 45 percent of 
hydro capacity in California, and 73 percent of Northwest capacity 
faces relicensing in the next 15 years. Given the current trend in 
relicensing, California and the Pacific Northwest might retire 1,200 or 
more MWs of generation capacity--enough power for 1.2 million homes. 
Given the current state of affairs in this region of the country, it is 
hard to imagine why we would not pursue policies to improve the 
licensing process.
    Congress must do its part to ensure that this important renewable 
resource continues to operate in a cost-effective and environmentally 
compatible manner. If current trends continue, the nation could lose a 
number of hydropower projects and, with them, enormous clean energy, 
reliability, drinking water, flood control, irrigation, transportation 
and recreation benefits. Moreover, consumers could face increased 
energy replacement costs with polluting sources.

Summary
    Hydropower has been a rich and vital part of our American history 
and continues to be an important part of our American landscape. Many 
of its benefits play a crucial role in regional economies and in 
national energy policy. Hydropower is not simply a remnant of our past, 
it continues to play an important role for our future. Working with all 
stakeholders, policymakers can develop a rational national policy that 
can both protect and preserve our waterways and environment, as well as 
the infrastructure within them.
    The hydro relicensing debate has, for years, been a search for 
balance: can the nation balance the benefits of hydropower with 
environmental protection and mitigation? A growing number of members of 
Congress from both parties believes it can. Given the enormous role 
that hydro plays and must continue to play in our national electricity 
grid, the time for balancing--and the time for Federal policymakers to 
better incorporate hydropower into the nation's long-term energy 
strategy--is clearly now.
                                 ______
                                 

 National Hydropower Association--Forecast for Hydropower Development 
                              Through 2020

    Two Federal agencies have estimated large potential capacity from 
hydroelectric facilities in the U.S. But the National Hydropower 
Association (NHA) expects that the existing licensing process will 
prohibit realizing any new capacity in the future. In fact, NHA is 
currently predicting a loss of renewable hydroelectric power in the 
U.S. without legislative changes to hydropower regulations.
    The Federal Energy Regulatory Commission's (FERC) river basin 
studies show a potential of 73,200 MW of additional U.S. hydroelectric 
capacity.\1\ Emphasizing engineering feasibility and some economic 
analysis, but no environmental considerations, the FERC estimate is the 
likely ``upper limit of conventional water power potential in the 
United States''.\2\
    The U.S. Department of Energy (DOE) has undertaken an assessment of 
hydropower resources using FERC's river basin analysis while also 
screening for environmental, legal and institutional constraints at 
potential sites including threatened or endangered species, national 
designations, cultural values and other non-power issues.\3\
    DOE's results show there are 5,677 undeveloped hydropower sites 
with a potential capacity of about 30,000 megawatts.\4\ Of that amount, 
57 percent (17,052 MW) are at sites with some type of existing dam or 
impoundment, but no power generation. Another 14 percent (4,326 MW) 
exists at projects that already have hydropower generation, but are not 
developed to their full potential. Only 8,500 megawatts or 28 percent 
of the potential would require new dams.\5\
    NHA anticipates that, given the regulatory burden associated with 
the Federal licensing process--the cost, delay and duplication--none of 
this new capacity will.be developed by 2020. And worse, with no changes 
in the current licensing process, studies show an average eight percent 
6 loss of hydroelectric generation in relicensing.\6\ Furthermore, 
considering the uncertain future of some Federal projects, the 
potential loss of generation from our nation's hydroelectric system 
could be very significant.
    However, there are factors that could change NHA's bleak forecast:
          The need for greenhouse gas reductions that would drive 
        domestic policy to again encourage hydropower development;
          The hydro licensing process is improved so that it increases 
        investor certainty and recognizes the unique energy 
        characteristics and environmental benefit of hydropower; and
          The resulting licensing rules fairly balances environmental 
        and energy needs.
    Under these circumstances, NHA forecasts that 20,915 MW of 
additional power from hydroelectric resources could be developed by 
2020--none of which would require the construction of a new dam or 
impoundment. In terms of greenhouse gas reductions, this would mean 
displacing 24 million metric tons of carbon emissions from coal.\7\
    Hydroelectric generating capacity would rise to 99,478 MW--a 27 
percent increase from current levels--and this nation's use of 
hydropower resources would rise to 4.9 quads.\8\
    Other factors that could further stimulate the development of 
hydropower capacity are:
          The development of commercially viable advanced turbines that 
        further improve biological conditions for fish (fish friendly 
        turbines);
          Greater efficiency from these advanced turbines;
          The trend in the growing deregulated market to value 
        hydropower's ancillary benefits--its unique ability to 
        stabilize the electric grid.
          Increased acceptance of green power programs that charge a 
        premium for the delivery of clean and renewable electricity in 
        a deregulated market.

                               FOOTNOTES

    \1\ Hydroelectric Power Resources of the United States; Developed 
and Undeveloped, FERC, Washington, DC, January 1, 1992, p. xi.
    \2\ Id. p. xxxv.
    \3\ ``Identification of Undeveloped Hydropower Resources in the 
United States, Based on Environmental, Legal, and Institutional 
Attributes'', Table 2, J.E. Francfort and A.M. Conner from Waterpower 
'97 Proceedings of the International Conference on Hydropower, Volume 
2, ASCE, New York, NY, p. 1307.
    \4\ Hydropower Resource Assessment program draft report U.S. DOE 
Hydropower Program, Idaho National Engineering and Environmental 
Laboratory, , November 
1998.
    \5\ Interview with Jim Francfort, Hydropower Resource Assessment 
program, September, 1998.
    \6\ ``Scenarios of U.S. Carbon Reductions: Potential Impacts of 
Energy Technologies by 2010 and Beyond'', Office of Energy Efficiency 
and Renewable Energy, U.S. DOE, September 15, 1997, p. 7.21.
    \7\ According to ``Impacts of the Kyoto Protocol on U.S. Energy 
Markets and Economic Activity,'' prepared by the Energy Information 
Administration, October, 1998, Table 17, p. 75, coal fired technologies 
emit 571 pounds of carbon per MegaWatthour.
    \8\ In 1996, total hydropower consumption was 3.911 quads. 
Hydropower capacity in 1996 was 73,129 MW. The ratio of quads consumed 
to capacity is .0000491.
                                 ______
                                 
    [Responses by Mr. Hocker to questions submitted for the record 
follow:]

Question 1 submitted by Representative James Hansen, Chairman of the 
        Committee

    In the early 1990's, the Advanced Hydropower Turbine Systems (AHTS) 
program was initiated by industry with a request to DOE for matching 
funds. The goal was to develop advanced turbines and other systems to 
improve safe fish passage while maintaining the operational efficiency. 
DOE responded positively, focusing its attention--and its hydro R&D 
funding--on the program. In some cases, interested parties in the 
hydropower industry also supported specific research items important to 
the AHTS program when funds were not available from DOE. Completion of 
the program would: minimize environmental impact to aquatic life; 
increase facility efficiency--savings that can be passed along to the 
consumer; improve relicensing negotiations; lower government's 
regulatory enforcement costs; increase government revenue from idled 
Federal projects that will benefit from this new technology; and 
encourage cooperation over conflict between industry, government and 
environmental advocates.
    The Advanced Hydropower Turbine System program is important to 
industry and should be fully funded to its completion, including field 
verification. The focus of the research should be broadly conceived to 
include the transfer of technology to smaller applications at a variety 
of sites, as well as potentially contributing to salmon restoration in 
the Northwest.
    Currently, the majority of the DOE's AHTS funds are being directed 
to Alden/NREC turbine laboratory pilot testing. To minimize the elapsed 
time between laboratory and field tests of the new Alden/NREC turbine, 
it is important to establish criteria for site selection, to select a 
site(s) for field testing, and to design features needed for the 
turbine installation, all while the turbine is being evaluated in the 
laboratory. The selection process should be defined and one or more 
field sites should be selected. Due consideration would be given to the 
need for owner participation, site characteristics and changes, 
construction methods, design of the turbine for the site head and flow, 
means and scope of the fish testing, and cost and schedule.
    The other focus of the AHTS program is devoted to the Voith Siemens 
Hydro AHTS design which is based on enhancing current turbine designs. 
A modified Kaplan turbine has been developed based on improved flow 
conditions and supported by field testing of existing turbines. Some of 
the advanced design features were included in the Bonneville Dam 
Minimum Gap Runner (MGR). Fish injury/survival tests were conducted at 
Bonneville Dam on the new MGR and on an existing turbine through a 
collaboratively funded project of DOE, U.S. Army Corps of Engineers, 
Bonneville Power Administration and Grant County PUD. To demonstrate 
that improvements have been made, it is essential to install and test a 
full size machine to prove these concepts.
    An improved AHTS concept Kaplan design has been developed to 
replace existing turbines for a site on the Columbia River and is ready 
for testing. Additionally, industry-developed technology for advanced 
control systems to optimize fish-passage survival is also available for 
field verification in conjunction with the advanced Kaplan design. 
Further opportunities exist for collaboration with industry in the 
field verification phase.
    The hydropower industry has demonstrated its commitment to a 
competitive and environmentally sound future for hydroelectric 
generation. The industry's partnership with DOE and its willingness to 
contribute funds and resources to the AHTS program should be seen as 
the foundation for a new cooperative era between industry, government, 
and the public in addressing our nation's energy and environmental 
needs.
    Industry urges that Federal water development agencies, principally 
the U.S. Army Corps of Engineers, the Bureau of Reclamation, and the 
Tennessee Valley Authority better coordinate their hydropower R&D 
efforts among themselves, with the DOE and with the private sector. In 
addition, Federal executive branch offices with science, technology and 
natural resource portfolios must pay closer attention to hydropower R&D 
as they examine their respective disciplines and coordinate R&D across 
Federal agencies.
    Most importantly, industry stands ready to collaborate with the DOE 
in the expansion and coordination of R&D related to hydropower. Basic 
research of water-related environmental issues must receive greater 
attention across multiple DOE offices and its laboratories where it is 
mission-appropriate (e.g., Office of Basic Energy Sciences, Office of 
Biology and Environment, and the Office of Policy).
    While much progress has been made already in devising new 
approaches to generating hydroelectricity while supporting healthy 
fisheries, much more work remains to be done. Now, DOE must expand its 
focus and devote attention and resources to other areas of hydropower 
R&D, while continuing to fund the AHTS program.
    Research and development efforts in the private sector tend to 
focus on meeting short-term objectives and, increasingly in the 
restructured electricity sector, must be justified by a short-term 
return on the investment. Only the Federal Government can take a 
longer-term, higher-risk approach to research that addresses strategic 
national interests.
    The hydropower industry proposes that the DOE should take a ``three 
track'' approach to hydropower R&D. One track should continue the 
efforts to improve hydropower systems that support safe fish passage. 
The second track should be focused on laboratory and field verification 
projects that optimize hydro operations, increase efficiencies, and 
enhance environmental performance. The third track should focus on 
policy issues affecting hydropower. This final track would include, but 
not be limited to, stimulating hydro upgrades and new development, 
valuing hydro's role in electric reliability, assessing hydropower's 
environmental performance, and expanding hydro's contribution to 
avoiding greenhouse gas emissions (please see attachment on specifics 
of NHA's recommendations to DOE).
    Funding for hydropower research has never reached the 1997 
President's Committee of Advisors on Science and Technology (PCAST) 
Report recommended levels. Because of the lack of support for 
hydropower, and the Advanced Hydropower Turbine specifically, the 
program is behind schedule and possibly in jeopardy. The millions of 
dollars that have been spent, and the progress that has been made, may 
all be for naught if the program if the program is not fully funding in 
2002 and beyond.
    NHA strongly encourages Congress to appropriate finances for the 
turbine program that are much closer to the recommendations of the 
PCAST report. The program is at a critical stage and needs the 
appropriate financing to move to the next stage.
    For 2002, NHA recommends $16,000,000. The amount provided is for 
cost-shared research and development of the AHTS. The amount is also 
for research to examine hydropower mitigation efforts; develop 
biological criteria for mitigation efforts; research and testing on the 
effectiveness of hydrokinetic energy systems; the development of 
consistent methodology for lifecycle analysis and total valuation of 
hydropower, including contributions to clean air; and to study the 
ancillary electric benefits of hydropower.

Question 1 Submitted by Representative Ken Calvert
    During the last 18 months, industry has been primarily involved in 
two non-legislative processes to address and resolve hydro relicensing 
issues--the Federal Advisory Committee (FACA) to the Interagency Task 
Force to Improve Hydroelectric Licensing Processes (ITF) and the 
National Review Group (NRG) headed by the Electric Power Research 
Institute (EPRI). Both of these administrative reform working groups 
produced a very helpful and positive dialogue concerning many of the 
relicensing issues and brought some helpful process-related 
improvements. The ITF and FACA completed their work for the most part 
(an implementation plan of the groups' recommendations is occurring but 
there is some concern regarding the level of implementation) while the 
NRG will continue into 2001 and focus on a few key issues. Industry 
will continue to play a very active role in those discussions and looks 
forward to working with the broad range of hydro stakeholders.
    Properly developed and implemented administrative remedies can 
certainly help on a number of fronts and should be encouraged. Taken 
alone, however, administrative reforms cannot fully address the 
substantive problems with the process. In some instances, 
administrative reforms (in these cases, led by the Clinton 
Administration) can actually complicate and worsen matters. For 
example:
    In January of 2001, the U.S. Departments of Interior (DOI) and 
Commerce (DOC) proposed a new policy regarding Section 18 fishway 
prescriptions. The proposed policy serves to define ``fishways'' 
broadly to include virtually any project structure or operational 
measure related to fish and would redefine the term ``fish'' to include 
virtually every form of water-related animal life other than mammals 
and birds. Further, it would give the agencies virtually unbounded 
authority to prescribe new or modified fishways throughout the term of 
a license. This will result in further overlapping and conflicting 
Federal roles in the relicensing process and will exacerbate the 
uncertainties for licensees and other stakeholders that currently 
plague the relicensing process.
    NHA strenuously objects to the Proposed Interagency Policy on the 
Prescription of Fishways and has asked that it be immediately rescinded 
and all processes related to this proposed policy be halted. Section 
1701 (b) of the National Energy Policy Act of 1992 rescinded the 
Federal Energy Regulatory Commission's (FERC) definition of fishways. 
The Act clearly defers to FERC to redefine fishways by rulemaking with 
the concurrence by the Secretaries of Commerce and Interior. Quite 
simply, the Departments' proposed policy attempts to evade the express 
intent of Congress.
    In addition to the serious concerns over the process of the 
Departments' proposed policy, we also stress that the proposed policy 
is premature, flawed and unbalanced. Moreover, contrary to the 
Departments' assumptions, the proposal could have serious economic 
impacts and should undergo review required by the Regulatory 
Flexibility Act.
    As we face rising energy prices, increased levels of pollution and 
greenhouse gases, energy shortages and serious reliability concerns, 
this is the least opportune time, when viewed from the public interest 
perspective, for the Departments to mount a campaign for unbounded 
advocacy for their prescriptive powers. Now is clearly the time for 
policymakers at the Federal level to better incorporate hydropower into 
the nation's long-term energy strategies, not to devise policies that 
further diminish a waning resource that is so vital to energy adequacy, 
diversity and security.
    Also in January, DOI and DOC implemented a new policy for 
administrative review of mandatory conditions and prescriptions 
developed by the departments under the authorities in sections 4(e) and 
18 of the Federal Power Act. Despite agency intention to ``improve'' 
the hydro licensing process, the new policy fails to define substantive 
standards for review of mandatory conditions and to detail procedures 
for the development of an administrative record. While the proposal 
does represent a good faith effort to improve the process within the 
confines of current law, it does not resolve industry's concerns and it 
fails to address the fundamental problems with the process. Again, NHA 
believes that legislative fixes are necessary to reform the relicensing 
process in a manner satisfactory to most stakeholders.

Question 2 Submitted by Representative Ken Calvert
    The industry is committed to exploring options and keeping the 
dialogue open as we move forward on a reform bill. As a matter of fact, 
we are currently involved in such discussions in both the House and the 
Senate. Progress has been made in certain areas and that is largely due 
to the fact that a productive discussion with all stakeholders 
occurred. It is not in the interest of industry (nor is it likely) to 
jam a bill through Congress while ignore other stakeholders' concerns.
    We understand that a bi-partisan approach is best and achievable. 
In fact, we feel ultimately that relicensing reform is a bi-partisan 
issue and we look forward to working in a bi-partisan environment. A 
few years ago, industry decided that taking a moderate approach to 
relicensing reform was best and we continue to believe that.
    We made tremendous progress last Congress and hopefully that will 
pay off in the 107th Congress with a bill that is signed into law. We 
want to work with the resource agencies and other stakeholders so long 
as a bill that brings balance and certainty to the licensing process is 
achieved.

Question 3 Submitted by Representative Ken Calvert
    The primary reason for lost hydro capacity is due to a relicensing 
process that is badly in need of repair. This problem demands urgent 
attention as half of licensed capacity--28,784 MWs--must to be 
relicensed by 2016, and over 52 percent of it is located in Western 
states where energy supply and reliability issues have already reached 
a critical stage, and water resource issues are paramount (please see 
attachment for specific state-by-state numbers).
    The relicensing process is exceedingly complex, needlessly 
fragmented, excessively costly and frustratingly inefficient. Further, 
it fails to fully weigh the benefits of hydropower and often results in 
extended and contentious litigation, costing both the project and the 
environment.
    While there are many perspectives, all stakeholders agree that the 
relicensing process is in need of improvement. A multitude of statutes, 
regulations, agency policies and court decisions has made the process 
time-consuming, contentious, duplicative and generally frustrating for 
all. Federal agencies are allowed to set conditions on licenses without 
regard to their effects on project economics, energy benefits and 
values protected by other statutes or regulations. Many times, agencies 
fight agencies and conflicting demands are issued. Worse, conditions 
are placed on a license that have little to do with project impacts.
    Hydropower licensees have no recourse to appeal, or even question, 
the basis of mandatory conditions set by the agencies, except through 
litigation. Further, a typical hydropower project can take eight to 10 
years to weave its way through the process--some have taken more than 
20 years--and cost up to a million dollars a year. The end result of 
this broken process is the loss of operational flexibility and 
generation capacity--on average 8 percent per project--possibly putting 
at risk system reliability and clearly resulting in the loss of clean, 
renewable power.
    Enacting legislation, such as bills offered in the 106' '' and 107' 
'' Congresses--Congressman Joe Barton's substitute amendment to 
Congressman Ed Towns' H.R. 2335, or Senator Larry Craig's S. 71--would 
give Federal resource agencies the responsibility to consider and 
document the power, economic, and other impacts of their mandatory 
conditions before imposing them on a hydro license. The bills would 
also impose deadlines on Federal resource agencies for submission of 
final conditions. Reform legislation will not change or modify any 
existing environmental laws, nor will it eliminate mandatory 
conditioning authority of Federal resource agencies. What legislative 
reform will do is bring a much needed balance and certainty to the 
relicensing process and help stop the decline of hydropower, while 
protecting the river resource.

Question 4 Submitted by Representative Ken Calvert
    Although maintaining a strong and viable hydropower industry is a 
critical component of the nation's long-term energy strategy, 
hydropower development has been stagnant--almost non-existent--for 
along period of time. Yet, most legislative proposals that address 
renewable energy ignore hydropower and its increasingly marginal 
economic state due to regulatory costs and capacity restrictions. This 
misguided omission threatens to jeopardize our country's most 
successful renewable energy resource as competition, and serious 
concerns over reliability and power supply, comes to the electric power 
industry.
    NHA forecasts that 21.3 GW of additional power from hydroelectric 
resources could be developed by 2020--none of which would require the 
construction of a new dam or impoundment. In terms of greenhouse gas 
reductions, this would equal displacing 24 million metric tons of 
carbon emissions. Of the 21.3 Gigawatts (GW), over 4,000 Megawatts (MW) 
can be developed at existing hydroelectric facilities alone.
    Bringing new hydro generation on-line, however, is increasingly 
difficult and expensive. While not the same disadvantages as those 
encountered by other renewable industries, hydro's disadvantages hold 
equal merit and demand similar counter-measures in policies designed to 
encourage the development of renewable sources of power. Providing 
financial incentives for hydro producers--such as those proposed in the 
106th Congress by Congressmen John Shadegg and Albert Wynn, or 
proposals in the 1071'' Congress that expand the Section 45 production 
tax credit to include all renewables, including hydropower--will 
encourage hydropower development at existing sites, allowing the United 
States to rely more on a clean, domestic resource.
    In the west, for example, 45 percent of hydro capacity in 
California, and 73 percent of Northwest capacity, faces the gauntlet of 
relicensing in the next 15 years. Given the current trend in 
relicensing, California and the Pacific Northwest might retire 1,200 or 
more megawatts of generation capacity. On the other hand, with changes 
to the process, and the proper financial incentives described above, 
another 8,800 MW of new capacity could be developed without building a 
single new dam. Given the current state of affairs in this region of 
the country, it is hard to imagine why we would not pursue policies to 
encourage additional clean, renewable hydropower capacity.

Question 1 Submitted by Representative Ed Markey
    The National Hydropower Association does not advocate any 
particular formula or structure for fees charged for the use of Federal 
lands. As recognized for decades in the Federal Power Act, the 
production of electric energy from our nation's waterways is considered 
to be in the public interest, and licenses are granted based on the 
determination of a hydro project being in the ``public interest, 
convenience, and necessity.'' So long as hydropower is determined to be 
in the public interest, we believe that fees should not be so high as 
to threaten the viability of a hydro project.
    To suggest, as the question does, that hydropower owners may 
``abandon their projects or leave a mess behind'' is purely speculative 
and has no basis in historical fact. NHA advocates the responsible use 
of the nation's waterways and takes very seriously its role as stewards 
of the rivers we are privileged to use. We strongly believe that 
healthy rivers and hydropower can coexist.

Question 2 Submitted by Representative Ed Markey
    See answer to Question 1.

Question 3 Submitted by Representative Ed Markey
    Again, the NHA does not advocate a particular fee structure or 
formula, nor do we take a position on the allocation of funds for water 
projects. Such allocation is currently been made in accordance with 
certain public policy decisions made by Congress, and it is Congress 
who properly should decide whether a change is necessary and if so, 
what the change should be. If such changes are considered by Congress, 
NHA will respond to the issue at that time.

Question 4 Submitted by Representative Ed Markey
    We do not have specific information at this time comparing oil and 
gas leasing with hydropower fees. Even if such information were 
available, such a comparison would likely be inaccurate and incomplete, 
since hydropower is an emission-free renewable resource that is not 
subject to depletion. As far as mitigation efforts to reduce 
hydropower's impacts, industry has spent hundreds of millions of 
dollars to lessen its impacts.

Question 5 Submitted by Representative Ed Markey
    The principle of scarcity applies universally, not just to 
hydropower. Again, a hydro project is recognized as being in the public 
interest by virtue of its holding a Federal license. NHA would be 
prepared to respond to specific proposals that modify the existing 
structure or formula for fees, and would be pleased to work with 
Congress to arrive at a fee structure that is reasonable and fair. In 
addition, NHA is pursuing polices that would maximize the power and 
non-power benefits of existing projects. While there are a substantial 
number of undeveloped sites where hydropower dams could be placed, NHA 
is more concerned with increasing the efficiencies and capacity at 
existing sites.

Question 6 Submitted by Representative Ed Markey
    NHA believes there is merit in shifting money collected from the 
FERC fees to the agencies participating in the relicensing process 
instead of allowing the money to be deposited into the general 
treasury. NHA has been discussing this issue with agencies and other 
stakeholders as the reform debated has moved forward. It is often 
pointed out by agencies and NGO's that resources for agency involvement 
in relicensing efforts are insufficient. We believe it is important for 
agencies to have appropriate resources available so a constructive and 
efficient relicensing process can occur with their full participation.

Question 7 Submitted by Representative Ed Markey
    The question could just as aptly be reversed: How can FERC, which 
is charged with balancing the broad spectrum of power and non-power 
interests in the licensing of a hydro project, be expected to do so 
when other agencies have unrestrained authority over aspects of a 
project that represent only narrow interests? What NHA supports is 
balance--the recognition that power and non-power considerations should 
be treated equally.
    We are not advocating a removal of mandatory conditioning authority 
or attempting to weaken the authorities of resource agencies. We are 
advocating a process that permits agencies to consider non-resource 
issues in their review and conditioning authority. By requiring 
agencies to consider the economics effects of resource protection on 
other project values, we will bring balance and certainty to the 
process that is desperately needed.
    Again, our attempts to reform the licensing process will not remove 
the conditioning authority of the agencies or undermine existing 
environmental laws designed to protect our resources. NHA believes in 
both resource protection and the pursuit of effective and meaningful 
energy strategies that include hydropower.

Question 8 Submitted by Representative Ed Markey
    The Forest Service does have a review process but it is rarely used 
and is mostly ineffective. Hydropower licensees have no recourse to 
appeal, or even question, the basis of mandatory conditions set by the 
other agencies, except through litigation. A review process established 
by reform legislation can hopefully avoid the costly and lengthy 
litigation that is often the result of the current process, costing 
both the project and the environment. In addition, a review process 
within the licensing process would establish an administrative record, 
allow licensees to offer alternative suggestions for resource 
protection and greaten stakeholder involvement. Please see the attached 
comments NHA filed in response to DOI and DOC's Notice for Comments on 
a Proposed Policy For Review of Mandatory Conditions.

Question 9 Submitted by Representative Ed Markey
    Again, what NHA seeks is balance, not a guarantee of profitability. 
We believe that a fair balancing of power and non-power interests will 
result, in an overwhelming majority of cases, in hydro projects that 
are both economically viable and protective of environmental resources. 
Under the current licensing system, however, the balance has been upset 
by the unrestrained mandatory conditioning authority of certain 
agencies who presently are not required to take economic viability into 
account. It's a stretch to suggest that the Federal Government is 
guaranteeing the hydropower industry's profitability. Industry's goals 
and the government's goals should not be mutually exclusive.

Question 10 Submitted by Representative Ed Markey
    I believe your question is attempting to ask how many projects have 
failed to acquire a new license because of actions by resource 
agencies. While there are projects that have not been relicensed, it's 
more important to focus on the overall effects of a broken relicensing 
process--the significant loss of clean, renewable generation capacity, 
and more importantly, the loss of operational flexibility which is 
extremely important from a transmission system reliability standpoint. 
Please see the attached paper that was included with my statement at 
the hearing for specific cases of agency involvement that has caused 
significant problems.

    Mr. McInnis. [Presiding.] Thank you, Mr. Hocker.
    Mr. Judd, Director of the USA Biomass Power Producers 
Alliance.

   STATEMENT OF ROBERT L. JUDD, JR., EXECUTIVE DIRECTOR, USA 
                BIOMASS POWER PRODUCERS ALLIANCE

    Mr. Judd. Thank you, Mr. Chairman, and Mrs. Napolitano. I 
come to you this morning fresh from the heartland of America's 
energy crisis, from Sacramento, California, where issues of 
energy supply and pricing and imports are front and center on 
the daily agenda there.
    I serve as Executive Director of the USA Biomass Power 
Producers Alliance. This is an association of the owners and 
operators of the nation's biomass power facilities. You need to 
know that the biomass power industry, as one of the alternative 
energy producers referenced earlier, converts environmental 
liabilities into clean electricity. Under carefully controlled 
conditions, our industry combusts more than 20 million tons of 
cellulosic residues per year, primarily wood waste from forest-
related activities, into clean electricity.
    To give you an example, in all of California and in an 
entire year, only 40 million tons of material go to the all of 
the landfills in the State. So, in effect, the biomass power 
industry is also a massive waste management system. There are 
currently 85 operating biomass power facilities in America, and 
there are 15 that are operable but idle because of market 
conditions at present.
    Decisions concerning the locating, the siting of these 
power facilities were primarily determined by the proximity of 
a sustainable fuel supply. The reason is simple. The biomass 
power facilities purchase the waste materials they use as fuel 
in the form of wood chips. The principal component of our fuel 
cost is transportation of materials from the point of origin, 
the forest, to the point of use, the facility. To minimize fuel 
costs, many of our facilities were located near their source. 
Now, they travel up to 100 miles to gather their materials.
    The materials used as fuel by the biomass industry are 
residual wastes that remain after all other economic value has 
been extracted from a product. We recycle materials that would 
otherwise be discarded into a product that has societal value. 
The materials we use from forests include slash and brush, 
tops, branches, bark, excess sawdust, et cetera. We buy this. 
It is delivered to us. We, in effect, are the garbage man for 
the forestry industry. We give a productive use to those 
materials that are worthless to someone else.
    There is a recent DOE study which we will submit for the 
record that monetizes the value of the benefits of U.S. biomass 
policy, in addition to the electricity that they produce. It 
turns out that the value of the environmental and economic 
benefits are more valuable than the electricity we produce 
itself.
    Our facilities in the past, in those instances where they 
are proximate to public lands, have taken substantial materials 
from public lands and converted them into electricity. In the 
future, that capability exists and should be expanded. However, 
in recent years we have obtained less and less material from 
public lands because there has been less and less commercial 
activity on public lands. We consequently now get material from 
the urban waste stream which has a much lower societal value 
than materials that might be thinned from the forests to reduce 
forest fire risk and severity.
    Facilities in our industry are dropping like flies. Our 
production is down 20 percent in 5 years, and in the past 3 
months alone 5 facilities, including 3 in Montana, 1 in Idaho 
and 1 in California, have gone down because of the 
unavailability of fuel from adjacent public lands.
    Looking ahead, in my final moments here, biomass facilities 
can and should be integrated into the implementation of the 
National Fire Plan. They can also help fulfill the promise of 
the Herger-Feinstein Quincy Library Group legislation, which 
will test large-scale progressive strategies for land 
management and fire risk reduction. Additionally, there is need 
and justification for the construction of new biomass power 
facilities in many regions.
    We have further recommendations in our comments here. The 
primary recommendation we have is that at a time of need for 
domestic electricity, we have to stop the bleeding first and 
foremost in the existing power facilities to allow them to 
serve the public need and then develop a plan to construct more 
facilities to provide a greater level of electricity output 
from this resource.
    Thank you, sir.
    [The prepared statement of Mr. Judd follows:]

Statement of Robert L. Judd, Jr., Executive Director, USA Biomass Power 
                           Producers Alliance

    Mr. Chairman and Members: Thank you for the opportunity to address 
the Committee today. My name is Robert Judd. I serve as Executive 
Director of the USA Biomass Power Producers Alliance. Based in 
Sacramento, California, we are a nation-wide association of owners and 
operators of biomass power facilities.

The existing biomass power industry
    The nation's existing biomass power industry is in the business of 
converting environmental liabilities into clean electricity. Under 
carefully controlled conditions, our industry combusts more than 20 
million tons of cellulosic residues per year--primarily wood waste from 
forest-related activities--to produce steam which drives a turbine that 
generates electricity for transmission and distribution to homes and 
businesses.
    Prompted by Federal policy and incentives put in place in the late 
1970's, what we now recognize as the biomass power industry emerged 
into its current form between 1985 and 1995. No new facilities have 
been placed into operation since that time, and electricity output from 
existing facilities has declined by nearly 20 percent since 1995, due 
primarily to declining availability and increasing prices in our fuel 
supply.
    The industry is currently comprised of approximately 85 power 
plants located in 14 states across the nation. In total, they have the 
capacity to generate 1,600 megawatts of electricity--or, looked at in 
another way, enough power to serve the needs of 1.5 million households. 
These facilities represent a capital investment in excess of $7 billion 
and they provide significant levels of rural employment and property 
tax revenues in the jurisdictions in which they are located.
    In addition to the 85 operating facilities, there are approximately 
15 facilities that are operable but currently sit idle due to local 
market conditions.
    For clarification, I would note that the facilities described in my 
testimony were constructed for the sole purpose of generating clean 
electricity from the combustion of certain organic residues. They are 
distinct from other facilities that generate electricity from the 
combustion of municipal solid waste or from residues within the pulp 
and paper manufacturing sector.
    Decisions concerning the siting of the existing biomass power 
facilities were primarily determined by the proximity of a sustainable 
fuel supply. The reason for this is a simple one. The biomass power 
facilities purchase the waste materials they use as fuel, and the 
principal component of fuel cost is transportation of materials from 
point of origin to point of use. In order to minimize fuel costs, the 
facilities were located as close to their fuel sources as possible. 
Some facilities are actually located directly at the source of their 
fuel--at a lumber mill, for example--while others are stand-alone 
facilities that obtain fuel from a variety of sources within a radius 
that usually does not exceed 100 miles. Given the decline in mill 
operations in recent years, few if any of the operating facilities are 
self-sufficient. All have the need and capacity to derive fuel from 
external sources.

The fuel supply
    Materials used as fuel by the biomass power industry are the 
residual wastes that remain after all other economic value has been 
extracted. In effect, the industry recycles material--that would 
otherwise be discarded--into a product (electricity) that has societal 
value.
    One can view the biomass power industry as a massive waste 
management system that generates electricity as one of a number of 
valuable by-products.
    Our fuel supply is derived from three major sources. The first and 
principal source is forest-related activities, which account for 
roughly 75 percent of our total supply. Within this category, materials 
include slash and brush from commercial timber harvest operations (we 
use the branches and tops after the tree has been sent to the mill), 
bark and excess sawdust from timber processing, and materials derived 
from thinning of overly-dense vegetation in order to reduce the risk 
and severity of forest fires. The biomass power industry is, in 
reality, the ``garbage man'' for the forestry sector. We gather and use 
only those materials that are worthless to someone else. If a certain 
material has more value as a pulp chip or as an input to another 
commercial product, the market will drive it in that direction rather 
than to us.
    Our second source of fuel is agricultural residues, which comprise 
approximately 15 percent of our total supply. These materials include 
orchard tree prunings and removals, as well as residuals from sugar 
manufacturing and rice milling.
    Our third and final source of fuel is urban wood waste diverted 
from landfill disposal. Included here are broken pallets and shipping 
containers, leftovers from construction and manufacturing activities, 
and selected other materials. Fuel specifications provided to our fuel 
brokers require the exclusion of paper that is commonly recycled and 
materials that are toxic or hazardous. Our industry simply cannot 
afford to find hazardous chemicals in our air emissions or our ash, so 
we take all necessary precautions to exclude them at the front end of 
the process.

Public benefits of biomass power generation
    The biomass power industry has a number of unique characteristics 
that are germane to the subject of this hearing and are particularly 
relevant as our new President develops and introduces a national energy 
policy within the next few weeks.
    In late 1999, the U.S. Department of Energy published an 
independent research report entitled The Value of the Benefits of U.S. 
Biomass Power, which compared the impacts of biomass energy production 
with that of the most probable alternative fate of the residues we use 
as fuel. The report also attempted to quantify (monetize) the value of 
the nonelectric benefits of biomass power production in terms of 
criteria air pollutants, greenhouse gas emissions, landfill capacity 
use, forest and watershed improvement, rural employment and economic 
development, and energy diversity and security.
    The findings of this report are notable and important. In an 
industry where the average cost to deliver a kilowatt-hour of 
electricity is 6\1/2\ cents to 7 cents, the report concludes that 
``Based on a base-case, conservative analysis, the value of the 
environmental services (described above) associated with biomass energy 
production in the United States is 11.4 cents per kilowatt hour.'' In 
other words, the environmental benefits are 63 percent more valuable 
than the electricity itself or, alternatively, each unit of electricity 
produced delivers a substantial environmental bonus that is not 
reflected in the price of the electricity itself. This bonus reflects 
the public ``externality'' value of biomass power and forms the basis 
for its inclusion in a sensible national energy policy.
    Further, the report cites recent research which estimates the 
savings in ultimate cost, on a net-present value (NPV) basis, of using 
mechanical thinning for forest treatment versus a regime of prescribed 
burns that must be carried out over a number of years to achieve the 
same degree of forest improvement. The mechanical thinning, followed 
five years later by a prescribed burn, has a cost (NPV) of $432 per 
acre. The alternative of three prescribed fire treatments during a 20-
year period has a cost (NPV) of $560 per acre for a net savings of $128 
per acre using the mechanical thinning and fuel production alternative. 
These savings do not include the reduction in air emissions during the 
various burns, the reduction in residual stand damage, or the 
diminished risk of prescribed burns flaring out of control. Moreover, 
there is an immediate value of benefits realized from the mechanical 
thinning/fuel production option versus the delayed benefits from 
multiple prescribed burn testaments.
    The public benefits of the biomass power industry are derived from 
the gathering, processing, and delivery of its fuel supply rather than 
from its generation of electricity. This characteristic distinguishes 
the biomass sector from all other energy technologies. As mentioned 
earlier, the biomass power industry pays to acquire its fuel. 
Consequently, an entire infrastructure has been established to provide 
the services needed to obtain and deliver the fuel to us, and this 
infrastructure is funded and sustained by the substantial per-ton 
payments we make to acquire our fuel. Our purchases support contractors 
who undertake pre-fire thinning in the public and private forests, with 
appropriate permits, to reduce forest fire risk and to remove excess 
biomass that depresses forest health and productivity and degrades the 
functioning of watersheds. Our purchases also support similar services 
in the agricultural sector to chip and deliver orchard prunings and 
other materials that would otherwise be a major source of air pollution 
when they are burned in the open field.
    It is widely recognized that the level of direct and indirect rural 
employment is higher in the biomass power industry than in any other 
renewable energy technology.

Biomass power and public lands
    In those instances in which biomass power facilities are located in 
relative proximity to public lands, they have the capability to play an 
important role in generating electricity from wood waste derived from 
those lands. The biomass facilities provide a destination and a 
productive use for removed materials that otherwise would be an 
environmental liability. The facilities have the capacity to utilize a 
high volume of materials on a continuous basis, and the availability of 
fuel beyond current levels would optimize electricity output at a time 
when many states, particularly in the West, are faced with distressing 
shortages.
    It is fair to note, however, that the correlation between the 
location of biomass power facilities and the location of public lands 
is less than perfect. In some parts of the country--from northern 
California up through Oregon and Washington and into Idaho--there is 
excellent correlation. Elsewhere, in Maine, for example, there is none. 
In northern Michigan, there is a good match.
    Due to constraints on commercial timber harvesting and modest 
efforts so far to implement mechanical thinning of overly dense 
woodlands, our facilities--even when they are proximate to public 
lands--have obtained a diminishing percentage of their fuel from these 
lands in recent years. When possible, our operators have replaced 
public-lands fuel with materials from private lands and, increasingly, 
with fuel derived from the urban waste stream. This is an unfortunate 
economic necessity if we are to maintain our electricity generation 
levels.
    Perhaps a few examples can illuminate the difficulties our 
facilities have faced in obtaining fuels from public lands. You may be 
aware that the U.S. Forest Service imposed a moratorium on all 
commercial activities in California's Sierra Nevada, effective December 
11, 2000. Its intent was not focused on the biomass industry, but an 
inadvertent consequence of its action was to abort fuel supply 
contracts that were already in place. This action unexpectedly 
disrupted power production at our facilities and forced our managers to 
scramble for replacement fuel on the spot market where they had no 
choice but to pay top dollar. Sixteen of California's 28 operating 
biomass power facilities depend, to a greater or lesser degree, on 
fuels derived from public lands. These facilities generate over 250 
megawatts of electricity, a critical supply in an energy emergency. One 
of the California facilities--Honey Lake Power--terminated its 
operations due to a lack of fuel and will not reopen until this May at 
the earliest.
    Numerous other examples exist. The Boise-Cascade biomass power 
facility at Emmet, Idaho just announced permanent closure due to 
inadequate fuel supplies from Federal lands. Two of the other three 
biomass facilities in Idaho are also out of service at present. 
Additionally, the absence of activity on public lands in northern 
Michigan has limited fuel availability and constrained normal output.
    In sum, there is an unmet potential to use biomass from public 
lands for electricity production purposes. While some facilities 
proximate to public lands can maintain high output by using alternative 
fuels, others do not have that option. The point to be made is that 
Federal policy should encourage the biomass power facilities to use as 
fuel those materials that would otherwise present the highest level of 
environmental risk. Certainly the overly dense vegetation that 
increases forest fire risk on public lands meets this criterion. The 
opportunity to convert these undesirable materials into a productive 
use, however, is quite limited under current conditions.

Pricing and economic considerations
    Briefly, it is worth noting that biomass power facilities are 
increasingly sensitive to fuel costs. In order to compete in 
deregulated electricity markets, which reward the lowest-cost provider 
and give no value to external benefits such as those described earlier, 
the biomass power facilities must reduce their fuel costs to the lowest 
possible level.
    For example, many biomass power facilities pay in the range of $40 
per ton for wood chips delivered to their facilities as fuel. Each $10 
they pay for fuel equates to 1 cent per kilowatt hour on the cost of 
their electricity. At $40 per ton (an average price for a ton of 
forest-derived fuel) the facilities are paying out approximately \2/3\ 
of their income (4 cents out of 6\1/2\ cents) for fuel alone. Going 
forward, the remaining income of 2\1/2\ cents may be inadequate to 
cover the costs of operations and maintenance, labor, debt service, and 
administration. Many facilities now need to reduce fuel costs if they 
are to maintain full productivity and continue to provide the 
environmental and economic benefits that serve the public good.
    This issue is pertinent here because the cost of biomass fuels 
removed from public lands will have to be measured against the cost of 
all other available fuels. Just because public land fuels may be 
available, there is no certainty that they will be utilized unless they 
are competitively priced. An opportunity exists here to shape Federal 
policy, perhaps in the form of priority fuel use incentives, to ensure 
that biomass power facilities turn first to residuals from public 
lands.

Looking ahead
    There is a solid case that can be made for optimizing the 
electricity output of the nation's existing biomass power facilities, 
including those that are operating at present and those that are 
currently idle. They generate clean renewable electricity and, as an 
inherent bonus, remedy a range of environmental and economic problems. 
This industry could provide a worthwhile service--and a higher level of 
service--to Federal land managers if certain policies were enacted. 
Biomass power facilities can and should be integrated into the 
implementation of the National Fire Plan whenever possible. They can 
also help fulfill the promise of the Herger-Feinstein Quincy Library 
Group legislation which will test large-scale, progressive strategies 
for land management and fire risk reduction.
    Additionally, there is a demonstrable need for the construction of 
new biomass power facilities in many regions of the country that are 
currently unserved or under-served. In light of the millions of acres 
of public lands in states like Alaska, New Mexico, and Montana, it is 
surprising that no biomass power facilities exist there at all. Other 
states like Oregon, Washington, and New York have only a handful of 
facilities.
    In order to move ahead with new projects, developers need certainty 
about long-term fuel availability at affordable contract prices and 
they need to know that they will receive a reasonable price for their 
electricity over an extended period of time. The rest is mostly 
engineering. The Federal government could accelerate the construction 
of the next generation of biomass power facilities in those locations 
where they are most appropriate and needed by reaching out with 
encouragement and assistance to the private sector.
    Biomass materials from public lands can also be co-fired in 
existing power plants that use coal as a primary fuel. By substituting 
a certain percentage (5 percent-10 percent) of biomass materials for 
coal, certain criteria air pollutants can be reduced without 
diminishing electrical output. There may in some instances be a 
locational match between public lands and coal-fired power plants that 
make this an attractive option.
    Finally, there is an emerging opportunity to use biomass materials 
from Federal lands as a feedstock for ethanol production. While ethanol 
and its tax credit are not without controversy, evaluation of its 
merits in a scenario in which an ethanol distillation facility is co-
located with an existing biomass power facility is underway at a number 
of sites. Attractive engineering and fuel efficiencies appear to be 
within reach.

Recommendations
    To ensure the availability of the nation's existing biomass power 
facilities as a productive-use destination for materials removed from 
public lands for fire risk reduction or other commercial purposes, our 
primary recommendation is to provide the industry with a much-needed 
production tax credit similar to the one that has been provided to the 
wind energy industry since 1992. Our industry is in turmoil now as fuel 
supplies contract and electricity markets are radically reshaped. The 
production tax credit would increase the electricity generated by the 
industry and would stabilize its operations at a time when many fear 
reductions or closure in the near future. Legislation which includes 
this production tax credit is known as the Energy Security Act of 2001 
and has recently been introduced in the Senate.
    From a broader perspective, the nation also needs an articulated 
biomass management policy as a context for future decision-making. None 
exists now, even though we have an abundance of biomass waste materials 
that are a latent source of products, wealth, and environmental 
benefits. Intelligent utilization of our biomass resources is the 
cornerstone of self-reliance for electricity production and other 
desirable purposes.
                                 ______
                                 
    Mr. Calvert. [Presiding.] I thank the gentleman.
    Mr. McInnis, you are outnumbered. We have three Southern 
Californians here, and we like it, too.
    Our last panelist is Ms. Leslie James, Executive Director 
of the Colorado River Energy Distributors Association.
    You may begin.

 STATEMENT OF LESLIE JAMES, EXECUTIVE DIRECTOR, COLORADO RIVER 
                ENERGY DISTRIBUTORS ASSOCIATION

    Ms. James. Mr. Chairman, members of the Committee, I am 
Leslie James. I am honored to have been asked to speak with you 
today regarding environmental and market impacts on the Federal 
Colorado River Storage Project and its customers.
    CREDA is a non-profit organization representing consumer-
owned utilities in the six Western States of Arizona, New 
Mexico, Nevada, Utah, Colorado, and Wyoming. For Mr. McInnis, 
our members include Tri-State GNT, Platte River Power 
Authority, and Colorado Springs Utilities.
    Formed in 1978, our organization members serve nearly 3 
million electric consumers in these States. They have all 
entered into long-term, cost-based contracts with the Western 
Area Power Administration, or WAPA, for purchase of Federal 
hydropower produced by the Colorado River Storage Project, or 
CRSP.
    CRSP contractors have been ensuring repayment of the 
Federal investment in that project for 30 years. The rates 
charged under these contracts are subject to frequent 
adjustment in order to repay all of the Federal investment, 
with interest, in the CRSP, including generation, transmission, 
operation and maintenance, and environmental costs. In 
addition, the contractors are paying over 95 percent of the 
cost of the irrigation features of the CRSP.
    CRSP generating resource capability has been severely 
restricted. Let's start with Glen Canyon Dam. Glen Canyon is 
the largest feature of the CRSP, located near Page, Arizona. In 
1996, after many years of study and a $104 million EIS, which 
was also paid for by CRSP power revenues, Glen Canyon 
operations were changed. Approximately one-third of the 
generating capability has been lost.
    The EIS identified the annual financial cost to CRSP 
customers at about $89.1 million per year, but that was in 1991 
dollars. Today, it is probably 3 to 4 times that cost. To date, 
over $134 million has been spent on Glen Canyon studies and 
paid for by CRSP power revenues. This figure does not include 
the nearly $8 million a year spent for the adaptive management 
program.
    Just last summer, due to the requirements of a 1994 Fish 
and Wildlife Service biological opinion, a low-flow experiment 
was undertaken. The experiment includes low flat flows all 
summer, which meant reduced generation and no ability to follow 
load. The low flat flows and dry hydrology, along with the 
increase in energy market prices in the West, had a severe 
impact on costs. It required WAPA to purchase $55 million worth 
of replacement power during that period last summer. The cost 
of the experiment alone for research and manpower was over $3.5 
million, also paid by CRSP power revenues.
    Let's move up to the upper basin, Flaming Gorge Dam. 
Flaming Gorge is on the Green River, located near Vernal, Utah. 
A 1992 Fish and Wildlife Service opinion has reduced Flaming 
Gorge generation by about 17 percent. Two years ago, the 
estimated impact of that reduction was about $2.87 million per 
year. There is also a current new potential for impacts to 
Flaming Gorge due to an ongoing EIS on Flaming Gorge flows. The 
cost of this EIS is estimated to be about $3 million, and it 
should be completed within the next 18 months.
    Let's move to the Aspinall Unit. The Aspinall Unit includes 
three dams and generating plants along the Gunnison River near 
Gunnison, Colorado. Since 1988, the Upper Colorado Endangered 
Fish Recovery Program has been performing studies and 
installing capital features to benefit four endangered species 
of fish, but no studies have been completed to address the 
impacts on power generation.
    The Fish and Wildlife Service has drafted a flow 
recommendations report which has yet to be finalized. Our 
concern is, once again, there will be efforts to re-operate 
these dams in favor of endangered fish and to the detriment of 
power generation. These facilities are basically the last 
remaining peaking units in the CRSP.
    Another impact to these facilities comes with the filing on 
January 17th of this year by the National Park Service of a 
proposal to quantify reserved water rights for the Black Canyon 
of the Gunnison National Monument.
    Now, I will talk briefly about the Western energy market 
and the effects on the CRSP and our members. This energy market 
crisis you have heard a lot about today is affecting all CRSP 
contractors and WAPA. Reduced generation at CRSP facilities has 
required our members and WAPA to be out in the market buying 
power to replace lost generation. This is the same energy 
market from which California entities are buying.
    Our members are potentially facing a rate increase from 
WAPA. As originally proposed, it could have increased the CRSP 
rate 67 to 187 percent. WAPA is considering alternatives to 
this rate adjustment, however. But just to give you an idea of 
the market impact, in a normal operating year WAPA would spend 
$6 million during the whole year on purchased power. Just this 
last winter, they spent $71 million.
    Additionally, the CRSP resources marketed by WAPA are 
pursuant to law and marketing plans. They are within a legally 
defined marketing area and on a long-term contractual basis. 
However, on September 18th and February 15th this year, WAPA 
was directed to ramp up Glen Canyon to help California avoid 
blackouts. Although sympathetic to the energy issues in 
California, CREDA has serious operational, legal, and financial 
concerns with the requirement that CRSP resources be made 
available to California.
    In summary, our view is that in any self-reliant, 
comprehensive energy policy the unique roles, obligations, and 
contracts of the Federal power marketing agencies must be 
recognized and maintained.
    Secondly, Federal generating facility agencies should be 
encouraged to maximum production from those facilities, 
recognizing existing legal constraints.
    Third, Fish and Wildlife flow recommendations for Federal 
hydropower facilities must be based on peer-reviewed, sound 
science, in consultation with all relevant stakeholders, and 
should take into account elements of Federal energy policy and 
economic impact. There must be a balance between costs and 
impacts.
    Lastly, CRSP contractors must not be held responsible for 
operational, legal, or financial impacts associated with the 
Federal Government's assistance to California during this time 
of crisis.
    Thank you for the opportunity of appearing before you 
today.
    [The prepared statement of Ms. James follows:]

 Statement of Leslie James, Executive Director, Colorado River Energy 
                    Distributors Association (CREDA)

    Mr. Chairman, members of the Committee, I am Leslie James, 
Executive Director of the Colorado River Energy Distributors 
Association (CREDA). I am pleased to have been asked to talk with you 
today regarding the Colorado River Storage Project, its role in the 
development of a self-reliant U.S. energy policy, and recent impacts on 
this Federal project.
    CREDA members (contractors) have entered into long-term, cost-based 
contracts with the Western Area Power Administration (WAPA), a power 
marketing administration of the Department of Energy, for purchase of 
Federal hydropower resources of the Colorado River Storage Project 
(CRSP). These contracts provide for frequent rate adjustments in order 
to ensure repayment of the Federal investment in the CRSP. Our purpose 
today is to provide some background on the facilities of the CRSP, to 
discuss the costs included in the CRSP rate, and to describe 
environmental and energy market impacts on both the Federal government 
and CRSP contractors. First, a description of CREDA and its membership.
    CREDA is a non-profit organization representing consumer-owned 
electric systems that purchase Federal hydropower and resources of the 
CRSP. CREDA was established in 1978, and serves as the ``voice'' of 
CRSP contractor members in dealing with resource availability and 
affordability issues. CREDA represents its members in dealing with the 
Bureau of Reclamation (as the generating agency of the CRSP) and WAPA 
(as the marketing agency of the CRSP). CREDA members are all non-profit 
organizations, serving nearly 3 million electric consumers in the six 
western states of Arizona, Colorado, Nevada, New Mexico, Utah and 
Wyoming. CREDA members purchase over 85 percent of the CRSP power 
resource. Attached is a listing of current CREDA members. At the time 
CREDA was formed, the key issue for its members was the continuing 
increase in CRSP rates. CREDA members felt it would be more effective 
and efficient to have a single organizational ``voice'' for them in 
regard to rate, Federal legislative and environmental issues impacting 
the CRSP.
    CRSP contractors have been ensuring repayment of the Federal 
investment for 30 years, by entering into long-term contracts to 
purchase the CRSP resource and by paying all of the Federal investment 
in generation and transmission facilities (with interest), all power-
related operation and maintenance costs, and environmental costs. In 
addition, the CRSP contractors are paying over 95 percent of the cost 
of the irrigation features of the CRSP (beyond the ability of the 
irrigators to pay). In fact in the current CRSP rate, 35 percent of the 
total annual revenue requirement is due to irrigation assistance! It is 
important to note that the cost-based nature of the CRSP rate includes 
costs beyond simply those associated with generation of the hydropower 
resource. A further example is the cost of the Glen Canyon Adaptive 
Management Program (AMP) and the Upper Basin Endangered Fish Recovery 
Implementation Program (RIP). More, detail on these costs will be 
provided below. Next, a description of the CRSP.
    The Colorado River Storage Project (CRSP) was authorized in the 
Colorado River Storage Project Act of 1956 (P.L. 485, 84th Cong., 70 
Stat. 50), as a multi-purpose Federal project that provides flood 
control; water storage for irrigation, municipal and industrial 
purposes; recreation and environmental mitigation and protection, in 
addition to the generation of electricity. This testimony will focus on 
the major generation features of the CRSP, although there are several 
irrigation projects included in the Project. The CRSP power features 
include five dams and associated generators, substations, and 
transmission lines.

Glen Canyon Dam
    Glen Canyon Dam is located near Page, Arizona and is by far the 
largest of the CRSP projects. Glen Canyon Dam began operation in 1964. 
The water stored behind the dam is the key to full development by the 
Upper Colorado River Basin states of their Colorado River Compact share 
of Colorado River water. The Glen Canyon power plant consists of eight 
generators for a total of about 1,300 MW, which is more than 70 percent 
of total CRSP generation. The ability of the Bureau to generate, and 
WAPA to market, the total generating capability of Glen Canyon Dam has 
been impacted over a period of many years, by various processes and 
laws. In 1978 the Bureau began evaluating the possibility of upgrading 
the eight generating units at Glen Canyon. This was possible primarily 
due to design characteristics of the generators and improved insulating 
materials. This upgrade was completed, and the generation was increased 
from about 1,000 MW to 1,300 MW. To fully utilize the unit upgrades 
would require the maximum release of water from Glen Canyon to be 
increased from 31,500 cubic feet per second (cfs) to about 33,200 cfs. 
The Bureau also studied the possibility of adding new units on the 
outlet works to provide additional peaking capacity. The possibility of 
increasing maximum releases from Glen Canyon raised concerns with 
downstream users. After discussion with stakeholders, the Secretary of 
the Interior initiated the first phase of the Glen Canyon Environmental 
Studies.
    In 1982, the Bureau began Phase I of the Glen Canyon Environmental 
Studies. These studies were primarily to analyze the impacts of raising 
the maximum release from 31,500 cfs to 33,200 cfs on the transport of 
sediment downstream from the dam, recreation (including fishing and 
rafting), endangered species (including the humpback chub in the Lower 
Colorado River), and the riparian habitat along the river banks. The 
studies proceeded during the early 1980's and were concluded in 1987. 
The general conclusion of the Glen Canyon Environmental Studies Phase I 
was that the dam had blocked much of the sediment coming down the 
Colorado River and therefore beaches were not being replenished with 
sand. Many questioned the results of the Glen Canyon Environmental 
Studies Phase I because the process did not in all cases follow good 
scientific practice. For instance, the impact on power and water 
economics was not fully explored.
    After reviewing the Glen Canyon Environmental Studies Phase I and a 
review by the National Academy of Science, the Secretary of the 
Interior determined that the Glen Canyon Environmental Studies should 
be continued to address the economic impacts, particularly as they 
relate to power, and also to collect additional data to substantiate 
some of the conclusions in the Phase I report. Flooding during 1983-85 
exposed Native American cultural sites in the canyon, so an inventory 
was necessary to identify these sites and recommend appropriate 
protection.
    The Glen Canyon Environmental Studies Phase 2 was initiated in 
1989. The Bureau of Reclamation decided to hire a Senior Scientist to 
assist with the development of the Phase 2 studies to assure an 
appropriate scientific process. The Bureau and the Senior Scientist 
developed Phase 2 studies, which included a series of test flows to 
evaluate the impact of different operating conditions and to develop 
response curves for various conditions. Many interested parties, 
including water, power, recreation, environment, and Native American 
interests participated in the process.
    In July 1989, the Secretary of the Interior announced the start of 
an environmental impact statement (EIS) on the operation of the Glen 
Canyon Dam. No specific Federal action was identified for study. 
Meetings were held during 1990 to seek input into alternatives that 
should be considered, and the Bureau determined the nine alternatives 
(including a ``no action'' alternative) to be studied. Meanwhile, in 
1992, the Grand Canyon Protection Act (106 Stat. 4672) was signed into 
law. Section 1804 of the Act required completion of the EIS within two 
years. The EIS was completed and the Record of Decision (ROD) signed in 
October 1996. The result was that Glen Canyon operations were changed 
to reflect a revised flow regime; approximately one-third of the 
generating capacity was lost (456 MW). The EIS identifies the annual 
financial cost to CRSP power contractors at $89.1 million per year. But 
this figure is in 1991 dollars and is probably 3-4 times greater today, 
given energy market conditions. The cost of the Glen Canyon EIS was 
approximately $104 million, and was funded by power revenues collected 
from the CRSP contractors. To date, over $134 million has been spent on 
Glen studies, and paid by CRSP power revenues. This figure does NOT 
include the nearly $8 million per year spent for the Adaptive 
Management Program.
    The Act also recognized that with the changes in operation that 
resulted from the EIS, there ought to be a new look at how the costs of 
the Dam are assigned for repayment. Section 204(e) of the Act requires 
the Secretary of the Interior to implement a new allocation of costs, 
which would relieve power from some of those obligations commensurate 
with the loss of generating capacity. The new operating criteria were 
implemented in 1996, but the Secretary has yet to produce a cost study 
or to reallocate the costs as required by law.
    In April of 2000, it was determined that, due to hydrologic 
conditions and requirements of a 1994 Fish & Wildlife Service 
biological opinion, a low flow summer experiment would be undertaken. 
The experiment included high spike flows in May and September, with low 
flat flows (8,000 cfs) all summer. The purpose was to gain information 
regarding endangered humpback chub conditions. The low, flat flows and 
hydrology, along with western energy market prices, had a severe impact 
on power generation, requiring CRSP customers, and WAPA, to purchase 
replacement power to meet their resource needs. The cost incurred by 
WAPA (and to be recovered from CRSP contractors) for this replacement 
power was $55 million, just for the summer. Twenty-four million dollars 
of this total is attributed to the low steady flow environmental 
experiment; the remainder is attributed to wholesale energy market 
prices. The cost of the experiment alone was over $3.5 million, funded 
by CRSP power revenues. These figures do not include additional costs 
to CRSP contractors who had to purchase or supplement their CRSP 
resource with purchases from the energy market.

Adaptive Management Program
    CREDA participates on the Federal Advisory Committee charged with 
making recommendations to the Secretary of the Interior as to 
operations of Glen Canyon Dam pursuant to the Record of Decision and 
underlying laws. Funding for the program (Adaptive Management Program) 
is through CRSP power revenues. Proposed funding for next year's 
program will exceed $10 million. On October 27, 2000, President Clinton 
signed the FY 2001 Energy and Water Development Appropriations Act 
which includes language (section 204) capping the amount of CRSP power 
revenues that can be used for the Adaptive Management Program at 
$7,850,000, subject to inflation. Without this cap, the annual program 
costs would have continued to increase, with power revenues being the 
sole funding source. Now, the program will need to seek appropriated 
dollars in order to maintain increased funding levels. CREDA supports 
seeking other sources of funding for this program. CREDA also 
participates on the Technical Work Group through our consultants, to 
ensure that good science and efforts to increase power production are 
considered.
    CRSP contractors have paid, and continue to pay, the majority of 
costs at Glen Canyon, even while the Glen capacity has been depleted by 
about one-third, and there are significant operating constraints on the 
remaining available capability, as required by the 1996 ROD. CREDA is 
optimistic, however, that additional capability may become available to 
the CRSP contractors while still in compliance with the operating 
restrictions.

Flaming Gorge Dam
    Flaming Gorge Dam is on the Green River, a major tributary of the 
Colorado River, and is located near Vernal, Utah. Flaming Gorge has 
three units producing about 152 MW of generation. In 1992, the Fish & 
Wildlife Service issued a Biological Opinion on the operation of 
Flaming Gorge Dam. Two years ago, the estimated impacts to power 
generation since implementation of the Biological Opinion was $2.87 
million per year. Approximately 26 MW have been lost to date due to 
changed operations to benefit endangered fish. During summer of 2000, 
the Bureau began the process of completing an EIS on proposed flow 
recommendations for endangered fish. The Bureau is attempting to keep a 
narrow scope on the recommendations, but some environmental groups are 
advocating the inclusion of an alternative to tear down the dam Two 
CREDA members from Utah are ``cooperating agencies'' and, thus, are 
able to participate in the meetings with the Federal agencies. The cost 
of the Flaming Gorge Dam EIS is expected to be $3 million, and could be 
completed within the next 18 months.

Aspinall Unit
    The Aspinall Unit includes three dams and generating plants along 
the Gunnison River near Gunnison, Colorado. Blue Mesa is the first darn 
on the river and has two units producing about 97 MW. Morrow Point is 
the second dam in the series and consists of two generators producing a 
total of 146 MW. Crystal is the final dam and has one 32 MW generator. 
Morrow Point and Crystal Reservoirs allow some regulation of the river 
flow so that releases from Crystal can be used to regulate downstream 
flows as necessary. Since the early 1990's as part of the Upper 
Colorado River Endangered Fish Recovery Implementation Program, or RIP, 
studies have been undertaken to determine fish needs in this region. 
But NO studies have been completed to determine impacts on power 
generation! CREDA's interpretation of the Fish & Wildlife Service's 
flow recommendations is that they advocate a return to ``natural'', or 
almost pre-dam flow patterns. In our view, this goal is unattainable 
and unrealistic. The dams are there, the environment has changed, and 
efforts to recover fish should recognize those facts. The Fish & 
Wildlife Service's draft flow recommendations report has yet to be 
finalized.
    Another looming impact on power generation on the Gunnison River 
comes with the filing by the National Park Service of a proposal to 
quantify reserved water rights for the Black Canyon of the Gunnison 
National Monument This filing was made in Colorado Water Court on 
January 17, 2001. (Case No. W-437, District Court, Water Division No. 
4, Colorado.) CREDA has not yet completed its analysis of the impacts 
to power generation, but our preliminary indications are that the 
proposed flows associated with the water right quantification are 
unachievable and will have a severe impact on power generation and 
existing water rights within the State of Colorado. Statements of 
opposition in this matter must be filed by March 30, 2001 in Colorado 
Water Court.

Upper Colorado River Endangered Fish Recovery Implementation Program 
        (RIP)
    The RIP was established through cooperative agreements among States 
and Federal agencies in 1988 for a 15-year period to help recover four 
endangered fish in the Upper Colorado Basin. Power revenues currently 
fund about 60 percent of the base research/study program, which until 
recently required about $2. 1 million per year. Authorizing legislation 
was passed in October 2000, which authorized a $100 million capital 
improvements program. CREDA testified in support of this legislation in 
both House and Senate hearings. The legislation provides matching funds 
for the capital program so that, in the event State funding for the 
program ceases, so too does power revenue funding. The legislation had 
the support of the Upper Basin States, CREDA, Federal agencies and some 
environmental groups. Why did CREDA support it? (1) It caps CRSP cost 
exposure; (2) unlike in the Grand Canyon, the States are contributing 
funding; and (3) also unlike in the Grand Canyon, the authorization 
expires in 2011 and the program will have to be reauthorized by 
Congress.
    The legislation requires CRSP power revenue funding for monitoring 
and research of up to $6 million per year, with credits toward 
repayment. In addition, the Upper Basin States and CRSP power revenues 
will each contribute $17 million toward capital features. The 
legislation recognized that changes in operation of Flaming Gorge and 
Aspinall generation as a result of Biological Opinions cost CRSP 
contractors $2 to $5 million per year. Notwithstanding the passage of 
authorizing legislation for the RIP, CREDA still has concerns regarding 
ongoing impacts to operation of the Federal facilities. In addition, 
CREDA is concerned that there should be specific recovery goals 
established as soon as possible. Recovery should be achieved through 
the capital features of the RIP, not rely solely on dam operation 
adjustments.

The western wholesale market
    The power systems throughout the western United States are all 
interconnected and thus operate as one large integrated system. 
Electricity is the ultimate in ``just in time delivery, but this 
delivery creates a problem because large quantities of electricity 
cannot be stored for later use. Any time the load increases or 
decreases, a regulating generator must sense that change and 
immediately respond appropriately. The system has been designed to 
allow certain units to be ``base'' loaded, while a few of the units are 
allowed to ``follow load'' or regulate. This system has provided a very 
stable and reliable electric system. To enable reliable moment-by-
moment system control, it is necessary to have contractual arrangements 
to address how the various entities will interrelate and account for 
the power and energy. These contractual arrangements can be very 
complex, but they provide a means of reconciling the system after the 
fact. Therefore, contractual arrangements may not necessarily follow 
the actual operation on a moment-by-moment basis, but the contracts 
allow the entities to operate within agreed upon guidelines so business 
can continue.
    Hydro projects are ideal for ``load following'' and meeting peak 
demand because they can be easily and quickly adjusted to meet changing 
load. The Federal hydro system historically has been used to follow the 
load within the region, while the larger, less flexible nuclear and 
coal-fired plants provide the base load requirements. It has also been 
possible for the output of the hydro projects to be reduced to a 
minimum at night to ``save'' the water in the reservoir for use the 
following day when peak loads require it. This integration of hydro and 
thermal resources provides the most efficient operation of the electric 
power system. Historically, WAPA has been able to reduce its hydro 
resources to the minimum level in the middle of the night (when most 
users are asleep and industrial loads are low) and use thermal 
resources, and then increase the hydro generation in the daytime to 
provide the peaking requirement and defer the addition by the customer 
of additional peaking or less efficient coal-burning resources. If the 
hydro resource is constrained by maximum and minimum flow and ramp rate 
releases, this flexibility and diversity is reduced. This also reduces 
the value of the hydropower, necessitates additional coal burning, 
possibly requires additional resources to be built, and raises the cost 
to consumers due to the need to replace unavailable resources.

CRSP rates and marketing program
    When the Federal reclamation projects were begun, they were 
designed, constructed, operated, and maintained by the Bureau. The 
Bureau also owned the transmission system and marketed the power from 
the projects. When WAPA was formed under the Department of Energy 
Organization Act in 1977, the design, construction, operation, and 
maintenance functions remained with the Bureau, and the transmission 
system and marketing responsibilities were moved to WAPA. Construction 
and capital projects are funded through the Federal Treasury at the 
interest rate determined by Congress or at the time construction 
starts. These projects go through a budgeting process associated with 
the Federal budget, and money is appropriated for these projects with 
congressional approval. As revenues are collected for the sale of 
Federal power, there is a priority assigned to payment of obligations. 
The priority of repayment of the projects is that O&M expenses for WAPA 
and the Bureau are paid first and then repayment of the highest 
interest loans is made to the Federal Treasury. The components 
associated with the power features are paid first, including the 
appropriate interest, and then the power revenues are used to pay the 
irrigation projects at no interest.
    Each year WAPA compiles a ``power repayment study'' which estimates 
expenses of both the Bureau and WAPA, and is the basis for the CRSP 
rate. After WAPA has completed the power repayment study and if a rate 
adjustment is necessary, a public process is begun. This process 
includes a notice in the Federal Register that a rate adjustment is 
necessary, public information and comment meetings, and then the 
proposed rate is filed with the Federal Energy Regulatory Commission 
(FERC) for review. The rate can be put into effect on an interim basis 
while FERC reviews the rate, and if FERC concurs, the rate becomes 
final. FERC may also choose to remand (or send back) the rate.
    In July 2000, CREDA was pleased to learn that through our 1992 Work 
Program Review process (a contractual arrangement among CREDA, the 
Bureau and WAPA), WAPA would defer a rate increase until 2001. However, 
as indicated in a November 8, 2000 Federal Register notice (65 FR 
66995) due to low hydrology, high purchased power costs and the impacts 
of the Glen Canyon low flow experiment, WAPA announced it is in a 
severe cash flow situation and would have to consider a rate ``adder''. 
CRSP financial obligations are paid from the CRSP Basin Fund, a 
revolving fund in the United States Treasury, which is greatly impacted 
by high purchased power prices. The replacement and firming power 
purchased by WAPA on behalf of the CRSP contractors is paid for from 
this Fund. Clearly, the significant increase in energy prices over the 
past 9 months has had a severe impact on the Basin Fund cash flow. The 
proposed ``adder'' would have amounted to a 62 percent increase in the 
CRSP rate. Under other, ``worst case'' hydrologic scenarios, this 
increase could have been as high as a 187 percent increase in the first 
year. As proposed, the increase would have translated to an 
approximately $57 million impact to CREDA members in the first year 
alone. WAPA is currently exploring alternatives to the ``adder''. The 
effects on the CRSP rate from the western energy market are staggering. 
For instance, in a ``normal'' operating year, WAPA purchases 
approximately $6 million worth of purchased power to firm up the CRSP 
resource commitments. This winter season, however, WAPA's purchased 
power requirements for CRSP are $71 million!
    The original CRSP contracts expired on September 1, 1989. WAPA 
completed an Environmental Impact Statement (EIS) on the Post-89 
Marketing Criteria. Contract amendments were executed which reflected 
changes in the operation of the CRSP facilities, and provided options 
for the CRSP contractors in terms of whether they desire to make up the 
``shortfall'' themselves, or whether they desire to have WAPA purchase 
on their behalf and pass through the associated costs.
    Changes to the amount of CRSP resources available to CRSP 
contractors began again in April 1998. The changes were made in the 
contracts to reflect the changed operating conditions at Glen Canyon 
Dam. In addition, in late 1998, the Department of Energy (DOE) was 
asked to begin the process to extend the CRSP and Central Valley 
contracts beyond 2004. Following this process, at the direction of 
newly appointed DOE Secretary Bill Richardson, a public process began 
to determine how much of the existing CRSP resource should be ``set 
aside'', primarily for Native American allocations. In June, 1999, WAPA 
published a Federal Register notice (64 FR 34414, June 25, 1999) 
indicating that in the post-2004 CRSP contract extensions, CRSP 
allocations would be reduced up to 7 percent to create a pool of power 
to be allocated to Native American and new customers. Preceding this 
decision, departing DOE Secretary Elizabeth Moler posed a series of 
questions for public comment regarding allocation of and use of Federal 
hydropower resources by preference entities in a deregulated 
environment (63 FR 66166, December 1, 1998). Ultimately, DOE found no 
change was required of WAPA's marketing criteria, which to CREDA 
reaffirmed the concept that the cost-based rates and marketing criteria 
associated with the CRSP are still relevant, possibly even more so, in 
a deregulated environment. WAPA is currently negotiating the ``post-
2004'' contracts with new applicants for the CRSP resource. In essence, 
CRSP contractors have experienced a reduction in the amount of CRSP 
resource available to them through both operational and administrative 
processes. They are now facing significant rate impacts due to the 
effects of hydrology and energy market conditions in the west.

The ``California'' crisis and CRSP
    The western energy market ``price crisis'' is affecting all CRSP 
contractors and WAPA. Reduced operational levels at CRSP facilities, 
due to environmental constraints, have caused WAPA and the contractors 
to be out ``in the market'' having to purchase resources to meet 
contractual obligations and to serve load. This is the same energy 
market from which California entities are buying.
    The CRSP resources are marketed by WAPA pursuant to law and 
marketing plans within a legally defined marketing area, on a firm 
basis to preference entities. And yet, by Presidential and DOE 
directives issued during 2000, WAPA was called upon on September 18, 
2000 and again on February 15, 2001, to ``ramp up'' Glen Canyon to 
assist the California Independent System Operator avoid blackouts. 
Although sympathetic to the energy situation in California, CREDA has 
some serious concerns with a requirement that CRSP resources be made 
available to California. CREDA's concerns are operational, legal and 
financial. Current hydrologic conditions in the Colorado Basin indicate 
the potential for another dry summer. Water released this spring may 
not be recoverable when so desperately needed to meet summer peak 
demands. CRSP resources are committed under long-term, cost-based 
contracts with a legally defined group of contractors, who are located 
within a legally established geographic marketing area. From a 
financial standpoint, the CRSP contractors are the ``guarantors'' of 
Federal repayment investment in the CRSP. Given the current financial 
situation of California power purchasers, CREDA believes the CRSP 
contractors must be provided protection from financial impacts which 
may result from Presidential or Administration directives which require 
WAPA to sell into the California market.

Conclusions and recommendations
    1. In any self-reliant, comprehensive Energy Policy, the unique 
roles and responsibilities of the Federal power marketing 
administrations must be recognized and maintained. CRSP resources are 
marketed under long-term, cost based contracts and guarantee repayment 
of the Federal investment in power facilities as well as its very 
sizable investment in irrigation projects.
    2. CRSP contractors must not be responsible for operational, legal 
or financial impacts associated with the Federal government's 
assistance to California.
    3. The Fish & Wildlife Service recommendations for flows to Federal 
hydropower operations in order to benefit endangered fishes must be 
based on peer-reviewed, sound science, in consultation with all 
relevant stakeholders, and should take into account elements of Federal 
energy policy and economic impacts. There must be a balance between 
costs and impacts.
    4. Federal hydropower facility operating agencies should be 
encouraged to maximize production from those facilities, recognizing 
existing legal constraints.
    CREDA thanks the Committee for the opportunity of providing this 
information and appearing today.
                                 ______
                                 

   Colorado River Energy Distributors Association (CREDA) Membership

Arizona:
    Arizona Municipal Power Users Association
    Arizona Power Authority
    Arizona Power Pooling Association
    Irrigation and Electrical Districts Association
    Navajo Tribal Utility Authority (also New Mexico, Utah)
    Salt River Project
Colorado:
    City of Colorado Springs
    Intermountain Rural Electric Association
    Platte River Power Authority
    Tri-State Generation & Transmission Cooperative (also Nebraska, 
Wyoming and New Mexico)
    Yampa Valley Electric Association, Inc.
Nevada:
    Colorado River Commission of Nevada
    Silver State Power Association
New Mexico:
    Farmington Electric Utility System
    Tri-State Generation & Transmission Cooperative
    City of Truth or Consequences
Utah:
    City of Provo
    Strawberry Electric Service District
    Utah Associated Municipal Power System
    Utah Municipal Power Agency
Wyoming:
    Wyoming Municipal Power Agency
Affiliate Member:
    Navopache Electric Cooperative (Arizona)
                                 ______
                                 
    Mr. Calvert. I thank the gentlelady.
    I have a few questions. Certainly, we do have an energy 
crisis. I don't want to just refer to it as a California energy 
crisis. I believe that we have an energy crisis that may be 
systemic throughout the United States, especially in the West, 
and California is just the first evidence of what may occur in 
other areas. Certainly, it already is occurring in other areas.
    Glen Canyon Dam. There are probably two people who could 
answer this question, Mr. Hocker and Ms. James. How many 
megawatts have been lost to production because of the new 
requirements that have been set forth in operations of that 
dam?
    Ms. James. Approximately 456 megawatts, of a total 
potential capability of 1,300 megawatts.
    Mr. Calvert. Close to 500 megawatts. California, can only 
use power out of Glen Canyon, as a last resort. I guess we have 
used it a couple of times here in the last few months. Is that 
correct?
    Ms. James. Mr. Chairman, yes, that is correct. On September 
18th of 2000 and on February 15th of 2001.
    Mr. Calvert. For spike energy needs.
    Ms. James. And you are right. Basically, it was the 
understanding of WAPA that it was a resource of last resort.
    Mr. Calvert. A resource of last resort.
    Since the new order came in effect limiting the amount of 
power out of Glen Canyon, has there been any effect on the 
species that they were trying to protect downstream? Was that 
the chub fish?
    Ms. James. Mr. Chairman and members, yes, the EIS addressed 
multiple downstream resources. But you are correct; it is the 
humpback chub. The habitat of the humpback chub is basically 
the lower Colorado River, which feeds into the main stem of the 
Colorado.
    The summer flow experiment that was undertaken this year--
the test results are not entirely in. The primary purpose for 
that experiment was The biological opinion that required them 
to do these type of flows for the humpback. So in terms of what 
was the impact, the jury is still out.
    Mr. Calvert. We don't know?
    Ms. James. That is correct.
    Mr. Calvert. And how long has this been going on?
    Ms. James. The record of decision was signed in October 
1996, and the experimentation in Glen Canyon through the 
adaptive management program has been going on since then. The 
low flow experiment this summer for the chub started in May and 
concluded in September.
    Mr. Calvert. Has there been any more discussion out of this 
administration about piercing dams in the West? Have you heard 
anything from the Department of the Interior recently about 
that?
    Ms. James. Mr. Chairman, no, I have not.
    Mr. Calvert. That has kind of stopped?
    Ms. James. We hope so.
    Mr. Calvert Mr. Hocker, in your statement you briefly 
discussed administrative reform efforts with resource agencies 
and other stakeholders. What were these processes and how have 
these processes helped?
    Mr. Hocker. Well, it has been helpful to have dialogue with 
the various agencies. There was an interagency task force. 
There has been a national review group put together by EPRI. We 
encourage this sort of effort between dam owners, hydro project 
owners, and the resource agencies.
    But there have also been disappointments, most recently 
when the Department of the Interior just before the change of 
administrations put forth a proposed fishway policy that 
essentially would have defined virtually anything as a fishway 
and virtually anything as a fish. It was discouraging to us 
because we felt it went against the National Energy Policy Act 
of 1992, and again shows why we think ultimately our search for 
balance and fairness in the licensing process is going to have 
to be legislative rather than administrative.
    Mr. Calvert. Mr. Hogan, you mentioned that there are folks 
selling power. I assume they have long-term power contracts.
    Mr. Hogan. No, they weren't long-term power contracts. They 
take an average over the past 5 years on usage and they 
calculate the payment to the producer on that usage.
    Mr. Calvert. So they pay you not to produce, in effect?
    Mr. Hogan. That is correct.
    Mr. Calvert. So by doing that, that obviously has a domino 
effect on the local economy, the people driving the trucks, the 
people in the stores. The only people who benefit from that 
obviously are the people who own the land.
    Mr. Hogan. Absolutely.
    Mr. Calvert. So that could be an ongoing effect if we don't 
get a hold of this problem pretty quickly.
    Mrs. Napolitano is recognized.
    Mrs. Napolitano. Thank you, Mr. Chair.
    I hate to bring California up again, but this still bothers 
me. Ms. James, I noticed in your testimony, and actually you 
referred to it, that the members of your distributors 
association include everybody except California. Can you 
explain why?
    Ms. James. Yes. The resources of the Colorado River Storage 
Project, or CRSP, are marketed pursuant to a Federal marketing 
plan. The marketing plan is restricted geographically to 
exclude California. It was a marketing plan that was developed 
at the time the CRSP resource was developed and has been 
renewed every time the long-term contracts are up for renewal. 
California is not part of the geographic scope of that Federal 
project, unlike Hoover. Hoover is marketed into California, but 
Hoover is an entirely different law and marketing plan.
    Mrs. Napolitano. What is the reason for the exclusion?
    Ms. James. Well, I guess you would have to ask the Congress 
at the time the CRSP Act was passed and the marketing plans 
were developed.
    Mrs. Napolitano. I just had to clarify that.
    One of the questions that I have is will it be possible to 
upgrade the existing generation or otherwise increase 
generation capacity in your projects and still comply with the 
environmental and Endangered Species Act requirement?
    Ms. James. Yes. We believe that to a certain extent there 
is the ability to increase generation within the confines of 
the record of decision at Glen Canyon. The Glen Canyon adaptive 
management program is a program of experimentation. What we 
continue to try to stress in that program is that power 
production is a downstream resource as important as sediment, 
vegetation, fish, et cetera.
    So we believe within the confines of the operational 
constraints, there is the ability, working with the Bureau of 
Reclamation as the operating agency, to make some adjustments 
to generation patterns to increase some of the output of Glen 
Canyon.
    Mrs. Napolitano. And is the Bureau also evaluating the 
improvements to project the generating capacity?
    Ms. James. That is a good question. I understand Section 
105 of Mr. Murkowski's bill has a provision that would require 
those agencies to look into that. I think at this point the 
Bureau is considering how are they going to respond, but that 
is something we would also encourage, that they look at the 
ability to increase and enhance flexibility within existing 
legal constraints for all the CRSP facilities.
    I might also add as to the Flaming Gorge and Aspinall Unit 
facilities, later this month we believe some recovery goals 
will be published in the Federal Register. Those recovery goals 
will also cover the humpback chub. There may be some ability 
through the recovery goals to ease restrictions at Glen in 
terms of experimentation for humpback chub.
    Mrs. Napolitano. Thank you. I will pass on further 
questions.
    Mr. Calvert. Mr. McInnis?
    Mr. McInnis. Thank you, Mr. Chairman. As you know, we are 
down to our vote, the final few minutes. Otherwise, I would 
like to spend some time.
    Ms. James, I found your testimony fascinating. One reminder 
that Black Canyon is no longer a monument. My bill in the 
House, with the support of my colleagues, made it a park.
    But that aside, I think you are pointing out very clearly 
what our difficulty is with this energy problem in this 
country. We have got the capability; we have got capacity in 
place ready to produce this. But because of these other 
considerations, we can't flip the switch, and literally in some 
cases that is all that is necessary.
    I wanted to, Mr. Chairman, submit for the record a 
statement from Tad Mason. He is Vice President of TSS 
Consulting.
    Mr. Calvert. Without objection.
    [The prepared statement of Mr. Mason follows:]


                                           TSS Consultants,
                                 Rancho Cordova, CA, March 5, 2001.
Hon. James V. Hansen,
Chair, House Committee on Resources,
1324 Longworth House Office Building, Washington, DC.
Dear Chairman Hansen: 
    As the Resources Committee deliberates on issues related to 
development of a comprehensive national energy policy consideration 
should be made for the support of renewable energy sources.
    The advantages of utilizing renewable sources of energy--especially 
biomass energy are numerous, and include:
          --Restoration of healthy forests
          --Alternatives to open burning
          --Reduction of greenhouse gas emissions
          --Landfill diversions
          --Beneficial economic impacts to rural counties
          --Community protection
          --Energy diversification
    Attached is a short paper describing the positive experiences that 
we have experienced in the West as a result of supporting biomass 
energy projects.
    Please contact me if you have any questions.
            Sincerely,
                                         Tad Mason, Vice President.
                                 ______
                                 

        Statement by Tad Mason, Vice President, TSS Consultants

         THE OPPORTUNITY TO DEVELOP BIOMASS ENERGY IN THE WEST

Introduction
    This paper addresses the opportunity to develop biomass energy as a 
renewable energy source in the 11 Western states. As this paper is 
being composed the West is experiencing a very serious energy shortage, 
one that will impact this region for years to come. Significant 
opportunities exist to both improve the health of our Western forests 
and create more electricity to help solve an energy crisis.

Advantages of biomass energy
    In the early 1980's California enacted statewide initiatives 
targeting the development of alternate energy projects. These, coupled 
with Federal legislation provided motivation for the almost overnight 
development of numerous biomass fired power generation facilities. By 
the early 1990's over 60 plants with an output of 800+ megawatts of 
power were on line and operating. These plants consumed over 10 million 
tons of waste wood annually. Not only did these plants generate 
electricity for an energy hungry region--they also provided significant 
societal benefits including the disposal of unwanted and underutilized 
wood waste.
    Today, California has 29 biomass to electricity plants operating 
with an output of just over 550 megawatts. A number of factors 
contributed to the downsizing of this industry, but the primary reason 
was concern over the long-term viability of these facilities in a 
deregulated electricity market. Today, as the state attempts to address 
the deregulated power generation market, there are ongoing discussions 
on how to best bring more power generation on line--including more 
biomass power. Currently the California legislature is considering a 
number of bills that provide incentives for the development of 
additional biomass plants.
    The California legislature is highly motivated to support the 
biomass energy sector due to the wide array of societal benefits that 
this state has experienced since the first plants were built and began 
operating in the early 1980's. These benefits include:
    Restoring Healthy Forests.--Almost a century of successful fire 
suppression has allowed unnatural accumulations of small trees and 
brush to grow into very dense thickets. These unnatural and very dense 
thickets fuel more intense and catastrophic forest replacing wild 
fires. Last season, over 7 million acres of Western forests were 
damaged by wild fire. By removing the overcrowded trees and brush, the 
forests are restored to a more natural condition--one that allows for 
the re-introduction of fire. Once thinned these forests support 
critical habitat for a wide variety of sensitive animal species and 
help assure the long-term health of entire watersheds.
    Alternative to Open Burning.--Until the advent of the biomass 
energy sector, large amounts of woody biomass were disposed of by open 
field burning. From agricultural byproducts such as orchard pruning 
material to forest derived byproducts--prescribed burning of small 
trees, brush, etc., large amounts of wood waste were open burned as a 
means of disposal. Now that a market exists for this material millions 
of tons of this waste is consumed in power generation boilers equipped 
with sophisticated emissions control devices rather than burned in the 
open with uncontrolled air emissions. The net impact is cleaner air and 
a move towards meeting new EPA air standards addressing particulate 
matter of 2.5 microns (down from 10 microns) in size.
    Greenhouse Gas Emissions.--Healthy forests have the ability to 
actively store a major greenhouse gas--carbon dioxide (known as carbon 
sequestration). As forests are thinned and become more efficient at 
growing and at carbon sequestration there is a relative reduction of 
this greenhouse gas. The biomass retrieved from forest thinning 
operations not only improves forest health (and therefore carbon 
sequestration) but also represents a power generation alternative to 
the burning of fossil fuels for power. Fossil fuels combustion releases 
CO2 that was stored away in long-term geological storage, while biomass 
combustion actively promotes improved carbon sequestration as in the 
case of newly thinned, healthy forest. Wild fires are also large 
producers of CO2 emissions. As more forests receive forest fuels 
reduction treatments, there should be a net decrease in wild fires, 
resulting in a net reduction of CO2 emissions.
    Landfill Diversions.--It has been estimated that wood waste in the 
form of crates, pallets, yard trimmings, demolition wood, etc. 
comprises over 25 percent of the waste stream going into landfills. 
Diversion of this wood waste to power generation extends the useful 
life of landfills, reduces waste handling costs and saves 
municipalities the cost of new landfill development. Less space devoted 
to landfills means more space for other uses such as parks, habitat 
conservation easements, etc.
    Economic Impacts.--Employment associated with biomass energy plants 
is significant--especially in the rural areas where these plants are 
typically sited. Activities such as harvesting, collecting, processing 
and transporting wood waste to the power plants requires skilled 
workers that earn relatively high wages. Highly skilled technicians are 
required to operate and maintain the power plant. The plants also 
contribute to the local economy through payment of property taxes. In 
many rural counties the biomass energy plants are among the largest 
taxpayers.
    Community Protection.--Communities located in forested regions of 
the United States are at significant risk due to the unnatural 
accumulation of forest fuels over the past century. In fact, this is 
such a high priority issue that currently, the U.S. Departments of 
Agriculture and Interior are maintaining a list of Urban Wildland 
Interface communities that are at high risk from wildfire. The 
establishment of this document, which now lists hundreds of 
communities, was in direct response to last seasons' catastrophic wild 
fire season. The proactive treatment of forest fuels around communities 
at risk will reduce the chance of catastrophic wild fire. Unfortunately 
many communities that experienced wild fire last year know only too 
well how fire can impact the long term economic well being of the areas 
primary employment sectors--forestry, recreation, agriculture, etc.
    Energy Diversification.--Biomass energy provides a renewable energy 
alternative to the use of non-renewable energy sources such as oil, gas 
and coal. Use of renewables represents a move towards energy 
independence, in support of national and international security. 
Currently, we as a nation import significant amounts of oil from highly 
unstable regions of the world. This dependence on finite energy 
resources from insecure regions places the United States at significant 
risk. Biomass energy, as with other renewable energy sources, represent 
opportunities to diversify our energy portfolio.

Recommendations
    As the House Resources Committee reviews alternatives to address 
energy policy, consideration should be made to address some hard 
targets:
          Set a renewables portfolio standard goal that mandates that 
        the nation's energy be sourced from at least 25 percent 
        renewables: wind, solar, geothermal and biomass by 2005.
          Provide energy tax credits for development of renewable 
        energy projects.
          Provide tax incentives to forest landowners that proactively 
        treat forest fuels through removal of biomass that is then used 
        for power generation.
          Encourage utilities to enter into long-term power purchase 
        agreements with renewable energy plants at rates that take into 
        account the societal benefits (for example, biomass: improved 
        forest health, clean sustainable energy, reduced open burning, 
        reduced waste to landfills, etc.) which these plants have to 
        offer, at rates that allow the plants to operate at a profit 
        over the long term.
          Support the long term funding of the National Fire Plan. 
        Implementation of the NFP will address the long term health of 
        our forests, long term employment in rural communities and 
        provide incentives for the development of biomass energy 
        projects.
          Support pilot project funding for biomass to ethanol 
        facilities. As the demand for ethanol in the West increases 
        there is a growing need to produce more ethanol from a wider 
        variety of feed stocks including biomass.

Conclusions
    The clear opportunity to address the long term health of this 
nation's Western forests and, at the same time generate power with a 
clean renewable energy source exists right now. The technology is 
proven, and the benefits from existing biomass plants demonstrates the 
potential for a West wide program.
                                 ______
                                 
    Mr. McInnis. Mr. Judd, I wanted to ask you a couple of 
quick questions. Mr. Mason in his remarks that we have just 
submitted for the record recommends we establish hard targets 
for renewable energy sources--he suggests about 25 percent by 
2005--and provide tax incentives to forest land owners who 
treat fossil fuels through the removal of biomass for power 
generation.
    Do you agree with those recommendations, and how do they 
tie into the National Fire Plan?
    Mr. Judd. Mr. Mason's first recommendation in terms of 
incentives is a good one. We have an industry of power 
producers and an industry of fuel suppliers on the forestry 
side that are standing still when they should be moving 
forward. Incentives for the private sector landowners to supply 
fuel would be useful for the facilities themselves. To keep 
them operating at full capacity, there needs to be a production 
tax credit for the existing facilities, and that will be 
proposed again in legislation this year.
    Mr. McInnis. Mr. Chairman, in consideration of the time, I 
will conclude my questioning.
    Mr. Calvert. I thank the gentleman, and I would again like 
to thank the witnesses for their valuable testimony and the 
Members for their questions. We may have some additional 
questions for you. We have several votes. We will be gone for 
half an hour, so I am going to adjourn this hearing, but please 
expect some additional questions that we will send to you. 
Hopefully, we can have some written replies. Again, we thank 
you.
    This Committee is adjourned.

    [Whereupon, at 1:50 p.m., the Committee was adjourned.]


            OVERSIGHT HEARING ON THE NATIONAL ENERGY POLICY

                              ----------                              


                        Wednesday, June 6, 2001

                     U.S. House of Representatives

                         Committee on Resources

                             Washington, DC

                              ----------                              

    The Committee met, pursuant to call, at 10:00 a.m., in Room 
1324, Longworth House Office Building, The Honorable James V. 
Hansen [Chairman of the Committee] presiding.

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

    The Chairman. The Committee will come to order.
    Good morning. As usual members come dribbling in through 
this, so we will start on time as we normally do. We are 
pleased to welcome the Honorable Gale Norton, Secretary of 
Interior to this full Committee hearing on energy policy.
    On May 17th, the administration released a National Energy 
Policy Report designed to identify and implement an energy 
policy that addresses the needs of the United States over the 
next three decades. It couldn't have come at a better time. The 
California problem has spread to other Western States. 
Consumers are putting a greater percentage of their hard earned 
paychecks toward electric and gas bills. Agriculture is being 
hit particularly hard, as is the manufacturing sector and 
transportation sectors. Clearly after 8 years of neglect, we 
need to develop a comprehensive long-term energy policy.
    The Committee on Resources has jurisdiction over energy 
policy as it relates to Federal lands. As you know, a 
significant portion of the U.S. energy reserves are located on 
Federal lands and in the Outer Continental Shelf. Roughly 15 
percent of all hydropower generated and transmitted in the 
United States is owned and operated by the Department of 
Interior. This Committee also has responsibility to ensure that 
all Federal statutes are followed closely so we might protect 
our public lands while allowing development of these valuable 
energy resources to go forward in a responsible and 
environmentally sensitive way.
    There are a number of regulatory and legislative tools at 
our disposal to allow us to address the pressing energy needs 
of our country. As the Committee begins the legislative 
process, we should look to ways to improve the implementation 
of NEPA, streamline the permitting process and improve 
coordination among Federal agencies.
    Numerous hearings have been held in the Energy and Minerals 
and Water and Power Subcommittees on the energy resources and 
issues on Federal lands and facilities. Those hearings have 
been very informative and I believe have provided a strong 
foundation from which we can begin the legislative process. The 
administration has also provided the Committee a good blueprint 
to begin as well.
    Unfortunately, the administration's report has been broadly 
criticized for placing too much emphasis on development of 
existing resources and not relying enough on conservation or 
emerging technologies. In that criticism, some extremist 
environmentalists have even gone so far as to deny that there 
is an energy crisis at all. I differ with that view. All 
evidence points to the fact that there is an energy crisis in 
the United States, from continued lagging economic reports to 
rolling blackouts to record high gasoline prices.
    Despite our best efforts at times, Congress will never be 
able to repeal the laws of supply and demand. The current 
energy crisis is a result of too much demand and not enough 
supply. Demand for energy has grown by 30 percent in the last 
decade. This is the cost we must pay for powering the engine of 
the United States economy. That same economic engine has also 
powered the rest of the world toward tremendous economic growth 
the past decade.
    Unfortunately, it is politically easier to stand on the 
sidelines and criticize those who have rolled up their sleeves 
and gone to work, rather than join them in working toward a 
solution. It is easier to hide behind the cloak of promises of 
future payoffs in alternative energy sources and conservation 
rather than to admit that difficult decisions must be made.
    We are told that all we have to do is conserve and apply 
energy efficient technologies and the problem will go away. 
That philosophy ignores the need to address the very immediate 
demands for increased supply today, not just 10 years from now.
    In the last decade our economy has grown by more than 30 
percent without a correlating increase in energy supplies or 
generation. This is most evident in California, which has 
benefited more than any other State from the high tech boom of 
the nineties. I know that my colleagues from California are 
proud that their State has the most intensive and rigorous 
conservation programs in the country. Californians also have 
the lowest per capita energy consumption in the Nation, and I 
congratulate them for that accomplishment. And yet as they sit 
in the dark un-airconditioned offices each afternoon, many 
Californians are learning that conservation alone does not 
constitute a sound energy policy. Try as we might, we simply 
cannot conserve our way out of our current problems.
    I recently read where the President of the Sierra Club, one 
of the most vociferous critics of the Administration, referred 
to the energy blueprint as a cesspool of polluter giveaways. 
That makes for a good sound bite but provides no insight as to 
how we end blackouts or bring down high gas prices.
    There are no solutions offered by the critics of the 
President's energy policy. All we hear from the critics are 
vague promises of quicker, cleaner, cheaper, safer solutions 
like energy efficient technologies, renewable power like solar 
and wind. Rarely is it mentioned that these technologies are 
years away from implementation. They would have us believe that 
simply waving a magic wand, all of these technologies can be 
put into place immediately.
    Rarely is it mentioned, for example, that it will take 15 
to 20 years to turn over the existing fleet of gas guzzling 
SUVs to more efficient vehicles. Fifteen years is a long time 
to wait when we need more production now. Even if a dramatic 
transformation was to take place within 5 to 10 years, we do 
not have the generation capacity to accommodate millions of new 
electric vehicles. To do so we have to rely on existing fuel 
supplies.
    More coal-fired plants? People say way too dirty. Think of 
all the terrible greenhouse gases. How about natural gas? Oh, 
no, that would allow for exploration on sensitive Federal lands 
and offshore, and think of all the pipelines that would have to 
cross forest roadless areas. How about increased nuclear power? 
I don't want a Chernobyl or Three Mile Island in my backyard. 
Solar and wind, but wait 20 years until the technology can be 
applied on a large scale. In the meantime how about mass 
transit? But don't count on light rail because that takes 
electricity.
    Isn't it time that someone said the emperor has no clothes. 
We cannot wish away our energy problems. There are no easy and 
painless solutions to this. There are no short-term fixes and I 
don't know who has got the magic wand. If someone has it, 
please come forward.
    It is time that we all begin to take this problem 
seriously. We have to first admit that ours is a fossil fuel 
based economy and will be for a long, long time to come. While 
there are indeed promising new technologies on the horizon, 
they are still on the horizon. We cannot conserve our way out 
of this current situation nor can we afford to do nothing until 
energy efficient technologies become fully implemented 15 to 20 
years from now. Given that, we must make the most of the 
technologies we have.
    I am sure today's hearing will be very lively. I look 
forward to hearing what suggestions the Secretary has for the 
Committee and what actions we should take, and I look forward 
to the testimony.
    No one is taking away from the idea we should conserve. Of 
course we should. Everyone should conserve energy. Still, let's 
be realistic on what the President has offered.
    I understand the Secretary is under some time constraints 
this morning. So I request the opening statements be restricted 
to Mr. Rahall and myself. I would encourage members of the 
Committee to use their allotted 5 minutes for statements and 
questions. I also want to remind Members that this hearing is 
about national energy policy and encourage them to keep their 
remarks and questions focused on that issue. If time allows, we 
will try to have a second round.
    Mr. Ranking Member, Mr. Rahall.
    [The prepared statement of the Chairman follows:]

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

    Good morning. We are pleased to welcome the Honorable Gale Norton, 
Secretary of Interior to this Full Committee hearing on Energy Policy. 
We look forward to hearing your testimony this morning.
    On May 17th, the Administration released the National Energy Policy 
report designed to identify and implement an energy policy that 
addresses the needs of the United States over the next three decades. 
It couldn't have come at a better time. The California contagion has 
spread to other western states. Consumers are putting a greater 
percentage of their hard earned paychecks toward electric and gas 
bills. Agriculture is being hit particularly hard as is the 
manufacturing sector and transportation sectors. Clearly after eight 
years of neglect, we need to develop comprehensive long-term energy 
policy.
    The Committee on Resources has jurisdiction over a portion of this 
energy policy. A significant portion of the U.S. energy reserves are 
located on federal lands and in the Outer Continental Shelf. Roughly 15 
percent of all hydropower generated and transmitted in the United 
States is owned and operated by the Department of Interior. This 
Committee also has responsibility to ensure that all federal statutes 
are followed closely so we might protect our public lands while 
allowing development of these valuable energy resources to go forward 
in a responsible and environmentally sensitive way.
    The Administration's report has been broadly criticized for placing 
too much emphasis on development of existing resources and not relying 
enough on conservation or emerging technologies. In that criticism, 
some extremists have even gone so far as to deny that there is an 
energy crisis at all. I beg to differ with that view. All evidence 
points to the fact that there is an energy crisis in the United States, 
from our lagging economic indicators to rolling blackouts to record 
high gasoline prices.
    Despite our best efforts at times, Congress will never be able to 
repeal the Laws of Supply and Demand. The current energy crisis is a 
result of too much demand and not enough supply. Demand for energy has 
grown by 30 percent in the last decade. That is the cost we must pay 
for powering the engine of the United States economy. That same 
economic engine has also powered the rest of the world toward 
tremendous economic growth the past decade.
    Unfortunately, it is politically easier to stand on the sidelines 
and criticize those who have rolled up their sleeves and gone to work, 
rather than to join them in working toward a solution. It is easier to 
hide behind a cloak of promises of future payoffs in alternative energy 
sources and conservation, rather than to admit that difficult decisions 
must be made.
    We are told that all we have to do is to conserve and apply energy 
efficient technologies and the problem goes away. That philosophy 
ignores the need to address the very immediate demands for increased 
supply today, not just ten years from now.
    In the last decade, our economy has grown by more than 30 percent 
without a correlating increase in energy supplies or generation. This 
is most evident in California which has benefited more than any other 
state from the high-tech boom of the nineties.
    I know that my colleagues from California are proud that their 
state has the most intensive and rigorous conservation programs in the 
country. Californians also have the lowest per capita energy 
consumption in the nation. I congratulate them for that accomplishment. 
And yet, as they sit in dark, un-airconditioned offices each afternoon, 
many Californians are learning that conservation alone does not 
constitute a sound energy policy. Try as we might, we simply cannot 
conserve our way out of the current situation we are in.
    I recently read where the President of the Sierra Club, one the 
most vociferous critics of the Administration referred to the Energy 
Blueprint as ``a cesspool of polluter giveaways.'' That makes for a 
good sound bite but provides no insight as to how we resolve the 
current problem.
    What solutions are offered by the critics of the President's energy 
policy? None. After soundly denouncing the Administration's plan, all 
they have to offer are vague promises of ``quicker, cleaner, cheaper, 
safer solutions like energy-efficient technologies renewable power like 
solar and wind.'' They also admit that we are in a crisis but it can be 
resolved by ``responsible additions to supply.''
    They would have us believe that simply waving a magic wand, all of 
these technologies will be put into place tomorrow and our problem goes 
away.
    Rarely is it mentioned for example that it will take 15 to 20 years 
to turn over the existing fleet of gas guzzling SUV's to more energy 
efficient vehicles. Fifteen years is a long time to wait without a 
short-term solution and even if a dramatic transformation was to take 
place within five to ten years, we do not have the generation capacity 
to accommodate millions of new electric vehicles. To do so, we have to 
rely on existing fuel supplies.
    More coal-fired plants? ``Too dirty. Think of all the terrible 
greenhouse gases.'' How about natural gas? ``Oh no, that would allow 
for exploration on sensitive federal lands and offshore. And think of 
all the pipelines that would cross Forest roadless areas.'' Increased 
nuclear power? ``I don't want a Chernobyl and Three Mile Island in my 
backyard.'' Solar and wind? Yes, but wait twenty five years until the 
technology can be applied on a large scale. In the meantime, just rely 
on mass transit. But don't count on light rail systems because they run 
on electricity.
    Maybe we should go back to wood-fired steam trains but since so 
many are opposed to logging that is not an option. Maybe we should 
light a candle and just curse the darkness.
    I don't intend to be flippant but isn't it time that someone says 
``The Emperor has no clothes.'' We cannot wish away our energy 
problems. There are no easy and painless solutions. There are no short 
term fixes and no magic wands to wave.
    It is time that we all begin to take this problem seriously. We 
have to first admit that ours is a fossil-fueled-based economy and will 
be for a long, long time to come. While there are indeed promising new 
technologies on the horizon, they are still on the horizon. We cannot 
conserve our way out of the current situation, nor can we afford to do 
nothing until energy efficient technologies become fully implemented 15 
to 20 years from now. Given that, we must make the most of the 
technologies and the energy supplies we currently have in place.
    I am sure that today's hearing will be a lively one. I look forward 
to hearing what suggestions the Secretary has for the Committee as to 
what actions we should take. I look forward to your testimony.
    I understand the Secretary is under some time constrains this 
morning so I request that opening statements be restricted to Mr. 
Rahall and myself. I would encourage Members of the Committee to use 
their allotted five minutes for statements and questions. I want to 
also remind Members that this hearing is about national energy policy 
and encourage them to keep their remarks and questions focused on that 
broader issue. If time allows, we will try to have a second round of 
questions.
                                 ______
                                 

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

    Mr. Rahall. Thank you, Mr. Chairman. Secretary Norton, on 
behalf of the Committee Democrats we welcome you to the 
Committee this morning to discuss the administration's National 
Energy Policy Report and specifically proposals it contains 
which are in this Committee's jurisdiction. The 
administration's energy policy report contains several 
proposals that would require legislation from this Committee. 
The one of course receiving the most attention involves the 
opening of a portion of the Arctic National Wildlife Refuge to 
oil and gas drilling.
    The question of whether or not Congress opens that area to 
development is a direct one. It can be debated and it can be 
dealt with one way or another. But frankly, what concerns me 
more are certain proposals which are either hinted at by the 
report or which have been alluded to by the President, 
yourself, Secretary Norton, as well as others within the 
administration and certain Members of this body as well. What I 
am referring to is this mantra we have been hearing that one 
way to salvation is to open more public lands to energy 
development. Let's open more public lands to energy 
development.
    The administration and others are actually suggesting we 
drill in our national monuments, to mine in pristine wilderness 
areas and lift bipartisan bans on oil and gas leasing in 
environmentally sensitive offshore areas. News flash, folks: 
Hey, big oil is just licking its chops. They are so happy. Sky 
rocketing gas prices, record profits, a beleaguered American 
public, and a chance to just rip, rip into areas they have been 
hankering and licking at their chops to rip into after many, 
many years.
    Yet apparently monuments and wilderness areas are not 
enough. The last few months when it comes to the issue of 
Federal lands I have posed the question within this Committee 
and in other forums what Federal lands are you talking about? 
What more do you want?
    Just recently we have been given the answer. There is a 
place in Montana that native Americans call the Valley of the 
Chiefs. It contains rare rock art. It has cultural and 
religious significance, so much so that the Bureau of Land 
Management designated it an area of critical environmental 
concern. Exploring for oil in this place has been described as 
being akin to placing a drilling rig in the Sistine Chapel, but 
not to this administration, and this dismays me, Secretary 
Norton. Just 12 days after the inauguration of President Bush, 
the BLM gave the green light to a company owned by one of the 
wealthiest persons in America, Philip Anschutz, to explore for 
oil in this sacred place, and in the process running roughshod 
over NEPA, the National Historic Preservation Act, and our 
trust responsibilities to Native Americans, let alone our 
responsibilities of good stewardship to the Nation.
    Are we really that desperate? Are we really that greedy 
that we as Americans are willing to squander the remaining 
vestiges of our national heritage to quench our thirst for 
energy, leaving nothing for our children and our future 
generations to come? I do not think so, nor am I certain do the 
vast majority of Americans.
    Secretary Norton, I am this morning imploring you to stop 
the drilling in the Valley of the Chiefs. This is within your 
power. If the President wants another photo op to show his 
concern for the environment, this would be the perfect, perfect 
place. There will be no alligators hungrily eyeing him as they 
were in the Everglades the other day, but there would be many 
people, many of whom are in this room, that would express their 
profound thanks.
    Thank you, Mr. Chairman.
    The Chairman. I thank the gentleman from West Virginia. 
Madam Secretary, it is indeed a pleasure to have you with us 
today as your first time in front of this Committee. Many of us 
here have sat through a lot of Secretaries, I was just checking 
off Watt, Clark, Hodel, Lujan and Babbitt that we have gone 
through. And all of it was interesting. And we appreciate you 
being here with us today and we will now turn the time over to 
you.

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

    Secretary Norton. Thank you very much. Mr. Chairman and 
members of the Committee--.
    The Chairman. Is the power on? Could you check that out? We 
are not in California. We still have power here.
    Secretary Norton. Mr. Chairman and members of the 
Committee, it is a pleasure to be here today to discuss the 
National Energy Policy Report and the Department of the 
Interior's role in carrying out the President's policy.
    In my short tenure as Secretary, I have spent a substantial 
amount of time studying the issues surrounding our Nation's 
energy policy. I have been concerned by the seriousness of the 
long-term energy problems facing our country and also amazed by 
the ingenuity of U.S. citizens and companies that allow us to 
produce energy with minimal impact on our environment and 
wildlife.
    What has become clear is that each of us is striving to 
attain the same goal, a secure energy supply, while protecting 
the environment. I believe the President's energy plan will 
increase energy production while we also improve our 
environment. Both goals can be achieved and sustained.
    More than half of the domestic recommendations in the 
National Energy Policy Report are targeted to conservation, 
environmental protection, renewable and alternative energy, and 
to measures aimed at helping consumers deal with rising energy 
prices. The national energy policy promotes the use of new 21st 
century technologies to increase energy efficiency and 
conservation.
    The executive branch is beginning its conservation efforts 
close to home. Although the Department of the Interior has had 
programs in place to reduce its energy consumption since 1985, 
we must do better. Last month I issued a directive to all 
Interior bureaus asking them to take steps to promote energy 
conservation. I am going to continue to push the Department to 
become a more efficient energy consumer. This commitment 
extends to all of our facilities.
    In addition to standard conservation practices, we are also 
exploring some innovative approaches. For example, the Green 
Energy Parks Program, a successful partnership between the 
National Park Service and the Department of Energy, has 
fostered over 200 energy and water conservation projects, 
saving the American taxpayers millions of dollars.
    Last week I saw one of those projects. It was in 
Yellowstone. We have a number of vehicles there that operate on 
alternative fuels. We have buses and maintenance trucks that 
operate with biodiesel, which is a combination of diesel 
energy, traditional diesel energy plus alternative energy 
sources. We also have one truck there that operates entirely on 
biomass fuel, and that is a truck that is essentially powered 
by potato scraps. I was even told that the exhaust from that 
smells something like french fries. Now, I don't anticipate 
that the Department of the Interior fleet is going to be 
running on vegetable scraps, but these are the kinds of 
innovative approaches that I think are worth pursuing, and I 
think it is worthwhile to make the Federal government a model 
for the types of practices that might some day become 
commonplace.
    In addition to reducing demand, we must also consider 
strategies to augment the Nation's energy supplies. Renewable 
and alternative energy supplies not only help diversify our 
energy portfolio, but they are sources of clean energy for 
current and future generations. The current contribution of 
sources such as wind, biomass, solar and geothermal to 
America's total electricity supply is small, less than 10 
percent. Nevertheless, the renewable and alternative energy 
sectors are part of our comprehensive energy plan.
    The President has directed the Departments of the Interior 
and Energy to reevaluate access limitations to Federal lands in 
order to increase renewable energy production. The 
identification of potential locations for wind, geothermal and 
solar energy production on Federal lands will assist in the 
planning and development of alternative energy resources. 
Interior's lands already produce 48 percent of our Nation's 
geothermal energy. The Department will look for ways to reduce 
delays in lease processing to encourage more geothermal energy 
production. Most geothermal plants are located in California, 
Nevada, Utah and Oregon. An expeditious leasing process can 
play a small but helpful role in meeting the energy needs of 
California and the West.
    Now I would like to turn to more traditional energy 
sources. The Department of the Interior manages oil, natural 
gas and coal that underlie all of our Federal lands, including 
Department of Agriculture and Department of Defense lands. We 
also oversee all Outer Continental Shelf oil and gas 
production. We work closely with Indian tribes regarding energy 
resources on their lands.
    The Cabinet Energy Policy Development Group recognized the 
growing gap between production and consumption. And I would 
like to first point you to the chart that on the right is 
headed U.S. oil consumption.
    The Chairman. Can I get you to move that out so the members 
can see it, please?
    Secretary Norton. What this chart indicates are two things. 
First is that the projections are that our oil consumption in 
the United States will continue to rise, and that is indicated 
of course by the red line. The green line indicates oil field 
production in the United States. And this is a part of the 
equation that I think is often missed, and that is that under 
our current situation our oil production in the United States 
is continuing to decline. The United States has the most mature 
oil production areas within the world; that is, we have been 
tapping our oil reservoirs for longer essentially than anyone 
else has, and as a result those initially rich reservoirs are 
beginning to be tapped dry. And so our production continues to 
decline unless we find new sources.
    The gray area is the projected shortfall. That is how far 
we come from meeting our oil needs. The gap has largely today 
been filled by imported oil. And that percentage has risen from 
35 percent in 1973, which at the time certainly seemed alarming 
to us, to 52 percent today. So over half of our oil is imported 
today.
    One of the choices that the Energy Policy Development Group 
felt needed to be presented to the American public is whether 
we want to continue on that pathway toward increasing imports 
or whether we want to analyze our own sources and return 
ourselves to more energy independence.
    The Interior Department is responsible for approximately a 
third of all oil, natural gas and coal produced in the United 
States. This percentage is increasing. And that is what is 
shown on the other chart. Perhaps you want to move that one 
around a little bit.
    That chart, the lowest area there, the pink area, is oil 
production, the cream colored area is natural gas production, 
the brown area above that is coal, and then the blue line is 
hydroelectric. And these are essentially indications of our 
domestic production. But what this chart shows is the 
increasing public land portion of that. As our private land 
resources are being depleted, those areas where we began 
production decades ago, we are seeing more and more reliance on 
public lands. The current estimates are that 68 percent of all 
undiscovered U.S. oil resources and three-fourths of our 
natural gas resources are on public lands. And that is why our 
discussion has tended to focus on utilization of our public 
lands.
    Also included, as I noted on that chart, is hydropower 
capacity. The Department of the Interior also owns and operates 
about 16 percent of all hydropower capacity in the United 
States. All of those facilities are located in the western 
United States.
    The National Energy Plan asked Interior to continue the 
study begun under last year's Energy Policy and Conservation 
Act, which asks us to study impediments to Federal onshore oil 
and gas exploration and development. Essentially we will be 
identifying the location of the most promising energy 
resources, then examining surface land use restrictions. We can 
then determine whether surface restrictions should be altered 
to allow access to the resources.
    Some areas such as parks or wilderness areas would stay 
undisturbed. However, in other areas the surface use may be 
reexamined so that energy resources become available. Such 
changes would ordinarily occur through administrative land 
management planning processes or rulemaking, and public 
involvement in the decision-making process would be expected.
    In some cases congressional action might be necessary to 
allow access. This is the case in the most well-known potential 
energy area, the Arctic National Wildlife Refuge. The 1002 area 
of ANWR is expected to be one of the Nation's largest sources 
of oil, enough to equal or exceed our current imports from 
Iraq.
    I am sure we will discuss this proposal further. For now 
let me point out that the National Energy Policy Development 
Plan calls for creation of a Royalties Conservation Fund. This 
fund would earmark potentially billions of dollars in royalties 
from new energy production in ANWR to fund land conservation 
efforts. This fund would also be used to help eliminate the 
maintenance and improvements backlog on Federal lands.
    We have recently done an analysis to try to compare 
production in ANWR in comparison to the lower 48. So many 
people ask why have you targeted the ANWR area, and that is in 
large measure because of the size of the potential reserves 
that are there. We compared production in the North Slope of 
Alaska, the existing production, with the statewide production 
totals from Wyoming, which is the largest oil producing State 
with substantial Federal lands. Wyoming has something over 
9,000 producing wells while the North Slope has about 2200 
producing wells. The existing Alaskan wells produce about 24 
times as much oil per well as those in Wyoming. At this rate it 
would take about 219,000 wells to produce as much oil in 
Wyoming as is produced from the North Slope if there were that 
much oil available. The point is that in order to produce oil 
domestically that would equal what we have potentially 
available from ANWR, we would have to produce perhaps 20 times 
as many wells here, 24 times as many wells from this example in 
order to have a similar amount of production from other areas 
of this country.
    Interior's other significant energy-related issue deals 
with infrastructure for energy transport. Rights-of-way for 
electric transmission lines and new gas pipelines will often 
require siting across some of the one out of every four acres 
of this country owned by the Department of the Interior. Such 
infrastructure is one of the fastest ways of mitigating 
California type energy shortages. Pursuant to the energy plan 
we will be streamlining our processes for handling these types 
of proposals.
    Mr. Chairman, while the challenges facing us are 
significant, they are not insurmountable. By building on new 
21st century technologies, this country can produce ample 
domestic resources while enhancing and protecting the 
environment. I look forward to working with this Committee and 
others in Congress to implement Interior's portions of the 
President's national energy policy, and that concludes my 
statement.
    [The prepared statement of Secretary Norton follows:]

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

    Mr. Chairman, members of the Committee, it is a pleasure to be here 
to discuss the ``National Energy Policy'' report and the Department of 
the Interior's role in carrying out the President's policy.
    In my short tenure as Secretary, I have spent a substantial amount 
of time studying the issues surrounding our Nation's energy policy. I 
have been concerned by the seriousness of the long-term energy problems 
facing our country, and also amazed by the ingenuity of U.S. citizens 
and companies that allows us to produce energy with minimal impact on 
our environment and wildlife. What has become clear is that each of us 
is striving to attain the same goal--a secure energy supply while 
protecting the environment.
    I believe the President's energy plan will increase energy 
production while we also improve our environment. Both goals can be 
achieved and sustained.

Background
    The need for a national energy policy becomes clear when you look 
at the numbers. Over the next 20 years, U.S. oil consumption is 
projected to grow by over 6 million barrels per day. If U.S. oil 
production follows the same historical pattern of the last 10 years, it 
will decline by 1.5 million barrels per day. U.S. natural gas 
consumption has been projected to grow by over 50 percent in the same 
time period while production will grow by only 14 percent if it grows 
at the rate of the last 10 years. Our U.S. energy production is not 
keeping up with our growing consumption, creating an ever-increasing 
gap between domestic supply and demand.
    A large portion of the United States' energy reserves are contained 
in the lands and offshore areas managed by Federal agencies. The 
Department of the Interior manages energy production on all Federal 
lands, both onshore and the Outer Continental Shelf (OCS). These 
Federal lands provide nearly 30 percent of annual national energy 
production. In the year 2000, 32 percent of oil and 35 percent of 
natural gas were produced from Federal lands. In addition, Federal 
lands produced 37 percent of coal and 48 percent of geothermal energy 
in 2000. Federal lands are also estimated to contain significant 
undiscovered domestic energy resources. Estimates suggest that these 
lands contain approximately 68 percent of all undiscovered U.S. oil 
resources1 and 74 percent of undiscovered natural gas resources.
    The Department also owns and operates about 16 percent of all the 
hydropower capacity in the United States, all of which is located in 17 
western states. Since a vital portion of our energy development occurs 
on Federal lands, I am going to tailor my remarks today to Interior's 
energy policy implementation plans on Federal lands.

Improving and Accelerating Environmental Protection
    More than half of the domestic recommendations in the National 
Energy Policy report are targeted to conservation, environmental 
protection, renewable and alternative energy, and measures aimed at 
helping consumers deal with rising energy costs. The National Energy 
Policy promotes the use of new, 21st century technologies to increase 
energy efficiency and conservation.
    In the implementation of this energy plan, our Department will 
strive to focus efforts among the Interior agencies on priority 
setting, resource allocation, and jointly focusing on the recovery and 
restoration of particular species or habitat types to improve the 
environmental baseline.
    There are also a number of existing Federal programs that can 
assist in restoring habitat on private lands, such as the FWS Partners 
for Fish and Wildlife and Coastal Programs and various Department of 
Agriculture programs. These and other private landowner incentive 
programs could be used to contribute to the conservation of important 
environmental resource values. Actions on Federal lands could also be 
coordinated with activities undertaken on non-Federal lands to increase 
their effectiveness. Another possibility is a Federal/state coordinated 
effort using grants to stabilize the status of a listed species through 
the conservation of important habitat by acquisition or regulatory 
control.
    Our Department has worked to develop new and innovative ways to 
manage our national treasures in our parks and on other Federal lands. 
To bolster funding for land conservation efforts, the National Energy 
Policy Development Group has recommended that the President direct 
Interior to work with Congress to create a ``Royalties Conservation 
Fund.'' This fund would earmark potentially billions of dollars in 
royalties from new oil and gas production in ANWR to fund land 
conservation efforts. This fund would also be used to help eliminate 
the maintenance and improvements backlog on Federal lands.
    The Department of the Interior has reduced its energy consumption 
in buildings and facilities by about 10% since 1985. However, we need 
to do better. I am going to continue to push the Department to strive 
to become a more efficient energy consumer. This commitment extends to 
all of our facilities. For example, the Green Energy Parks Program, a 
successful partnership between the National Park Service and the 
Department of Energy, has fostered over 200 energy and water 
conservation projects saving the American taxpayers millions of 
dollars. We hope to use this effort as a model for establishing 
additional partnership efforts within Interior.

                    REGULATORY AND LEGISLATIVE TOOLS

Improving the Implementation of the National Environmental Policy Act
    The NEPA process is often perceived as lengthy and arduous. The 
fundamental premise of ensuring that public decision makers have good 
information that is scrutinized by the public before decisions are made 
must always be maintained. However, we can seek to improve the process 
in a variety of ways. For example, the process could be streamlined 
through better use of joint agency documents for environmental reviews 
for proposed energy developments. This may be especially applicable 
when projects, such as transmission lines and pipelines, cross 
jurisdictional boundaries and require approvals from more than one 
Federal agency, State, or Tribe.

Expedited Permitting
    Permitting for energy-related projects is often a lengthy multi-
agency process. The President has issued an Executive Order directing 
Federal agencies to expedite the review of permits and other Federal 
actions necessary to accelerate the completion of energy-related 
project approvals on a national basis. The Administration will work to 
establish a task force to ensure that Federal agencies set up 
appropriate mechanisms to coordinate Federal, State, tribal, and local 
permitting activity in particular regions where increased activity is 
expected.

Improving the Endangered Species Act Consultation Process
    The Endangered Species Act (ESA) Section 7 consultation process is 
also an important component of reviewing projects for their potential 
adverse effects. The FWS has recently implemented several initiatives 
to increase the efficiency and effectiveness of the Section 7 
consultation process. Interior is also considering a number of other 
actions to improve the Section 7 consultation process.

Ensuring Diverse Domestic Energy Supplies
    At the core of any long-term national energy policy are strategies 
to increase the Nation's energy supplies. The President's plan lays out 
a road map for meeting our future energy demands from diverse fuel 
sources through the use of 21st century technologies. The United States 
has significant domestic energy resources, and remains a major energy 
producer. Between 1986 and 2000, production of coal, natural gas, 
nuclear energy, and renewable energy increased. However, these 
increases have been largely offset by declines in oil production. If we 
wish to maintain a large measure of energy independence, our Nation 
must rise to meet this challenge.

Federal Onshore Lands
    The Congress, in the Energy Policy and Conservation Act, directed 
the Department to study the impediments to Federal onshore oil and gas 
exploration and development and then review the results with full 
public consultation. The Department will expedite completion of this 
study. As appropriate, Interior will consider making changes to land 
use plans based on the findings of the study.

The Outer Continental Shelf
    The Outer Continental Shelf (OCS) encompasses 1.76 billion acres. 
As you know, Congress has designated about 610 million acres off-limits 
to leasing on the OCS, which has been extended by Presidential action 
through 2012. For available OCS areas, it is imperative that the 
variety of Federal and State statutes, regulations, and executive 
orders are clear to ensure effective and efficient environmentally 
sound development. For this reason, the President has directed the 
Departments of the Interior and Commerce to re-examine the current 
Federal, legal and policy regime surrounding energy-related activities 
in the coastal zone and on the OCS to determine if any changes are 
needed.
    Although significant technological breakthroughs have allowed for 
more deepwater production, substantial economic risks remain. The Deep 
Water Royalty Relief Act of 1995, which granted variable royalty 
reductions for new leases in deep water, contributed to much of the 
increase in deepwater leasing in the central and western Gulf of Mexico 
over the last five years. Similar incentives could help spur 
development in other technological frontiers, such as deep natural gas, 
or make possible continued production from both offshore and onshore 
fields near the end of their economic life. The President has directed 
us to continue to explore opportunities for royalty reductions, 
consistent with a fair return to the public, in areas where production 
might not otherwise occur.

The Alaskan North Slope
    I had the opportunity to go to Alaska in March to visit the North 
Slope, talk to the local citizens and learn about current and potential 
future energy and environmental issues in the region. I would like to 
take a few minutes to discuss four Department of the Interior 
initiatives specific to the Alaskan North Slope.
NPR-A
    Let me turn first to the National Petroleum Reserve-Alaska, or NPR-
A. Leasing was reinitiated in NPR-A a few years ago. The President's 
National Energy Policy calls for the Department of the Interior to 
consider additional oil and gas development, based on the best 
available environmentally protective technology, through further lease 
sales in the NPR-A, including areas not currently leased in the 
Northeast sector of the Reserve. In support of the President's policy, 
Interior will take a number of steps, including: conducting additional 
leasing in the northeast sector of NPR-A on a biennial basis; preparing 
to hold lease sales in other NPR-A sectors; initiating environmental 
analysis for a full field development; completing and publishing 
updated estimates of the undiscovered oil and gas resources of the NPR-
A; completing unitization, suspension, and extension regulations for 
NPR-A;and, if necessary, promulgating regulations to issue rights-of-
way in NPR-A to cover potential NPR-A and OCS oil and gas development.
ANWR
    Next, let me discuss the Administration's position on energy 
activities in the Arctic National Wildlife Refuge (ANWR). The President 
is proposing to open a small fraction of the 19 million acres in ANWR 
for oil exploration using the most high-tech, environmentally 
responsible methods. The President and I both believe that oil and gas 
development can successfully coexist with wildlife in Alaska's arctic 
region.
    ANWR is located in the northeast corner of Alaska. The Refuge is 
about the size of South Carolina; however, the portion of the Refuge 
known as the 1002 Area is only about 6 percent of the total Refuge. We 
expect that no more than 2000 acres will be disturbed if the 1002 Area 
is developed. The 1002 Area was excluded from wilderness designation 
and Congress specified that it be studied further through a 
comprehensive inventory of its fish and wildlife resources, and the 
potential for oil and gas production. Estimates of substantial 
resources in the 1002 Area based on nearby drilling results and seismic 
data have made it one of the most promising prospects for oil and 
natural gas in the United States.
    In 1998, a USGS assessment of petroleum resources of the 1002 Area 
estimated the expected volume of technically recoverable oil beneath 
the 1002 area to be 7.7 billion barrels, with a 95 percent chance of 
4.2 billion barrels and a 5 percent chance of 11.8 billion barrels. For 
comparison, the U.S. currently consumes about 7 billion barrels per 
year. Of this, the U.S. imports about 4 billion barrels and produces 
about 3 billion barrels. Congressional action would also open up 
Native-owned lands. The overall mean estimate of technically 
recoverable oil for the 1002 region, including Native and state 
offshore areas is 10.4 billion barrels.
    The Refuge provides a variety of arctic habitats supporting fish 
and wildlife species. The wildlife most associated with the 1002 Area 
is the Porcupine caribou herd, named after its wintering grounds along 
the Porcupine River of northwest Canada. Currently numbering nearly 
130,000 caribou, the herd migrates each year across the Brooks Range to 
arrive in early summer on the North Slope's coastal plain in the 1002 
Area and eastward into Canada.
    Contrasting with the migratory nature of the Porcupine caribou 
herd, muskoxen are year-round residents on the 1002 Area. According to 
the Fish and Wildlife Service, to survive the long winter, 
approximately 250 animals in scattered groups carefully conserve their 
energy reserves by minimizing their activities until summer.
    In the fall, polar bears from the Beaufort Sea region visit the 
area along the coast and barrier islands to forage, rest, and wait for 
the sea ice to form. Later toward winter, pregnant females enter dens 
either on the sea ice or on land and give birth to their young.
    One hundred forty-six bird species are known to visit the 1002 
Area. Approximately one-third of these nest and raise broods during the 
brief summer while the remainder use the refuge as a resting stopover 
during spring and fall migrations. The 1002 Area, including its 
lagoons, support 8 species of marine mammals, 62 species of coastal 
fish, and 7 species of freshwater fish of which the Arctic grayling and 
Arctic char are common. Several of these species are important as 
subsistence food resources.
    The Inupiat Eskimo Village of Kaktovik is located on the northern 
border of the Arctic Refuge coastal plain. Their subsistence resources 
include marine mammals, fish, caribou and muskoxen. The Kaktovik 
Inupiat Corporation (KIC) owns 92,000 acres of private land within the 
Refuge boundary. This land cannot be developed for oil and gas unless 
Congress authorizes leasing of the 1002 Area. On the whole, Kaktovik 
residents support oil and gas development in the 1002 Area.
    South of the 1002 Area and on the other side of the Brooks Range, 
the Gwich'in Athabascan people live in villages in Alaska and Canada. 
Gwich'in rely heavily on the Porcupine caribou herd for subsistence, 
and caribou figure prominently in their cultural heritage. Because of 
their concern over the potential impacts to the herd, the Gwich'in 
villages of this region oppose oil development in the 1002 Area.
    Our support for enactment of authority to lease oil and gas 
resources in ANWR is a prime example of the Department's dual 
commitment to energy development and environmental conservation. We 
recognize that the ecological resources of the Refuge are unique and 
precious. We must respect and conserve this wealth for future 
generations of Americans. However, because of advances in technology 
and in our enhanced understanding of the ecology, we are now able to 
proceed with exploratory work with very little long-term effect.
    If this exploration discovers as much oil and gas as we hope, we 
will proceed cautiously with development and production. To achieve 
this goal under our proposal, lessees will be required to use 
directional drilling and ice road technologies to reduce the extent of 
surface alteration. We will require lessees to operate in a no 
discharge, no litter mode. All materials and fluids brought into the 
Refuge will be taken out or injected into deep wells. We will require 
monitoring of wildlife populations and habitat conditions so that 
unexpected degradation is identified early and actions are taken to 
prevent and restore. We will require restoration, both as activities 
proceed and when production is shut down at the end. Our goal must be 
to have no significant alterations in wildlife populations or the 
environment after oil and gas production are finished.
    The President and I know that there is a long history of debate 
surrounding opening ANWR to energy development. However, we believe 
that new technologies enable us to conduct environmentally safe oil and 
gas exploration and production. Any legislation must contain adequate 
safeguards to protect wildlife and other environmental values.

Arctic Outer Continental Shelf
    The third part of a comprehensive North Slope package involves the 
Arctic Outer Continental Shelf. The Beaufort Sea Planning Area 
encompasses approximately 65 million acres. Active leases in this area 
represent only 0.4 percent of the total acreage, and only 5 percent of 
the leased acreage is being actively pursued for development and 
production. The Northstar project, scheduled to come on-line later this 
year, will yield the first Federal OCS production from offshore Alaska. 
The Chukchi Sea Planning Area encompasses approximately 63.7 million 
acres, none of which is currently leased. Both of these areas are under 
active consideration for the next 5-Year Plan for 2002-2007.

Infrastructure
    The fourth component of the North Slope strategy concerns 
infrastructure. The right-of-way permit for the Trans-Alaska Pipeline 
System (TAPS) must be renewed by January of 2004. The President has 
directed our Department to work with Alaska to ensure an expeditious 
process for the renewal of the lease and right-of-way for TAPS.
    One of the largest known reserves of natural gas in the United 
States has been found in the Arctic. The existing production areas of 
the North Slope contain large amounts of gas that have been reinjected 
rather than marketed. The President has asked Departments of Energy and 
State, along with the Department of the Interior, to work with Canada, 
the State of Alaska, and other interested parties to expedite the 
permitting process for construction of a pipeline to deliver natural 
gas to the lower 48 states once an application is filed. In addition, 
the Department will continue participating in interagency efforts to 
improve pipeline safety and expedite permitting in an environmentally 
sound manner.

Enhanced Oil and Gas Recovery from Existing Wells
    From 30 to 70 percent of oil and 10 to 20 percent of natural gas, 
is not recovered in normal field development. It is estimated that 
enhanced oil recovery techniques, through new technologies, could add 
about 60 billion barrels of oil nationwide through increased use of 
existing, not new, oil fields. This translates into more energy supply 
with fewer environmental effects because enhanced recovery does not 
require drilling in new areas. For this reason, the President has 
directed both the Departments of Energy and the Interior to promote 
enhanced oil and gas recovery from existing wells through new 
technology.
Coal
    Coal is one of our country's most abundant resources. The United 
States possesses one-fourth of the world's coal resources. Part of the 
National Energy Policy is to maintain and improve the Department's coal 
leasing activities to assure that coal supplies are adequate for 
electricity generation.

Renewable and Alternative Energy Supply
    At the heart of any national energy policy are strategies to 
augment the Nation's energy supplies. Renewable and alternative energy 
sources such as wind, hydropower, biomass, solar, and geothermal are 
critical components of this plan. Renewable and alternative energy 
supplies not only help diversify our energy portfolio, but they are 
sources of clean energy for current and future generations. While the 
current contribution of renewable and alternative energy resources to 
America's total electricity supply is small--less than 10 percent--the 
renewables and alternative energy sectors are integral to U.S. energy 
security.
    The President has directed the Departments of the Interior and 
Energy to reevaluate access limitations to Federal lands in order to 
increase renewable energy production, such as biomass, wind, 
geothermal, and solar. The identification of potential locations for 
renewable energy production on Federal lands will assist in the 
planning and development of alternative energy resources. A review of 
administrative impediments and access limitations will aid in the 
development of these resources.
    The Department will look for ways to reduce delays in geothermal 
lease processing to encourage more geothermal energy production. Most 
geothermal plants are located in the West, in California, Nevada, Utah, 
and Oregon. An expeditious leasing process could be an important source 
to help meet the energy needs of California and the West.
    Finally, per the President's request, Interior will seek to work 
with Congress on legislation to use an estimated $1.2 billion of ANWR 
bonuses for funding research into alternative and renewable energy 
resources, including wind, solar, geothermal, and biomass.

Hydropower
    Although the majority of the Nation's electricity is generated 
using fossil fuels, hydropower also plays an important role. Western 
states, such as Idaho, Washington, Oregon, Montana and California, rely 
on hydropower for a significant portion of their electricity supply. 
Other states, such as South Dakota and New York, also depend to some 
substantial extent on hydropower for their electricity. Hydropower is a 
clean, domestic, and renewable source of electricity. The 
Administration seeks to increase electricity generation from hydropower 
plants. The Department is committed to accomplishing these gains in an 
environmentally sound manner.

Bureau of Reclamation Efficiency Improvements
    The Bureau of Reclamation has undertaken an aggressive uprating and 
efficiency improvement program, which has significantly expanded the 
capacity of our hydropower system. For example, Bureau of Reclamation 
has ongoing turbine runner work at Grand Coulee Dam in eastern 
Washington, which is ultimately expected to result in 45 - 50 MW of 
additional capacity. Replacements are also underway at Yellowtail Dam 
in Montana, and turbine runner replacements at the Shasta Powerplant in 
California are planned. These three programs will result in an 
equivalent of 250 new megawatts of capacity over the next nine years.
    With an average age of 43 years, Interior's generation capacity is 
old. While two-thirds of the facilities have been uprated and/or 
rewound, one-third have not been modified. The efficiency of the 
existing generators could be increased by replacing aging windings 
inside the generator. In fact, there often can be substantial increases 
in capacity by installing windings using modern insulation technology. 
Reclamation presently has rewinding projects ongoing on units at Alcova 
and Davis Powerplants which could result in the equivalent of an 
additional 10 megawatts.

Using Market-Oriented Incentives
    Another potential source of additional power is leasing water that 
could then be used to generate power. Such leasing arrangements would 
be between willing non-Federal buyers and sellers. Reclamation will 
work to facilitate such arrangements and will shortly initiate an 
internal effort to identify potential opportunities in this area.
    Reclamation continues to work on flexible power generation 
schedules to support the needs of the western power grid. In many 
cases, Reclamation has asked its project pumping customers to shift the 
timing of their deliveries to off-peak times to make more peaking power 
available to the market. At Grand Coulee Dam in eastern Washington, we 
have been able to shift more than 300 megawatts of pumping load to off-
peak times - making it available to the Bonneville Power Administration 
for peaking purposes. There are likely to be additional opportunities 
in this area, especially if power marketers are willing to provide 
financial incentives to project water users to shift the timing of 
their use.

Infrastructure
    Our energy infrastructure includes many components, such as the 
physical network of pipelines for oil and natural gas, electricity 
transmission lines and other means for transporting energy to 
consumers. Unfortunately, the Nation's energy infrastructure has not 
kept up with the changing requirements of our energy system. The demand 
for additional energy and electricity is expected to increase the need 
for rights-of-way across Federal lands. To help with this process, we 
have identified a number of opportunities to expedite the processing of 
energy rights-of-way applications by streamlining the application 
process.

Conclusion
    Mr. Chairman, while the challenge facing us is significant, it is 
not insurmountable. By building on new 21st century technologies, this 
country can produce ample domestic resources while enhancing and 
protecting the environment. I look forward to working with this 
Committee and others in Congress to implement Interior's pieces of the 
President's National Energy Policy.
    Mr. Chairman, this concludes my statement. I would be pleased to 
answer any questions that you or members of your Committee might have.
                                 ______
                                 
    [Charts included in Secretary Norton's testimony follow:]

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    The Chairman. Thank you, Madam Secretary. We appreciate 
your statement. We will now turn to members of the Committee 
for questions. We limit the members to 5 minutes. We appreciate 
them doing their best to stay within that time. Mr. Rahall, we 
will start with you, sir.
    Mr. Rahall. Thank you, Mr. Chairman. Thank you Secretary 
Norton, for your testimony. The Department at times, as we have 
been reading, has resorted and responded to extraordinary 
situations involving mineral leases with innovative approaches, 
including buybacks, working at the local level, at the State 
level, trying to arrange exchanges, et cetera, in order to 
prevent Federal involvement or a Federal solution to the 
particular issue.
    I am wondering if you are prepared to invoke such a similar 
program, invoke measures of this nature in regard to the 
situation I referred to in my opening testimony at Weatherman 
Draw; that is, to stop the drilling in the Valley of the 
Chiefs, this area of critical environmental concern and very 
sacred religious rights to many of our tribal leaders in this 
country. If you are willing to go in and invoke these type of 
measures at the local level in consultation with the tribal 
leaders in trying to arrange an acceptable solution here.
    Secretary Norton. Thank you, Congressman, for the 
opportunity to comment on that. That is an area that I became 
aware of through seeing newspaper accounts of that. The 
decision-making on that so far has taken place at the State 
level within the Bureau of Land Management. It is my 
understanding that there was a 4-year long process of 
consultation and study on that, that they are going forward 
with essentially one exploratory well, is the current proposal, 
and that there would be measures taken to try to protect the 
resources in that area. That decision, however, is subject to 
appeal to the Interior Board of Land Appeals, and that process 
would presumably take place before any activity would occur on 
the grounds.
    We will continue to monitor that and to see what 
information arises out of that process.
    At this point I don't have the level of detailed 
information on that to really interject my opinion.
    Mr. Rahall. There has been such a long process to which you 
referred because it has been described as an area of critical 
environmental concern. It is an area ripe in resource values as 
well as its sacred implications that I have alluded to. Some of 
the opponents to the drilling in the Valley of the Chiefs have 
advised me that there was a decided shift in the Bureau of Land 
Management after, last year's Presidential election, toward the 
Anschutz Exploration's drilling permit application.
    So I would ask you if you can assure this Committee that 
the politics did not influence the Montana BLM State office 
after the election to approve this application.
    Secretary Norton. To the best of my knowledge and after 
some checking with the Montana people, we found no evidence 
that there was any communication from or to Washington in that 
decision-making process. And so as far as I know, there was no 
consultation that the Montana officials from BLM had with 
regard to that.
    Mr. Rahall. As I said in my opening comments, you do have 
the administrative ability to stop this exploration and 
drilling and I would just like to in a more general way ask 
your views how this activity might comport with what I view as 
your responsibilities to our Native Americans, a very important 
responsibility in your job as Secretary of the Interior.
    Secretary Norton. We certainly work with the tribes on 
energy issues both in situations like this where they may be 
concerned about energy development as well as in those 
situations where they want to pursue energy development on 
their own lands. And so we hope to have a working relationship 
with them. My direction to the bureaus throughout, and the 
point that I have made, is that they need to consult with the 
people who are affected by the decisions, and that would 
include consultation with tribes in situations like this as 
well as with other affected local residents, with environmental 
groups in various situations. And so I would like to see a 
consultation process take place. So I will continue to monitor 
this one and we will continue to see how this evolves and to 
obtain more information about it.
    Mr. Rahall. I hope that would take place along with Mr. 
Anschutz as well and involvement of the tribal leaders.
    The Chairman. The gentleman from Louisiana, Mr. Tauzin.
    Mr. Tauzin. Thank you, Mr. Chairman. Madam Secretary 
welcome. Let me ask you, have you ever visited the Mandalay 
National Wildlife Refuge in Louisiana?
    Secretary Norton. No, sir, I have not.
    Mr. Tauzin. I want to welcome you. I hope you will come one 
day. We have quite a number of wildlife refuges and incredible 
wetland areas in my State. The reason I would particularly like 
you to come visit Mandalay National Wildlife Refuge is that we 
have drilled over a hundred wells in the Mandalay National 
Wildlife Refuge in Louisiana. Some were drilled before the 
refuge was created, but many were drilled after it. And it is a 
prime example of how we can produce and have produced energy 
for this country without disturbing or environmentally damaging 
whatsoever a very beautiful part of our country.
    The reason I ask you about the National Wildlife Refuge in 
Louisiana is because I have a very profound question to give 
you and maybe visiting the refuge will allow you to answer that 
question. Is the Mandalay Wildlife Refuge in Louisiana less 
important than the National Wildlife Refuge in Alaska or 
National Wildlife Refuge in Montana, Wyoming, or any other part 
of this country?
    Secretary Norton. I have learned I should not prioritize 
our lands by showing favoritism.
    Mr. Tauzin. I should hope not. But you see, we develop oil 
and gas resources for America on the wildlife refuges in 
Louisiana. We develop on Federal lands in Louisiana. In fact, 
here are some numbers for the Committee. Louisiana, onshore and 
offshore Federal jurisdiction, production of oil for America is 
27 percent of our national consumption. Louisiana, on and 
offshore Federal and State jurisdictional lands produce 27 
percent of the natural gas. A lot of it goes to the Northeast. 
My friends here on the Committee enjoy that natural gas. In 
fact, they tax it more than we do. We don't even tax the 
Federal offshore. They get revenue from it, they get the 
benefit from the gas from it.
    I want to ask you a simple question. What would happen if 
we made a decision in Louisiana today that we didn't want any 
more production on the Federal lands in Louisiana, the 
Louisiana jurisdiction lands, they are too sacred. They are too 
precious. We shouldn't take any chance of any damage to them. 
We ought to shut down all drilling and all production in 
Louisiana. What would happen to this Nation if all of a sudden 
27 percent of the supplies were suddenly shut down because 
Louisiana decided to do what many parts of the country 
apparently decide to do and we decided not to be a contributor 
to this Nation's energy security? What would happen to this 
country if we went from a 52--I understand it is closer to 58 
percent--dependence on foreign sources and we added another 27 
percent dependence on foreign sources? What would happen to 
this country if Louisiana decided to act like many other places 
in this country and protect our wildlife refuges from any 
drilling, any exploration, any development at all; what would 
happen to this country?
    Secretary Norton. Obviously that would have a severe impact 
on our--
    Mr. Tauzin. Severe? It would be catastrophic, Madam 
Secretary. Catastrophic. The Secretary of Energy is visiting 
Louisiana, I think, this week, today maybe, he is over in 
Garyville, where the last new refinery was built in America, 
Marathon Oil Refinery. We produce 17 percent of the gasoline 
that this country uses in Louisiana. What would happen if we 
shut down those refineries today because we don't want any 
environmental impacts from refineries in our State? We want to 
protect our air and land. We had an explosion at one of those 
refineries. Almost blew up the whole town in my district. It 
shattered a lot of lives temporarily. But you know, that town 
gathered around itself and rebuilt that refinery, rebuilt the 
cat cracker so that we could in fact continue the operation of 
that refinery and supply this Nation with gasoline. What if we 
decided that we don't want to take any chances with explosions 
and natural gas pipelines and we don't want to have any more 
production and refining in Louisiana? What would happen to 
prices of gasoline and natural gas in this country if we 
decided we wanted to act like other people in this country and 
not produce? Would it be serious or catastrophic?
    You know the answer. It would be catastrophic. Bottom line.
    Secretary Norton. I will let you answer that.
    Mr. Tauzin. Bottom line is we produce in the sensitive 
wetlands in Louisiana, even in the National Wildlife Refuges in 
Louisiana. We dedicate a lot of the monies from our State lands 
back to preserve those refuges. We have I think 5 million acres 
in preservation of wetlands in Louisiana that are producing oil 
and gas for the rest of you here and produced in 
environmentally sensitive ways and yet the money is going back 
to preserve and enhance those wetland areas.
    Now, I am just going to make that little simple point. We 
in Louisiana have made a decision to be contributors to this 
Nation's energy security and we take some risk in doing it. But 
we think we do it wisely. But if we ever shut down like some of 
you want to shut down some other areas of this country, if 
Texas ever decided to do the same thing, Oklahoma and few other 
States, Wyoming, where on earth would this country be?
    Thank you very much.
    The Chairman. Thank the gentleman. The gentleman from 
California, Mr. Miller.
    Mr. Miller. Thank you, Mr. Chairman. And Madam Secretary, 
welcome to the Committee. I guess I will pick up where Mr. 
Tauzin left off, but on a different vein. That is that we have 
had--since 1982 under the Reagan administration, we have had a 
moratoria on offshore oil and gas drilling in California and 
since that time Congress has renewed that moratoria every year 
and that moratoria in fact has been expanded to the coast lines 
of other States, Florida, of course being the other big State, 
but up the coast in part or in whole North and South Carolina 
and almost up the entire East Coast, if not the entire East 
Coast at this point.
    And that was--that moratoria was extended to the year 2000 
by former President Bush and it was extended by executive order 
to 2012 under former President Clinton. I guess the opening 
question I have for you is will you or will you not continue to 
support that moratorium?
    Secretary Norton. We will continue to support the 
moratorium. President Bush has been steadfast in saying that he 
will observe the moratoria and that the role of States in 
making those decisions is something that should be recognized.
    Mr. Miller. Well, I appreciate that answer. I am quite 
hopeful with that answer. Let me ask you a couple of particular 
problems that are drifting around in this discussion. And that 
is that the Mineral Management's advisory board has recommended 
that Mineral Management should identify five areas of potential 
exploration, quote, to identify the top five geological places 
in the moratoria area and if possible the most prospective 
areas for natural gas in a place the industry would likely 
explore if allowed. Do you view that as consistent or 
inconsistent with the moratoria that these States have asked 
for and have been granted by this Congress?
    Secretary Norton. That advisory board represents the State 
governments. It includes representatives of the governors of 
coastal States as well as a number of other groups that are 
represented on that; local government interests, for example. 
It is advisory to us and therefore they made a recommendation 
to us. Their proposal was to look at natural gas areas and to 
determine whether there were natural gas areas that might be 
acceptable to any of the coastal States. And so that continues 
as a recognition that the States might be receptive to making 
changes in the moratoria, but I believe also recognizes that 
the States are the ones--
    Mr. Miller. Do you view that Federal activity, to the 
extent that that engages Federal activity, that that is 
consistent with the moratoria?
    Secretary Norton. At this point that is purely a 
recommendation coming from an advisory committee. It has not 
even reached my desk in the form of a formal recommendation, 
much less us deciding to go forward with that recommendation.
    Mr. Miller. Well, let me ask you this: With respect to your 
operation in the--apparently in a set of draft options, I 
realize those are options like recommendations from the 
Department of Interior, the suggestion has been--I think there 
were three or four suggestions. One specifically recommends 
going forward with lease sale 181 of the Florida--in the 36 
tracts, the preexisting tracts in California. Is it your plan 
to go forward with drilling activity in those areas?
    Secretary Norton. The lease sale 181 area is excluded from 
the moratoria. That was action taken by Congress a few years 
ago as well as signed by President Clinton that removed that 
area from any moratoria. That is a preexisting proposal. 
Existing leases are and always have been excluded from any of 
the moratoria.
    Mr. Miller. So your proposal--would you accept that--you 
are going to plan to accept that recommendation to go forward 
with drilling development in those areas?
    Secretary Norton. We are in the process of reviewing lease 
sale 181. That process has not yet concluded, and so there has 
not been a final decision on lease sale 181. As to any existing 
lease activities, I am not aware of the particular status of 
those.
    Mr. Miller. And that is true with respect to the 
preexisting tracts in California?
    Secretary Norton. That is correct.
    Mrs. Cubin. Will the gentleman yield? I think that the OCS 
Policy Committee's recommendation isn't for drilling, they 
recommend not to drill. It is to gather seismic data and also 
data about the ocean floor itself, animals, plants and so on.
    Mr. Miller. I understand that. Those are all what we call 
preleasing activities or in this case, where leases are already 
existing, those are predrilling activities and that is why the 
concern in the States--
    Mrs. Cubin. Those are not preleasing activities.
    Mr. Miller. In this case they are preexisting leasing, but 
they are obviously designed to consider whether or not to go 
forward. As you know, those leases certainly off of California 
have been the subject of long negotiations about whether or not 
to purchase those leases to pay back, to give people credits to 
lease in other areas. This is the suggestion, recommendations 
of activities to suggest that you want to go forward with those 
leases because the next recommendation is that you assess 
Federal consistency on the CZMA, EPA discharge standards, all 
of which suggest that the provisions that are in place either 
in a Federal or State statute that may be prohibiting those 
leases from going forward now in some form or another are going 
to be weakened so that those leases in fact can go forward.
    That is the reason for concern. We appreciate the leases 
exist and that the stakeholders that have those leases want to 
drill them. But we are also terribly concerned that there is 
also a body of law about the thresholds that have to be met 
before that would be going forward and the recommendation 
appears to suggest that those thresholds are in fact going to 
be weakened.
    The Chairman. The time of the gentleman has expired. Would 
you like to quickly respond, and we will move on?
    Secretary Norton. Essentially what the Committee has 
recommended is initiating a process of discussion with the 
State governments, and it is my understanding that that 
discussion with State governments is the core of that proposal. 
It is not moving forward with any sort of actual drilling 
program.
    The Chairman. The gentleman from Tennessee.
    Mr. Duncan. Madam Secretary, I read in Consumers Research 
Magazine in April that President Clinton just before he left 
office locked up 213 trillion cubic feet of natural gas and 
then I had the mayor of Englewood, Tennessee come to me and 
tell me that he had senior citizens who were having to choose 
between eating or paying their utility bills. What I have 
noticed is that most of these environmental extremists seem to 
come from very wealthy families and perhaps they are not hurt 
by some of these policies, but when you have groups that when 
you won't allow drilling for any oil you drive the price up, 
when you won't allow people to dig for coal you drive the price 
of coal up, when you won't let anybody cut any trees you drive 
the price of lumber up, when you won't let anybody produce any 
natural gas you drive up the price of natural gas. And what I 
am asking is this: Will you try to keep in mind in all the 
policies that you advocate, that if we don't allow the 
production of any energy or any natural resources in this 
country, that we are not hurting the wealthy people but we are 
hurting the poor and lower income and working people in this 
country by driving up prices and destroying jobs?
    Secretary Norton. Congressman, that is a very important 
point. It certainly is the least fortunate among us who are the 
ones who suffer the impacts from energy shortages and high 
prices of fuel, and so that is one of the concerns that our 
policy group had in mind as we discussed our energy proposals.
    Mr. Duncan. Also I have been up to Prudhoe Bay twice and in 
both of those visits I have seen that 1.5 million-acre coastal 
plain and I don't believe there is a trigger bush on it hardly. 
It is this frozen tundra. I have never seen anything like it. 
Yet this Arctic National Wildlife Refuge I am told is 19.8 
million acres. I was pleased in your statement to see that you 
pointed out that you would like to drill on only 2000 acres out 
of 19.8 million acres. I don't know what percentage that is, 
but it is almost minuscule. Yet some of these groups show 
pictures of the Brooks Range and the mountains and where the 
trees are. And it seems to me it is as false as Nazi propaganda 
used to be.
    I read in Time magazine a couple of months ago that the 
entire Arctic Wildlife Refuge had 1,000 visitors last year. 
Now, I represent about half of the Great Smoky Mountains 
National Park and we have about 10 million visitors a year for 
an area that is only 1/35th the size of the Arctic National 
Wildlife Refuge. I assume that we don't have the votes to allow 
that drilling for that oil in Alaska. But it is really 
endangering our national security to become more and more and 
more dependent on foreign and imported oil, and I would hope 
that you would try to get that message out as much as you 
possibly can.
    Secretary Norton. Thank you, Congressman. I believe that we 
need to put in perspective both the potential impacts in the 
Arctic National Wildlife Refuge as well as the measures that 
can be taken to ensure that environmental protection is done at 
the highest levels if we were to go forward there.
    Mr. Duncan. Thank you very much.
    The Chairman. Thank the gentleman. The gentleman from 
Massachusetts, Mr. Markey, is recognized for 5 minutes.
    Mr. Markey. Thank you, Mr. Chairman. Welcome, Madam 
Secretary. We from New England would just like to nail down 
with some specificity the intention of the administration to 
drill off of George's Bank. Can you give us today the 
unequivocal promise that you are not going to back away from 
the moratoria which exists and that no amount of study by any 
of the panels that may be looking at it will change the mind of 
this administration with regard to the drilling which the 
industry would like to commence off of George's Bank?
    Secretary Norton. Congressman, I am not familiar with 
exactly where the George's Bank area is, but I presume that is 
covered by existing moratoria. Obviously--
    Mr. Markey. If you never find out where it is, I don't 
think New England would mind. I think that is probably, you 
know, a big plus right now in your testimony. But what our 
concern is this, that in the actual national energy policy 
plan, which is why we are greatly concerned, the administration 
says that the group recommends that the President direct the 
Secretaries of Commerce and Interior to reexamine the current 
Federal legal and policy regime statutes and regulations and 
executive orders to determine if changes are needed regarding 
energy related activities in siting of energy facilities in the 
coastal zone and on the Outer Continental Shelf.
    So obviously, you know, you say, well, we are going to keep 
the moratorium in place, but at the same time, the President's 
own--Vice President Cheney's own panel that you served on 
basically is calling for a study of these very areas that are 
the subject of the moratoria.
    Secretary Norton. If I could make two points. First of all, 
I think it is wise for us to have a wide array of information 
as we are making decisions. And I think understanding where 
resources are located is something that leads to wise decision-
making, whether we decide to go forward with trying to access 
those resources or not.
    Secondly, I think what the policy is primarily aimed toward 
is looking at the processes that are used on Outer Continental 
Shelf development in existing areas. I think there is some 
potential room for improvement in those. We are analyzing that 
to determine whether we need administrative changes or whether 
we need to come back to you all.
    I think the process that we have today of environmental 
planning in the Outer Continental Shelf is one that lacks some 
clarity as to the point at which it makes the most sense to go 
forward with the decision-making on leasing. At this point we 
have decision-making that has environmental analysis at a 
number of--
    Mr. Markey. There is a prohibition. The moratoria includes 
a prohibition on leasing activities. You understand that?
    Secretary Norton. And I am talking about--if we talk about 
the areas that are offshore Texas in the existing Outer 
Continental Shelf, I think there are still some issues that we 
can look at in terms of the appropriate process for our 
analysis. And so--
    Mr. Markey. What weight are you going to give to the 
States? I have a letter that I am going to send over to you 
today from the entire Massachusetts delegation asking this 
administration not to reopen any consideration of drilling off 
of George's Bank. Is that something that you are going to give 
complete deference to?
    Secretary Norton. It seems to me that what you are asking 
about is something that is within your control in terms of the 
congressionally imposed moratoria. And to the extent that this 
area is controlled by moratoria, then obviously we cannot go 
forward with any sort of action there. The President--
    Mr. Markey. Do you have any intention whatsoever of 
drilling off of George's Bank?
    Secretary Norton. Obviously we are going to comply with the 
law and not to drill in areas that are currently covered by 
moratoria. I mean obviously we would not be considering doing 
things that are covered by existing moratoria.
    Mr. Markey. Would you oppose an extension of the moratoria?
    Secretary Norton. That is a completely abstract question 
and I am not sure what you have in mind.
    Mr. Markey. Let me make one quick point to you.
    Secretary Norton. If I can say, I don't think there is any 
problem with discussions that consider where our resources are 
located, that present to the American public what the choices 
are. The eastern seaboard is an area that is a natural gas 
production area as opposed to an oil area. And so oil spills 
are not a significant concern on the Atlantic seaboard. And so 
natural gas is something that would be considered.
    The Chairman. The time of the gentleman has expired. The 
gentleman from Colorado, Mr. Hefley.
    Mr. Hefley. Thank you, Mr. Chairman. Madam Secretary, it is 
wonderful to see you here in this role. We have worked so long 
in Colorado on various issues together and it is good to see 
you here. Thank you for being part of an administration at 
least trying to develop an energy plan, because so many 
administrations, both Democrat and Republican, refuse to 
struggle with this very knotty issue. At least you are 
struggling with it and the debate is going on, and I think that 
is very, very healthy.
    I would like to just point out Mr. Rahall took a swipe at 
President Bush about his photo opportunity down in the 
Everglades. You are on a little bit of shaky ground, Nick, when 
you think of your President Mr. Clinton, who I recall, Mr. 
Chairman, just before the election went down on the banks of 
the Grand Canyon and announced a gigantic national monument in 
Utah, but the photo op was better in Arizona than it was in 
Utah. So a little bit of shaky ground there, you might be 
careful about that.
    Mr. Rahall. I love photo ops myself.
    Mr. Hefley. Sure, sure.
    There is no question that we need to pursue additional 
energy resources. You got to go where the energy is. Now there 
is some ground that is truly sacred ground. Yellowstone, you 
are not going to drill in Yellowstone National Park. But I grew 
up in Oklahoma. And when I was growing up fishing the streams 
and ponds and so forth as a boy, a lot of the streams had oil 
slicks on them. And I thought that is the way streams came. I 
didn't realize that the oil industry was being very, very 
casual about their environmental awareness there and letting 
oil get into the streams and into the water table. They don't 
do that any more. That has changed.
    You look in Colorado, you look at the mining, the way the 
mining industry defiled Colorado, or the timber industry, 
anywhere you want to look in the old days, but they don't do 
those things any more. So, Gale, we don't have to have either/
or. And you might want to speak to that, because there are so 
many people in this debate that say either you have energy 
production or you have environmental protection. It doesn't 
have to be either/or with the way we do it today.
    Speaking of Oklahoma and sacred ground, it is interesting 
that the way Indian tribes oftentimes and others come up with 
something that all of a sudden is sacred ground. I would be 
very interested to know--I don't have any idea how long this 
has been the Valley of the Chiefs. Is this a modern thing or is 
this a long time thing? Maybe it is a long time thing.
    Mr. Hefley. I know that oil made an awful lot of Indian 
tribes in Oklahoma very, very rich.
    Mr. Rahall. Would the gentleman yield on that question? I 
have got the answer.
    Mr. Hefley. I will in just a minute, but I do want to know 
the answer.
    Mr. Rahall. Try 1,000 years.
    Mr. Hefley. You are sure of that.
    Mr. Rahall. Or more. Thousand or more.
    Mr. Hefley. All right. Maybe that is true or maybe that is 
a number that you just threw out. I don't know, but I will 
accept your word for it. On the ground, the sacred grounds of 
the Oklahoma capital are oil wells producing energy; doesn't 
seem to bother anyone. They are producing energy for the 
Nation. Do you have a process--I know that there is a process 
but do you have a process that you have confidence that will 
determine what truly is a sacred area where the values are more 
important as to what it is today, like a Yellowstone, than for 
it to be an area of oil production? Is there a process so that 
when you go through that process you have confidence that you 
have made not an emotional decision but a realistic decision 
about what truly is sacred and what isn't.
    Secretary Norton. We have several different layers in that. 
First of all, there are areas that Congress has set aside as 
not being appropriate for new development where we would not 
consider leasing activities, and that would include our parks 
obviously and wilderness areas. So there are some areas that 
are, as you pointed out, off limits.
    As to other areas we would engage in a process of planning 
that would include input from local people, from State 
governments, from environmental groups. It is an open and 
public process of concentration to determine what the various 
values are and to try and weigh which of those are going to be 
the most significant and taking into account the way in which 
any sort of activity might occur in order to be most 
environmentally sensitive. We live in the 21st century and, as 
you point out, technology has increased dramatically and we can 
do things today to protect our resources that were not possible 
20 years ago, and so we do have the potential to ensure that we 
can both have the energy that we need for our way of life and 
also to go forward with our protection of our environment.
    The Chairman. Time.
    Mr. Hefley. Thank you very much.
    The Chairman. I thank the gentleman. Gentleman from 
Michigan, Mr. Kildee.
    Mr. Kildee. Thank you, Mr. Chairman. Thank you, Madam 
Secretary. Madam Secretary, in January of 2000, then Governor 
Bush said that the President, quote, ought to get on the phone 
with the OPEC cartel and say we expect you to open your 
spigots. What has President Bush's policy been towards OPEC?
    Secretary Norton. Congressman, I hesitate to speak on 
international issues since that is not my area. That is a 
delicate area, and so I would be happy to provide that 
information for you for the record.
    Mr. Kildee. Do you know of any President getting on the 
phone with anyone in OPEC and coming close to saying turn on 
your spigots? Are you aware of that just from reading the 
Washington Post and listening to the electronic media; are you 
aware of any of that?
    Secretary Norton. Again, I hesitate to comment on 
international issues. That would be the subject of 
international negotiations.
    Mr. Kildee. So you are not aware of the President 
intervening with the OPEC?
    Secretary Norton. I have stated my position.
    Mr. Kildee. Maybe we should probably bring Spencer Abraham 
over here, too. Most of the newscasts indicate there is a 
decidedly different policy under President Bush with regard to 
OPEC than there was under President Clinton when he sent 
Richardson over there to really try to get them to open the 
spigots more, but if you could get some clearance on that very 
delicate international situation of getting on the phone and 
provide that to the Committee we would appreciate it very, very 
much.
    Madam Secretary, in Michigan, in one area of Michigan 
overnight gasoline went up 30 cents a gallon and going up a 
nickel, a dime, 15 cents, but 30 cents a gallon overnight. Has 
your Department or anyone in your Department looked into that 
or asked the Department of Justice to look into how that 30 
cent increase could occur overnight and how that is related to 
the market forces?
    Secretary Norton. My understanding is that most of those 
price spikes are due to refinery capacity problems and 
transportation problems that deal with essential boutique 
fuels, the fuel formulations that are unique to particular 
geographic areas, and that is something that is being examined 
as part of the overall energy plan.
    Mr. Kildee. Is the Department of Justice involved in 
looking at spikes of 30? That is really a very, very sharp 
spike, isn't it, 30 cents overnight? Is the Department of 
Justice working on that? Have you requested that they look into 
such Draconian spikes?
    Secretary Norton. Attorney General Ashcroft would have to 
be the one to answer that. I obviously am not privy to 
Department of Justice review of things. I know when I was 
Attorney General of Colorado we had jurisdiction over antitrust 
enforcement and we were frequently called every time there was 
an increase in the price of gasoline to look for price fixing 
conspiracies and we had a complete investigation. We had a 
panel that we brought of outside people to analyze pricing 
structure within Colorado and they found no evidence of any of 
that, and so it is something I think people want to look to but 
there very often are other explanations and I think those who 
have looked at this have for the most part found the 
explanation to be within the refinery formulations.
    Mr. Kildee. But when you were Attorney General, you had 
other departments of State government making requests of you 
for investigations?
    Secretary Norton. No, never actually, not on that sort of 
thing. Those antitrust investigation requests are based on 
evidence and people coming forward with information about 
potential activities and most often on consumer complaints. 
That is the way in which that often arises.
    Mr. Kildee. Both in Michigan and in the Federal Government 
very often departments do call upon the Department of Justice 
to investigate since they are the arm of investigation and have 
the wherewithal to do that and the ability.
    Thank you very much for your testimony, Madam Secretary.
    The Chairman. Gentleman from California, Mr. Calvert.
    Mr. Calvert. I thank the Chairman. Welcome, Madam 
Secretary. I wanted to say something positive about California. 
I know nowadays that is not the most popular thing to do, but 
California is a great State and we have done some great things 
in California. We are a large solar user, I think the largest 
in the union. We use a significant amount of wind. As a mater 
of fact, in my own County of Riverside, California, you can 
drive down on the 10 freeway--I am sure many of you have done 
that on your way to Palm Springs, and you will see all those 
windmills down there. They are ugly as hell, but they sure 
generate a lot of power for folks down there in Riverside 
County.
    And geothermal, I don't know if there is an area anywhere 
in the country that produces more geothermal power than the 
State of California, especially just down the road from 
Riverside County out in Imperial County, down toward the 
Mexican border.
    And I have got to congratulate the City of Los Angeles. I 
know the Chairman would appreciate this, and certainly Mr. 
Rahall, is that the City of L.A. In their wisdom is down there 
negotiating a deal in Utah right now to put together 3,500 
megawatts of coal power to ship down to the City of Los Angeles 
to help the Department of Water and Power meet future demands 
for the City of L.A. So you know we are doing a lot of things 
in California to meet the problems that we are having, but we 
do need some help.
    And the question I have, a lot of the energy problems we 
have isn't necessarily just supply, though that is the biggest 
problem. It is also distribution. We have certainly a problem 
that has been well-publicized of natural gas distribution in 
California, not able to get enough natural gas within the State 
to meet the increasing demand for natural gas; also, for 
electricity, and the most famous one of course is Path 15, 
which I am certain you have heard about. What role, if any, 
does the Department of Interior have in helping expedite the 
permitting process to get this Path 15 problem resolved where 
we can get better electric distribution within the State of 
California from north to south?
    Secretary Norton. The Path 15 area between north and south 
areas of California would be something Interior would be 
involved in to the extent that any public land right-of-ways 
would be necessary, and so we would be happy and have said that 
we would work to expedite any right-of-way activities involving 
that.
    Nationwide, the opportunity to look at transmission both 
for electricity and gas pipelines is something that would often 
involve Interior lands and we hope to expedite those processes.
    Mr. Calvert. And that was the next question because when I 
was reading through the energy policy, there certainly is a lot 
of impetus about creating right-of-way for not just natural gas 
but for electric distribution. Is it the administration's 
position to prioritize using Federal land first prior to using 
condemnation on private property?
    Secretary Norton. To my knowledge there is not a particular 
proposal on that. I think that would be a case-by-case type of 
determination, depending on what particular properties is 
involved.
    Mr. Calvert. I would hope you would look into that because 
certainly condemnation is difficult and I think it would 
expedite the process somewhat if that could be prioritized over 
private property.
    One other issue of course, water resource and its ability 
to create electricity, essentially hydro and peaking power, 
which is very important in the West right now because 
California is not the only State suffering or will suffer this 
summer, and what role would you have this summer in potentially 
increasing the amount of peaking power that we could be able to 
count on in the West?
    Secretary Norton. Unfortunately, in terms of this summer, I 
have bad news and that is that in most of our areas of hydro 
production in the Pacific Northwest, this is the second driest 
year in the 100-year history of the Bureau of Reclamation and 
so additional water is simply not available for significant 
amounts of hydropower being available. We have less supply than 
we ordinarily would. We have taken steps to try to provide 
peaking power where we can and we have a number of situations 
where we have assisted California, and we have every time we 
have been asked by California to assist in Stage 3 kinds of 
blackouts situations. So we have done that. But it is more a 
long-term issue in terms of being able to look at our 
facilities across the board and see what we can do at existing 
facilities to enhance the turbines and otherwise provide more 
electricity from those areas. So we are doing what we can with 
very little water.
    The Chairman. The gentleman's time has expired. Gentleman 
from Oregon, Mr. DeFazio.
    Mr. DeFazio. Thank you, Mr. Chairman. Madam Secretary, 
excuse me if we go quickly here. Five minutes isn't very long 
and I have a number of questions.
    I will go first to the issue of eminent domain. I am a bit 
concerned about the extraordinary proposals and the broad brush 
proposals I see to give the Federal Energy Regulatory 
Commission, which is of course a fairly obscure agency of 
Federal bureaucrats out behind Union Station in some nice lush 
headquarters, the right to preempt any and all private property 
rights in the United States of America. I would assume with 
your background with the Rocky Mountain Foundation and others 
that you would not support such a proposal and perhaps this is 
contrary to suggestions you made during the discussions.
    Secretary Norton. The proposal to give the Federal Energy 
Regulatory Commission condemnation rights is essentially 
something that they have already had with regard to 
electricity--
    Mr. DeFazio. No, with pipeline.
    Secretary Norton. With regard to pipelines. It is a new 
proposal as regards to electricity. Essentially having studied 
something of the constitutional issues in property rights, when 
you have a public purpose that requires that--
    Mr. DeFazio. I am familiar with it. This is a point where I 
am going to interrupt you. I understand. So you are going to 
defend the policy. But I just find it a bit ironic that many of 
the same people who adamantly oppose the CARA legislation last 
year, which is for conservation purposes, which provided 
extraordinary new protections against preemption of private 
property, more than we ever had in terms of congressional 
authority to review and stop those sorts of things, would now 
propose a huge new broad brush preemption on private lands. I 
mean you are saying you are taking for public purpose. How 
about this public purpose?
    In Minnesota the citizen advocates want a new line that 
goes West to bring in cheaper power from Montana and elsewhere. 
The incumbent utilities want a new line that goes east so they 
can sell the less expensive power of Minnesota into the more 
expensive markets of Chicago. So what is the public purpose 
there? Is it cheaper prices for the constituents of the State 
which would be a line to the West which the utilities don't 
want or is it the line to the East which the utilities do want 
so they can make more money? In whose interest is FERC going to 
be acting?
    Secretary Norton. Well, from an overall perspective we have 
an energy grid that is essentially 1950s era--
    Mr. DeFazio. Well, it was not designed for deregulation, 
which I opposed--
    Secretary Norton. We really need to enhance our grids and 
to have more--
    Mr. DeFazio. So you fully support this. Do you expect to be 
also suggesting that it would preempt Federal statutes and 
protections, wilderness, scenic areas, Columbia Gorge Scenic 
Area for instance and other areas, would you suggest that the 
preemption authority of FERC would go also to public lands?
    Secretary Norton. This would be a legislative proposal and 
I am not sure what the outlines are on the--
    Mr. DeFazio. Will you recommend that they could preempt 
those protected lands?
    Secretary Norton. I am not sure what the existing status of 
that would be.
    Mr. DeFazio. Well, I mean would you recommend it?
    Secretary Norton. It would concern us to have that kind of 
a proposal--
    Mr. DeFazio. So you will oppose it then? You oppose it?
    Secretary Norton. We will take a look at that.
    Mr. DeFazio. I see. Okay. All right. If we could go just 
quickly to the offshore. You gave both definitive and qualified 
answers. Do all those definitive and qualified answers apply to 
Oregon and Washington, the same ones that California got 
answers to and Massachusetts?
    Secretary Norton. We continue to observe the existing 
moratoria.
    Mr. DeFazio. That is good. Now, do you think if the wildest 
dreams of this policy are realized that we can double our oil 
reserves, U.S. Oil reserves, I mean, known reserves? Do you 
think there is that possibility?
    Secretary Norton. I am sorry, I--
    Mr. DeFazio. Do you think we could possibly with all the 
exploration that is being advocated could we double or even 
triple our known oil reserves, U.S.?
    Secretary Norton. I don't believe that anybody knows the 
answer to that.
    Mr. DeFazio. What would you say--how about 10 times, do you 
think it is possible we could get to 10 times our existing 
reserves with all the exploration you want or is that kind of 
out there?
    Secretary Norton. It is quite unlikely that you would see 
anything like that.
    Mr. DeFazio. Well, I would refer you to an article, the 
Mirage of a Growing Fuel Supply, by Edgar J. Nearing, who just 
happens to be a mathematician, I am not, but he says that if we 
have 5 percent growth, that a 1,000-year supply--that is, if we 
could have 10 times as much as we do now, would last 79 years, 
and he suggests rather that if we just got half of that in 
conservation, reduce a 5 percent growth to 2.5 percent growth, 
we could quadruple the lifetime of our expected reserves. So I 
would suggest strongly that if we apply the laws of mathematics 
here that we could do a lot better by having a little more 
emphasis on conservation in this plan, and I appreciate the 
potato fueled buses in Yosemite or wherever that was going to 
be, that is great, and I will eat more French fries to help 
with that, but that is the French fries--I am sorry, I was 
thinking, you know, we do grow some potatoes in Oregon.
    I think my time has expired. Thank you, Madam Secretary.
    The Chairman. I thank the gentleman. The gentleman, the 
vice Chairman of the Committee, Mr. Young, is recognized for 5 
minutes.
    Mr. Young. Thank you, Mr. Chairman. Thank you, Madam 
Secretary. It always amazes me to hear people question this 
policy because there was a President for 8 years who had no 
policy at all but to burn, burn, burn, baby, burn, and now to 
hear the Congress on the other side talk about we have got to 
have--this policy is not good, it has got holes and we are 
going to conserve our way into prosperity is absolutely 
ludicrous.
    Besides that, Madam Chairman, I am here for one reason. You 
just went to Alaska, I understand, and went to Prudhoe Bay and 
ANWR and Kaktovik. Just give me a little rundown on your trip.
    Secretary Norton. We toured the North Slope area as well as 
some other areas of Alaska. Had the opportunity to go to 
Kaktovik and to talk with the natives who live within the 1002 
area of ANWR and to examine the high technology approaches that 
are used in other parts of the North Slope. The Alpine facility 
is one that we visited and I was quite impressed with the 
technology that is used there with ice roads, with drill pads 
that use horizontal drilling going out several miles in order 
to minimize the impact on the surface.
    Mr. Young. What were the native people in the North Slope--
what did they tell you?
    Secretary Norton. They are concerned because their native 
lands are tied up in the 1002 area and they have 92,000 acres 
of native owned lands where they would like to see oil and gas 
or oil development take place and they are prevented from doing 
that until Congress acts.
    Mr. Young. I happen to believe they have a right to drill 
their own wells, by the way. I am one of the people to advocate 
that and deliver to the market. And what we have done to them 
is absolutely wrong because the Act itself says specifically 
the Congress has to act on 1002 but we also granted them lands 
and I have asked them to explore through the legal branches 
where they could possibly do so. To their credit they have not 
said that they want to do that yet because they would look to 
do it with the consortium rather than do it on their own. With 
the horizontal drilling, Madam Secretary, they probably could 
drain all our oil, which I think would be quite interesting for 
them to do so, and I say that sincerely because it is their 
land, it is their oil. We gave it to them and now we are saying 
you can't do it because of a special interest group.
    There was a little bit of a difference of opinion in your 
statement about the amount of oil, estimated 10.4. The so-
called environmentalists say they are over-optimistic, that it 
is 3.5. I have heard as high as 16 and I predict as high as 39. 
What is the Geological Survey's estimate of the oil? What is 
their true numbers, most recent numbers?
    Secretary Norton. The number that we use primarily is the 
median estimate of recoverable oil, and that is 7.7 billion 
barrels. For the broader area that includes the native lands 
and State-owned lands, that is 10.4 billion barrels so that you 
often hear 7.7 and 10.4. The difference between those is just 
what lands are included.
    Mr. Young. And these are estimates because I have to remind 
the Committee that when we had this--and this Committee 
passed--the Trans-Alaskan Pipeline's estimated amount of oil 
was the maximum of 10 billion barrels. We have now pumped the 
16th billion barrel of oil and we are still pumping 1 million 
barrels a day. So I don't believe estimates can be really 
clarified until actual drilling takes place and the production 
takes place.
    I am a little bit concerned because I don't know how many 
on the Committee recognize that Saddam Hussein has stopped 
producing 2 million barrels of his oil that he uses for 
military purposes and has raised the price of oil and I am 
happy to say for Alaska is up to $32 a barrel today. It will 
probably go to $35 a barrel and yet we have those that oppose 
drilling in ANWR because you don't want to disturb supposedly 
the environment. Yet you are willing to take and go on your 
knee pads and go over there and negotiate with the OPEC 
countries to get them to try to produce more oil, and I think 
that is a very, very shortsighted point of view.
    I am going to continue to push this issue and I do believe 
eventually the wisdom of America will wake up and say this is 
for the good of the Nation. By the way, Madam Secretary, this 
is the same area in 1973 when we fought the pipeline bill that 
the environmental community said let's go west to east with the 
least hospitable, with the least wildlife quality lands. That 
is where they want to build the pipeline, and now we have found 
a little oil and it becomes the Serengeti of Alaska. I wish 
they would stay and be consistent.
    I will suggest respectfully that this is an issue that is 
going to go a long ways over a long period of time, a lot of 
debate, but don't be blindly led by the misadvertisement of the 
environmental community and the propaganda they put forth. Go 
up there and look at it. And those that haven't gone up there 
and are willing to vote against me, shame on you. Go up and 
look at it, come back and tell me I am wrong, and that is fine, 
but don't do it blindly.
    Thank you, Mr. Chairman.
    The Chairman. I thank the gentleman. Gentleman from New 
Mexico, Mr. Tom Udall.
    Mr. Tom Udall. Mr. Chairman, I believe that Congressmen 
Kind and Inslee were in front of me so I would defer to them if 
they are going to ask questions.
    The Chairman. Congressman Kind.
    Mr. Kind. I thank you, Mr. Chairman. I thank the gentleman 
from New Mexico for yielding me his time or however that worked 
out. Mr. Chairman, I do have a written statement I would like 
to submit for the record without objection.
    The Chairman. Without objection.
    [The prepared statement of Mr. Tom Udall follows:]

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

    Mr. Chairman, Ranking Member, I commend you for holding this 
hearing so that we may address one of the most pressing issues 
presently facing our Nation--energy.
    The National Energy Policy Group, chaired by Vice President Cheney, 
released its report, the National Energy Policy, on May 17. The plan 
promotes an increase in domestic oil and gas production from Federal 
public lands, specifically endorsing a change in law to allow oil and 
gas leasing in 1.5 million acres of the Arctic National Wildlife Refuge 
(ANWR).
    The U.S. Energy Information Administration projects that U.S. 
demand for refined petroleum products will grow over 35 percent by year 
2020, and natural gas is expected to rise by 45 percent. Instead of 
reducing this escalating rate of consumption, the Bush Administration 
suggests, among other things, to increase our energy supplies, remove 
regulatory hurdles, and expedite permits for new projects.
    A key component of the Bush Administration's energy plan is to 
promote domestic energy security and reduce our reliance on foreign oil 
by opening the coastal plain of ANWR to oil and gas drilling. Reducing 
our reliance on foreign oil is important. However, meeting this goal by 
focusing on drilling of in ANWR is an unrealistic and misplaced 
priority because it does not exercise proper stewardship responsibility 
of our Federally managed lands. Moreover, with small changes in vehicle 
fuel efficiency, we could save many times over the amount of energy at 
stake. After all, the oil and gas under the coastal plain isn't going 
anywhere and we may develop future technologies which are much less 
damaging to this magnificent resource
    The coastal plain of ANWR is the most biologically productive part 
of the refuge and the heart of its wildlife activity. In the mid-
1980's, I rafted the Hula Hula River traveling over 100 miles from the 
mountains of the Brooks Range and through the coastal plain to the 
Beaufort Sea. I viewed first-hand the critical habitat for caribou, 
muskox, swans, snow geese as well as the Porcupine Caribou Herd which 
supports the subsistence lifestyle of over 7,000 Gwich'in (gwe-CHEEN') 
American and Canadian Indians who oppose the drilling in ANWR because 
of the potential disruption of the caribou herd. As such, I question 
whether the administration intends to manage the protected Federal 
lands appropriately and take into consideration the input of the 
general population and our nation's native and traditional communities 
who will be most affected by such an initiative.
    This Administration has not given consideration to developing those 
areas Congress has specifically recognized as being appropriate for oil 
and gas exploration on Alaska's North Slope. Ninety five percent of 
Alaska's North Slope is open to oil and gas exploration. Why aren't we 
doing the necessary work in those areas, rather than focusing on ANWR? 
The 23 million acre National Petroleum Reserve - Alaska (NPR-A) was set 
aside by Congress in 1923 for preservation as a future supply of oil, 
and was specifically opened for leasing in 1980. It makes much more 
sense to explore for more production in NPR-A instead of squandering 
the time, energy, and resources on ANWR.
    (Gas Pipelines)
    The National Energy Policy plan directs the Secretary of the 
Interior to coordinate with Federal and state agencies and interested 
parties to expedite the construction of a pipeline to deliver natural 
gas from Alaska to the lower 48 states. This recommendation lacks 
adequate safety and environmental protections that are a must to 
proceeding.
    Reflecting on the horrible pipeline explosion near Carlsbad, New 
Mexico last August that killed 12 people and the Bellingham, Washington 
gas pipeline tragedy, I want to further ensure that our existing and 
future gas pipelines across the U.S. are safe. With that in mind, the 
Administration and Congress must strengthen our current oversight 
program for pipelines in order to enhance safety and reliability. As 
the Secretary of the Interior, I would hope that you would take the 
lead in the administration and work with Secretary Abrahams and Mineta 
to provide to Congress ideas on how to provide maximum safety.
    The energy plan calls for more power plants, more refineries and 
38,000 mile of new pipelines. Since many of gas pipelines cross Bureau 
of Land Management lands, the Department of the Interior is responsible 
for regulatory law compliance, specifically in regards to environmental 
analyses and the permitting process. The projected growth in energy has 
called into question whether regulatory actions and permitting 
processes can keep pace with the necessary construction of new delivery 
facilities. The current staffing and budget levels at the BLM field 
offices for these efforts are inadequate. I look forward to hearing 
from you how the Department of the Interior intends to address this 
issue. Without focusing on this aspect, I do not see how the BLM can 
effectively implement its resource management program in the lower 48 
states with the proposed President's budget. The President's BLM budget 
for Fiscal Year 2002 identifies an overall decrease of $2.1 billion 
from Fiscal Year 2001 to $1.8 billion for Fiscal Year 2002. Although 
the administration intends to increase the BLM's energy and mineral 
program by $15 million, a large portion of that will be going toward 
exploration on Alaska's North Slope and completion of the BLM's land 
management planning process. That doesn't leave much money for the BLM 
to manage its other programs, and the programs will suffer tremendously 
because of the budget cuts.
    In conclusion, let me say that the key elements for a balanced, 
long-term comprehensive energy strategy must be the reduction of our 
consumption levels and diversification of our energy base in an 
environmentally sound manner. And let me stress that last element--
environmentally sound. These basic goals can be accomplished through a 
variety of measures including improving energy efficiency, promoting 
the use of renewable energy sources, and enhancing the productive 
capacity of the domestic oil industry. Thus, a comprehensive strategy 
should ensure that energy and environmental policies are complementary, 
and work together to support long term energy goals as opposed to 
implementing a policy at either extreme. America has placed its trust 
in this Administration and in Congress to implement an energy policy 
that is balanced and that serves not only our present environmental and 
energy interest, but also those of future generations.
                                 ______
                                 
    Mr. Kind. Thank you. And as ranking member of the Energy 
Subcommittee on Resources along with Chairwoman Cubin, we have 
had quite a few hearings, Madam Secretary, in regard to the 
energy policy and the effect on public lands. They have been 
very enlightening hearings. In fact, one of the prominent facts 
that kind of came out in the course of these hearings is that 
roughly 95 percent of the public lands already are available 
for access for exploration and drilling under current policy, 
and there are a lot of new discoveries being conducted on these 
lands that are already available for exploration.
    In fact, I am wondering if when you were up in the North 
Slope of Alaska recently you had a chance to get together with 
the officials at Phillips Alaska to discuss with them the 
recently discovered oilfield that was made there on May 22nd. 
In fact, it is the largest oil reserve finding in the last 
decade in land that was already obviously accessible to these 
companies, land that is part of a national petroleum reserve, 
and so there is I think a lot of great potential that is 
untapped. In fact, discoveries that are being made, I think 
they are estimating it to be about a half a billion barrel 
oilfield that was just recently discovered.
    But I think we also need to be honest with the American 
people. I know there is lot of optimism here in this Congress 
and with various members of the administration that we can do 
this on public lands, do it with the latest technology and in 
an environmentally friendly way, but there are, to be honest, 
inherent risks that come with exploration and drilling on our 
public lands.
    And in fact, I don't know if you had an opportunity during 
your tour of the North Slope to go to Kuparuk Oilfield because 
on April 17th, the Anchorage Daily News just announced one of 
the largest oil spills to have occurred on the North Slope, oil 
and salt water spills, that affected a few acres of tundra 
because the salt water that came out, the oil that came out 
were over a hundred degrees in temperature and which just 
burned right through the snow and the ice and, now we have got 
saturated acres of tundra up there that was just reported in 
the Anchorage Daily News.
    Mr. Young. And if you believe the Anchorage Daily News, I 
can tell you a great many whales, too. That is a propaganda 
paper, always has been and will continue to be so. It is the 
left wing coming out of--
    Mr. Kind. Reclaiming my time, Mr. Chairman, but this wasn't 
an isolated incident that was reported. Apparently there have 
been four other comparable oil spills that have occurred in the 
North Slope in the last 6 months that are being reported, and I 
would be more than happy to go up there and trudge around.
    Mr. Young. I hope that you do.
    Mr. Kind. And the point I am trying to make, Mr. Chairman, 
reclaiming my time--
    The Chairman. Gentleman from Wisconsin yielded to the 
gentleman from Alaska; is that correct?
    Mr. Kind. The point I am trying to make is that there are 
going to be risks inherent in drilling on the public lands. If 
there aren't, then why is Governor Bush in Florida adamantly 
opposed to offshore drilling for natural gas in the Gulf? And 
why is every Republican candidate for Joe Scarborough's seat 
down in Pensacola opposed to offshore drilling if there aren't 
some inherent risks?
    But we need to balance those risks with the short-term 
energy needs we have as a country, and I don't think anyone is 
proposing that we don't have a short-term need that needs to be 
addressed. We are a fossil fuel dependent nation. We are not 
going to change that overnight, and it is going to call for 
some increased production. We want to be able to work with you 
and the administration on how we can do that in an 
environmentally friendly way but with a balanced approach, an 
approach that recognizes the fossil fuel needs that we have as 
a Nation but one that also is honest in recognizing the 
potential that does exist with renewable and alternative energy 
sources.
    We are not 15 years away, Mr. Chairman, in being able to 
develop some of this latest technology. In fact, GM just 
announced plans of coming out with trucks in the next couple of 
years that are four-cylinder--eight-cylinder trucks that are 
going to increase fuel efficiency by up to 25 percent because 
of the fourth generation cylinder machines that they are going 
to be producing. So a lot of this is starting to happen right 
now, and I am hoping the administration will take a balanced 
approach to our long-term energy needs, one that recognizes the 
need for some fossil fuel development and production 
domestically, but one that also taps into the potential of 
alternative and renewable energy sources.
    The budget that the administration submitted I don't feel 
reflected those values or those priorities. When you take a 
look at a 48 percent reduction in funding for the photovoltaic 
program, 48 percent less in the wind power program, 48 percent 
less in geothermal, 48 percent less in hydrogen program, for 
many of us it means that you are not treating the alternative 
and renewable aspect of this seriously. Otherwise why would we 
just have 48 percent across the board cuts in these programs. 
And perhaps the height of cynicism in the energy plan was that 
they will restore funding for these programs but only after we 
collect the oil reserves, after we go into the Arctic National 
Wildlife Refuge and drill and extract that oil.
    And so I think the hope here is that we do approach this in 
a balanced way, realistically understanding that we are going 
to have to increase our short-term production needs in the 
country but tap into the developing technology--
    The Chairman. The time of the gentleman--
    Mr. Kind. There have been tremendous progress in the last 
couple of decades, and we would like to be able to work with 
you in more detail as we start to develop the energy plan in 
this Congress. Thank you again for coming.
    The Chairman. The time of the gentleman has expired. The 
gentleman from Colorado, Mr. McInnis.
    Mr. McInnis. Thank you, Mr. Chairman. I would hope that the 
other side of the aisle takes some interest in the issue now 
ongoing in the State of California. It is unfortunate that Mr. 
Markey has left, but I am concerned. There is about 83,000 
acres in California near the Big Sur. It is mostly wild 
undeveloped coast that forms the southern gateway to the Big 
Sur, and it is now being proposed for development, and from my 
colleagues on the other side of the aisle, the expert that they 
hired this week was Bruce Babbitt, who helped developed that.
    Second of all, I would like to say to the Secretary of 
Interior that the politics on this Weatherman Draw--the lease--
the Weatherman Draw, the politics on this is being played by 
the opponents to this. It is not being played by the lessee or 
Mr. Anschutz's corporation.
    Furthermore, Mr. Rahall, I noticed that some of the 
comments based on your press conference or some of the comments 
based on reports by the press of your comments, Mr. Rahall, 
strayed into a personal attack on Mr. Anschutz himself.
    Mr. Udall from Colorado, the Secretary herself, myself, I 
consider myself a good friend of Mr. Anschutz's. Mr. Anschutz 
has been covered extensively in the media by Colorado for 30 
years that I have kept up. I have known him for 30 years. Never 
once during that period of time have I seen an attack on his 
personal integrity. He is well respected in Colorado, and I 
would hope they would keep it to the facts.
    Mr. Rahall. Would the gentleman yield since he has 
mentioned my name?
    Mr. McInnis. Madam Secretary, I would hope that the 
Department of Interior, kind of like the old detective show, 
just the facts, ma'am, just the facts, that is what we need to 
look at here and not some kind of political play. I would be 
happy to yield to the gentleman as I get towards the end if I 
have some time.
    Mr. Rahall. You mentioned my name in a false statement.
    Mr. McInnis. Then I will yield right now. Go ahead, Mr. 
Rahall.
    Mr. Rahall. Would you please quote to me the personal 
assault I made on Mr. Anschutz?
    Mr. McInnis. No, no. I said comments as a result of your 
press conference yesterday by the Sierra Club that comes out, 
made a comment about Western art and so on, and they apparently 
have teamed up with you on this approach to oppose this. In 
fact, I would like--reclaiming my time, I would ask the 
Secretary, would you reiterate for me your response to Mr. 
Rahall's comment. Mr. Rahall asked you if you had--I guess he 
didn't use the word inappropriate, but if you had contact in 
regards to this particular permit, undue influence. Remember 
that question earlier? Would you repeat your answer to that?
    Secretary Norton. The question was with regard to the 
decision making in Montana on that.
    Mr. McInnis. Yes.
    Secretary Norton. And the decision making so far in this 
Department, and in that regard, as far as I know there was no 
contact between those who have made decisions on this and 
anyone in Washington. I do have to say I did see Phil Anschutz 
at his opening of his exhibits at the Corcoran Gallery that 
took place a while back. I don't believe that I had heard of 
this issue at the time. And so I know I have had no discussion 
with him on that type of issue.
    Mr. McInnis. And this particular decision went to the State 
director of the BLM over in Montana. It went to the appeal 
process. As I understand from the date of the permits, the 
permits were first issued in 1987 and 1985. That is the numbers 
on them. In February of 1994 they got--I mean there is a lot of 
history to this. There is a lot of facts to this, and all of 
the sudden in the last couple of weeks I think there is a 
political play that is being motivated by facts that apparently 
I am not aware of or emotions that I am not aware of and I 
think it is unfair. I think you are the person to stand up to 
these kind of challenges. I think you are doing an excellent 
job, and I just wanted to clarify that.
    Now, as courtesy to Mr. Rahall, Mr. Rahall, I would be 
happy to yield in my 30 or 40 seconds for further discussion.
    Mr. Rahall. I was asking the gentleman to quote me the 
statement he accused me of making a personal attack on Mr. 
Anschutz. I was looking for that statement so that if that is 
true I could apologize. If it is not true then I have nothing 
to apologize for.
    Mr. McInnis. Mr. Rahall, I am not saying that you 
personally made this. I am saying as a result of the press on 
this, the Sierra Club, and I can certainly quote the Sierra 
Club, who is apparently working with you on their opposition to 
this, have begun a personal attack on this gentleman, a 
gentleman who is well respected in Colorado and undeserving of 
this type of an attack. So I would hope that you constrain or 
help restrain the Sierra Club and some of these others from 
straying off into that personal attack mode versus a 
professional disagreement or objection filed on the permit 
process.
    Thank you, Mr. Chairman.
    The Chairman. The gentleman's time has expired. We are 
going to recognize folks by the order in which they arrived on 
the minority side, Mr. Inslee, Mrs. Christensen, Tom Udall, 
Mark Udall. In the column on the GOP side it would be Mrs. 
Cubin, Mr. Gibbons, Mr. Osborne, Mr. Rehberg, Mr. Cannon and 
Mr. Gilchrest. With that in mind Mr. Inslee is recognized for 5 
minutes.
    Mr. Inslee. Madam Secretary, my name is Jay Inslee. I 
represent the First District. That is the area north of Seattle 
and Redmond in the State of Washington. And I want to tell you 
my constituents are very concerned about one of the lines on a 
graph you showed us this morning. That is this graph showing 
proposed or projected oil consumption by America in the next, I 
guess it is the next 20 years that you have brought this graph 
with you today.
    Their concerns are that the projection of the increase that 
you and the administration have projected are as if they are 
fixed in stone and we can't do anything about wringing 
efficiencies from our vehicles and other machinery to try to 
reduce the slope of that curve as it goes up. And my 
constituents are very, very concerned that while we are in this 
energy shortage and while we have known technology to increase 
the fuel efficiency of our vehicles, this administration has 
not supported increasing our CAFE standards, our average 
mileage standards to our vehicles.
    And the reason that is very concerning to them is that 
nationwide I see numbers, 89 percent of Americans believe we 
ought to improve the fuel efficiency standards of our vehicles 
and yet the administration has not supported moving forward to 
increase those CAFE standards. Perhaps they are listening to 
other folks, I don't know, but they certainly are not taking 
action to reduce the slope of that oil consumption curve.
    The question I have to ask you is, I want to ask about your 
role in this discussion. You are the steward of our public 
lands. You have an incredible responsibility of the most 
beautiful land in the known solar system to date in any event. 
Now, I would hope during the administration's energy policy you 
went to these meetings and said, hey, folks, we shouldn't be 
drilling in the Arctic Refuge or we shouldn't be drilling in 
the Hanford Reach New National Monument until and unless we 
first improve our CAFE standards and improve the mileage of our 
vehicles. I guess I would like to know, did you make that 
argument during the development of this policy?
    Secretary Norton. We have looked at a comprehensive 
approach that looks across the board, and I would like to 
correct something on the CAFE standards. There is currently a 
study underway by the National Academy of Sciences and the 
administration is planning to look at the results of that study 
and act upon those results of that study, and so we have not in 
any way ruled out looking for a whole variety of different ways 
of trying to reduce the slope of that oil consumption increase. 
That is really the most likely scenario. It is obviously not 
the only scenario and that is why we have taken an across the 
board look that looks at reducing demand as well as increasing 
supply.
    Mr. Inslee. Well, perhaps you can answer my question. As a 
steward of all public lands, did you argue within the 
administration that our CAFE standards should be improved 
before we look at drilling in the ANWR and other national 
monuments?
    Secretary Norton. I think we need to look at things 
simultaneously and that is the position that I take across the 
board every place.
    Mr. Inslee. Today are you advocating?
    Secretary Norton. That we need to take a long-term look. We 
are in a situation today because we have not built a new 
refinery in a generation, we haven't seen new power plants in 
California in 10 years, we have not planned ahead and I think 
we need to plan ahead, take a long-term look. That means we 
don't stop at any place and wait for just one proposal. We need 
to look across the board at a comprehensive approach.
    Mr. Inslee. Are you today here arguing that we should 
improve our CAFE standards; is that your testimony?
    Secretary Norton. That is not something that my Department 
deals with. We are not the ones who have the scientific 
expertise in dealing with that. I have a strong position that 
we need to base our decision making on a thorough understanding 
of science and based on public input, and that would be an 
element of any decision that is made on that.
    Mr. Inslee. Let me encourage you to consider your portfolio 
larger. As a steward of the public lands, I can tell you that 
the people I represent want to go to this administration and 
say I as steward of these public lands want to improve our CAFE 
standards before we endanger the environment that I am sworn to 
protect.
    Second issue, pipeline safety, if we are going to drill in 
these national monuments you have got to have pipelines that 
don't explode. Three people were incinerated in Bellingham, 
Washington over a year and a half ago, several in New Mexico. 
To date the U.S. House has not moved a meaningful bill. The 
U.S. Senate has approved a bill. Are you urging our noble 
Chairman to move at least a bill as strong as the Senate's bill 
that has passed this year on pipeline safety?
    Secretary Norton. I am not aware of that particular 
legislation. I am sure we would be happy to take a look at 
that.
    Mr. Inslee. We would encourage you to do so, and I hope you 
can join us in urging the House to act. It has been over a year 
and half since three children were incinerated in Bellingham 
and this House has not acted in a meaningful way in pipeline 
safety, and if we are going to drill on these lands I think we 
ought to do it in a way that doesn't expose the people to 
incineration.
    Secretary Norton. Safety obviously is very important.
    The Chairman. The time of the gentleman has expired. The 
gentlelady from Wyoming, Mrs. Cubin.
    Mrs. Cubin. Thank you, Mr. Chairman. Welcome, Madam 
Secretary.
    I did want to make a point that on May 2th--Mr. Inslee will 
be interested in this, as Mr. Kind would be--that the President 
put in the budget amendment to drastically increase the 
research and development on renewable energies. So I think that 
should make them very happy. I am also going to want to talk 
about the budget. No matter how much people might want us to be 
able to conserve ourselves out of this energy crunch or crisis, 
it is not possible. We finally have to face the consequences of 
inaction, of restrictive land policies and extremist 
environmental policies. We finally have to deal with the 
consequences of the actions that have been taken over the past 
so many years.
    Now when I hear members on the other side say that 95 
percent of the public lands are available for exploration, I 
wonder what in the heck that even means. I just really question 
that in the first place, and then I wonder if they understand 
that available for exploration, maybe some of the land is 
leased but so they think because the land is leased somebody 
can go poke a hole in the ground because the land is leased. 
They don't realize the permitting process that has to be gone 
through and all of those laws that are in place have to be 
applied by members, personnel in the agencies to protect the 
environment, and that is where they give us a hard time because 
they really don't understand what happens out there on the 
ground, and that is what I want to talk about. I was concerned 
that, I am concerned that the agencies have enough personnel to 
process applications to permit drilling or all of those kind of 
things, with taking into account that the President recommended 
a $200 million cut, was it, how much, I can't remember how much 
the cut was to Interior.
    Secretary Norton. $200 million from last year's.
    Mrs. Cubin. I have spoken with Chairman Young and it is my 
opinion, it is my very strong opinion, that the only agency or 
basically the only agency of our government that generates new 
money is the Interior Department and it seems very short-
sighted to me to not have that agency funded to the level that 
they can actually do the work that is given them to do. We have 
a gas area in Wyoming of cold bed methane. There are 2,300 APDs 
pending because they can't get to them. I would like to get a 
larger appropriation for the agency to help with that. Would 
you give me your views on that?
    Secretary Norton. We are looking across the board at what 
we can do to expedite permits. To some extent that may require 
simply decreasing the time that it spends in somebody's desk 
drawer before it is sent on to the next agency for action. In 
other cases, it may be a manpower type situation. We are in the 
process and will be taking a look at those kinds of issues so 
that we can tell you exactly where the problems are. I would 
like to point out to you a Department of Energy study that is 
being released today was done in cooperation with my Department 
that deals with the Powder River area in Wyoming and the 
stipulations and the restrictions on land use in that area and 
it found that 68 percent of the resource is not available 
because of surface restrictions, and that is the type of study 
and the type of information that will be coming out of our 
long-term study.
    Mrs. Cubin. That is excellent. I also find it curious that 
some members on the other side seem to be afraid of gathering 
information on drilling, or not on drilling but on gathering 
information off the coast of New England and California when 
they in fact voted for the bill that required the study to find 
out all of that information in the lower 48 States. So it is 
sort of like not in my backyard.
    Another thing I wanted to bring up, and again you can do 
this internally, but I want to be as helpful as possible, there 
are areas as we know like the Powder River Basin where there is 
a lot of activity and we have in the Parks Department, as you 
know, a fee program where the park who collects the fees gets 
to keep a certain percentage of the fees to use in that park 
rather than returning it to the general Treasury and we have 
been thinking about possibly having a setup like that for BLM 
offices or Park Service offices where a lot of permitting has 
to be done and where it seems to me that that would be a good 
way to address activity where the activity is.
    Secretary Norton. I would be happy to talk with you further 
about that.
    Mrs. Cubin. Thank you for being here. I look forward to a 
productive year and please know we are here to help you out.
    The Chairman. I thank the gentlelady. Madam Secretary, we 
have two votes on. I understand we have got about 40 minutes 
more that we can infringe on your time. If the Committee could 
stand in recess, myself and the ranking member feel we probably 
have room for one quick one, and if it is all right with the 
Committee I would kind of yield to myself for that and then we 
will quickly go over and vote. We have two votes, and then come 
right back and see if we can indulge you for the remainder of 
the time.
    Let me just say, if I may, very respectfully, I notice that 
past Chairman Mr. Young talked to you about going to Alaska and 
you have been there. I don't want to in any way pin you down on 
anything but we have something that we call the Grand Staircase 
Escalante and I have noticed that some of the members have 
alluded to the idea of drilling in our monuments. I still feel 
the same way about that.
    How many have been there? People talk about monuments and 
parks and Federal land. A lot of that has to be done on a 
retail basis. What are we looking at? You know in the 1.7 
million acres of that monument--and I have to say I am very 
familiar with it. My father had uranium mines on it. I have put 
Piper supercubs down in places that only a person that is not 
using their head would put them down on. I have been on horses 
on it. I have driven jeeps across it and the whole nine yards. 
I am very, very familiar with the property down there. If 
anyone seems to think that that is a grand and glorious 
scenery, they are kidding themselves. I would say maybe 10 
percent of it would qualify under my criteria of the 1906 
antiquity law under what is an archaeological, scientific or 
historic site.
    It is basically sagebrush, but on there is probably the 
largest supply that we have of low sulfur coal, fossil fuels 
and natural gas. And I think we have to do this on a retail 
basis and look at it and see what we can drill on so an idea of 
saying just because someone declares it as sacrosanct and it 
can't be looked at is nonsense. It can be.
    I also would like to talk to you for a moment about the 
idea, this idea of the big bad oil companies. I am given to 
understand in my briefings on this that oil companies basically 
could do better going overseas. But as the Chairman of the 
Commerce Committee always likes to refer to it, we are dealing 
with those we can't depend on and I understand they could make, 
from my briefings, probably more money going overseas than they 
can here. But it is not a big issue of who is making money, it 
is more of an issue who do you want to depend on, and I think 
that is something that should be taken into consideration.
    So with that said, I just wanted to get that in, if I may, 
and point out that these things can be done in an 
environmentally sound way and I think they should be. I really 
appreciate you coming and we are going to just recess for a few 
moments here and we will run over and vote and come right back 
and then wind this up. Is that all right with you?
    Secretary Norton. Yes, thank you, sir.
    The Chairman. Okay. With that said, we will stand in recess 
and be right back, and I urge the Committee members of the 
Committee to hurry back.
    [Recess.]
    The Chairman. The Committee will come to order. Thank you, 
Madam Secretary. I really appreciate the members keeping in 
mind that we have got 15 minutes and the Secretary has to 
leave, so let's be very brief. We are trying to get to 
everybody that we can.
    The gentleman from New Mexico, Mr. Udall, is recognized.
    Mr. Tom Udall. Thank you very much, Mr. Chairman. Welcome 
now, Madam Secretary. It is great to have you here today and as 
a beginning I just wanted to compliment you on what you are 
doing, at least what I am reading about that you are doing, 
with the Corps of Engineers. I noticed they put out a new set 
of regulations on wetlands. It looks like those are going to 
weaken protection for the riparian areas and I hope that you 
keep it--it reported in the press that you and several other 
agencies were keeping the pressure on them and keeping up the 
fight, so I hope that you continue to do that.
    Mr. Tom Udall. The question that I wanted to ask, and I am 
going to preface it with a little bit of a statement to give 
you a little bit of background, but it goes along a line that 
Congressman Inslee was approaching, and this is--and the 
Chairman talked about, and other Members here have talked 
about, a national energy policy. And we are getting into a 
national energy policy. The thing that I fear is we are really 
not telling the truth to the American people about what our 
energy situation is.
    And there has been a lot of criticism of the 
administration's policies being too supply-oriented and trying 
to increase supplies of oil and gas. And I wanted to 
specifically focus on natural gas, because it seems to me that 
we have put all our eggs at the national level here in the 
United States in the natural gas basket. Seventy percent of the 
new homes coming online use natural gas. All of the new power 
plants that we have been talking about, and many of them are in 
the report, and there are numbers from 1,000 to 1,600 going to 
be run by natural gas. And I am worried about that because as 
you note in your testimony, and I think you do it pretty 
persuasively here, you talk about how natural gas production is 
just barely keeping up, and we are talking about a 50 percent 
increase in demand.
    And I just wanted to read a brief little statement to you. 
This is a fellow--and I don't consider myself the absolute 
expert on this, but here is a guy named Matt Simmons, he is in 
President Bush's kitchen cabinet. He is an investment banker 
and deals with the energy services industry, and here is what 
he writes about this natural gas situation: An energy crisis is 
descending over the world. The situation is grave. The world 
has not run out of oil, and North America has not run out of 
natural gas, but what we are short of is any way to grow our 
energy supply.
    North America has no excess natural gas capacity. What we 
do have is extremely aggressive decline rates making it harder 
each year to keep current production from falling. A massive 
number of gas-fired power plans have been ordered, but the gas 
to run them is simply not there.
    And so my question to you, Madam Secretary, is aren't we 
better off, knowing that we have this massive increase and 
knowing that we have this serious problem confronting the 
Nation, aren't we better off focusing on conservation, on 
efficiency, even use a new term, let's call it energy 
productivity, that is where we make productivity gains, and 
focus on that side of the equation where we know we can make 
enormous gains? For example, the rules put in under the Clinton 
administration for air conditioners would allow us to not build 
146 power plants, and so those kinds of savings are out there. 
The industry people have endorsed some of them. And I am just 
wondering if we are not better off focusing in a bold way and 
in a big way on conservation or what we call energy 
productivity?
    Secretary Norton. Congressman Udall, I think you raise a 
good point in terms of trying to focus on conservation. That is 
something that we would like to look at. Natural gas demand far 
exceeds any expectation that is currently there in terms of 
what conservation can accomplish. The Energy Department 
proposals that estimate the 50 percent increase in natural gas, 
I believe, do factor in that we continue with conservation 
efforts and that we continue with these at the current rate 
that we are going forward and finding new ways of conserving. 
It is largely for air quality reasons that natural gas has 
become so much in demand, and so to a large extent that natural 
gas increase is a shift from other fuels in order to take 
advantage of the air quality benefits.
    Mr. Tom Udall. And I understand that. And what I would like 
you to focus on is aren't we better off being very aggressive 
on energy productivity rather than putting all our eggs in the 
natural gas basket so to speak?
    Secretary Norton. We are trying to pursue both avenues so 
that we have both conservation and additional supplies.
    Mr. Tom Udall. Thank you very much.
    The Chairman. The time of the gentleman has expired. The 
gentleman from Nevada Mr. Gibbons is recognized for 5 minutes.
    Mr. Gibbons. Thank you, Mr. Chairman, and, Madam Secretary, 
I want to welcome you to our Committee and certainly appreciate 
your testimony and presence here today. I have only been in 
this Committee for now 5 years, or beginning my 5th year, but 
during that time your predecessor Secretary Babbitt never once 
came in here and testified and argued and demanded CAFE 
standards be increased. Perhaps that is because he also 
realized that CAFE standards are not in his jurisdiction. But 
in the 96 months of the previous jurisdiction, they never came 
up with an energy plan as comprehensive or detailed as yours, 
so I want to give you great credit for that.
    I also want to thank you. Thank you for your willingness to 
look at the 3809 regulations. As you know, in Nevada, a State 
which has approximately 111,000 square miles, is 90 percent 
Federal public land, whether that is Forest Service or BLM, and 
mining is an important industry for our State. It is an 
important industry for the United States. So your willingness 
to take a look at the 3809 regulations and review those changes 
that were made are greatly appreciated and deeply important to 
a lot of Nevadans, as I am sure to a lot of Americans.
    My issue, of course, is one as we look at all of the 
renewable energy issues, geothermal. Recently in the last 
Congress in the late night, passed as a rider to one of the 
appropriation bills, was a change to some of the status of 
Nevada lands, that Black Rock National Conservation Area in 
which approximately 1.3 million acres was removed from 
geothermal potential and taken off the books.
    We would appreciate your willingness and your understanding 
to take a look at the Black Rock conservation issue, geothermal 
potential, not that we want to change any of the provisions 
which are going to protect those pristine areas that need 
protecting, but we do also recognize that Nevada, unlike what 
my friend from California says, is probably the heart of 
geothermal energy in this Nation. And we have a great potential 
for it, one, which I think is a very clean energy source that 
could provide a great deal of energy for the answer to 
California's problem.
    In addition to that, let me say that California has 
approached Nevada in the last year, and I know I was talking 
with your director, State director, with approximately 11 
applications for new power plants to be built in Nevada for 
California. This is probably part of the problem with 
California, its unwillingness to look internally at its own 
energy needs and demands.
    But that being put aside, I want to thank you for your 
interest here, but also I want to talk about the geothermal as 
I indicated earlier and hopefully get the Department of 
Interior's willingness to take a look at the boundaries of that 
1.3 million-acre Black Rock NCA to see whether or not we can 
efficiently and effectively and environmentally soundly, may I 
say, look at the geothermal energy potential there and make 
some accommodations for that very vital, very needed energy 
resource from that standard.
    Secretary Norton. Congressman, we would be happy to work 
with you and to examine that issue further.
    Mr. Gibbons. Thank you. And I know that you are on a very 
short time leash, and with that I would again applaud you for 
being in office for 4 our 5 months and having come up with an 
energy plan for this Nation. And again, you know, we have to 
address these issues. It is important for you to be here to 
address these issues. You are doing a fine job, and we look 
forward to having you back. Thank you.
    I yield back the balance of my time.
    The Chairman. Appreciate the gentleman's comments.
    Looks like we have time for one more. The gentlelady from 
the Virgin Islands is recognized.
    Mrs. Christensen. Thank you. I will be very brief. Thank 
you, Mr. Chairman.
    Good morning, Madam Secretary. It is a pleasure to join my 
colleagues in welcoming you to the Committee for the first 
time.
    Secretary Norton. Thank you.
    Mrs. Christensen. Before I ask the one question that I 
have, I want to take the opportunity to thank you for the way 
in which you have addressed with us the issue of the monument 
which is still ongoing, the two monuments that have been 
designated in my district. Mr. Chairman, from that experience 
and the other opportunities that we have had to work with the 
Secretary, despite what we are going through now, I am sure 
that we are going to end up at the end of the process with a 
very fair and balanced approach to dealing with our energy 
crisis.
    My question is that based on your testimony, the U.S. 
consumes about 7 billion gallons of oil--barrels of oil per 
year, and of that we import 4 billion and produce about 3-. How 
much does your office estimate we could increase production, 
for example, from increased drilling in the 95 percent of the 
BLM lands in those five States in the West from the lease that 
is already existing and available to us, and the outer 
continental shelf from enhanced recovery from the existing 
wells? Because your testimony says that maybe somewhere from 30 
to 70 percent is not recovered of what is drilled, how much 
more can we increase our production from just those areas and 
not putting any of our environmentally sensitive areas at risk?
    Secretary Norton. We are in the process of looking at some 
of those things and would be happy to provide you with some 
follow-up information about that. I obviously don't have those 
figures right at the top of my head. Certainly looking at 
enhancing production from existing areas is one of the things 
that we would like to pursue, and I think there are some good 
opportunities for doing that. That doesn't solve all of our 
problems, but I think that is one of the many steps that we 
have to pursue.
    Mrs. Christensen. Thank you. And you know, I agree with my 
colleague Mr. Udall here. I think that if we use the existing 
areas and increase our production, then the yield, and use the 
conservation--and what is it--energy productivity measures, I 
think that we can address this crisis.
    The Chairman. I thank the gentlelady.
    We have four Members who haven't had an opportunity. We 
have got about 3 minutes. Raise your hand if you want to ask a 
question. We will take you by the order you came then.
    Mr. Osborne.
    Mr. Osborne. Thank you, Mr. Chairman. Thank you, Madam 
Secretary, for being here. I realize it may not be directly in 
your province, but we are very interested in biodiesel and 
ethanol as part of renewable fuels and wondered if you had a 
quick comment on how you see this fitting into the energy plan?
    Secretary Norton. The alternative fuels such as ethanol are 
a part of the comprehensive energy plan, and that is something 
that the administration does plan to pursue with additional 
research, as well as looking at other incentives for going 
forward with that.
    Mr. Osborne. Thank you. Yield back my time.
    The Chairman. Thank you.
    Mr. Rehberg.
    Mr. Rehberg. Thank you, Mr. Chairman.
    Having been in public service since 1984 as a State 
legislator, and Lieutenant Governor from 1991 and 1997, and now 
as Congressman, I have spent my entire time traveling in the 
State of Montana to all 56 counties. I can honestly tell you I 
have never even heard of Mr. Anschutz, nor was this a 
controversy until it was created, this controversy, by the 
media and by the various interest groups to create the 
controversy. I hope you will stay above it, allow the process 
to go forward. I commend you for what you have done so far.
    I also want to thank you for sending Mike Koslowski out to 
Montana most recently. We had a Missouri Breaks hearing, and as 
you know there is a controversy surrounding that breaks 
designation by President Clinton and Mr. Babbitt.
    My question is--and certainly the monument that was created 
for the purposes of protecting the Missouri Breaks, but as you 
know, there are 80,000 acres of private property that were 
included within that designation, and there was quite a bit of 
oil and gas leasing property and, in fact, active Federal gas 
wells in that area. Are you open to suggestions for boundary 
adjustments?
    Secretary Norton. That is one of our more controversial 
monument designations and one that has, I think, one of the 
largest amounts of concern from local citizens.
    We are going through a process. We would be happy to work 
with you further. We are just beginning our process in looking 
at what should be the future of that monument, and perhaps 
adjustment of boundaries is something that you all might want 
to consider for congressional action.
    Mr. Rehberg. Thank you. I hope that Mike will give you a 
full briefing. We sat there for 8 hours and had 300 people. 
Mike gave everybody an opportunity to testify. It took us about 
8 hours to get through that process.
    My second quick question is Otter Creek. Are we any closer 
on Otter Creek? As you know, the State of Montana negotiated in 
good faith with the Federal Government for the transference of 
the Otter Creek tracts because they wanted to keep us from 
actually mining the New World Project north of Yellowstone 
Park. That was a good faith negotiation. It broke down in the 
end because Mr. Babbitt chose to turn his back on the State of 
Montana. How are we on that process?
    Secretary Norton. My understanding is that we are still 
working with the State of Montana in trying to move forward on 
that.
    Mr. Rehberg. Thank you, Mr. Chairman.
    The Chairman. The gentlelady from Minnesota.
    Ms. McCollum. Thank you, Mr. Chair.
    Secretary Norton, I am from the State of Minnesota, and the 
Great Lakes does have some drilling going on in Michigan. The 
Great Lakes provides drinking water for 10 million people, 35 
percent of the fresh water, and we are very alarmed and very 
concerned that there is going to be increased pressure both on 
the States, with the Canadian Government also, with more 
drilling going on in the Great Lakes as well as the proposed 
pipeline, which, it is my understanding, may have some input in 
whether or not it is approved or not, running a pipeline 
through the Great Lakes to transport what eventually could be 
oil, which covers 35 percent, as I said, of America's drinking 
water, the world's fresh water. So can you tell me what your 
position is, the Department's position is, on protecting fresh 
drinking water in the Great Lakes? And if you have taken any 
position, I hope have you taken a position in slowing down and 
not drilling in the Great Lakes.
    Secretary Norton. My understanding is that the drilling in 
the Great Lakes is entirely a State issue as opposed to any 
Federal land being involved in that. And I am not familiar with 
the pipeline proposal. I would be happy to get back with you 
with additional information on that. I don't have an 
understanding of or a position on the pipeline proposal at this 
time.
    Ms. McCollum. Mr. Chair--Ms. Norton, yes, it is a State 
issue. The Federal Government, I would think, would have a 
health and safety concern with the fresh water sources that are 
out there. So I am asking the Federal Government, you know, you 
are representing the Department of Interior, if you are going 
to ask States to slow down on this, or if you are going to be 
working to identify oil and other resources potentially that 
could be drilled out of the Great Lakes, or are you going to 
take a position where there is the place of last resort we 
should go because it is drinking water, as I said, for 10 
million people?
    Secretary Norton. I would be happy to take a look and see 
what jurisdiction the Department of the Interior has on those 
issues. I am not aware of a particular jurisdiction we have at 
this point. I think it would be primarily an Environmental 
Protection Agency issue in terms of water quality.
    Ms. McCollum. Well, Secretary Norton, even if you don't 
have direct jurisdiction, you are a leader in this area. I am 
asking for your strong consideration of doing what we have to 
do to protect drinking water. We are focused on oil right now, 
but any of the futurists will tell you the next battles that 
future generations will fight over will not be over oil, it 
will be over water. Thank you.
    The Chairman. I thank the gentlelady.
    The gentlemen from Colorado.
    Mr. Tancredo. Thank you, Mr. Chairman.
    Although some may be surprised at the great accomplishments 
you have already been able to achieve, Madam Secretary, none of 
us from Colorado are surprised, because we know you, and we 
know exactly what you are made of. And I have to say that you 
make us all very proud. Personally certainly I can attest to 
that.
    Madam Secretary, just a point about ANWR and the bonus 
bids. If you could clarify for us exactly how the 
administration is--as I understand it, some revenue from the 
bonus bids would be directed toward land conservation and some 
toward research and development of alternative energy sources. 
Am I accurate in that? Do you know how that split will occur? 
Do you have any idea about how much money we may be talking 
about?
    Secretary Norton. My recollection is that we would be 
looking at alternative energy types of research from the money 
coming from the bonus bids, where land conservation measures 
would be coming from the royalties from actual production. I 
don't have dollar figures for that, but would be happy to see 
if we do have any of those available.
    Mr. Tancredo. Thank you. I have no other questions except 
to say it is great to see you.
    The Chairman. Thank the gentleman from Colorado.
    We thank the Secretary. We appreciate your patience and 
your time with us. I think as I have listened to all the 
testimony, the most revealing testimony I heard today was from 
Mr. Markey from Massachusetts, his comments when he said this, 
"The State should be given complete deference when deciding how 
to use the natural resources." Now, I hope that applies to 
Alaska, Utah and Colorado and those other States, because so 
far those of us that live in the West, my 21 years as a Member 
of this organization, I haven't seen that. I say amen. I agree 
wholeheartedly with Mr. Markey on that with the exception of 
one thing in Nevada, Mr. Gibbons. And sometimes the good of the 
country has to come first.
    Mr. Gibbons. A little nuclear waste, that is all we have 
got a problem with.
    The Chairman. I don't know how you came up with that.
    Thank you, Madam Secretary. We surely appreciate it and 
appreciate your kindness, and we now stand adjourned
    [Whereupon, at 12:36 p.m., the Committee was adjourned.]

    Additional statements submitted for the record follow:

    [The prepared statement of Mr. McInnis follows:]

Statement of The Honorable Scott McInnis, a Representative in Congress 
                       from the State of Colorado

    Recently, my Subcommittee on Forests and Forest Health conducted an 
oversight hearing exploring the role of community-based partnerships in 
the management of our nation's forests, and another on forest biomass 
as an economic use for forest fuels. During the course of these 
hearings, two critical themes surfaced. First, healthy forests and 
healthy local communities are inalterably intertwined. Second, the 
emerging field of biomass production provides a great opportunity to 
promote both healthy forests and healthy local economies while 
contributing to our nation's energy needs.
    Biomass production seeks to utilize wood fiber generated by the 
mechanical thinning of forests for energy production. This practice 
complements other efforts to turn small logs into innovative value-
added products, such as furniture or hardwood floors, or composite 
signs made from chip wood and plastics.
    As Secretary Norton and members of this Committee know, last year 
Congress established the National Fire Plan to combat the rampant 
threat of catastrophic fire on our forest lands. At present, 73 million 
acres of National Forest lands run the substantial risk of experiencing 
run-a-way wildfires during the coming fire season. Additional acres are 
at risk on Interior Department lands. The cause of this imminent threat 
is clear: after 100 years of aggressive fire suppression, many of our 
forests are crowded with excess fuels--live small-diameter trees, dead 
trees of all sizes, branches, brush, and heavy accumulations of needles 
and leaves. The National Fire Plan creates a comprehensive and 
coordinated framework through which land managers can address this 
fundamental cause of our current forest fire crisis.
    As resource managers begin to systematically reduce hazardous 
forest fuels under the National Fire Plan, vast quantities of biomass 
could be made available. If this excess wood and brush must be removed 
to improve forest health, it only stands to reason that these resources 
should be put to efficient use in the local market place. It's a matter 
of common sense. In my view, Congress and Federal land management 
agencies should take all practical steps to promote the long-term 
availability of biomass and the viability of the businesses that 
utilize it.
    There will no doubt be some who cynically, and wrongly, view 
biomass production as some sort of threat to our public forests. It is 
not. Let me be clear: forest fuel reduction and biomass production is 
not an excuse to increase timber harvesting. Instead, it is a one-two 
combination that simultaneously promotes the sustainability of our 
forests and the health of our local economies.
    I look forward to hearing how the Department of the Interior will 
participate in exploring the benefits, opportunities and obstacles to 
utilizing biomass from our Federal lands. Such a renewable resource can 
boost domestic energy production while providing a viable and safe 
alternative to letting our public land treasures burn up in 
catastrophic fire.
                                 ______
                                 
    [The report entitled "National Energy Policy" was too 
lengthy to be included in the printed hearing. It has been 
retained in the Committee's official files.]
    [The prepared statement of Mr. Kind follows:]

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

    Thank you Mr. Chairman. Ms. Norton, I would like to thank you for 
appearing before the Resources Committee today to discuss aspects of 
the President's National Energy Policy. I have reviewed the policy and 
found aspects that I can support. In particular, I was impressed with 
those sections of the plan that address the need for increased emphasis 
on renewable energy, conservation, and energy efficiency.
    I believe these are exactly the areas that we as a country should 
focus on in order to achieve greater energy self sufficiency. However, 
while there were good words in the President's energy policy regarding 
energy efficiency and renewable energy sources, the President's Fiscal 
Year 2002 budget request does not support his commitment in these 
areas. For example, the President proposes to cut Department of Energy 
funding for solar and renewable energy sources by $136 million - a 
reduction of 36 percent.
    Further, the Administration's request would eliminate the 
International Renewable Energy Program and the Renewable Energy Program 
for American Indians. It would include $36.1 million less for 
Photovoltaics, $19.1 million less for Wind, $17.8 million less for 
Superconductivity, $13.0 million less for Geothermal, $13.0 million 
less for Hydrogen, and $11.8 million less for Concentrating Solar 
Power.
    I find it very difficult to understand these proposed cuts in light 
of the glowing words for renewable energy contained in the National 
Energy Policy and the President's claim that the nation faces an energy 
crisis. Indeed, common sense would dictate that we be increasing 
funding for these programs, not cutting them as the President proposes.
    The National Energy Policy also calls for increased domestic 
production of oil, natural gas, and coal. While I recognize the 
possible need for increased domestic production of these traditional 
energy resources, I am concerned that the Administration is too willing 
scale back environmental protections in the name of increased supply. 
Environmental restrictions designed to protect our wildlife must not be 
sacrificed. For example, I am concerned that the environmental impacts 
of pumping billions of gallons of contaminated water to the surface as 
a result of coalbed methane gas production have not been adequately 
assessed. In addition, the energy industry must be required to use the 
most advanced technology designed to minimize environmental impacts.
    Over the short term, we may need to increase domestic production of 
our traditional energy to meet our needs. However, this must be done in 
a manner that is truly protective of the environment. We should not 
allow the current situation to be used as an excuse to rollback 
environmental protection. Over the long term, our economic and 
environmental future lies with using our advanced technology to develop 
clean, renewable energy sources and becoming more energy efficient.
                                 ______
                                 
    [The prepared statement of Mr. Mark Udall follows:]

  Statement of The Honorable Mark Udall, a Representative in Congress 
                       from the State of Colorado

    I am looking forward to hearing from Secretary Norton, because this 
is a most important topic.
    I have some very serious concerns about the Administration's energy 
policies. I think they lack balance, with too much emphasis on 
increased production of fossil fuels and not enough on alternative 
sources, energy conservation, and increased efficiency.
    I also am very apprehensive about how these policies would affect 
the management of the Federal lands, which are the property of all the 
American people.
    Certainly those lands--in Colorado as in other states--can and 
should provide our country with energy and minerals.
    But the lands also have many other resources, both natural and 
cultural, as well as less-tangible values.
    Like energy and minerals, those other resources and values are 
important for the entire country. But they are especially important for 
the people of the Western states--they shape our region and our lives.
    In Colorado, rapid population growth is putting increased pressure 
not only on our national parks and monuments but also on the national 
forests, the wildlife refuges, and the public lands managed by the 
Bureau of Land Management.
    We are becoming increasingly aware of the need to respond to that 
pressure by better management of recreational and other uses of all the 
Federal lands in our state, and by increased protection for the most 
sensitive areas.
    Just in the last two years, legislation has been enacted to enlarge 
the Black Canyon of the Gunnison and the Great Sand Dunes National 
Monuments and to designate them as National Parks; to create the 
Colorado Canyons National Conservation Area; and to add the Spanish 
Peaks and the Black Ridge areas to the National Wilderness Preservation 
System.
    And pending before this Committee are bills to protect more 
wilderness areas in our national parks, national forests, and public 
lands and to designate Rocky Flats as a National Wildlife Refuge once 
that former weapons site is fully cleaned up and closed.
    I strongly support these initiatives and also support protecting 
the roadless parts of the national forests. I think that is the way we 
should be going.
    But the Administration's energy policies seem to go in the other 
direction.
    In fact, I am tempted to borrow some rhetoric from the other side 
of the aisle and say that we are on the verge of a ``war on the West.--
    That is not a new phrase. Some people used it about some actions of 
the previous Administration. But now there is a difference--this time, 
it may prove to be accurate.
    Unless we restore some balance, the energy policy will be a war on 
wilderness, a war on wildlife, a war on open spaces--and ultimately, a 
war on the economy of the West.
    The administration wants the people of the West to open up 
protected areas, forsake protecting more wilderness, and sacrifice much 
of what makes our part of the country special--all to avoid a 
commitment to a balanced policy of increased efficiency and 
conservation and an energy supply featuring not only oil and gas but 
also greater use of wind, solar, biomass, and other renewable sources.
    The West has heard that before--but the West has changed 
significantly since the Reagan-Bush administration came to Washington. 
Our region's economy is more diverse and many of the jobs in the new 
economy are based on people's desire to live where open space and the 
natural environment are vigorously protected.
    So, I urge the President to draw back from the brink, rethink his 
priorities, and listen to all the voices of the west and the rest of 
the country.
    If that happens, I think we in the Congress can work with the 
Administration to develop a sound, balanced policy that will address 
our energy problems without sacrificing the other resources and values 
of the Federal lands. Certainly I am ready to help in that effort.
                                 ______
                                 
    [The prepared statement of Ms. Solis follows:]

Statement of The Honorable Hilda L. Solis, a Representative in Congress 
                      from the State of California

    Chairman Hansen, Ranking Member Rahall, and colleagues, I am 
disappointed with this so-called National Energy Policy.
    As a Representative from the great state of California, my 
constituents and I have experienced first hand what it is like to sit 
in the dark. We have grumbled as we sat in traffic because the traffic 
lights were not working due to a blackout and we have cried out for 
relief as prices have jumped from $30 per Megawatt Hour (MWh) to $1900 
per Megawatt Hour (MWh).
    My constituents are on the front line of the energy crisis. And 
yet, they have been ignored by the Bush Administration and its National 
Energy Policy Development Group. How can our country take seriously an 
Administration who has promised so much in the future but is unwilling 
to deal with the present?
    The Administration promises more drilling, less environmental 
protection standards, and more coal burning. They want the focus of our 
national energy policy to be on the destruction of the environment 
instead of the future of this country.
    Sure, President Bush's plan has some portions which are 
environmentally conscious - but this limited good does not make up for 
the overall destruction of our precious resources. We are drilling away 
at our children's future.
                                 ______
                                 
    [The prepared statement of Mr. Flake follows:]

  Statement by The Honorable Jeff Flake, a Representative in Congress 
                       from the State of Arizona

    President Bush's energy policy is intended to increase energy 
supply through a variety of measures while paving the way for more 
self-reliant energy production. The economics of the plan move toward 
allowing the market to correct current imbalances between current 
supply and demands. Today we look into how this plan will affect 
legislation to be heard before the Resource Committee this Congress.
    Currently, we are experiencing the results of policies that 
inhibited production, raised costs and imposed price controls on 
energy. Our situation is felt in rolling blackouts, higher utility 
bills, higher gasoline prices and concern over our country's future 
energy supply. And, we find ourselves 56% dependent upon foreign 
produced oil. The President's Energy Policy is intended to address 
these very issues.
    In a report containing over 100 recommendations, the National 
Energy Policy emphasizes basic economics, and production of energy on 
our own soil to a much greater extent than we have seen over the past 
several years. In order to accomplish this, we need to directly address 
issues of expedited permitting processes, infrastructure development, 
and exploration of regions known to contain energy resources.
    It is my hope that together we can approach this situation with a 
strong effort for reform that will bring us closer to a self-sufficient 
energy supply. I look forward to hearing more about how the Committee 
can work towards accomplishing the President's goals during this 
Congress.
                                 ______
                                 
    [The response from Secretary Norton to questions submitted 
for the record follow:]


 FOLLOW-UP QUESTIONS AND ANSWERS FOR SECRETARY NORTON FROM THE JUNE 6, 
   2001 HEARING BEFORE THE HOUSE RESOURCES COMMITTEE ON THE NATIONAL 
                             ENERGY POLICY

(HANSEN) Energy and Minerals
    Question 1a: Does the Interior Department have an estimate as to 
how much oil and gas production is presently not accessible due to 
restricted land management uses or designation such as wilderness study 
areas, national monuments?
    Answer: General information is available for National Monuments and 
Wilderness Study Areas regarding oil and gas potential. The probability 
of oil and gas development within these sites is generally low based 
upon preliminary geologic data, Bureau of Land Management (BLM) 
planning and known industry records (including proprietary data). One 
notable exception to this is Canyons of the Ancients National Monument 
in Colorado which is currently 85% leased for oil and gas and is 
subject to valid existing rights and further leasing in particular 
circumstances, as provided by Proclamation. In other areas, there is 
limited overlap of industry identified oil and gas reserves with 
National Monuments and Wilderness Study Areas. The Department of Energy 
report in June of this year that analysts studying Federal lands in the 
Greater Green River Basin of Wyoming and Colorado found that nearly 68% 
of the area's technically recoverable gas is either closed to 
development or under significant access restrictions. However, the 
total volume of the reserves is not proven at this time and BLM is 
working closely with the USGS to obtain more detailed information about 
the potential for undiscovered oil and gas reserves within these areas.
    Question 1b: How have permitting delays for drilling and 
construction of transportation facilities, such as pipelines and 
transmission lines across public land impacted our ability to develop 
energy resources on public lands?
    Answer: Permitting delays result in slowing the efforts to bring 
on-line energy development in a timely manner.
    The BLM is responding to this concern regarding our national need 
for increased energy and mineral production from our Federal lands in 
an environmentally responsible manner through several initiatives. One 
key element is the study required in Section 604 of the Energy and 
Policy Conservation Act (EPCA) of 2000. The EPCA study will identify 
and inventory impediments and restrictions to oil and gas resources. We 
will also study ways to ensure that the permitting of drilling and 
construction of transportation facilities and other right-of-ways for 
oil and gas are made available in a timely and expedited manner as 
allowed by budgetary resources.
    Question 2: Do you believe that you as Secretary of Interior have 
the authority to acquire seismic data in areas which are designated 
off-limits to oil development through annual appropriations riders or 
an executive order?
    Answer: In moratoria language appearing in the Fiscal Year 1992 
House Report, accompanying the Fiscal Year 1992 Interior 
Appropriations, restrictions on preleasing activities did not preclude 
environmental, geologic, geophysical, economic, engineering, or other 
scientific analyses, studies, or evaluations. These studies are not 
considered a part of the EIS or the formal sale process. While the 
current moratoria language is silent on these interpretations, this 
language has not been revised or reinterpreted in subsequent 
appropriation bills.
    Question 3: In light of highly publicized natural gas shortages and 
high market prices, what specific actions does Interior plan to take to 
speed up the permitting process, particularly in areas where excess 
pipeline capacity is available to carry natural gas into gas-short 
areas like California or the Midwest?
    Answer: Permitting for energy-related projects is often a lengthy 
multi-agency process. The President has issued an executive order 
directing Federal agencies to expedite the review of permits and other 
Federal actions necessary to accelerate the completion of energy-
related project approvals on a national basis. The Department of the 
Interior is well on its way to developing our energy implementation 
plan. Specific actions to expedite permitting will be contained in that 
plan. The BLM is addressing permitting through several initiatives, 
including revising key land use plans for current development 
scenarios; streamlining the processes for timely approvals for oil and 
gas development such as ESA Section 7 consultation with Fish and 
Wildlife Service, National Marine Fisheries Service, and cultural 
resources clearances; and improving coordination among affected parties 
by the use of information meetings and forums such as the National 
Petroleum Forum and Federal Leadership Forum. In addition to 
permitting, the Bureau must also address the monitoring and compliance 
of existing and new operations. Finally, pipeline carrying capacity is 
not a responsibility of the Department of the Interior, but we will 
work with FERC to expedite Right-Of-Way approval to facilitate this 
process.
    Question 4: Does BLM have any national guidelines on how regional 
managers should handle prospective energy resource lands in the area 
planning process or is that left to the individual's discretion? Is it 
time to re-examine these guidelines in light of energy shortages?
    Answer: The BLM does have existing national Supplemental Program 
Guidance for oil and gas leasing and planning. This guidance is in the 
process of being reviewed in light of the National Energy Policy.
    Question 5: What is the current status of the implementation of the 
Energy Policy and Conservation Act, Sec. 604 study on impediments to 
oil and gas exploration and development? How will the Department use 
the study in increasing access to oil and gas resources?
    Answer: Since the reauthorization of the Energy Policy and 
Conservation Act (EPCA) (P.L.106-469) on November 9, 2000, the 
Department of the Interior is proceeding expeditiously in its efforts 
to complete the assessment of restrictions and impediments to oil and 
natural gas development underlying Federal land. To expedite the 
process, the Secretary designated the BLM as the lead agency to 
coordinate the assessment. Working cooperatively as an inter-agency 
team, the BLM, USGS, USFS, and DOE completed identifying current 
studies and ongoing efforts, establishing agency's responsibilities and 
identifying the overall approach to the analysis. Currently, the study 
is focusing on five priority areas within the Rocky Mountain Region 
based on industry interest, resource potential, reserve ranking and an 
oil and gas needs analysis. The analysis for these basins is expected 
to be provided to the House and Senate energy and resource Committees 
within the required two-year time frame.
    As the information from the assessment is received, the BLM and 
USFS will review the findings, assess the restrictions and impediments 
effects on the availability of oil and gas resources for future 
development, and consider modifications, as necessary, to increase 
access to oil and natural gas resources.
    Question 6: Can you give us an idea regarding the budget 
requirements for the Department to conduct this work? What level of 
detail will this assessment take if new funds are not sought in the 
current fiscal year? Will a reprogramming request be sent to the 
appropriators to get this job funded?
    Answer: Implementation of Section 604 of the Energy Policy and 
Conservation Act Amendments of 2000 affects Interior's Bureau of Land 
Management and the U.S. Geological Survey, as well as the U.S. Forest 
Service and the Department of Energy. Section 604 requires these 
agencies to identify and evaluate the extent of oil and gas resources 
and reserves on public lands, and evaluate impediments and restrictions 
to access and development of these resources. These evaluations are to 
be completed by the end of 2002.
    In the 2002 President's Budget, $3.0 million is requested in the 
BLM budget for the work of all four agencies. Since oil and gas 
assessments are performed by geological basin, and since it would not 
be possible to perform these analyses on all basins in the U.S. within 
the time provided, the agencies are in the process of discussing the 
basins of greatest interest with the authorizing Committees. Currently, 
the four agencies will be able to fulfill the requirements of EPCA by 
the end of 2002 for five study areas in the Rocky Mountains with the 
largest estimates of oil and gas resources and significant Federal land 
ownership. These study areas include Montana Thrust Belt in Montana, 
the San Juan and Paradox Basins in Colorado and New Mexico, the Unita/
Piceance Basin in Colorado and Utah, the Greater Green River Basin in 
Wyoming and Colorado, and the Powder River Basin in Wyoming and 
Montana.
    Because the requested funding is sufficient to complete work in 
these five basins, the Department does not anticipate that a 
reprogramming request will be necessary to meet the requirements of the 
provision by the end of 2002.
    Question 7: BLM is implementing a major planning effort that 
concentrates on updating and completing land use management and 
activity plans. Has BLM set energy resource areas as their highest 
priority?
    Answer: The BLM fully supports the goals and measures outlined in 
the President's Energy Policy and is taking the necessary measures to 
achieve them. This includes adjusting the priority and schedules of 
land use planning activities. Management of energy resources was a key 
factor used to identify planning projects included in the Fiscal Year 
2001 and 2002 President's budget requests. The BLM has recently 
undertaken efforts to expeditiously identify and complete high-priority 
energy related plans. The BLM currently is in the process of 
identifying 5 - 10 time-sensitive plans where we will take appropriate 
measures to ensure their timely completion. These measures will 
include, as needed, the use of policy and technical support teams, 
additional training, enhanced contracting procedures, and the re-
allocation of funding.
    Question 8: Will BLM be exploring new approaches to the planning 
process to assure that management plans not only remain current but 
also address the energy potential of each resource area?
    Answer: In November 2000, the BLM issued a revised land use 
planning manual and handbook to more clearly outline planning and 
decision making requirements, including those for mineral and energy 
development. This manual and handbook includes specific guidance on 
updating land use plans to ensure they address energy and mineral 
development. This guidance also includes direction for addressing new 
information and circumstances to ensure that land use plans remain 
current. This guidance identifies factors to consider when making a 
determination of whether plan revisions or amendments are necessary, 
such as the identification of new information or changes in anticipated 
impacts. We are currently revising our Planning for Fluid Mineral 
Leasing Handbook to ensure it provides up-to-date guidance for energy 
development, including procedures to address energy potential for each 
resource area. We plan on expanding this handbook to address other 
energy sources as well. This handbook will also provide guidance for 
addressing information generated through the assessment of oil and gas 
resources which is being conducted under provisions of the Energy 
Policy and Conservation Act of 2000.
    The BLM is currently exploring opportunities to modify the land use 
planning regulations so that they more closely align with the Council 
for Environmental Quality's regulations for implementing the National 
Environmental Policy Act. These modifications will reduce some of the 
confusion that exists between the procedural requirements for land use 
planning and the procedural requirements for completing environmental 
analyses. The anticipated changes will also allow land use plans to be 
completed in less time.
    Question 9: Are any bottlenecks in the oil and gas leasing and 
permitting process caused by conflicting requirements in different 
laws? If so, what legislation is required to resolve these conflicts?
    Answer: As part of the President'' National Energy Policy, we will 
be examining whether there are any such bottlenecks and how best to 
resolve them.
    Question 10: In many offices the BLM has significant Application 
for a Permit to Drill backlogs, even though states are also involved in 
issuing drilling permits on state and private land in the same areas. 
Would it be feasible for BLM to contract some of the APD backlog to the 
appropriate state agency or rely on outside parties to conduct much of 
the work?
    Answer: Most Application for a Permit to Drill (APD) backlogs are 
due to NEPA and planning requirements and the consultations and 
reviews, required by several statutes, that are conducted in 
conjunction with the environmental analysis required by NEPA. Most of 
the large-scale EISs are already contracted out to private contractors. 
Decision making on individual APD approvals is a Federal function which 
is not susceptible to contracting out. However, BLM is considering 
possible additional uses of contractors for the analytical processes 
involved prior to decision making.
    Question 11: The National Resources Defense Council said in a 
report to this Committee that it is not necessary to drill in offshore 
Alaska, the eastern Gulf of Mexico, and other OCS areas where drilling 
moratoria are in place because 70 percent of the country's estimated 
undiscovered, economically recoverable oil and gas is located outside 
of these areas. Can you respond to this statement?
    Answer: It is true that the estimated undiscovered economic 
resources of the moratoria areas represent less than a third of the 
estimate for the total OCS. The current reserves and resource estimates 
are concentrated in the Central and Western Gulf. Large portions of 
these areas are mature and natural gas production on the shelf has been 
in decline since 1997. Resources in moratoria areas could have a 
significant effect on the Nations energy future. Since these areas are 
comparatively under-explored, less certainty exists about the resource 
estimates. There is also relatively greater up-side potential since the 
comparative lack of exploration in these areas also means that the 
larger fields in the field size distributions remain undiscovered. It 
is these larger fields that normally produce resources more efficiently 
with less environmental impact since less infrastructure is required to 
produce a given resource level than from more numerous but smaller 
fields.
    Question 12: In the Powder River Basin there has been a de facto 
moratorium on Federal gas drilling because of the threat of a lawsuit 
over the inadequacy of the current land use plan to contemplate CBM 
development of this magnitude. What is being done to resolve this 
impasse in a timely fashion?
    Answer: An environmental assessment for approving up to 2,500 CBM 
drainage protection wells was completed in March of this year and 
Wyoming BLM is actively approving CBM wells in its portion of the 
Powder River Basin (PRB). In addition, a new EIS for permitting CBM 
wells in the Wyoming PRB is scheduled for completion in mid-2002. This 
document will allow for the permitting of up to 50,000 CBM wells. In 
Montana, BLM is doing a joint EIS with the State of Montana for CBM 
wells in its portion of the Basin. The Montana EIS is scheduled for 
completion in late 2002.
    Question 13: The Wyoming Oil and Gas Conservation Commission 
continues to approve coal bed methane drilling permits in the Powder 
River Basin. During the last 12 months they have approved about 6400 
permits, which included about 1500 on Federal lands. This seems to be a 
duplication of efforts. Is it necessary for BLM to also approve 
drilling permits?
    Answer: Under current law, BLM has the responsibility to coordinate 
and manage all resources on Federal lands and to comply with a number 
of other environmental laws (such as the National Historic Preservation 
Act, Endangered Species Act, FLPMA, NEPA, etc.). These are not 
requirements in the State of Wyoming. Consequently, the State 
permitting process is vastly different.
    Question 14: The imbalance in drilling permit approvals indicates 
that Federal gas resources are being drained by non Federal wells. BLM 
has received about $3.5 million in supplemental appropriations during 
the last three years for coal bed methane in the Powder River Basin. 
What is the current backlog in the approval of CBM drilling permits and 
when will the backlog be eliminated?
    Answer: The current backlog for CBM drainage permits is 1,400 
wells. Since the drainage Environmental Assessment was completed in 
March 2001. Wyoming BLM has approved approximately 550 CBM drainage 
wells. The remaining backlog should be processed by end of year. 
Additionally, there are approximately 1,600 non-drainage CBM permits 
pending. These will not be processed until the 50,000 well EIS is 
completed in 2002 at which time thousands of additional drilling permit 
submissions are anticipated. Ultimately, the Wyoming Office plans to 
permit more than 2,500 CBM wells a year once the environmental 
documents are completed and additional staff are hired.
    Question 15: This Committee has heard complaints about EIS delays 
in Wyoming's Jack Morrow Hills Resource Area and at the Vernal District 
Office in northeastern Utah? What is the cause of these delays and when 
may we expect this process to be completed?
    Answer: The Jack Morrow Hills Coordinated Activity Plan is in the 
process of being revised by the BLM in Wyoming. The BLM has received 
approximately 12,000 public comments on the plan. Since we must still 
analyze all the comments, we cannot provide a completion date at this 
time. In northeastern Utah, the Vernal Field Office is preparing an EIS 
for conventional gas well drilling. The project was first analyzed in 
an Environmental Assessment (EA) but due to public input, an EIS was 
initiated. The BLM plans to complete the EIS in the summer of 2001.
ANWR
    Question 16: In your testimony, you say the mean estimate of 
recoverable oil under the coastal plain of ANWR is 10.4 billion 
barrels. Environmentalists say the Geological Survey's most 
``optimistic'' estimate is only 3.5 billion barrels or less. There 
seems to be a difference of opinion. Can you clarify the Geological 
Survey's estimate of oil? What is estimate of ``in-place'' oil 
resources under the coastal plain, including Native and State lands?
    Answer: The USGS Petroleum Assessment of the 1002 Area of the 
Arctic National Wildlife Refuge is reported in three categories: in-
place, technically recoverable, and economically recoverable resources. 
For each category, they report a range of values from lowest and most 
conservative (at the 95% confidence level) to highest, but unlikely (at 
the 5% confidence level). Also, they report the mean, or the expected 
value.
    Also, the USGS estimates are reported geographically for the 1002 
Area alone (both deformed and undeformed areas), and the entire 
assessment area, which includes the 1002 Area, the State waters, and 
the Native lands. This assessment did not assess state lands. Given the 
many categories and ranges of values, it is not surprising that quotes 
of assessment results might appear to be in conflict.
    The best way to clarify the Geological Survey's estimate of oil 
resources is to present the results in the table below, with categories 
labeled. The results of the economic analysis are given for oil at $24 
a barrel, which is just an example. If the price of oil were to 
increase, the resource estimate would increase as well. Tables within 
the Assessment report include volume estimates for economically 
recoverable oil for a range of prices for oil.
    The USGS mean estimate for ``in-place'' oil under the coastal 
plain, including Native lands and State waters (not lands) is 27.78 
billion barrels. The full range reported is from 15.58 bbo (at the 95% 
confidence level) to 42.32 bbo (at the 5% confidence level).

[GRAPHIC] [TIFF OMITTED] T0888.036

    Question 17: The industry on Alaska's North Slope has increased its 
success rate in recovering oil the last 20 years. Is it possible that 
the estimated amount of recoverable oil in ANWR could increase, too, if 
further technological advances are made?
    Answer: The technically recoverable resource volumes reported in 
the USGS Petroleum assessment of the 1002 Area of ANWR were estimated 
by applying recovery rates, that are typical for current North Slope 
fields, to in-place resource estimates. Therefore, it would be 
reasonable to say that technically recoverable resource estimates might 
increase if recovery rates increased, if all other information remained 
the same.
    Question 18: Have the caribou arrived in the coastal plain of ANWR 
this year? What time did they arrive last year?
    Answer: Not as of June 15. This year an unusually late spring, 
coupled with exceptionally deep snow persisting along the spring 
migration route in Canada, has delayed the Porcupine herd from reaching 
the coastal plain of the Arctic National Wildlife Refuge. Since the 
herd calves in early June, we assume they calved on the north slope of 
the Yukon Territory and upland migration routes east of Old Crow Flats. 
This is very similar to the pattern observed in 2000, also a late- 
spring deep-snow year.
    Under a similar pattern in 2000, initial birth rate was lower than 
average (71% v 80%), and survival of calves to 1 July was also lower 
than average (63% vs 88%). Data for 2001 are not yet available. Given 
the late spring, this summer's census will be particularly important. 
An inter-agency team will attempt to conduct a herd census beginning 
around 25 June.
    Last summer, caribou of the Porcupine herd began arriving on the 
refuge coastal plain around 15 June 2000 after calving primarily in 
Canada. Major movements from the calving grounds in Canada arrived 
during the period of 20-25 June 2000.
    Question 19: What has been the effect of oil development on 
wildlife in and near Prudhoe Bay? Has the oil development caused any 
wildlife to become endangered or caused species to be listed due to 
development?
    Answer: The potential impacts of oil field development on wildlife 
near Prudhoe Bay and across the Arctic Coastal Plain of Alaska can be 
broadly classified to include: loss of habitat due to gravel fill; 
avoidance or displacement from preferred habitats; disturbance; changes 
in hydrology and vegetation near infrastructure; distribution and 
abundance of predators and scavengers; contaminants; and the chance of 
a significant onshore or offshore oil spill. Knowledge of the potential 
effects of oil development on wildlife in the Prudhoe Bay area is 
constrained by the lack of quantitative pre-development data, 
particularly for migratory waterbirds (e.g., waterfowl, shorebirds), 
predators (e.g., foxes, brown bears), and scavengers (e.g., gulls). In 
1999, oil production facilities extended approximately 80 miles across 
the Arctic Coastal Plain (Alpine to Badami) with more than 362 miles of 
roads, 11 square miles of land developed for drill pads and processing 
facilities, 1,130 miles of pipelines and 15 gravel mines totaling 
approximately 2.5 square mile. The direct loss of wetland habitats as 
the result of gravel fill and indirect impacts (e.g., disturbance, 
avoidance, potential changes in hydrology and vegetation) of oil 
development on the distribution, breeding density and productivity of 
migratory birds are unknown. Although many species of migratory birds 
occur, nest and raise broods in or near oil field infrastructure, some 
species have been shown to avoid infield facilities.
    Although adequate data have not been collected, arctic foxes near 
Prudhoe Bay may produce more young and live longer due to the 
availability of a supplemental food source (garbage) and den sites 
(buildings, equipment). The potential impacts of increased numbers and 
survival of arctic foxes on ground nesting birds, including threatened 
species, are unknown. Similarly, the occurrence, density and 
productivity of brown bears and gulls have likely increased as the 
result of the Prudhoe Bay landfill. Ravens did not occur in the Prudhoe 
Bay area until the development of infrastructure which provided nesting 
structures and anthropogenic food sources.
    Relative to caribou, the Central Arctic herd has two distinct 
calving areas. From 1980-87, the western-most portion of the herd that 
calved near Prudhoe Bay shifted its location of concentrated calving 
away from oil field infrastructure. Since 1987, the concentrated 
calving has remained south and outside of the oil field in an area of 
poorer quality forage. Yet despite this shift, from 1978 to 2000, the 
Central Arctic herd increased from 5,000 to its current population of 
about 27,000 individuals.
    The two threatened migratory birds which occur in the Prudhoe Bay 
area during summer are spectacled eiders and the Alaska breeding 
population of Steller's eiders. Causes of the declines of both species 
are not well understood but factors include lead shot poisoning; 
increased predation by ravens, large gulls and foxes on breeding 
grounds in areas where predators may be enhanced by year-round food and 
shelter due to human activities; and degradation of winter habitat. The 
development of the Prudhoe Bay area, in itself, has not resulted in any 
species becoming endangered or being listed under the Endangered 
Species Act.
    Question 20: You've been to the North Slope of Alaska. How would 
you compare the environmental track record of oil development there 
with that of similar industrial development in other areas you've 
toured?
    Answer: Yes, I have visited the North Slope of Alaska. I find the 
environmental record of the industry in Alaska, under state and Federal 
regulation and supervision, to be good. In addition, I believe all 
efforts are being made to improve the oil industry's environmental 
record. My experience in other states is similar to what I saw in the 
North Slope in that the industry continues to refine environmentally 
sound ways to produce.
    Question 21: How much Federal land in Alaska has Congress set aside 
in Wildlife Refuges, Parks, Monuments, Wilderness Areas, and Wild and 
Scenic Rivers? Was the coastal plain of ANWR ever designated a 
wilderness area?
    Answer: 77.0 million acres in Alaska are set aside in Wildlife 
Refuges of which 18.7 million acres are Wilderness. There are 
approximately 5.2 million acres of National Park Service Land in Alaska 
of which approximately 33 million acres are Wilderness and .72 million 
acres are Monuments. The Bureau of Land Management has .6 million acres 
(952 miles on 6 rivers) of Wild and Scenic River Land and .78 million 
acres of Wilderness Study Areas in Alaska. The coastal plain of the 
Alaska National Wildlife Refuge has never been designated as a 
wilderness area.
Water and Power
    Question 22: In 1996, Former Secretary Babbitt signed a Record of 
Decision regarding the operations of Glen Canyon Dam that reduced the 
peaking power capacity of the dam by one third. Obviously this has had 
significant impact on municipalities across the west. What are the 
Administration's plans to evaluate and improve this situation? What 
suggestions do you have as to what action could be taken to increase 
the power capacity of Glen Canyon Dam?
    Answer: The 1996 Record of Decision(ROD) on the Operation of Glen 
Canyon Dam EIS placed restrictions on the power plant releases from the 
dam, but also put in place an Adaptive Management Program to monitor 
the effects of these restrictions. Annual monitoring and research 
activities are currently being conducted to evaluate the effectiveness 
of the ROD in meeting the intent of the EIS preferred alternative and 
the Grand Canyon Protection Act of 1992. Results from this long term 
effort will address whether the constraints are achieving the desired 
effect. Recommendations to the Secretary from this Adaptive Management 
Program could lead to changes.
    Increasing the power capacity of the dam depends not only on these 
constraints, but also on the availability of water for release for 
generating electricity. Release volumes are bound by treaty, compact 
and statute, and we have no authority to release water in excess of 
these requirements. Drought conditions in the Southwest thus constrains 
our ability to meet municipalities' electrical demand from hydropower 
facilities.
    The ROD contains a provision for deviation from EIS constraints 
under emergency conditions, and this provision has been used 7 times in 
the last year to temporarily increase on-peak releases to assist power 
users. However, there are no provisions for deviation from the ROD 
constraints for financial reasons. Since there can be no increase in 
annual water deliveries from the dam, any additional releases for 
emergency purposes must be offset by lower releases later in the water 
year. Therefore, permanent increases in generating capacity could only 
occur by relaxing the daily fluctuation constraints of the EIS, a 
proposal which would be expected to have adverse impacts to most of the 
downstream resources in the Grand Canyon.
    Question 23: What role will Departmental agencies take in regards 
to mandatory conditions for FERC relicensing?
    Answer: Interior bureaus are responsible for establishing 
hydropower license conditions as they relate to the protection and 
adequate utilization of Indian and public lands, and as they relate to 
fishways. Interior has committed to developing preliminary conditions 
within 60 days after FERC determines that the license application is 
ready for analysis, and final conditions within 60 days of the close of 
the draft NEPA comment period. We are looking for other ways to 
streamline the process and will be examining whether or not an appeals 
process would be appropriate. We will also be re-examining our 
definition of ``fish'' and ``fishway.--
    Question 24: As you know, hydropower is one of the cleanest sources 
of energy available, yet like all other forms of energy production, 
dams require a source of fuel--water. With much of the west in drought 
conditions, what is the Department doing to assure maximum power 
production, within the limits of water availability and water service 
contracts, throughout the 17 western Reclamation states?
    Answer: Through the 1980's and 1990's, Reclamation has had an 
aggressive program to update and uprate existing units. Reclamation 
presently has programs underway to increase capacity and energy at many 
facilities including new runners at Grand Coulee (400 MW) and Shasta 
(51 MW) and uprating Davis (11 MW). In addition, Reclamation continues 
to implement life extension programs to revitalize performance and to 
reduce/eliminate expensive failures.
    Reclamation has been changing pumping operations to provide 
additional power during peak hours. As an example, Grand Coulee pumping 
for irrigation of the Columbia Basin Project has been shifted as much 
as possible to non-peak hours. This can remove up to 300 megawatts from 
the peak hours and add up to 600 megawatts of load to non-peak. The 
off-peak pumping also reduces spill on other Columbia River hydro 
plants by increasing off-peak loads during high water release periods 
when water might otherwise bypass the generating units.
    In operations, Reclamation is working with BPA on powerplant 
optimization and other operational improvements which would improve 
powerplant operations. As an example, at Hungry Horse, Reclamation is 
reviewing different unit configurations for power generation to 
maintain the minimum water releases this year and increase power 
generation.
    Region powerplants have coordinated closely with the PMAs on a 
daily basis and regular scheduled weekly conference calls to ensure 
that units are scheduled out at the most opportune time. This has 
resulted in frequent changes to outage schedules and occasionally 
expedited return to service should system emergencies arise. Many units 
such as those at Grand Coulee units are also used for reserves (both 
standby and spinning) in addition to generation requirements.
    Conservation efforts Reclamation is making include signed 
agreements with BPA for energy conservation audits at Reclamation Power 
facilities. Presently, the Hungry Horse audits have been completed. The 
recommend retrofits in lighting, HVAC, and other systems will save 
energy that will be available for BPA to market.
    In the Upper Colorado Region, the project operators for pumping 
plants are the water districts. The water districts have entered into 
power contracts with the Western Area Power Administration (Western) 
and Reclamation. A requirement in the power contract is to have an 
energy conservation plan. This plan includes such items as using energy 
efficient equipment and operating at times to best use the water and 
power.
    Question 25: What is the Administration's position regarding the 
Path 15 transmission issue in Northern California?
    Answer: The Department and the BLM support designation of the 
Western Area Power Administration (WAPA, a Department of Energy agency) 
as the lead Federal agency for this issue. It is not known at this time 
whether public lands will be involved in the proposed upgrade/expansion 
of the Path 15 transmission line. In March 2001, WAPA hosted a meeting 
in Sacramento, California of Federal and State agencies and other 
organizations that would be involved in the permitting of the upgrading 
of Path 15. Various discussions of how to streamline and coordinate the 
Federal National Environmental Protection Act and the State California 
Environmental Quality Act reviews that would be required were raised at 
that meeting, and the goal of producing a joint Environmental Impact 
Statement/Environment Impact Report. This coordination should continue 
under WAPA's lead and BLM will provide whatever support is needed.
    Question 26: What steps is the Department taking in determining new 
Federal water resource projects that could potentially provide power 
generation? Is the Department of the Interior undertaking any studies 
that will increase the amount of water storage, while at the same time 
providing potential power generation?
    Answer: At present the Department has no completely new water 
resource projects under consideration that would provide new power 
generation. The Department has however been studying modifications to 
existing projects that would substantially increase power output of 
existing facilities or increase the power that could be provided during 
peak load periods. One of the most promising opportunities is our 
program to evaluate the replacement of aging water turbine runners of 
existing units to substantially increase energy output with no 
additional water through the units. We are beginning to develop 
criteria to evaluate the best opportunities. Once identified, further 
evaluation of these opportunities will be conducted as funding permits.
    Studies that are presently underway include the following:
    1) Hungry Horse units have already been uprated with the intention 
of installing a small re-regulating reservoir 3 miles below Hungry 
Horse Dam. The downstream flows could be improved (fluctuations 
decreased) for fishery and environmental quality purposes. As a result 
of the new Biological Opinion for Bull Trout Reclamation has been 
requested to reexamine the addition of a re-regulation reservoir below 
Hungry Horse Dam.
    2) Looking at increasing capacity at Folsom Powerplant.
    3) Reclamation is working with BPA to rebuild the 2.5 MW Boise 
Diversion Dam Powerplant, which is presently mothballed.
    4) Increasing the water storage at Keswick reservoir by the 
addition of flashboards to the existing gates and looking at doing 
environmental cleanup upstream of the reservoir to allow greater 
reservoir operating flexibility. This will substantially increase 
peaking from Shasta powerplant.
    5) Looking at an additional 10MW generation at Black Canyon.
    6) Looking at increasing capacity at Keswick Powerplant.
    7) Looking at increasing output at Shasta with the proposed raising 
of the dam.
    8) Negotiating the replacement of the aging 0.3 MW Lewiston 
Powerplant with a 1.5 MW facility.
    Other programs are underway to evaluate the economic viability of 
rewinding and upgrading of older generating units to increase the 
energy and power output of existing units.
Forest and Forest Health
    Question 27: Significant energy resources may be ``locked up'' by 
the Forest Service's Roadless Rule and transportation policy. Since, 
the subsurface resources in these areas are actually managed by the 
BLM, will Interior work with the Forest Service to identify these 
resources and modify the rule so that they remain open for development? 
Can you suggest any actions that Congress should take to resolve this 
problem?
    Answer: a) The BLM, in cooperation with the USGS, the Department of 
Energy, and the Forest Service is conducting the EPCA study to more 
clearly identify these resources and the impediments to accessing them. 
On July 10, 2001, the Forest Service published an Advanced Notice of 
proposed Rulemaking (66 Fed. Reg. 35918) that gives the public the 
opportunity to comment on key issues that have been raised regarding 
the protection of roadless areas. These comments will help the USDA 
determine the next steps in addressing the long-term protection and 
management of roadless values within the National Forest System. For a 
discussion of the relative responsibilities of the Forest Service and 
BLM regarding subsurface mineral management, see pages 3-250 to 3-261 
of the roadless rule FEIS.
    b) We do not have any suggestions for Congressional action at this 
time.
    Question 28: The Federal lands currently contain millions of acres 
of forest lands at high risk of catastrophic fire, due largely to many 
decades of successful fire suppression. The National Fire Plan has set 
objectives for both the National Forests and the Department of the 
Interior to reduce the fire risk where it is greatest. With millions of 
acres needing treatment each year, would you support a policy 
encouraging the use of woody material, such as a small tree thinnings 
and brush, for biomass energy production?
    Answer: Yes. Utilization of biomass for energy production is 
consistent with a National Energy Policy objective to increase 
America's use of renewable and alternative energy sources. Biomass 
utilization is also consistent with the goals and objectives of the 
National Fire Plan to reduce accumulations of woody material that 
create a fire hazard, threatening communities and forests and 
rangelands. Markets for small woody material are currently limited but 
there are opportunities to utilize these byproducts of resource 
restoration treatments for heat, steam, electric energy generation, and 
transportation fuels. Firewood, wood-stove pellets and hog fuel; 
cofiring and biogasification; and small modular power systems and 
transportation fuels are examples of existing or emerging technologies.
    Question 29: How many acres of such lands are estimated to need 
treatment on Interior lands, by agency, under the National Fire Plan? 
Could you describe your plans for accomplishing the fire plan goals?
    Answer: For Fiscal Year 2001, it is estimated that 1.383 million 
acres managed by the Department of the Interior are at high risk from 
catastrophic fire and need to be treated. Plans for accomplishing this 
goal include treating an estimated 123,000 acres by mechanical means 
such as thinning, 1,040,000 acres by prescribed burning, 87,000 acres 
by combination of mechanical and prescribed treatments and roughly 
233,000 acres by a combination of multiple treatments. We plan to treat 
an estimated 296,000 acres of land administered by the National Park 
Service, 495,000 acres of land administered by the Fish and Wildlife 
Service, 172,000 acres administered by the Bureau of Indian Affairs, 
and 420,000 acres administered by the Bureau of Land Management.
    The Department of the Interior may not achieve the estimated 
treatment acreage with prescribed fire due to regional drought 
conditions resulting in restrictions on use of prescribed fire in the 
Southeast, Pacific Northwest, and Northern Rockies. A severe fire 
season may also hamper fuels treatment efforts as many of the personnel 
involved in fire suppression are also responsible for project planning 
and implementation.
Tribal Energy Issues
    Question 30: How does the Presidents Energy Policy ensure that 
Tribal lands will be included in any new interstate or national grid 
plans?
    Answer: This is a matter that would need to be dealt with by the 
Federal Energy Regulatory Commission.
    Question 31: Will the Administration provide tax incentives for 
development and production of Tribal oil, coal, natural gas to enable 
tribes to be competitive with other domestic and foreign product?
    Answer: There are no current proposals to do so.
    Question 32: Will the Administration support double tax credit for 
the development of renewable resources on Tribal lands?
    Answer: The Department will work with the Administration in 
formulating a policy following consultation with Tribes and other 
Federal Agencies involved.
    Question 33: Will the Administration support granting FERC 
regulating authority to establish national interconnection 
requirements?
    Answer: The Department recognizes that interconnection is a 
problem, particularly for small utilities, including those on Tribal 
lands. The Department welcomes proposals offering an appropriate set of 
national standards.
    Question 34: Does the Administration have provisions to 
affirmatively clarify the authority of Tribal governments to control 
the siting and regulation of generation, transmission facilities and 
rate-making authority on Tribal lands?
    Answer: The decision to develop energy resources on Indian lands is 
entirely at the discretion of the Indian mineral owner(s) and, as 
noted, any actions by the Federal Government that could affect those 
resources must be accomplished through consultation.

CZMA
    Question 35: Section 307(b)(3)(B) of the Coastal Zone Management 
Act gives the Secretary of Commerce the authority to determine what 
data states may request to review in addition to the information 
provided under the plans required by the OCSLA. Since the Secretary of 
Interior has the expertise to determine if any additional data is 
needed, or if states are merely engaging in dilatory tactics, would the 
Administration support giving the Section 307(b)(3)(B) authority to the 
Secretary of the Interior?
    Answer: The correct citation is 307(c)(3)(B). Under the 
Administration's National Energy Policy Report, the Departments of the 
Interior and Commerce are tasked with re-examining the current Federal 
legal and policy regime to determine whether changes associated with 
OCS activities are needed. The procedures for determining what 
additional information states may request for their consistency reviews 
should be part of that review. The Administration will support a 
process that ensures States have adequate relevant information for 
their consistency reviews while providing operators with a predictable 
and reasonable decision making process for their proposed activities. 
Through the joint review, we will be able to identify any legal/policy 
areas requiring modification and will develop possible solutions to 
implement any identified changes.

(DEMOCRATIC QUESTIONS)
    Question 36: According to the Denver Post, on March 15, President 
Bush was quoted as saying that there was room in some national 
monuments for drilling rigs. He said, according to the Post, that the 
Bush Administration will look at ``all public lands'' for new sources 
of energy. Do you support oil and gas drilling in National Monuments?
    Answer: For the most part, potential for O&G development in 
National Monuments is low. However, if the required EPCA study should 
identify an area in a National Monument that restricts O&G development 
with a higher potential, we would carefully assess these findings. It 
should be noted that some monuments are already accessible, under valid 
existing rights, for oil and gas development.
    Question 37: In that same Denver Post article, President Bush is 
also quoted as saying that concerning whether or not to allow energy 
development in national monuments, ``It all depends upon the cost-
benefit ratio.'' Is that the criteria you will use to determine energy 
development in national monuments?
    Answer: Careful evaluation of the relationship between the oil and 
gas potential and resources being protected would occur on a site 
specific, case-by-case basis. It should be noted that some monuments 
are already accessible for oil and gas development.
    Question 38: You have stated your intention to open some of the new 
National Monuments (those created by President Clinton) to energy 
exploration and development--apparently by adjusting the boundaries. 
Will you attempt to make such changes administratively or will you seek 
legislation to accomplish this?
    Answer: I have not indicated an intention to open Monuments to 
energy exploration and development. On March 28, 2001, letters were 
sent to elected officials requesting their (and their constituents) 
ideas about Monuments. Responses to those letters will be collected and 
analyzed and determinations will be made as to changes that should be 
made.
    Question 39: According to press reports, you have sent invitations 
to certain elected officials seeking their ideas on National Monument 
boundary adjustments, existing uses that should be accommodated, 
vehicle use, rights-of-way, grazing, water rights, and ``other 
traditional multiple uses . . .'' What process do you intend to use in 
making decisions regarding oil and gas development and these other 
``uses in our national monuments?
    Answer: On March 28, 2001, letters were sent to elected officials 
requesting their (and their constituents) ideas into how they would 
like to see their National Monuments managed and for what uses. 
Responses to those letters will be collected and analyzed and 
determinations will be made as to changes that are recommended. In 
general, changes to the National Monument proclamations would require 
legislation. All other land use issues will be addressed in the Land 
Use Plans being prepared for each area.
    Question 40: Is it your intention that the BLM land use planning 
process be used to consider changes in National Monument boundaries, 
proposals for energy development, mining proposals, and other uses, 
such as off-road vehicles? Will you commit to consider proposed changes 
to monument boundaries or proposed uses within the new Monuments only 
after BLM has considered such changes during the development of a land 
use plan for each Monument? (i.e., assuring public review and comment).
    Answer: I have demonstrated my commitment to the public involvement 
process by the letters sent March 28th asking for input into the land 
uses in National Monuments and by placing a priority for funding the 
Land Use Plans currently underway.
    Question 41: Which Monuments do you believe should be altered?
    Answer: Once the responses from the March 28th letters are in and 
completely analyzed, decisions and recommendations will be made on 
whether changes will be made.
    Question 42: Have you or your staff had discussions with Members of 
Congress regarding proposed alterations to the new Monuments? If so, 
which Monuments are under consideration for changes?
    Answer: On March 28, 2001, letters were sent to elected officials 
including affected Members of Congress requesting their (and their 
constituents) ideas into how they would like to see their National 
Monuments managed and for what uses. Responses to those letters will be 
collected and analyzed and determinations will be made as to changes 
that are recommended.
    Question 43: For example, the Associated Press reported on June 5 
on a possible threat to the new Ironwood Forest National Monument from 
mining. According to the report, ASARCO, a giant producer of copper and 
other metals is lobbying you and other officials to change the 
boundaries so that mining can take place on what is now protected 
monument lands. The article stated that a Congressman Kolbe's request, 
officials from BLM and Pima County, Arizona, toured the ASARCO Silver 
Bell mine last week. Representative Kolbe was quoted as saying that he 
had sent an aide to the meeting at Chairman Hansen's and your request. 
Is this an accurate report? What are your intentions for this monument?
    Answer: We would be willing to consider changes to monuments which 
resolve difficult and conflicting land use issues while working to 
protect the resources as intended by the proclamation.
    Question 44: Secretary Babbitt made a habit of meeting with members 
of the public prior to making recommendations on the designation of new 
national monuments. He held open public forums in communities that 
would be affected by these proposals and articulated his intention to 
recommend national monument designation before doing so. Will you 
commit to engage the public in an open dialogue before proceeding with 
any changes-or proposals to change-the new National Monuments?
    Answer: Yes, I have already made that commitment through the March 
28th letters and am taking the feedback seriously.
    Question 45: In June 2000, then-candidate Bush stated that he did 
not support extension of the deepwater royalty relief program in the 
Gulf of Mexico OCS leasing program. As you know, that 5-year program 
expired after allowing oil and gas companies a free ride on paying 
royalties due on billions of barrels of oil and gas produced from the 
deepwaters of the Gulf of Mexico. Interestingly, the President's energy 
plan takes a different approach, suggesting that the program be 
reintroduced to encourage oil and gas development. Given the boom that 
continues in the Gulf, why would a royalty holiday be warranted?
    Answer: My understanding is that when President Bush stated that he 
did not support extending the Deep Water Royalty Relief Act, he was 
referring to the specific amounts and form of relief embodied in that 
legislation, which passed in 1995 and expired in 2000. By the year 
2000, economic conditions and geologic findings in the Gulf of Mexico 
had changed considerably in the five years since passage of the Act. 
So, clearly, the provisions in the Act needed to be adjusted or 
eliminated.
    The President's energy plan provides that the Secretary of the 
Interior consider economic incentives for environmentally sound 
offshore oil and gas development where warranted by specific 
circumstances: explore opportunities for royalty reductions, consistent 
with ensuring a fair return to the public where warranted for enhanced 
oil and gas recovery; for reduction of risk associated with production 
in frontier areas or deep gas formations; and for development of small 
fields that would otherwise be uneconomic. (NEP p. 5-7) (emphasis 
added).
    Accordingly, royalty relief will provide some insurance that the 
net proceeds from production in the future will justify today's 
required substantial deepwater investments. In addition, if oil and gas 
prices are higher than expected and exceed the price thresholds 
specified as part of the conditions of royalty relief, producers are 
required to pay royalties on production during those time periods even 
if it otherwise would be royalty-free. Thus, the public's interest is 
protected during times when prices are higher than expected.
    Question 46: A May 30th article in a Montana newspaper, The Great 
Falls Tribune, on oil and gas development Montana and Wyoming, reported 
that Department of Interior officials have suggested streamlining 
decision-making about oil and gas leases, by removing any say-so of the 
Forest Service. Under the current system, the Forest Service decides 
where oil and gas activities will occur. Do you believe the BLM should 
decide where in National Forests energy development should occur?
    Answer: We do not recommend changing the current responsibilities 
of the Forest Service and the BLM for energy development in National 
Forests. We will continue to strive to improve our coordination with 
the Forest Service and other agencies to expedite environmentally-sound 
energy development.
    Question 47: The OCS Policy Committee recently recommended to you 
that the Department lift the OCS moratoria in at least five places. 
Specifically, the advisory group recommended that the Interior 
Department examine ``the most prospective areas for natural gas in 
[places] the industry would like to explore if allowed.'' The 
President's plan also recommended that the Interior and Commerce 
departments reexamine laws and regulations restricting offshore 
exploration.
    Answer: The recommendations forwarded to the Secretary of the 
Interior were those of the OCS Policy Committee. Neither the Natural 
Gas Subcommittee report, nor the OCS Policy Committee recommendations, 
specified revisiting any particular moratoria area. The Natural Gas 
Subcommittee charter stated ``The purpose of this subcommittee is to 
independently review and evaluate information on natural gas, and then 
to provide an assessment of the contribution the OCS can make to 
meeting the short-term and long-term natural gas needs of the U.S. 
within the framework of a national energy policy.'' The report provided 
resource estimates and potential for the entire OCS.
    On May 24, 2001, the OCS Policy Committee amended the Natural Gas 
Subcommittee recommendations and adopted a resolution to forward its 
amended recommendations to the Secretary of the Interior. I received a 
letter from the Policy Committee forwarding a resolution to transmit 12 
recommendations ``to encourage increasing natural gas production from 
the OCS.'' I plan to take all 12 recommendations under advisement.
    Copies of the Policy Committee's Resolution and Recommendations are 
attached.
    Question 48: On pages 3-8 through 3-9 of the National Energy 
Policy, there is a discussion about hydro power and the importance of 
communities working together to reduce the impacts dams have on 
fisheries. The report touts the work of Grant County Public Utility 
District 2 which installed spillway deflectors on Wanapum Dam and says 
Grant County's work is ``an example of successful collaboration'' 
between the National Marine Fisheries Service and the utility. Can you 
tell me more about the history of Grant County's participation in this 
project? I am advised that the so-called collaboration stems from 
litigation that the States of Washington and Oregon, National Marine 
Fisheries Service and Fish and Wildlife Service brought against Grant 
County in a suit before the Federal Energy Regulatory Commission.
    Answer: The spillway deflectors developed by the Grant County 
Public Utility District and referred to in the National Energy Report 
are needed to reduce dissolved gases in the Columbia River. (Dissolved 
gases can adversely affect migrating salmon.) They are being installed 
by Grant County to improve water quality and reduce salmon mortality. 
The U.S. Fish and Wildlife Service is not involved in litigation with 
Grant County and we are not aware of any litigation regarding the 
spillway deflectors. However, while the Grant County PUD has not been 
involved in any litigation, they still do face exposure to litigation.
    The Mid-Columbia River has several Federal Energy Regulatory 
Commission (Commission) licensed projects including Priest Rapids, 
Wanapum, Rock Island, Rocky Reach, and Wells. Grant County owns and 
operates the Priest Rapids and Wanapum Projects. Since the mid-1970s, 
the State and Federal agencies and the licensees have been trying to 
reduce project-related mortality on migrating salmon and steelhead. 
These efforts have included installing fish screens, improving upstream 
passage of adults, spilling water to help juvenile salmon avoid the 
turbines, installing spillway deflectors to reduce dissolved gases, and 
several other measures. Many of these devices have been installed or 
are in the approval process.
    To approve these devices, the licensee must petition the Commission 
to amend their license. In this case, Grant County asked the Commission 
to change the license for the Wanapum Project because the spillway 
deflectors are not an authorized part of the project. Under the 
Commission's procedures for requesting an amendment of a license, the 
licensee must petition the Commission to reopen the license; must 
provide substantial evidence to support their position; must outline 
the legal and technical basis for their petition; and must provide 
evidence of consultation with the Federal and State agencies. This 
process appears, for all practical purposes, to be litigation. However, 
it is not litigation, instead it is the normal quasi- judicial process 
the Commission uses to make decisions. The same process is used 
regardless of whether it is a contested proceeding or all parties agree 
with the proposal.
    The U.S. Fish and Wildlife Service, NOAA-Fisheries, and the States 
of Oregon and Washington are involved in the efforts to improve fish 
passage on the Mid-Columbia. They are consulting with Grant County and 
Chelan County, and are aware of the counties efforts to improve their 
hydropower projects for the benefit of salmon and steelhead
(YOUNG)
    Question 49: Your testimony describing the productivity of the 
average oil well on the North Slope of Alaska in comparison to the 
average well in the Lower 48 States was an interesting point that has 
not been often made. Can you elaborate on the significance of this 
issue?
    Answer: The point of my remark was that there are significant 
differences in the size of the prospects for oil and gas between the 
North Slope of Alaska and the lower 48 that should be considered when 
we think about the expected results of exploration and development in 
those areas. The North Slope holds the potential to yield substantial 
additions to our oil and gas supplies with much less drilling and much 
less surface area devoted to petroleum production than in the lower 48.
    This situation results from the fact that the geological features 
that remain to be explored on the North Slope are much larger than 
those remaining in the lower 48. In addition, only large discoveries 
are economical to develop and produce on the North Slope. In the lower 
48, as illustrated by the data from Wyoming, the targets for 
exploration are a larger number of small geological features, each one 
needing exploratory wells. Each of the few prospects on which oil or 
gas are found requires production wells and equipment and an access 
road.
    In comparison, on the North Slope, the exploration targets are much 
larger so that much more oil will be discovered by successful wells. 
Moreover, the large reservoirs of the North Slope can be produced using 
numerous wells drilled directionally from the same surface facility. 
This substantially reduces the extent of the area occupied by such 
facilities in relation to the amount of oil produced. Disturbance for 
roads is also reduced on the North slope by using ice roads.
    Comparing the data for Wyoming to a recent discovery in the 
National Petroleum Reserve - Alaska (NPR-A) that is typical of the 
North Slope shows that the area of surface disturbance per barrel 
discovered is about 300 times less for the NPR-A discovery than the 
average in Wyoming.
    The North Slope has about 2200 producing oil wells with an average 
production of about 455 barrels of oil per day. On a state-wide basis, 
Wyoming, the largest oil producing state with substantial Federal 
lands, has 9,121 producing oil wells with an average production of 19 
barrels per day. Existing Alaskan wells produce about 24 times as much 
oil per well as those in Wyoming. At this rate, it would take about 
219,000 wells to produce as much oil in Wyoming as is produced on the 
North Slope--if there was that much oil available.
    These statistics illustrate the high potential for discovery of oil 
on the North Slope and they support my point that we should consider 
the fact that those will be less drilling and less surface disturbance 
per barrel than the lower 48.
    Question 50: What are the USGS estimates of the in-place oil 
resources on the coastal plain of ANWR, including the Federal 1002 
area, and State and Native lands? If oil recovery methods improve on 
oil fields that are comparable to those believed to underlie the 
coastal plain, would the estimate of technically recoverable oil 
resources under the coastal plain increase?
    Answer: The USGS mean estimate for ``in-place'' oil under the 
coastal plain, including Native lands and State waters (not lands) is 
27.78 billion barrels. The full range reported is from 15.58 billion 
barrels (at the 95% confidence level) to 42.32 billion barrels at the 
5% confidence level).
    The volume of technically recoverable oil is that volume that is 
recoverable from the in-place estimate. Therefore, it is reasonable to 
expect that larger volumes of oil could be recovered as recovery 
methods improve. However it is very difficult to forecast what that 
volume might be.
    Question 51: Some believe the 1002 area is a Wilderness area. Is 
the 1002 Area now, or has it ever been, a unit of the Wilderness 
Preservation System?
    Answer: The 1002 area is not designated as Wilderness, nor has it 
been.

(GALLEGLY)
    Question 52: I have concerns about the fairness of some of the 
studies that small hydro-power plants have been asked to do in the 
midst of the current energy crisis.
    In my district, the operators of the Santa Felicia Dam and hydro-
plant near Piru Creek, have been asked to do a number of studies by 
various Federal agencies. It is estimated that the costs of the studies 
outweigh the costs of the hydro facility - the hydro facility costs $2 
million. The dam currently provides clean hydro-electric power to an 
estimated 1,500 homes in my district.
    Will you work with your fellow agencies to ensure that the FERC 
relicensing process is not overly burdensome for small hydro-electric 
plants?
    Answer: I am committed to working with other resource agencies to 
guarantee that the FERC-licensing process is not overly burdensome for 
applicants.
    Upon initial review of this case I believe that this was an 
instance where the applicant initially did not do enough to provide 
necessary information to the resource agencies. Unfortunately the 
resource agencies responded with expensive study requirements to fill 
the information gap. I am happy to report that the resource agencies 
and the applicant will be meeting this summer to decide on a course of 
study that is appropriate to the physical scale of the project and its 
environmental impacts.
    Studies provide key scientific information to all involved in the 
licensing process: 1) Licensees use study information to develop 
mitigation that addresses impacts related to their project operations; 
2) Resource agencies rely on studies to develop license conditions to 
protect resources for which they have statutory responsibilities; 3) 
FERC uses the information to perform NEPA analysis, to meet other 
regulatory responsibilities, and to make decisions regarding the 
appropriate level and type of mitigation to require in licenses.
    Recent forums for improving hydropower licensing identified a 
number of issues and solutions with respect to selecting and 
implementing studies. The Interagency Task Force to Improve 
Hydroelectric Licensing Process (ITF) called for the resource agencies 
to more clearly identify their resource management goals and 
objectives, and establish a clear nexus between project operations and 
impacts on the resources being studied. Importantly, the Department 
made a commitment to choosing the least cost alternative to achieve 
management goals. The resource agencies are committed to implementing 
these and other changes.

(MARKEY)
OCS Drilling
    Question 53(a): One of the recommendations made in the Bush 
Administration's proposed national energy policy was to revisit OCS 
drilling policy. What specific changes in ``current Federal legal and 
policy regimes'' is your Department currently considering to implement 
this recommendation?
    Answer: We are at a very early stage in implementation of the 
Administration's energy policy. We plan to work with other agencies, to 
see if we can improve the efficiency of our regulatory process while 
ensuring involvement of essential stakeholders.
    Question 53(b): What aspects of this issue [do] you expect will be 
evaluated by the Commerce Department?
    Answer Under the Administration's National Energy Policy Report, 
the Departments of Commerce and Interior have been tasked to review 
policies, procedures, and regulations associated with energy-related 
activities and facilities in the coastal zone and on the OCS to 
determine whether they lend themselves to an efficient, predictable, 
and environmentally-sound oil and gas leasing, exploration, and 
development program.
    Question 53(c): In your oral testimony, you said in response to a 
question about the Administration's plans to revisit OCS drilling 
policies that ``I think it is wise for us to have a wide array of 
information as we are making decisions. And I think understanding where 
resources are located is something that leads to wise decision-making, 
whether or not we decide to go forward with trying to access those 
resources or not.'' With respect to the OCS moratoria areas, what 
additional information do you believe it is necessary to obtain at this 
time that we do not already have, and how are you proposing to obtain 
this information?
    Answer: As we look to and plan for the future, we need to have a 
sound information base for discussions and consultations with all 
stakeholders. We need to understand the environment and the geology. We 
have conducted environmental studies of moratoria areas in the past, 
but clearly some would need to be updated. Acquiring environmental 
information in moratoria areas has been supported by past review of the 
National Academy of Science and the Department of the Interior Advisory 
Committees.
    We would also benefit if there were more geological and geophysical 
information collected using state of the art techniques. This is an 
activity normally done by the private sector and it is unlikely 
companies will pursue such activity while areas are under moratoria.
    Question 53(d): Would the Department be considering allowing 
exploratory drilling or related activities in order to obtain the type 
of information you are seeking?
    Answer: Consistent with longstanding Departmental interpretation, 
the current congressional restrictions on OCS activities, as well as 
the restrictions under the President's 1998 OCS directive, do not 
preclude the collection of environmental, geologic, geophysical, 
economic, engineering or other scientific analyses, studies or 
evaluations. These are the types of information needed to better 
understand the environment and resources potential of an area. Also, 
current congressional moratoria, as well as the restrictions under the 
President's 1998 OCS directive, do not preclude exploratory drilling on 
existing leases located in areas under a leasing moratorium. Therefore, 
a lease owner of an existing lease within a moratoria area can file an 
exploration plan, which could include exploration drilling. If that 
were to occur, an exploration plan would require review and approval by 
MMS and affected states under NEPA and CZMA.
    Question 53(e): During the hearing, you seemed to suggest that the 
Department's ``re-examination'' might also focus on policies affecting 
off-shore drilling in those existing regions where such drilling is 
currently permitted. Here, you indicated in your oral testimony that 
you believed there was ``some potential room for improvement'' and that 
``we are analyzing that to determine whether we need administrative 
changes or whether we need to come back to you all?'' What specific 
administrative or legislative changes are you considering and why?
    Answer: We would like to reexamine several laws. Much of this work 
involves other Federal agencies. Under the Administration's National 
Energy Policy Report, the Departments of Interior and Commerce have 
been tasked to examine the current Federal legal and policy regime 
(statutes, regulations and Executive Orders) to determine if changes 
are needed regarding energy-related activities and the sitting of 
energy facilities in the coastal zone and on the OCS.
    Question 53(f): Your testimony also seemed to indicate a desire to 
review existing environmental planning requirements relating to off-
shore drilling because you felt current requirements lacked some 
``clarity.'' What specific concerns do you have about these 
environmental requirements?
    Answer: Our interest is that the regulatory framework provides 
clear instruction as to what regulatory requirements will be met, what 
environmental information is required to be submitted, how that 
information will be used, and when decisions must be made. We also 
believe that timeframes should be clear.
    Question 53(g): When do you expect the Department's 
``reexamination'' of OCS drilling policies and the relevant legal and 
regulatory framework to be completed?
    Answer: It is my understanding that staff from the Department of 
the Interior and the Department of Commerce will meet soon, and I do 
not know when a review would be completed.
    Question 53(h): Recent press reports indicate that the Natural Gas 
Subcommittee, a division of the Federal advisory Committee that 
provides recommendations to the Interior Department, has recommended 
that the Department examine ``the five top geological plays in the 
moratoria areas, and if possible, the most prospective areas for 
natural gas in the plays that the industry would like to explore if 
allowed.'' In your response to a question raised at the Committee's 
hearing, you indicated that you have not been formally presented with 
the recommendations of this Subcommittee. When do you expect that this 
will occur, and what action will the Department take in response to 
these recommendations?
    Answer: The OCS Policy Committee provides advice to the Secretary 
of the Interior on implementing the OCS Lands Act. Representing the 
collective viewpoint of coastal states, environmental interests, 
industry and other parties. The Policy Committee advises the 
Department, through the Minerals Management Service, on a number of 
important issues involving our Nation's energy policy. The Committee 
establishes subcommittees to study issues in-depth and to develop 
recommendations for consideration by the full Committee. Committee 
recommendations are forwarded to the Secretary.
    On May 24, 2001, the OCS Policy Committee amended the Natural Gas 
Subcommittee recommendations and adopted a resolution to forward its 
amended recommendations to the Secretary of the Interior. On June 7, 
2001, I received a letter from the Policy Committee forwarding a 
resolution to transmit 12 recommendations ``to encourage increasing 
natural gas production from the OCS.'' I plan to take all 12 
recommendations under advisement.
    Copies of the Policy Committee's Resolution and Recommendations are 
attached.
    Question 53(i): Who are the current Members respectively of the 
Natural Gas Subcommittee, the Outer Continental Shelf Advisory 
Committee, and the Minerals Management Advisory Board? For each of 
these panels, how many Members are employed by, affiliated with or have 
financial ties to the oil and natural gas industries, including 
consultants to those industries? How many Members are from 
environmental, consumer, or public interest organizations?
    Answer: The members of the Natural Gas Subcommittee were:
    Jerome M. Selby (Chair), Consultant for the Mayor of Anchorage, 
Anchorage, Alaska; Patrick S. Galvin, Division of Governmental 
Coordination, Juneau, Alaska; Robert R. Jordan, Delaware Geological 
Survey, Newark, Delaware; Jack C. Caldwell, Louisiana Department of 
Natural Resources, Baton Rouge, Louisiana; Lawrence C. Schmidt, 
Department of Environmental Protection, Trenton, New Jersey; Daniel F. 
McLawhorn, North Carolina Department of Environment and Natural 
Resources, Raleigh, North Carolina; Bruce F. Vild, Statewide Planning 
Program, Providence, Rhode Island; Andrew L. Hardiman, Chevron Gulf of 
Mexico Deepwater Business Unit, New Orleans, Louisiana; Paul L. Kelly, 
Rowan Companies, Inc., Houston, Texas; George N. Ahmaogak, Sr., Mayor, 
North Slope Borough, Barrow, Alaska Environmental Community advisor.
    The Minerals Management Advisory Board is comprised of four 
committees, the OCS Policy Committee, the Royalty Policy Committee, the 
Alaska OCS Region Offshore Advisory Committee (inactive), and the OCS 
Scientific Committee. The advice and information that the Board, 
through its committees, provides to the Department and MMS are unique. 
The members serve as MMS's primary contact to the Governor's offices 
and Native American Indian tribes. These members bring into focus a 
broad range of knowledge and invaluable perspective and provide for 
distillation of data affecting offshore oil and gas exploration and 
development and royalty management. The committee meetings also provide 
opportunities for parties with an interest in OCS oil and gas 
development and royalty management issues to discuss their differences 
in an open forum and examine alternatives to resolve conflicts.
    The OCS Policy Committee follows:

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    Question 53(j): Do you intend to revisit the moratorium on oil and 
gas exploration in the Georges Bank, as the Natural Gas Subcommittee 
has recommended? Do you intend to authorize any further studies, 
reports, or other evaluations of drilling in the Georges Bank? If so, 
what would be the purpose of such studies, reports or other 
examinations be?
    Answer: The Administration supports the current moratoria and there 
are no plans under consideration for exploration and development in the 
Georges Bank area.
    The OCS Policy Committee amended the Natural Gas Subcommittee 
recommendations and adopted a resolution to forward its amended 
recommendations to the Secretary of the Interior. On June 7, 2001, I 
received a letter from the Policy Committee forwarding a resolution to 
transmit 12 recommendations ``to encourage increasing natural gas 
production from the OCS.'' I plan to take all 12 recommendations under 
advisement.
    Question 53(k): According to press reports, in a May 9, 2001 
interview, Energy Secretary Spencer Abraham stated that he was ``not 
aware of any changes to any of the moratoria'' and that ``I don't think 
that's been at all under consideration, to my knowledge.'' Your 
testimony, on the other hand, seems to indicate that the Administration 
is trying to obtain information that would form the basis for making 
such changes.
    Answer: My testimony was not intended to indicate any lack of 
support of current OCS moratoria. The Administration supports current 
presidential withdrawals and congressional moratoria.
    Question 53(l): During the Committee's hearing, you indicated that 
the Administration would comply with the existing Congressionally 
imposed moratoria on drilling in the OCS. However, President Clinton 
also issued an executive order extending the current moratoria until 
2012. Does the Bush Administration intend to keep this executive order 
in place?
    Answer: We appreciate the longstanding history, context, and 
concerns associated with OCS moratoria and presidential withdrawals. 
The Administration has no plans to undo this framework.
    Question 53(m): Is the Administration also ``re-examining'' whether 
or not to retain the existing executive OCS order or repealing, 
shortening, or narrowing its scope? If so, what options are you 
considering?
    Answer: We intend to comply with existing moratoria/executive 
withdrawals.

COOGER Leases
    Question 54: Secretary Norton, the Administration's Energy Task 
Force Report recommended a reexamination of the currently suspended 
offshore leases near California. If you include these leases in your 
review and your Department decides not to allow drilling in offshore 
California, then will you allow these stakeholders to recover their 
offshore California investments for use in future lease sales in the 
Gulf of Mexico or elsewhere?
    Since your Administration seems to be fixated on giving on the 
production side of the equation, what guarantee would you give these 
leaseholders that they have not wasted their money in vain and can use 
their money for other sales? What mechanism would you propose to allow 
them to recover their costs?
    Answer: The Administration's Energy Policy Development Group does 
not recommend a review of the currently suspended California offshore 
leases. The operators of these leases are submitting plans for the 
exploration and development of their leases this year, with a number 
pursuing delineation of reservoirs in order to craft development plans 
to maximize recovery with a minimum of environmental disruption. 
Thorough analyses of the environmental effects of exploration and 
development are being performed on the proposals under the National 
Environmental Policy Act and the Coastal Zone Management Act.

Ultra-Deepwater Drilling
    Question 55(a): It is my understanding that there is a great deal 
of natural gas beneath the ultra-deepwater portion of the Gulf of 
Mexico. The problem seems to be that it is very expensive and 
technically challenging to develop natural gas from great water depth. 
Has the Interior Department conducted an analysis of the oil and gas 
deposit values in the ultra-deepwater region of the Gulf of Mexico?
    Answer: Sediments beneath the ultra-deepwater of the Gulf of Mexico 
are believed to contain significant quantities of natural gas, as well 
as oil resources. To date, the deep water has been more of an oil 
province with primarily associated natural gas. Although there are 
numerous high profile discoveries in this region; e.g. Crazy Horse, 
North Crazy Horse, Mensa and Mad Dog, actual production has occurred in 
only a single field, Mensa. Reserve estimates are very speculative for 
fields at this early stage of exploration and delineation, but current 
estimates total 3.7 billion barrels of oil (Bbo) and 6.8 trillion cubic 
feet of gas (Tcfg). In its most recent assessment of undiscovered 
hydrocarbon resources in the Gulf of Mexico, MMS estimated that, at the 
mean level, 16.1 Bbo and 62.6 Tcfg may exist in the portion of the 
region available for exploration and development.
    No attempt was made to develop an estimate of the value of the 
hydrocarbon in either the individual or aggregate field discoveries. 
MMS, however, did develop estimates of the quantities of undiscovered 
resources in ultra-deepwater with water depth greater than 1800 meters 
that would be economically recoverable under two different price 
scenarios. In the base case scenario ($18/bbl and $2.11/mcf) 4.7 Bbo 
and 14.5 Tcfg are estimated to be economically recoverable. In the high 
case scenario ($30/bbl and $3.52/mcf) 10.9 Bbo and 34.8 Tcfg are 
economic. These estimates respectively represent 27 and 63 percent of 
the assessed volumes of undiscovered hydrocarbon resources in the area.
    Question 55(b): What has the Department done to expedite 
development of this region when there are so many pipe dreams of 
drilling in ANWR. Does the Department have a contingency plan if 
Congress doesn't open up ANWR to drilling?
    Answer: As for expediting ultra-deepwater development, we have 
increased resources (mainly through additional staff) to review and act 
on deepwater plans and permits. We have also changed our plans and 
permitting process, including use of conceptual Deep Water Operations 
Plans, for all deepwater applications. These changes give us access to 
information at as early a stage as possible to hopefully improve cycle 
time in the application review process.
    Question 55(c): Could the ultra-deepwater region of the Gulf help 
meet domestic oil and gas demand in light of the inevitable failure to 
open up ANWR?
    Answer: Even though only a single field (Mensa) is currently 
producing, the recent announcements of numerous significant field 
development projects in this region (e.g., Crazy Horse, North Crazy 
Horse, Mad Dog, and Nakika) assure that the area will be a significant 
source of domestic hydrocarbon production for years to come. With 
respect to natural gas, there is still a concern that the OCS will not 
be able to meet the increases required to meet the expected increased 
in natural gas consumption by 2012.
    Question 55(d): Should we be accelerating the development of the 
ultra- deepwater no matter what the fate of ANWR?
    Answer: The U.S. currently imports nearly 60 percent of its crude 
oil consumption and is projected to face significant challenges in the 
next two decades in meeting forecasts of natural gas demand. It, 
therefore, makes sense to encourage production in those areas where it 
can occur in an environmentally safe manner. The ultra-deepwater region 
of the Gulf of Mexico is one such area. Virtually all of the unleased 
deepwater area of the central and western Gulf of Mexico is offered. 
Additional deepwater tracts are proposed to be offered later this year 
in the eastern Gulf of Mexico area as well.
    Question 55(e): When exploring the ultra-deepwater region, has the 
Department made a determination of the necessary technological 
capabilities to enhance production capabilities in this area while 
protecting the environment?
    Answer: The MMS has assessed and continues to track the evolution 
of technological capabilities that will enable and enhance the 
development of hydrocarbon fields in water depths exceeding 5000 feet 
(i.e., the ultra-deepwater). A concentrated effort was initiated in the 
mid-1990's to investigate the development of deepwater hydrocarbon 
reserves. A multi-task strategy was formulated with the goal of 
ensuring deepwater development activities were consistent with the 
Agency's environmental, safety, conservation mandates. The Deepwater 
Strategy is a proactive approach to managing operations, ensuring 
appropriate environmental and technical reviews, and focusing studies 
and research efforts related to deepwater activities. Part of this 
effort was the identification of over 100 new technologies, techniques, 
and systems that are in use or necessary for deepwater development. MMS 
continues to gather information about these technologies. A database is 
used to track the status of the individual deepwater technologies.
    The MMS evaluation of new technologies and alternative compliance 
measures (procedures and equipment) can be complex, involving risk 
assessment, comparative analyses, and a review of hazard analyses 
conducted by the operator in support of the departure (or alternative 
compliance). MMS reviews have resulted in some denials of requests to 
use new technology as untested and unproven. MMS has launched a series 
of initiatives, including an aggressive technical research effort, 
joint funding with industry projects, linkages to major universities, 
and joint research with foreign governments to address mutual 
questions. Some of the issues being addressed include well control, oil 
spills, production flow assurance, and risk assessment of new 
production systems. MMS has also conducted and cosponsored workshops to 
address issues of immediate concern. MMS uses these workshops to 
identify issues and to gather information for evaluations and 
decisions.
    The near-term implications of MMS' efforts are being realized. 
Development intentions for 3 fields in water depths greater than 7000 
feet are currently being reviewed; there are 20 hydrocarbon fields in 
the development stage in water depths exceeding 5000 feet that will be 
in production before 2004. The baseline work to address new, enabling 
technologies are directly beneficial to the MMS review of these 
projects.

Pipeline and Electricity Transmission
    Question 56: In your opening statement, you said that the 
Department was going to streamline the process through which it 
considers and approves requests to allow the construction of electric 
transmission lines and natural gas pipelines. What specific options is 
the Department going to consider?
    Answer: The BLM, in collaboration with the Forest Service and 
interested stakeholders, has been streamlining the processes used to 
receive, review and analyze applications for electrical and natural gas 
transmission lines. For example, the BLM has developed procedures to 
allow oil and gas developers to apply for Right-of-Ways concurrently 
with the applications for permit to drill. The BLM has also developed 
procedures that allow for payment of Right-of-Way processing fees 
(which must be paid in advance before application processing can 
proceed) with ``call in'' credit card information. In the future, the 
BLM will be expanding its use of electronic commerce by exploring ways 
to accomplish pre-application ``meetings,'' application data review, 
and data submission using the internet. The BLM is also exploring ways 
to have all the required application processing fees paid 
electronically
    Question 57: Can you assure the Committee that the measures you are 
considering will not result in any diminution in the Department's 
critical responsibilities to protect and management sensitive public 
lands, and will not curtail a full and thorough assessment of the 
environmental impact of any proposed new powerlines or natural gas 
pipelines?
    Answer: Yes, BLM strongly encourages the use of private sector 
environmental contracting companies to prepare applications and the 
required environmental reports. This allows BLM to concentrate its 
workforce on application review, analysis, and decision making. The BLM 
and the FS are leading the way in refining procedures related to 
establishing ``Lead Agency'' and ``Lead Office'' responsibilities when 
processing applications that cross lands administered by both agencies. 
When a lead agency and office are designated, single points of contact 
are established and the application review and decision processes are 
coordinated out of one office. This saves time and resources for both 
the applicant and the Federal agencies. The BLM is also working to 
finalize regulations that will modernize its cost recovery procedures. 
When implemented these regulations will allow the BLM to direct more 
resources to the offices processing applications. The regulation will 
also allow the BLM in certain situations to enter into agreement with 
companies to meld its administrative practices with the companies 
business practices.
    Question 58: How will the Department's plans to streamline this 
process affect the opportunities for public comment and public 
participation in the decision-making process regarding siting of new 
pipelines and electrical transmission lines?
    Answer: The Department is fully committed to involving the public 
in its decision-making process for pipelines, electrical transmission 
lines, and other transportation support needs. The BLM will complete 
all necessary land use plan amendments or revisions, and their 
associated environmental analysis in accordance with procedures for 
public involvement. This includes notifying the public of the upcoming 
planning and environmental process and providing notification of 
opportunities for the public to review and comment. BLM's planning 
process also includes provisions for affected parties to raise 
objections to the BLM Director. The planning and right-of-way granting 
processes will be completed with one document, rather than 
sequentially, to decrease the amount of time required. None of the 
measures being considered will diminish the Interior's critical 
responsibility to protect and manage the public lands. The measures 
will increase our ability to protect and manage our public lands 
because they are designed to reduce the routine administrative 
procedures associated with application review and to focus the 
Interior's activity on critical analysis and decision making elements 
of application review. One example is contracting private sector 
environmental firms to prepare applications and environmental reports. 
This frees BLM personnel to concentrate on the analysis of the data and 
on making the required decisions.

Oil and Gas Production on Public Lands
    Question 59: The American public will judge how ``environmentally-
sensitive'' new production on public lands might be according to how 
``environmentally-sensitive'' we have already been. In this regard, I 
would like to know what steps you are taking to impose enforceable 
obligations on developers when they are granted oil and gas leases on 
public lands. Certainly mitigating the damage done by the routine 
operation of oil and gas exploration and production on the scale of 
Prudhoe Bay, for example, would be a vast, expensive undertaking. The 
industry plans to expand into pristine, environmentally sensitive areas 
on lands belonging to the public. Will the mess ever be cleaned up?
    Requirements for Cleanup: What conditions regarding clean-up and 
environmental restoration of a drilling or production site are 
currently contained in Federal leases on Federal lands such as the NPR-
A? Please provide the actual language from such leases. Please provide 
a discussion of the method used, if any, to set the standards of 
cleanup and to hold the leaseholder accountable if it fails to meet the 
requirements of the lease.
    Answer: Many of the following requirements are created and 
implemented to prevent or minimize damages which might otherwise 
require cleanup upon completion of specific activities.
    The standard lease stipulations were created by the BLM's 
Washington Office staff with considerable input from the BLM field 
staff and review by the Solicitor's Office to assure that any standard 
conditions which might be encountered in the field are covered. Special 
stipulations are created based on environmental research and public 
input which occurs during the environmental review process as required 
by the National Environmental Protection Act (NEPA). Additional site-
specific NEPA reviews are made, and if any additional needs are 
identified, additional NEPA protective requirements are added by the 
BLM's authorized officer (AO) when reviewing the lessee's or operator's 
plan of development and site-specific Applications for Permit to Drill 
(APDs). A copy of the NPR-A requirements is attached.
    BONDING: Bonding doesn't relieve a lessee or operator from it's 
cleanup and resource protection requirements and responsibilities, but 
is nevertheless an integral part of the ``cleanup'' package. It is 
required by the BLM in every case ($10,000.00 minimum per lease; 
$25,000.00 minimum statewide; $150,000.00 minimum nationwide) before 
any on-the-ground activity is allowed to take place, and also for 
geophysical exploration ($5,000.00 minimum per exploration; $25,000.00 
minimum statewide; $50,000.00 minimum nationwide). For the NPR-A, the 
BLM also requires bonding, but at these different amounts: individual 
lease ($100,000.00 minimum); NPR-A-wide bonding ($300,000.00 minimum). 
NPR-A bonds must be filed and approved before we will issue a lease or 
leases to a lessee. Further, individual states have differing bonding 
requirements in addition to the BLM-required bonding. For example, the 
State of Alaska's Oil and Gas Conservation Commission requires a 
$100,000.00 bond for each well drilled on Federal, state or private 
lands, or--. . . not less than $200,000 for a blanket bond covering all 
of the operator's wells in the state, except that the commission will 
allow an amount less than $100,000 to cover a single well if the 
operator demonstrates to the commission's satisfaction in the 
application for a Permit to Drill (Form 10-401) that the cost of well 
abandonment and location clearance will be less than $100,000.--
    SPECIAL SITE-SPECIFIC RESTRICTIONS: The unique particulars of site-
specific cleanup and environmental restoration are established by the 
BLM's AO, as noted above, and set out as specific terms and conditions 
in the NEPA-review / approval process for each individual Application 
for Permit to Drill (APD) or drilling and development plan. This allows 
them to be tailored to the most currently available environmental data, 
technological advances, and other changing issues which arise over a 
period of time.
    Standardized resource protection and reclamation requirements are 
contained in the lease forms and, as developed during the course of 
NEPA analysis, in the Record of Decision for the pre-sale NEPA study. 
In the case of the NPR-A, these general stipulations, as well as five 
special stipulations applicable to only certain leases, were also 
contained in the Detailed Statement of Sale.
    See attached Appendix A for the standard protections in lease 
language.
    Question 60: Ensuring the Availability of Cleanup and Restoration 
Funds: The huge cost of dismantling, removal and restoration occurs 
once the wells have stopped producing. Therefore, the oil and gas 
industry cannot expect to have the resources necessary to do the job 
unless it sets the funds aside while the wells are still producing. 
What guarantees exists to ensure that sufficient financial resources 
will be available to complete the required activities at the 
appropriate time? Are funds being held in escrow? If not, why not? 
Please provide the actual language from leases regarding such 
requirements.
    Answer: All oil and gas lessees are responsible for cleanup and 
restoration of damaged lands resulting from their operations. It is a 
requirement on all Federal oil and gas leases as well as current 
operating regulations contained in 43 CFR 3160. In addition, there are 
an number of other Federal laws that also require clean up and 
restoration of contaminated lands. The BLM assures enforcement of these 
requirements through the use of lease bonds as well as enforcement 
provisions of the oil and gas operating regulations (Re: 43 CFR 3104 
Bonding and 43 CFR 3163 Noncompliance). Lease bonds are a form of 
escrow held by the surety company and payable to the BLM. Actual lease 
language is as follows:
        ``4.(a) The Undersigned certifies that...(6)offeror is in 
        compliance with reclamation requirements for all Federal oil 
        and gas lease holdings as required by sec. 17(g) of the Mineral 
        Leasing Act."
    Question 61: Examples: Please provide three good examples of 
successful implementation of cleanup requirements implemented by the 
holder of an oil or gas lease on public lands following major 
production, pursuant to the requirements of the lease.
    Answer: The BLM routinely approves hundreds of well abandonments 
each year. On all of these sites the well is plugged according to 
approved BLM specifications, the well location is re-contoured and the 
entire disturbed area is re-vegetated. The BLM does not release the 
final lease bond obligation until field inspectors have verified the 
location is fully reclaimed. These are the standards for all Federal 
onshore oil and gas wells. The following are three examples of 
successful implementation of cleanup requirements following oil or gas 
production:
    1. EOG Resources Incorporated, formerly Enron Oil and Gas Company's 
Big Piney/Labarge operations (in Sublette County, Wyoming), received 
the BLM's Director's Excellence Award for EOG's efforts and 
contribution in performing outstanding reclamation activities on 
Federal lands administered by the BLM in 2000. EOG Resources 
reclamation endeavors within the Big Piney/Labarge operations include 
the following accomplishments: successful final abandonment of three 
entire oil and gas fields, including extensive road and pad removal, 
recontouring and reclamation, resulting in the prior disturbed land 
being reclaimed back to that of a natural landscape; substantial 
reduction in soil erosion through extensive road upgrading and 
graveling which included numerous culvert installations for a road 
network covering over 70-square miles; establishment of stable 
producing well locations through surface re-contouring which alleviated 
erosion and weed infestations; and re-establishment of specific plant 
subspecies that resulted in considerable improvement to winter range 
areas of wildlife;
    2. Over the last two years, Merit Energy has conducted extensive 
environmental clean-up and production facility consolidation of the 
Hamilton Dome Oil Field in Hot Spring County, Wyoming. Hamilton Dome is 
considered one of Wyoming's major oil fields. Pursuant to the 
requirements of the lease, Merit Energy upon acquiring the Hamilton 
field operation, expended considerable resources to improve the oil 
field infrastructure to minimize and in a number of cases alleviate 
environmental problems. As an example, Merit has been proactive at 
plugging and reclaiming a significant number of idle or inactive wells 
which are no longer capable of production.
    3. The Hogback Dakota Field, located to the northwest of 
Farmington, New Mexico, in the San Juan Basin, is an oil field which 
was discovered in the late 1920's, but developed beginning in the 
1950's. Several dozen wells were drilled to completely develop the 
field. The northern part of the field was depleted by the early 1990's. 
The operator at the time, Duncan Oil Company, plugged 24 wells on three 
of the oil and gas leases in 1995. Reclamation consisted of grading and 
reseeding the locations. The three leases were then terminated. The 
southern part of the Hogback Field continues to produce under a 
successor operator to Duncan Oil Company.
(GILCHREST)
    Question 62: Does the Secretary support continuation of the 
offshore oil and gas moratorium for the Atlantic Coast?
    Answer: The Administration supports the existing moratoria/
executive withdrawals.
    Question 63: How many national wildlife refuges currently host 
extractive activities (oil, gas, coal, other minerals)?
    Answer: 42 refuges host oil and gas extractive activities;
    0 refuges host coal extractive activities;
    1 refuge hosts hardrock extraction;
    29 refuges host sand and gravel extractive activities; and
    2 refuges host extractive activities of other minerals
    Question 64: How many extractive use leases have yet to be acted 
upon in national wildlife refuges, and how many refuges does this 
effect?
    Answer: From the regions that were able to respond, only 634 
potential extractive use leases were identified coming from 3 regions 
and affecting 19 refuge units. 632 of these leases were from 7 refuges 
in Alaska.
    Question 65: How many refuges have potential oil, gas, coal, and 
other energy resources, that have yet to be capitalized upon?
    Answer: 45 refuges reported potential oil, gas, coal, and other 
energy resources that have yet to be capitalized on. One region was 
unable to obtain the information in the time allotted. Several of the 
others only provided best guesses.
    Question 66: The Secretary described in her testimony, actions that 
the Department has taken to improve energy efficiency and to diversify 
energy sources it draws upon. What are some of the best examples of 
energy efficiency and diversification within the Department of the 
Interior? How much biofuel does the Department use annually? How many 
fuel cells are in operation? Solar panels? Other non-fossil fuel 
sources?
    Answer: General: Over the past two decades, Interior has done much 
to reduce energy use and embrace energy efficient technologies. This 
legacy of accomplishment has resulted in numerous successful energy and 
water conservation and renewable energy projects around the country. In 
response to the National Energy Policy and Secretary Norton's energy 
mandates, Interior bureaus have renewed their emphasis on energy 
efficiency, energy conservation and the use of energy-saving 
technologies. By partnering with the Department of Energy (DOE) and its 
national energy laboratories, other Federal agencies, state and local 
governments, and non-governmental organizations, Interior will continue 
to implement energy conservation practices and techniques, and 
introduce new technologies to increase energy efficiency and reduce 
energy consumption.
Best Examples of Energy Efficiency and Diversification Within the 
        Department of the Interior:
    The following fourteen energy and water conservation showcase 
facilities have been recognized by the DOE and offer some of Interior's 
best examples of energy efficiency and diversification:
 National Park Service (NPS)
    *  Golden Gate National Recreation Area,
    *  Joshua Tree NP,
    *  Sleeping Bear Dunes National Lakeshore,
    *  Whitman Mission National Historic Site, and
    *  Zion National Park (NP)
 Bureau of Reclamation
    *  Centennial Job Corps Center,
    *  Denver Federal Center-Building 67,
    *  Davis Dam, and
    *  Glen Canyon Dam
 Fish and Wildlife Service (FWS)
    *  John Heinz NWR,
    *  National Conservation Training Center,
    *  Neal Smith National Wildlife Refuge (NWR), and
    *  Wichita Mountains Wildlife Refuge
 U.S. Geological Survey
    *  Central Region - EROS Data Center
    These and other Interior facilities, have incorporated energy-
saving concepts into building design including automated energy 
management control systems; energy-efficient heating, ventilation, and 
air conditioning systems; energy-efficient lighting; insulation, 
passive solar energy design; ground-source geothermal heat pumps; use 
of recycled materials in building construction; and power generation 
from renewable energy sources.
    Biofuel use annually: During Fiscal Year 2000, Interior's motor 
vehicle and marine fleets used over 70,000 gasoline-equivalent gallons 
of biofuels produced from renewable domestic feedstocks such as forage 
grasses and oil seeds. With greater production and improved 
distribution, Interior will be able to significantly increase biofuel 
usage. Many Interior facilities are partnering with public and private 
sector organizations to improve the availability of biofuels. With the 
assistance of the Defense Energy Support Center, DOE and industry, 
Interior plans to greatly expand its use of biofuels through bulk 
purchasing for facilities in the Mid-Atlantic, Northwest and Southwest 
beginning in Fiscal Year 2001. A few facilities plan to begin use of 
biofuels in their diesel generators.
    Fuel Cells in Operation: The high cost of fuel cells has been the 
obstacle to greater use of this technology. Currently, Interior has a 
fuel cell operating at Golden Gate National Recreation Area with 
another one planned to be installed at Yellowstone NP during the 
summer. Both of these systems were financed through cost-sharing 
partnerships. Other Interior facilities are actively seeking to acquire 
fuel cells to replace diesel generators and supplement energy currently 
supplied through the electric grid. They are looking to partnerships to 
help finance the acquisition of these systems.
    Solar panels in Operation: Interior is a government leader in the 
use of solar-powered energy generating systems with nearly 600 solar 
photovoltaic (PV) facilities and an estimated 40 solar hot water 
systems primarily located at NPS, Bureau of Land Management and FWS 
facilities. The Bureau of Indian Affairs (BIA) is also working with 
Native Americans to deploy solar powered generating systems on Indian 
lands. Our installations are notable for the fact that they are not 
just demonstrations--they are cost-effective power sources that were 
the best choice for the application. These systems conservatively 
represent about 600 kiloWatts (kW) of capacity, and generate over 1 
million kW hours of electricity annually. Each system is made up of 
multiple panels, which vary from roughly 50 to 100 Watts each. With 
total capacity at 600 kW, that would represent between 6,000 and 12,000 
panels.
    Other Non-Fossil Fuel Sources: As resources allow, Interior 
facilities are using other non-fossil fuel sources such as from off-
grid wind turbine, geothermal, and hybrid systems (combining two energy 
sources) and green power from renewable sources available on the grid 
to meet energy needs. Highlights include:
     FWS and NPS are using ground source geothermal systems to 
both heat and cool the buildings at seven facilities.
     BIA is incorporating the use of geothermal systems in the 
design for some of its Native American school replacement and 
renovation projects.
     FWS is using wind energy at five refuges.
     Several bureaus facilities in Denver, Colorado will 
purchase a portion of their monthly electric power from wind-generated 
electricity.
     Channel Islands NP is in the process of installing an 
innovative hybrid wind/PV system on Santa Rosa Island, reducing the 
island's annual diesel fuel consumption for power generation by 94 per 
cent.
     The Office of Surface Mining and the Minerals Management 
Service are working with the General Services Administration to 
incorporate the use of non-fossil renewable fuel sources where 
possible, into their building lease agreements.
     With DOE's design assistance, the National Business 
Center is planning to create an energy efficient ``green'' roof for the 
Main Interior Building consisting of liner, insulation, gravel and 
topsoil, and moss, plants or grasses as well as a small PV system.

(ORTIZ)
    Question 67: Madam Secretary, it is my understanding the Department 
is moving forward with development of a new 5-Year program for Outer 
Continental Shelf leasing for 2002-2007. What is the current status of 
this plan?
    Answer: In December 2000, in accordance with section 18 of the OCS 
Lands Act, the MMS published a request for information with a 45-day 
comment period in order to begin preparing a new 5-Year OCS Program for 
2002-2007. The current 5-Year Program expires in June 2002. The 5-Year 
Program indicates the size, timing and location of leasing activity 
determined to best meet national energy needs. In preparing a new 5-
Year Program, we seek comments from constituents including States, 
local government, industry, interest groups, and individual citizens. 
Based on an analysis of these comments, the 5-Year Program must balance 
the potential for environmental damage, the discovery of oil and gas, 
and the adverse impact on the coastal zone.
    We have now completed the initial information gathering phase, and 
we are currently evaluating a number of options in light of the 
information we have received, our own analysis, and the 
Administration's developing energy policy. Our objective is to develop 
a 5-Year OCS leasing program, which meets the mandates of the OCS Lands 
Act and advances the nation toward its energy goals.
    We plan to publish an initial Draft Proposed Program for 2002-2007 
and draft EIS, this summer. Subsequent steps in developing a new 5-Year 
Program after receiving comments on the Draft Proposed Program and 
accompanying draft EIS, will include an appropriate comment period and 
publication of a Proposed Program and draft EIS with an appropriate 
comment period; and publishing a Proposed Final Program with a final 
EIS. We hope to have the next 5-Year Program in place before June 2002.
    Question 68: Considering the status quo of limiting offshore 
exploration and production to the Central and Western Gulf of Mexico 
and Alaska, what consideration is being given to the ``equitable 
sharing'' of the production and distribution of offshore energy 
resources?
    Answer: Section 18 of the OCS Lands Act requires that every new 5-
year program for OCS oil and gas leasing be prepared in a manner 
consistent with four main principles: (1) consideration of economic, 
social, and environmental values and the potential impact on marine, 
coastal, and human environments; (2) a proper balance among potential 
for environmental damage, discovery of oil and gas, and adverse impact 
on the coastal zone; (3) assurance of receiving fair market value; and 
(4) consideration of eight factors. The equitable sharing of 
developmental benefits and environmental risks is one of these eight 
factors. Among the others are existing information on geographical, 
geological, and ecological characteristics of regions; location of 
regions with respect to needs of energy markets; location of regions 
with respect to other uses of the sea and seabed; interest of potential 
oil and gas producers; and laws, goals, and policies of affected 
States.
    The current program, you have noted, includes proposed lease sales 
only in the Gulf of Mexico and the Alaska OCS, the result of a greater 
weight given to the laws, goals, and policies of affected States and 
the location of regions with respect to other uses of the sea and 
seabed. As we develop a new program to succeed the current one, I will 
give full consideration to the geographic distribution of proposed OCS 
lease sales and the benefits and risks that would result from those 
sales. However, I will have to temper this consideration with the 
understanding that both the Atlantic and the Pacific OCS and all but a 
small portion of the Eastern Gulf of Mexico, under presidential 
authority, have been withdrawn from disposition by leasing until after 
June 30, 2012.
    As the President pledged during the campaign, the Department will 
work with the various affected parties to try to craft agreement as to 
what kind of program would best serve the Nation by providing energy--
especially natural gas--and employment while protecting other valued 
resources.
    Question 69: In developing your plan, will your Department consider 
the costs of eliminating large areas from consideration under the 5-
year plan? While I support reserving areas of important resource and 
cultural benefit, I am concerned that we do not understand the costs of 
removing large areas from consideration, not only in terms of economics 
and jobs, but equally, in terms of national security.
    Answer: As directed by the OCS Lands Act, MMS has begun its 
analysis for the new 5-year program by examining all planning areas 
eligible for leasing consideration. This initial analysis includes a 
ranking of these planning areas by the potential net economic value and 
by the potential net social benefits of leasing all of each area. Areas 
under Presidential and congressional moratoria are not considered for 
leasing and are not included in the economic analysis. The information 
provided by MMS allows me to gauge the effect on total value to the 
Nation of any options eliminating areas from consideration or reducing 
the eligible portion of a planning area.
    The environmentally sound development of the Nation's OCS 
resources, through a reliable lease sale schedule that is consistent 
with other uses of the OCS sea and seabed and with State and local 
government priorities, can help further the achievement of each of the 
goals set out in the OCS Lands Act. Investments in and production of 
OCS oil and gas generate billions of dollars annually in bonuses, 
royalties, and taxes and create thousands of well-paying jobs 
throughout the American economy. Production of offshore resources under 
proper environmental safeguards poses less risk of major oil spills 
than does importing foreign oil in tankers. Expanded use of natural 
gas, including that produced on the OCS, has substantial environmental 
benefits over other fossil fuels.
    Most production resulting from lease sales held under the new 5-
year program is likely to begin over the next decade and continue well 
into the first half of this century. Just as important, the program 
decisions and the way they are made will have a lasting effect on the 
relationship between the Federal Government and other interested 
parties and the ability to develop and implement future programs in a 
way that best meets the Nation's energy needs while protecting the 
values reflected in competing Federal, State, and local priorities.

(FLAKE)
    Question 70: Natural gas appears to be a cleaner alternative to 
energy production because it does not release soot, chemical toxins, or 
mercury. It emits half as much smog producing nitrogen oxide and 30 
percent less carbon dioxide, a green house gas believed to worsen 
global warming. How can the Committee address this and encourage 
sources of natural gas to be tapped and used?
    Answer: The NEPD Group recognized the critical importance of 
boosting production to meet anticipated demand, and ensuring that the 
natural gas pipeline network is expanded to the extent necessary. To 
that end, the NEPD recommended that my agency should examine land 
status and lease stipulation impediments to Federal gas leasing, 
economic incentives for environmentally sound off-shore development, 
and opportunities for royalty reductions in specific instances and 
where warranted. It is also recommended that we expedite discussion on 
a right-of-way for a gas pipeline for North Slope natural gas if and 
when an application is received.
    Question 71: It was assumed in the 70's that many of the nation's 
older, higher emitting power plants would soon go off line and thus 
were exempted by the Clean Air Act. The Act specified that improvement 
beyond routine maintenance- including measures to prolong the life of 
these plants - would make the entire plant subject to the newer, more 
stringent, rules. Some say these plants continue to run, evading 
compliance by calling major expansions ``routine maintenance.'' What 
will be the Department's approach to enforcement of these situations.
    Answer: While I am sensitive to the importance and complexity of 
this question, I believe that it would not be appropriate for me to 
comment on this issue which is under the regulatory jurisdiction of 
EPA.
    Question 72: President Bush has called for reducing and expediting 
Federal regulations, such as those protecting public lands and air 
quality, in order to stimulate oil drilling and power generation. How 
can we encourage this to occur and get the market rolling?
    Answer: At Interior, we will be reviewing our regulations to 
identify opportunities for streamlining. We are also focusing attention 
on expediting decisions within existing regulations.
    Question 73: When encouraging development of power resource 
production and generation, the issue of eminent domain arises and the 
fact that rather than use or harm public lands, privately held property 
is sometimes ``taken.'' There appears to be a conflict when the Federal 
government has the ability to name National Monuments and private 
property becomes the remaining vehicle by which energy can be 
developed. Can you comment on how we might ensure that this does not 
create a conflict of interest for the Federal government? (Article 1, 
Section 8, Clause 17).
    Answer: There is a potential for such conflict, and we will want to 
weigh that in the balance as Federal land use decisions are made. In 
any given case, there may be important public land values that need 
protection from a utility corridor such as an electric transmission 
line, but we also need to take into account that forcing a right-of-way 
off public lands may have major economic impacts due to extensive and 
longer rerouting, but also land use impacts on the lands to which the 
right-of-way is rerouted. It is not clear that this was always taken 
into account in developing the boundaries for new National Monuments.
    Question 74: Only 17% of Arizona is privately owned land. Given the 
recommendation that legislation be developed to grant authority to 
obtain rights of way for electricity transmission lines and our 
Committee's interest in Federal lands, how do you see privately owned 
lands being addressed versus those that are publicly owned?
    Answer: The Bureau of Land Management (BLM) currently has authority 
to grant rights-of-way across public lands for oil and gas pipelines 
under the Mineral Leasing Act of 1920 (MLA) and for other rights-of-
way, including electric transmission lines and facilities, under the 
Federal Land Policy and Management Act of 1976 (FLPMA). In practice, 
BLM processes over 1,200 pipeline and electric system rights-of-way 
authorizations annually and, based on increasing demand for energy, BLM 
expects this number to increase by 15 - 20 percent over the next five 
years. At present, BLM estimates that some 90 percent of all oil and 
gas pipeline and electric transmission rights-of-way in the western 
U.S. are dependent to some extent on rights-of-way authorizations on 
Federal lands. Given the increased demand for rights-of-way, their 
obvious importance, and the growing complexity of some applications, 
the BLM issued a proposed rule in June of 1999 to update its cost 
recovery program in order to better meet the increasing demands of the 
rights-of-way program.
    With regard to acquisition of rights-of-way on private lands for 
electrical transmission lines or facilities, industry must acquire such 
lands independent of any right-of-way application related to public 
lands. The Department of the Interior does not play a role in the 
acquisition of rights-of-way on such lands.
    Question 75: It was originally thought that with our country's 
shift to the service sector that energy consumption would decrease, 
however, with the onset of computerized business, we now have less 
conservation and more use of peak hour energy consumption. How has this 
factored into the National Energy Policy?
    Answer: Changes in our society have led to changes in our 
projections about future supply and demand of crucial energy resources. 
President Bush recognized the need to incorporate an analysis of these 
trends into a comprehensive National Energy Strategy. Energy intensity, 
or the energy required to produce a dollar's worth of gross domestic 
product will continue to decline, due to improved energy efficiency, as 
well as to structural changes in the economy. The NEPD Group offered a 
number of suggestions that address energy conservation and energy 
efficiency.
    Question 76: The President has stated that there are no short term 
fixes, but is he considering, or will he consider short term bailouts 
in case there are extreme shortages this summer, such as tapping into 
the Strategic Petroleum Reserve?
    I am certain that the President is concerned about the potential 
impacts of energy shortages this summer. He has directed us to expedite 
permits for new power production and to work as good partners to reduce 
our electricity at Federal facilities, especially during the peak 
periods this summer. We have not had discussions about tapping into the 
Strategic Petroleum Reserve.

(PALLONE)
    Question 77: According to chart 6-2 that you provided to the 
Committee, between 1978 and 1983 consumption of oil in the United 
States dropped from nearly 19 million barrels per day to just over 15 
million barrels per day. Then between 1983 and 1998, oil consumption 
increased to once again meet the 1978 level of approximately 19 billion 
barrels per day. Clearly in the late 1970's through conservation 
efforts and innovative solutions, this country reduced the need to use 
billions of barrels of oil. Twenty years later, in 1998 consumption 
levels were equal to those in 1978.
    Additionally, the USGS has calculated that at today's high oil 
prices, only 2.6 billion barrels of oil - equal to 140 days of current 
U.S. consumption - in the Refuge are ``economically recoverable.--
    As the proprietor of our country's natural resources, to what 
extent will you promote conservation efforts, supported by historical 
figures, prior to supporting development of oil and gas production in 
our country's most sensitive areas?
    Answer: We are committed to promoting conservation efforts and 
alternative fuels. Interior bureaus have renewed their emphasis on 
energy efficiency, energy conservation and the use of energy-saving 
technologies. Interior facilities have incorporated energy-saving 
concepts into building design including automated energy management 
control systems; energy-efficient heating, ventilation, and air 
conditioning systems; energy-efficient lighting; insulation, passive 
solar energy design; ground-source geothermal heat pumps; use of 
recycled materials in building construction; and power generation from 
renewable energy sources. In addition, the Bureau of Land Management 
(BLM) is reviewing the opportunities for expanded siting of solar and 
wind electrical generating facilities on public lands. The BLM is also 
working with the Forest Service to identify sites for biomass 
development.
    Question 78: In regard to the Alaska National Wildlife Refuge, in 
your testimony you state, ``...because of advances in technology...we 
are now able to proceed with exploratory work with very little long-
term effect''. Further you identify regulations that Department of 
Interior intends to put in place on production in the Arctic Refuge and 
conclude with ``we believe that new technologies enable us to conduct 
environmentally safe oil and gas exploration and production.--
    Just days before you visited Prudhoe Bay, state inspectors found 
that almost a third of the safety shutoff valves tested at one drilling 
platform failed to close. Additionally, on the North Slope, 92,400 
gallons of saltwater and crude oil leaked from a pipeline at the 
Kuparuk oil field on April 15; this was the fourth major spill on the 
North Slope in the winter of 2000. Given these recent environmentally 
disastrous incidences, I am deeply concerned about your use and the 
Administration's frequent use of the term environmentally friendly 
technology.
    Question 79a: First, please explain to me what you believe is 
``environmentally safe oil and gas exploration and production--?
    Answer: Environmentally safe oil and gas exploration and production 
in the context of the North Slope is activity where ``state of the 
art'' environmentally friendly technology and procedures are employed 
such as low impact exploratory approaches that include ice roads and 
extended reach directional drilling. It includes developing contingency 
plans and procedures to deal with incidents and potential environmental 
impacts. Planning, training, equipment, Federal and state regulation 
and supervision all play a part. Finally, it includes operating under a 
strong environmental standard that overlays all activities conducted in 
the area.
    Question 79b: Second, please explain how you determine what are 
long-term effects and the scientific insight you have to determine 
these effects?
    Answer: We are monitoring the ongoing development in the Naval 
Petroleum Reserve-Alaska (NPRA) under the stipulations we developed 
prior to leasing. Funding for additional studies covering issues such 
as ice road location is included in the President's 2002 Budget
    Question 79c: Third, how will the cost of the regulations you 
intend to put in place in the Arctic National Wildlife Refuge affect 
oil and gas production rates and the overall cost benefit analysis of 
economically recoverable resources?
    Answer: The National Energy Policy states that Congress should 
require the use of the best available technology and should require 
that activities will result in no significant adverse impact to the 
surrounding environment. This standard will be our position despite any 
additional costs that could arise.
    Question 80 : Will the Administration seek to overturn the 
Presidential moratorium in place until 2012 to develop oil and gas 
production in the OCS?
    Answer: We appreciate the longstanding history, context, and 
concerns associated with OCS moratoria and presidential withdrawals. 
The Administration has no plans for undoing this framework.
    Question 81a: Earlier this morning I met with tribal leaders from 
the Crow, Comanche, Blackfeet, and Standing Rock Sioux about a sacred 
area known as Weatherman's Draw. Aside from the fact that I find it 
outrageous we would be drilling in an environmentally sensitive area, I 
find it unacceptable that the tribal nations were not adequately 
consulted about the proposed drilling in the area. This Canyon has 
religious and spiritual significance and is found to contain some of 
the most impressive rock drawings and petroglyphs in the West. How do 
you explain the fact that local American Indians were essentially left 
out of consultation process?
    Answer: There is a long history of tribal consultation associated 
with this area.
    Geographically, the nearest tribes to BLM's Billings Field Office 
are the Crow and Northern Cheyenne in Montana, and the Eastern Shoshone 
and Northern Arapaho in Wyoming. Initial contacts were made with all 
four of these local tribal governments within several days after the 
applications for permits (APDS) to drill came in to our Billings office 
late in 1993. An initial visit to the Weatherman Draw sites was 
conducted by BLM in March 1994, with representatives of all four tribes 
in attendance. Other tribes in Montana more distant from the Billings 
area were contacted by phone, including the Blackfeet and Assiniboine 
Sioux, however these additional tribes deferred to the Crow and the 
other local tribes.
    Since the initial site tour for the tribes in 1994, the Bureau has 
met with tribal government representatives from each of the four local 
tribes on numerous occasions in the BLM office and in tribal 
administration offices. Tours of the Weatherman sites were conducted 
twice with government representatives of the Crow and the Northern 
Cheyenne Tribes. BLM sought comments repeatedly from all four groups 
and have kept them informed of the project status. BLM had numerous 
letters and faxes that were sent to the tribes informing them of the 
project and asking for comments and involvement. We have written 
comments on file from the tribal governments of the Northern Cheyenne 
and the Crow. We have verbal comments from the Eastern Shoshone 
government and the Northern Arapaho government.
    The comment period on the final EA for the Weatherman Draw APD 
closed December 1, 2000. After the comment period closed several 
environmental groups requested a meeting on Weatherman Draw. The 
meeting was held January 17, 2001, in Billings and Dr. Lawrence 
Loendorf presented evidence indicating possible links with prehistoric 
Apachean peoples, all of whom reside now in New Mexico, Arizona, 
Oklahoma, and Alberta. We also had a number of comments on the EA 
suggesting that more distant tribes should be involved in consultation. 
We looked at the range of tribes with possible prehistoric ties to the 
Billings area and contacted those groups. In addition, we were 
contacted by other groups who wish to consult, but who are not well 
documented as ancient residents of the area. In total, we have spoken 
with, written to, and provided materials to 26 tribes, including almost 
all the tribal governments on the North American Plains.
    Question 81b: Given your authority and ability to stop this 
proposal and knowing now of its disturbing history, do you have any 
plans to stop the exploratory drilling from proceeding?
    Answer: On February 5, 2001, the Bureau of Land Management 
concluded an environmental study that began in 1993 and issued a 
decision to allow drilling of a single exploratory well. Several groups 
requested a review of that decision. The review was signed on May 21, 
2001, and upheld the decision to allow the exploratory well. However, 
the review can be appealed to the Interior Board of Land Appeals, and 
the BLM will not allow any drilling activity to take place until the 
30-day appeal period has expired June 23. The Board has the discretion 
to issue a stay of drilling activity until it renders a decision. I 
will, of course, continue to monitor this issue.
    Question 82: Question 6. Under the 1992 Energy Policy Act, the 
Secretary of the Interior is authorized to request funding for American 
Indian Renewable Energy Projects. Given the potential for renewable, 
clean energy production by tribes, will you seek funding for the 
American Indian Renewable Energy Project? What is the Department of 
Interior's plan to help tribes develop their renewable resources?
    Answer: Funding for American Indian Renewable Energy Projects will 
be considered within the overall evaluation of economic viability using 
present and developing technology. Where feasible, these energy sources 
can contribute in environmentally attractive ways. In addition, for 
Indian tribes, renewable energy might provide energy locally more cost 
effective than by conventional grid service.
    As a Department, we are considering how to best develop a plan to 
help tribes with all energy resources on Indian lands including 
renewable resources.

(KIND)
    Question 83: Drilling and producing methane gas from coal beds 
results in vast quantities of water being pumped to the surface. For 
instance, there are proposals to drill up to 70,000 such gas wells in 
the state of Wyoming alone. These wells would result in more than one 
billion gallons of water being pumped to the surface everyday. Pumping 
such quantities of water to the surface can impact the water table, 
contaminate drinking water supplies, cause flooding, etc. In addition, 
the water sometimes has a high salt content that has an adverse impact 
on plants and animals. Has a comprehensive analysis of the impacts of 
pumping such vast quantities of water to the surface been performed. If 
not, is one planned? Does the Department have a strategy for mitigating 
possible impacts?
    Answer: All of these issues are part of the EISs and EAs being 
conducted in Wyoming and Montana. Specifically, the impact of water 
production, disposal, and use has been analyzed in substantial detail. 
An EIS is in preparation on this area and these issues. The final EIS 
is expected to be completed mid-year 2002. In addition, all Coal Bed 
Methane (CBM) wells on Federal leases must have an approved water 
management plan prior to approval of the drilling permits. The BLM also 
requires State Department of Environmental Quality approvals under the 
Clean Water Act for any disposal of produced water.
    Question 84: Directional drilling is one of the technologies being 
touted as a means of reducing the infrastructure footprint associated 
with oil and gas drilling, particularly in regard to drilling in 
Alaska. However, in some cases industry has resisted using this 
technology for drilling on Federal lands in the lower 48 states. Rather 
than using directional drilling, the industry is lobbying to increase 
the density of oil and gas wells allowed on Federal lands. Do you 
believe the allowable density of oil and gas wells on Federal lands 
should be increased, or do you think the industry should be encouraged 
or required to pursue technologies such as directional drilling that 
minimize the industrial footprint and associated environmental impacts?
    Answer: The technology for a ``small footprint'' is applicable in 
many situations, both in Alaska and the lower 48 states. I support this 
technology where needed to minimize environmental impact and where it 
can be done technically and with reasonable economics.
    Question 85: There are a number of lease stipulations regarding 
drilling and production on Federal lands that are designed to minimize 
the impacts on animal wildlife. For instance, in some cases there are 
prohibitions on production activities during sensitive animal breeding 
or migration periods. There are industry proposals that call for 
relaxing or eliminating such protective measures in the name of 
increasing production. Do you support relaxing or eliminating these 
protective measures that are designed to protect animal wildlife?
    Answer: Most of the prohibitions to reduce impacts to wildlife 
populations are applied only to drilling operations when most of the 
human influence is present. Production restrictions are uncommon. I 
support continued use of all necessary prohibitions, whether on 
drilling or production if they are supported by sound science and 
provide for the continued existence of viable wildlife populations 
while allowing for development of our energy resources.
    Question 86: Approximately 95% of the land managed by the Bureau of 
Land Management within the Rocky Mountain States of Colorado, Montana, 
Wyoming, Utah, and New Mexico are already open to oil and gas leasing 
and there are extensive ongoing exploration and development activities 
on these lands already. Can you provide an estimate of the size of oil 
and gas reserves on the remaining five percent of Federal lands not 
currently available for leasing? How does the size of these projected 
reserves compare to U.S. total reserves of oil and gas?
    Answer: The USGS does not have information about energy resources 
under Federal lands that are not currently available for leasing. The 
Energy Act of 2000 requires the Secretary of the Interior to conduct an 
inventory of energy resources under Federal lands and the restrictions 
and impediments to their development. The first five priority regions 
will be completed by November 2002, and estimate of resources under 
land available for leasing will be available at that time.

(T. UDALL)
    Question 87: Reflecting on the horrible pipeline explosion near 
Carlsbad, New Mexico last August that killed 12 people and the 
Bellingham, Washington gas pipeline tragedy, I want to further ensure 
that our existing and future gas pipelines across the U.S. are safe. 
With that in mind, the Administration and Congress must strengthen our 
current oversight program for pipelines in order to enhance safety and 
reliability.
    As the Secretary of the Interior, please explain how you will take 
the lead in the administration and work with Secretaries Abraham and 
Mineta to provide ideas to Congress ideas on how to provide maximum 
safety?
    Answer: The Department of Transportation (DOT) has the lead 
responsibility for pipeline safety issues. However, the Department of 
the Interior is strongly committed to working with the DOT on 
environmental and right-of-way impacts of pipelines on public and 
Federal lands. In order to better explain the role of pipeline safety 
to both government and private industry pipeline managers, the DOT's 
Office of Pipeline Safety (OPS) actively participated in the inter-
agency/International Right of Way Association, Pipeline Committee, 
Pipeline Systems Course. It is becoming increasingly common where 
pipeline safety is a concern in the application review process to have 
OPS personnel conduct ``on site'' public land reviews.
    Question 88: I do not see how the BLM can effectively implement its 
resource management program in the lower 48 states with the proposed 
President's budget. ThePresident's BLM budget for Fiscal Year 2001 was 
$2.1 billion and dropped to $1.8 billion for Fiscal Year 2002. Although 
the administration intends to increase that BLM's energy and mineral 
program by $15 million, a large portion of that will be going toward 
exploration on Alaska's North Slope and completion of the BLM's land 
management planning process. That doesn't leave much money for the BLM 
to manage its other programs, and the programs willsuffer tremendously 
because of the budget cuts.
    Can you provide a breakdown of all the BLM's programs funding 
levels between Fiscal Year 2001 and the President's budget for Fiscal 
Year 2002, nationally and in New Mexico?
    Answer: The attached table (appendix B) provides funding changes by 
account. It is accurate that the BLM President's budget shows an 
overall decrease from Fiscal Year 2001. However, BLM's two main 
operating accounts include an increase from Fiscal Year 2001. Also, a 
major portion of the proposed decreases in the budget are one-time or 
emergency costs that were provided in Fiscal Year 2001 and not 
continued in Fiscal Year 2002. For example, $226 million in reductions 
reflect the elimination of a fire emergency contingency fund [$199.6 
million] as well as one-time fire equipment purchases and a targeted 
research project [$26.8 million]. Other similar reductions include $17 
million in one-time emergency funding for Great Basin restoration and 
Grasshopper and Mormon cricket control.
    We do not yet have a detailed breakdown of Fiscal Year 2002 funding 
for New Mexico or other BLM states. It is expected that New Mexico 
would share in the requested energy increases as specified in BLM's 
Fiscal Year 2002 budget justifications. For example, of the requested 
increase for land use planning, $217,000 would be directed to New 
Mexico for five high priority land use plans. A portion of the $11.7 
million requested increase for oil and gas activities would be directed 
to high priority areas in New Mexico such as the San Juan Basin to 
process additional Applications for Permit to Drill and for 
implementation of the Energy Policy and Conservation Act. $670,000 of 
the $1.5 million increase requested for processing additional right-of-
ways would be directed to New Mexico. Approximately $7.6 million would 
also be used in New Mexico for land acquisition in four critical, 
specially-designated areas, as well as sufficient resources to prepare 
for and address wildland fires.
    Question 89: Even at the Fiscal Year 2001 budget levels, staffing 
levels if BLM field offices such a Farmington, New Mexico appear 
severely deficient to manage and implement its resources objectives as 
well as its public relations program.
    How do you intend to maintain or ramp-up the appropriate staffing 
levels for these program areas, especially with fire management and 
suppression given the proposed budget cuts?
    Answer: The BLM Full Time Equivalency [FTE] request for Fiscal Year 
2002 is 10,771 FTE, the same as Fiscal Year 2001. This level represents 
an increase of 833 FTE [8%] over the FTE actually used in Fiscal Year 
2000. The Fiscal Year 2002 budget request also presents several 
internal adjustments in FTE levels to address the highest priorities. 
For example, an additional 40 FTE will be directed to priority energy 
activities, 17 FTE will be used to make more progress in land use 
planning and 11 FTE will help process additional right-of -ways.
    A significant number of these positions will also help BLM to 
ensure a full readiness capability for wildland fire management. The 
BLM is moving toward increasing staffing in the wildland fire program 
in Fiscal Year 2001 by 656 FTE to continue progress in implementing the 
National Fire Plan prepared after the Fiscal Year 2000 fire season.
    The Fiscal Year 2002 budget request for wildland fire management is 
more than double historical funding levels. At the proposed level, 
emphasis will continue on full implementation of the National Fire 
Plan, including building capacity in preparedness, ensuring a 
responsive operations program, and sustaining support for rural fire 
districts.

(INSLEE)
    Question 90: Will the Administration withhold funding of the 
Hanford Reach National Monument in order to attempt to drill for 
natural gas on the monument, or change the boundaries of the monument?
    Answer: I have not indicated an intention to open Monuments to 
energy exploration or drilling, nor have I recommended withholding 
funds to do so. On March 28th, letters were sent to elected officials 
in Washington State requesting their (and their constituents) ideas 
about how they would like to see their National Monuments managed and 
for what uses. Responses to those letters will be collected and 
analyzed and determinations will be made as to recommended changes.
(M. UDALL) Withdrawn Areas
    Question 91: The Cheney task force recommended that the President 
direct you, as Secretary of the Interior, to review public lands that 
are now withdrawn from oil and gas leasing, and to ``consider 
modifications where appropriate.'' Will you be doing that?
    Answer: Yes. This will be done, primarily through the Energy and 
Policy Conservation Act section 604 studies and the land use planning 
process.
    Question 92: As I understand it, right now about 16 million acres 
of BLM lands in Colorado are open to oil and gas leasing, while about 
600,000 acres - that is, about 3.5% of the total - are withdrawn from 
leasing. Are those numbers about right?
    Answer: The BLM Colorado administers 12.6 million subsurface acres 
that are open to oil and gas leasing. About one million acres are 
withdrawn from leasing, including 145,000 acres of wilderness and 
615,000 acres of wilderness study areas.
    Question 93: Will you be reviewing lands in Colorado that BLM is 
now managing as wilderness study areas? If so, which ones?
    Answer: We will be reviewing all lands BLM manages in priority oil 
and gas basins under the EPCA section 604 process. However, until 
Congress determines otherwise, wilderness study areas will be managed 
according to the Wilderness Act of 1964, which states in part A...so as 
not to impair the suitability of such areas for preservation as 
wilderness, subject, however, to the continuation of existing mining 
and grazing uses and mineral leasing...@
    Question 94: In addition to the formal wilderness study areas, 
there are a number of areas in Colorado that BLM has been re-
inventorying to see if they might have wilderness potential. How will 
the energy plan affect those areas?
    Answer: In 1997 and 1998 the BLM Colorado conducted in-depth 
roadless reviews in six western slope areas. After consultation with 
filed offices, on-the-ground tours, and review of hundreds of public 
comments, 167,000 acres in the Vermillion, South Shale Ridge, and Bangs 
Canyon areas were identified as containing wilderness values; land use 
plan amendments were prepared. When funding is available, BLM will 
proceed with a land use classifications. In addition we expect the 
result of the EPCA review to be factored into the land use planning 
process. To the extent that land use planning recommendation could 
result in additional restrictions on land use development, they will be 
evaluated pursuant to Executive Order 13211- ``Actions Concerning 
Regulations That Significantly Affect Energy Supply, Distribution or 
Use.--
    Question 95: What other Colorado withdrawals will you be reviewing?
    Answer: The only withdrawn land that is closed to oil and gas 
leasing is the U.S. Air Force Academy. The BLM is currently reviewing 
about 200,000 acres of Bureau of Reclamation withdrawn lands and 
opening those lands no longer needed for water project purposes. 
However, these lands have always been open to oil and gas leasing.
    Question 96: How will you decide what modifications to these 
withdrawals would be ``appropriate--?
    Answer: As noted in question 95 above, the only withdrawn lands in 
Colorado closed to oil and gas leasing are withdrawn to benefit the 
U.S. Air Force Academy. When withdrawn lands are returned to management 
by the BLM, land use plans are amended to address resource issues, 
concerns and future management direction.
    Question 97: How will you go about consulting with people in 
Colorado about this?
    Answer: Land use planning and compliance with NEPA are public 
processes. The BLM routinely notifies and solicits participation by our 
public through the NEPA scoping process, which includes Federal 
Register notices, press releases, letters to interested citizens, and 
open houses or meetings.
    Question 98: What modifications can you make administratively, and 
which would require legislation?
    Answer: In general, withdrawn by legislation and proclamation 
(e.g., National Conservation Area's, National Monuments, Military and 
power site withdrawals, Wilderness, Wilderness Study Areas and Wild 
Rivers) from oil and gas leasing would require legislation to allow 
leasing. Any withdrawals executed through land use planning can be 
modified through a new or amended land use plan.
    Question 99: Am I right in understanding that relaxing restrictions 
on leasing in wilderness study areas can only be done through 
legislation?
    Answer: Yes. Mineral leasing on the overwhelming majority (98%) of 
BLM wilderness study areas is restricted by Act of Congress. To change 
that restriction requires legislation.
    These are a small number of WSA's (2%) that were identified by BLM 
through the land use planning process. The Secretary has the discretion 
to reconsider these section 202 WSA's. Release of these WSA's would 
require a land use plan amendment and associated NEPA analysis.
    Question 100: Wilderness Study Areas - Just before he left office, 
the first President Bush sent Congress a final report on possible BLM 
wilderness. It named 54 Colorado wilderness study areas and recommended 
that more than 346,000 acres in Colorado be designated as wilderness. 
Congress dealt with some areas in the 1993 Colorado wilderness bill and 
later legislation. But the others are still wilderness study areas, and 
other areas have been proposed as well. I understand the task force 
considered urging the Administration to encourage Congress to decide 
which BLM and Forest Service wilderness study areas should be protected 
as wilderness. That evidently is not in the final report. But don't you 
think that it would be good to get this resolved, at least in Colorado, 
by passing a BLM wilderness bill?
    Answer: The final decision as to whether or not a wilderness study 
area becomes a designated ``Wilderness Area'' under the authority of 
the Wilderness Act of 1964 is made by Congress. I support Congress 
resolving these issues in Colorado and throughout the West.
Leasing Stipulations
    Question 101: The task force also recommended that the President 
direct you, as Secretary, to review the stipulations on existing oil 
and gas leases, and to modify them as appropriate. Will you be doing 
that?
    Answer: Yes. The review is proceeding. The EPCA study and the 
related Green River Basin study include a component where existing 
lease stipulations are analyzed.
    Question 102: Will you be doing this in a generic way, or on a 
case-by-case basis?
    Answer: BLM may make some generic changes, but case specific 
stipulations will still be applied were warranted.
    Question 103: What kinds of modifications might be considered?
    Answer: Duration of seasonal stipulations might be amended; size of 
others might be reduced; and terms of prohibited activities might be 
modified. BLM anticipates the EPCA study to provide valuable 
information on both the effectiveness of new and existing stipulations 
as well as a review of the impact of the stipulations on energy and 
mineral development. It will provide a baseline for monitoring 
effectiveness of the stipulations.
    Question 104: Do you know if any Colorado leases are likely to be 
modified?
    Answer: It is unknown at this time whether any Colorado leases are 
likely to be modified.
    Question 105: How will you go about consulting with people in 
Colorado about this?
    Answer: We have pledged to include public notification and 
consultation in the modification of lease stipulations. The National 
Energy Policy recommends that the President direct the Secretary of the 
Interior to ``review public land withdrawals and lease stipulations, 
with full public consultation, especially with the people in the 
region, to consider modifications where appropriate.--
Canyons of the Ancients Monument
    Question 106: Will you be considering any changes to the boundaries 
or the management of the new Canyon of the Ancients National Monument?
    Answer: On March 28th, letters were sent to elected officials in 
Washington State requesting their (and their constituents) ideas about 
how they would like to see their National Monuments managed and for 
what uses. Responses to those letters will be collected and analyzed 
and we will consider recommended changes.

(HOLT)
    Question 107: It appears the R&D funding for renewable energy and 
funding for land conservation proposed in the Administration's energy 
plan all rely on revenues generated from the oil and gas leases in the 
Arctic Refuge. In the event that Congress does not allow drilling in 
the 1002 Area, what contingencies does the Administration propose for 
making up for these lost funds?
    Answer: The research and development funding from ANWR leasing was 
projected to occur in 2004, and our understanding is that discretionary 
funds are also proposed in the President's Budget for renewable 
research and development, independent of ANWR royalties. However, the 
research and development of renewable energy is a Department of Energy 
program, so the Department of Energy may be able to provide a more 
complete answer about funding these programs.
    The proposal to fund land conservation from royalties collected on 
ANWR production is part of a recommendation in the National Energy 
Policy, but is not part of the budget request for 2002. We are 
proceeding with planning efforts for implementing the National Energy 
Policy recommendations and hope to be able to provide more detail in 
the future.
    The Department and the Administration remain optimistic about the 
potential of ANWR to provide for our nation's future energy needs. The 
proposal in the 2002 budget, and any proposals in future budgets, will 
take several years to come to fruition.
    Question 108: The President recently renewed his commitment to 
maintaining a moratorium on offshore oil drilling off the coast of 
California. In the recent hearing before the Resources Committee, the 
Secretary stated she would abide by the existing moratoria. Is the 
Secretary willing to abide with the moratorium on offshore drilling off 
of the coast of New Jersey?
    Answer: We appreciate the longstanding history, context, and 
concerns associated with OCS moratoria and presidential withdrawals. 
The Administration has no plans to undo this framework.
    Question 109: The plan proposes providing additional economic 
incentives for companies to develop reserves in frontier areas and 
using deep gas production. First, does this imply that these reserves 
would not be developed without these incentives? Second, every industry 
assumes much of their own risk, especially when reporting record 
profits. Why are we proposing that the taxpayers reduce or eliminate 
the risk of this exploration?
    Answer: The President's National Energy Policy calls for the 
Secretary to consider economic incentives for environmentally sound 
offshore oil and gas development where warranted by specific 
circumstances which includes exploring opportunities for royalty 
reduction consistent with ensuring a fair return to the public where 
warranted. We estimate that about one billion additional barrels of oil 
equivalent could be developed from the unleased resource base due to 
royalty relief. Absent this relief, these resources would not be 
developed at prices expected to prevail over the next 10 years. In 
addition, some fields that would be developed, but at a later time 
without royalty relief, will be developed sooner in the presence of 
relief from royalties.
    Taxpayers stand to gain considerably by the increased production, 
in the form of less vulnerability to oil supply disruptions, greater 
domestic natural gas reserves, and lower domestic oil and gas prices. 
In short, for commodities such as oil and gas, the value to the Nation 
of each unit produced domestically is worth more than its market price. 
Few products generated in other industries can make this same claim. 
So, reducing the risk of exploration to oil and gas companies benefits 
all the citizens of the Nation, especially when the result is 
additional domestic oil production that replaces insecure supplies of 
foreign oil, and additional domestic gas production that lowers 
domestic gas prices. Further, our royalty relief program is not open-
ended. Royalty relief is granted only when prices are below the 
thresholds specified in the leases. If prices exceed the threshold 
values, producers pay royalties and the production applies against 
their royalty suspension volume.

(SOLIS)
    Question 110: What private organizations and businesses did the 
Administration consult when creating the National Energy Policy report? 
Will you submit a list to the Committee for our information?
    Answer: The Department of the Interior did not request information 
or views from private organizations and businesses in developing 
options for consideration in the National Energy Policy effort.
    Question 111: The Federal Energy Regulatory Commission (FERC) has 
clearly acknowledged that energy prices in California are not ``just 
and reasonable.'' Yet according to FERC Commissioner William Massey, 
FERC is not willing to ensure that consumers are protected from these 
outrageous rates. In light of these facts, why didn't the National 
Energy Policy Development (NEPD) Group direct FERC to exercise their 
responsibility and regulate skyrocketing wholesale prices in the West?
    Answer: Competition, if implemented effectively, will benefit 
consumers. The California deregulation plan, unfortunately, was 
severely flawed and counter-productive in that it did not allow the 
market to work. In order for electricity markets to function, there 
must be adequate supplies to meet demand, and there must be efficient 
means to deliver the goods to the electric power consumers. The major 
part of the problem of providing adequate supplies in California was 
locking in enough long-term contract power to provide a strong 
incentive to increase generating capacity and supply; this was 
exacerbated by the lack of new local generating facilities and the 
unusually low amount of hydropower generation due to the extensive 
regional drought. The problem with regulatory action--establishing 
price caps to lower the price of electricity in this market is that 
such caps will do nothing to increase, and may lower, the amount of 
electricity produced. At the same time the lower prices will increase 
the amount of electricity consumers use which is immediately and 
directly counterproductive.
    The Administration's view of this unfortunate situation is that it 
is important for the market to continue to send price signals to 
consumers that more conservation is needed--especially in the immediate 
term, and to potential suppliers that more power needs to be produced 
in both the short and longer terms. This approach appears to be working 
since conservation is way up in California, and substantial new 
investment in new and expanded generating facilities is extensive. From 
FERC actions to date, it appears that there has been inappropriate 
overpricing of power in some specific cases; FERC appears to be dealing 
with this, and has ordered refunds where it has determined that 
overcharging took place.
    Question 112: Most of the NEPD Group proposals are long term in 
scope and will not impact the consumer for many years to come. My 
constituents are dealing with an energy crisis today. How does the NEPD 
group propose to relieve this burden in the near future?
    Answer: President Bush has directed us to expedite permits for new 
power production and to work as good partners to reduce our electricity 
use at Federal facilities, especially during the peak periods this 
summer. The President has also instructed us to work with Congress in 
increasing funding for the Low Income Home Energy Assistance Program 
(LIHEAP) and allow use of oil and gas royalties for that program when 
oil or gas reaches certain prices.
    Question 113: Extensive drilling will take place if this proposed 
National Energy Policy becomes a reality. How will the Administration 
ensure local voices are heard and taken into consideration when making 
decisions about drilling? How will you ensure that these activities are 
not taking place disproportionately in minority communities?
    Answer: Leasing decisions are made only after extensive planning 
with ample opportunity for public participation. If applicable, we will 
proceed in light of Executive Order 12898 February 11, 1994 on 
Environmental Justice. Agencies must analyze the environmental effects 
(ie, human health and economic and social effects) of their actions--
including their effects on minority communities and low-income 
communities--when such analysis is required by NEPA. Also, agencies 
must provide opportunity for community input in the NEPA process, 
including identifying potential effects and mitigation measures in 
consultation with affected communities and improving the accessibility 
of meetings, crucial documents and notices.
    Question 114: The Bush Administration froze funds for the Low 
Income Heating and Energy Assistance Program (LIHEAP). The NEPD Group 
has proposed making the future of the program contingent on oil/gas 
royalties. In fact, the Groups recommendations go as far as to direct 
the Secretary of Energy to raid weatherization programs to fund LIHEAP. 
This program directly affects my constituents - people in dire need. 
Why would your group recommend risking funds for this program when it 
is so worthwhile.
    Answer: The NEPD Group recommended that the President take steps to 
mitigate the impacts of high energy costs on low-income consumers. The 
President understands the real impacts of high energy prices on 
families. As part of its support for LIHEAP, the National Energy Policy 
recommends that Congress enact legislation that would allow the use of 
oil and gas royalty payments to bolster LIHEAP funding whenever oil and 
natural gas prices exceed certain prices. The Administration wants to 
work with the Congress to determine the appropriate trigger prices or 
the formula for determining them.
    Question 115: The NEPD Group recommends what looks to be national 
electricity deregulation to increase competition. In light of the 
FERC's inability to live up to its responsibilities to ensure ``just 
and reasonable'' prices, how can we ensure that the price gouging of 
the West doesn't spread nationwide?
    Answer: It is difficult to draw a general conclusion about 
deregulation from the California example. The risk that the California 
experience will repeat itself is low, since other states have not 
modeled their retail competition plan on the California model.
    Question 116: The Federal budget proposed by President Bush cut 
research for renewables, which would increase electricity generation 
and protect our environment. At the same time, the NEPD group 
recommends an increase in the Administration's requested funding for 
renewable research. How can you explain this discrepancy?
    Answer: One NEPD recommendation was that the President should 
direct the Secretary of Energy to conduct a comprehensive review of 
current funding and historic performance of renewable and alternative 
energy research. The President is committed to increasing America's use 
of renewable and alternative energy. Additionally, the Administration 
has found that congressional action to add significant energy 
efficiency and renewables funding above the President's Fiscal Year 
2002 Budget request on both the Fiscal Year 2002 Energy and Water and 
Interior and Related Agencies Appropriations bills, is consistent with 
and largely supportive of the NEPD recommendations. The Administration 
looks forward to working with Congress to ensure allocation of 
resources to those programs that most effectively meet performance-
based criteria, and to fund the most efficient program alternatives by 
reducing lower priority program resources.
    Question 117: According to scientists throughout the world, your 
recommendations are sure to cause an increase in global warming. Yet, 
you make no mention about the climate in your policy discussion. Was 
this issue addressed during the NEPD Group's meetings? How will you 
ensure that the policy's actions don't increase greenhouse gas 
emissions?
    Answer: The primary focus of the Administration on global warming 
is being addressed through the cabinet-level Global Climate Change Task 
Force which is currently assessing the science and potential actions to 
address the issue. While global warming was discussed in the processes 
of developing the National Energy Policy, the NEPD consciously deferred 
dealing with this issue because of the more comprehensive analysis on 
global climate change being conducted. There are a number of major 
elements in the National Energy Policy, however, that will help address 
global climate change including the major emphases on energy 
conservation, natural gas, clean coal technology, nuclear energy, and 
alternative energy sources such as wind, geothermal and solar power.
    Question 118: One of the proposals that the NEPD Group put forth 
requires the Secretary of Transportation to provide Corporate Average 
Fuel Economy (CAFE) standards that will not negatively affect the auto 
industry. The Report says nothing about how the CAFE standards affect 
the environment, or about the Environmental Protection Agency's 
participation in the determination of those standards. How will you 
ensure that the Secretary of Transportation takes into consideration 
the environmental impacts of the CAFE standards?
    Answer: This question relates directly to a recommendation made by 
the NEPD that the President has tasked to the Secretary of 
Transportation. The Secretary of Transportation must craft CAFE 
standards that increase efficiency without adversely affecting the 
automotive industry. The President believes that environmental 
protection and economic growth are not mutually exclusive.
    Question 119: The NEPD Group's recommendations strongly support the 
expedited use of nuclear energy. How can the Administration endorse 
such a plan when we have not yet found a safe way of disposing of spent 
nuclear rods?
    Answer: I will have to defer to the Department of Energy on this 
issue.

(WILSON) Bureau of Reclamation and the Middle Rio Grande Conservancy 
        District
    Question 120: As you know, the New Mexico office of the Bureau of 
Reclamation loaned the Middle Rio Grande Conservancy District money for 
work on the Middle Rio Grande Project in 1951 and the San Juan-Chama 
Project; both projects involved District irrigation improvements and 
water. The Middle Rio Grande Conservancy District paid off the first 
loan last year. It recently tried to pay off the San Juan-Chama loan, 
but the Bureau refused to accept the payment and claimed indefinite 
control over these projects. This in effect Federalizes the control of 
local water rights, whether intended or not. Will you direct the local 
office of the Bureau to accept complete repayment for the loan?
    Answer: The Reclamation decisions carried out by the local office 
were discussed and supported by the highest levels of Reclamation and 
the Department. The Reclamation Act does not authorize Reclamation to 
issue loans. Rather, in the Reclamation Act, Congress authorized the 
funding and construction of Federal Reclamation projects and provided 
that the dams and reservoirs that make up those Federal projects would 
remain in Federal ownership until Congress provided otherwise. Thus, 
when Congress authorized the Federal Middle Rio Grande Project in 1948, 
it did not provide a situation where lands and facilities would be held 
as collateral for a loan, but rather was creating a Federal Reclamation 
project which would remain in Federal ownership until Congress made 
other provision. Consequently, the repayment of construction costs is 
not the equivalent of a mortgage payment but instead is the price paid 
for water delivery from Federal facilities.
    Additionally, the Reclamation laws impose conditions upon those who 
enter into contracts for Reclamation water. Those conditions include 
price and acreage limitations in order to control the benefits provided 
by Reclamation projects and ensure they are provided to the largest 
number of people possible. Therefore, Congress also placed stringent 
conditions upon the repayment of construction obligations and the 
termination of price and acreage limitations.
    In 1951, the Middle Rio Grande Conservancy District (MRGCD) 
contracted to repay, without interest, the reimbursable costs of the 
Middle Rio Grande Project. In 1963, that contract was amended to 
include repayment, without interest, of costs related to a supplemental 
water supply from the San Juan-Chama (SJ-C) Project.
    Acting pursuant to authority provided to the Secretary by Congress 
in 1962, Reclamation constructed the SJ-C Project to furnish irrigation 
water to Native Americans, Pueblo lands, and other lands within MRGCD. 
Additionally, the SJ-C Project provides water for municipal and 
industrial purposes and recreation and fish and wildlife benefits in 
New Mexico. The SJ-C Project is a transbasin diversion which helps to 
satisfy New Mexico's entitlement to water from the Colorado River and 
helps meet the increasing demands in the Rio Grande basin.
    In 2000, MRGCD completed repayment for the Middle Rio Grande 
Project portion of its contract but has until 2022 to repay the 
approximately $2.4 million balance on the San Juan-Chama Project 
portion.
    On May 14, 2001, MRGCD attempted to present Reclamation with a 
check for the remainder of San Juan-Chama Project costs. After 
consultation with the Department's Solicitors, Reclamation declined to 
accept payment because Section 213 1 of the Reclamation 
Reform Act of 1982 (RRA) precludes lump sum or accelerated repayment by 
water users unless specifically provided for in a contract existing 
prior to enactment of the RRA. MRGCD's contract requires repayment in 
50 consecutive annual installments ending in 2022 and makes no 
provision for lump sum or accelerated repayment. Legislative action is 
therefore necessary before Reclamation can accept complete repayment.
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    \1\ Section 213, Reclamation Reform Act of 1982 (96 Stat. 1269; 43 
U.S.C. sec. 390mm), paragraph (c), states:   (c) Nothing in this title 
shall be construed as authorizing or permitting lump sum or accelerated 
repayment of construction costs, except in the case of a repayment 
contract which is in effect upon the date of enactment of this Act and 
which provides for such lump sum or accelerated repayment by an 
individual or district.
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    MRGCD has stated publicly that its objective is to terminate 
Contract No. I78r-243 and obtain title to Project lands and facilities 
in order to remove the Federal presence from the Middle Rio Grande 
Project. An exemption from Section 213 authorizing early payout would 
not accomplish this objective because Reclamation law requires that 
title to project lands and facilities must remain in the name of the 
United States until Congress provides otherwise.
    Question 121: The local Bureau of Reclamation office has refused to 
accept repayment of a Federal loan from the Middle Rio Grande 
Conservancy District. This defies common sense. This position is 
unacceptable and may be contrary to law. Is this the official position 
of the Bush Administration or reflection of the local Bureau of 
Reclamation office policy? Do you support this policy or will you 
reverse the position of the local Bureau of Reclamation?
    Answer: Reclamation and I share your view that interest-free loans 
should be recovered quickly whenever possible.
    Section 203 [Middle Rio Grande Project], Flood Control Act of 1948 
(62 Stat. 1179)
        In carrying out the provisions of this Act, the Secretary of 
        the Interior shall be governed by and have the powers conferred 
        upon him by the Federal reclamation laws (Act of June 17, 1902, 
        32 Stat. 388), and Acts amendatory thereof or supplementary 
        thereto, except as is otherwise provided in this Act or in the 
        reports referred to above. This Act shall be deemed a 
        supplement to said Federal reclamation laws.
    Section 213 of the Reclamation Reform Act of 1982 (RRA) appears to 
leave Reclamation no administrative remedy to solve this problem 
without Congressional assistance. We believe that legislation exempting 
the District from Section 213 is necessary before Reclamation can 
accept their lump sum payment.
    Even though a statutory exception from Section 213 and other 
provisions of the RRA could facilitate prepayment, such an exception 
alone will not achieve the District's publicly stated desires to 
terminate its contract and obtain title to project facilities.
    Title to project facilities does not automatically transfer to the 
District when their contract is paid in full. Section 6, Reclamation 
Act of 1902 (32. Stat. 389, 43 U.S.C. sec. 491, 498), states:
        Provided, that when the payment required by this act are made 
        for the major portion of the lands irrigated from the waters of 
        any of the works herein provided for, then the management and 
        operation of such irrigation works shall pass to the owners of 
        the lands irrigated thereby, to be maintained at their expense 
        under such form of organization and under such rules and 
        regulations as may be acceptable to the Secretary of the 
        Interior: Provided, that the title to and the management and 
        operation of the reservoirs and works necessary for their 
        protection and operation shall remain in the Government until 
        otherwise provided by Congress.
    This is also reiterated in Article 29 of the District's contract, 
which specifically states: ``Title to all works constructed by the 
United States under this contract and to all such works as are conveyed 
to the United States by the provision hereof, shall, as provided in 
Article 26, be and continue to be vested in the name of the United 
States until otherwise provided for by Congress, notwithstanding the 
transfer hereafter of any such works to the District for operation and 
maintenance.'' I do not believe that current law allows this 
prepayment. Our management actions must continue to comply with the 
law.
    Question 122: If the reason for the Bureau's policy is based on 
statute, it clearly has unintended consequences. Will you provide 
Congress with specific language that will allow us to correct this 
situation for the Middle Rio Grande Conservancy District?
    Answer: We appreciate your willingness to seek a legislative remedy 
and are willing to work with your staff and the District to find a 
solution for this situation. Reclamation believes that legislation 
would be required in order to terminate MRGCD's contract without 
terminating water delivery. Reclamation also believes that legislation 
would be required before title to project lands and facilities could be 
transferred from the United States to MRGCD.
    Termination of the contract and transfer of title to project 
facilities would reduce the Federal presence in the Middle Rio Grande 
Project. Termination of the contract would terminate MRGCD's right to 
receive water from both the Middle Rio Grande and the San-Juan Chama 
projects unless Congress deauthorized the projects and removed them 
from Reclamation law. Legislation which would fully accomplish this 
objective would be complex.
    An exemption from Section 213 of the Reclamation Reform Act of 1982 
(RRA) alone would not relieve MRGCD of all of the acreage limitation 
and reporting requirements of the RRA. Despite early payout, MRGCD 
would remain subject to acreage limitation and reporting requirements 
unless the legislation also exempted MRGCD from other portions of the 
RRA. A comprehensive exemption from RRA requirements might be viewed as 
precedent-setting.
    The United States holds water rights for the six Native American 
Pueblos (Acts of February 14, 1927, March 13, 1928, August 27, 1935, 
and June 30, 1938). These rights are satisfied first through natural 
flow of the Rio Grande, but any deficiencies are made up through Rio 
Grande water stored in El Vado Reservoir under a 1981 agreement. Water 
is delivered to the Pueblos through facilities of the Middle Rio Grande 
Project. The Secretary of the Interior has a trust responsibility to 
the Pueblos associated with the Pueblos entitlement to receive water 
through project facilities to irrigate lands which were reclaimed under 
the Middle Rio Grande Project. A portion of the Pueblo right has first 
priority over any water right lands within MRGCD, and the water right 
for reclaimed Pueblo lands has priority equal to water delivered to 
other water right lands within MRGCD. Additionally, because the Middle 
Rio Grande Project facilities must continue to deliver Pueblo water, a 
portion of the Federal interest in the Middle Rio Grande facilities 
would survive title transfer.
    The reach of the Middle Rio Grande from which MRGCD obtains its 
water supply is considered critical habitat for the endangered Rio 
Grande silvery minnow. In 1999 a coalition of environmental groups 
filed suit against the United States and MRGCD alleging violations of 
the Endangered Species Act (ESA) in the operation of the Middle Rio 
Grande Project. Authorization of early payout could impact the outcome 
of ongoing litigation in the Federal District Court for the District of 
New Mexico (CIV 99-1320-JP/RLP-ACE, Rio Grande Silvery Minnow vs. J. 
William McDonald, et al., and Middle Rio Grande Conservancy District)
    Many municipal providers, such as the City of Albuquerque, receive 
a municipal and industrial water supply from the SJ-C Project and have 
repayment contracts with Reclamation similar to MRGCD's contract. 
Additionally, it would be inconsistent if MRGCD were the only entity to 
receive title transfer to any SJ-C Project facilities by repaying its 
portion of the construction obligation.

                              ATTACHMENT A

OCS Policy Committee Meeting (May 24, 2001)
    The OCS Policy Committee is an independent advisory committee 
chartered under the Federal Advisory Committee Act to give the 
Secretary of the Interior advice on discretionary issues related to 
implementation of the OCS Lands Act. The members represent Governors of 
coastal States, local government, environmental interests, and the 
offshore oil and gas, minerals and fishing industries.
    In October 2000, the OCS Policy Committee established a Natural Gas 
Subcommittee to independently review and evaluate information on 
natural gas, and then provide an assessment of the contribution the OCS 
can make to meeting the short term and long term natural gas needs of 
the United States within the framework of a national energy policy. The 
subcommittee forwarded its report with accompanying recommendations for 
consideration of the OCS Policy Committee on April 20, 2001.
    Action Taken: The OCS Policy Committee on May 24, 2001 amended the 
Subcommittee recommendations and adopted the resolution to forward its 
amended recommendations to the Secretary of the Interior.

OCS POLICY COMMITTEE

Resolution of the OCS Policy Committee on Recommendations based on the 
        Report from the Subcommittee on Natural Gas
    In consideration of the duty of the Outer Continental Shelf (OCS) 
Policy Committee to provide policy guidance to the Secretary of the 
Interior on issues related to the management, protection, and 
development of mineral resources on the OCS, the following resolution 
is hereby adopted in Alexandria, Virginia on this 24th day of May, 
2001;
    WHEREAS, growth of U.S. consumptive demand for natural gas is 
currently of national interest, with projections as high as 30 trillion 
cubic feet (Tcf) of natural gas annually by the year 2015, representing 
a 50 percent increase over current national consumption;
    NOTING that if the offshore is expected to maintain the same 
percentage contribution towards future U.S. gas consumption, the annual 
gas production from Federal waters will have to be increased to reach 
about 7 to 8 Tcf from its current level of 5 Tcf;
    WHEREAS, the OCS Policy Committee established a Subcommittee to 
independently review and evaluate information on natural gas, and then 
provide an assessment of the contribution the OCS can make to meeting 
the short term and long term natural gas needs of the United States 
within the framework of a national energy policy; and
    WHEREAS, the Subcommittee on Natural Gas, after careful review and 
due consideration of significant factors including resource, 
production, and demand projections; infrastructure; alternatives; the 
environmental safety record of, and current technologies and procedures 
used by, the offshore industry; leasing moratoria; safety and 
operational considerations unique to natural gas; and social impacts; 
has prepared a report that documents its review and offers 
recommendations; but does not evaluate energy, fuel, or building 
efficiencies and the roles these may play in the nation's energy needs 
over the next several decades; and
    WHEREAS, the report of the Subcommittee will help guide the 
Secretary of the Interior and the Minerals Management Service (MMS) in 
identifying the role of the OCS in addressing the natural gas needs of 
the nation by identifying potential issues and policy options;
    NOW, THEREFORE BE IT RESOLVED by the OCS Policy Committee that the 
attached recommendations based on the Report of the Subcommittee on 
Natural Gas are approved and adopted by the OCS Policy Committee; and
    Further, Be It Resolved, that the Secretary of the Interior is 
urged by the OCS Policy Committee to take timely action to implement 
the recommendations of this Committee.

Outer Continental Shelf Policy Committee
Chairman Donald F. Oltz, Jr.

   OCS POLICY COMMITTEE RECOMMENDATIONS BASED ON THE REPORT FROM THE 
                      SUBCOMMITTEE ON NATURAL GAS
                              MAY 24, 2001

    After consideration of the available information concerning the 
supply and demand for energy in the U.S., the Policy Committee finds 
that natural gas should be considered as a significant part of an 
energy base, which includes alternatives and conservation programs. 
Recognizing that natural gas is only a portion of a national energy 
policy, the Policy Committee makes the following recommendations:
     The Outer Continental Shelf (OCS) should be viewed as a 
significant source for increased supply of natural gas to meet the 
national demand for the long term.
     Congressional funding to MMS and other critical agencies 
such as Fish and Wildlife Service, National Marine Fisheries Service, 
DOE, and EPA, should be assured to allow staff to accomplish the work 
necessary to increase production of natural gas in an environmentally 
sound manner from the OCS.
     Future production will have technical and economic 
challenges; therefore, following on the success of the deep water 
royalty relief program, MMS should develop economic incentives to 
encourage new drilling for natural gas in an environmentally sound 
manner in deep formations, subsalt formations, and in deep water. Such 
incentives should be considered for both new leases and existing leases 
to maximize the use of the existing natural gas infrastructure on the 
OCS.
     The MMS, in cooperation with industry, should encourage 
increased natural gas production in an environmentally sound manner 
from existing OCS leases.
     The Policy Committee supports the existing 5-year leasing 
program. However, the leasing process can be improved with increased 
congressional funding for mitigation, including impact assistance 
funds, revenue sharing, and local participation in the decisionmaking 
process.
     Encourage congressional funding for additional education 
and outreach regarding the leasing program.
     With regard to improving the leasing process, the Policy 
Committee also recommends that MMS:
      * Include the mitigation of local social, cultural, and economic 
impacts within its policy determinations and recommendations.
      * Consider how the Bureau can restructure its decisionmaking 
process to provide for greater input from local communities, including 
the opportunity for MMS, the industry, and local residents to attempt 
to reach agreement on controversial matters and how they should be 
adjusted, remedied, or mitigated--at specific times and places that 
various activities occur.
      * Conduct a comparative assessment of environmental risk between 
offshore and onshore production, where onshore reserves exist in the 
same area as offshore reserves.
      * Encourage operators to provide natural gas to the local 
communities in all areas.
     Specifically in Alaska,
      * Give special consideration to local, social, cultural, and 
economic impacts in northern Alaskan communities, in light of the 
unique subsistence culture in, and the remoteness of, these 
communities.
      * Adopt as a resource tool the 1994 NRC Committee report 
entitled ``Environmental Information for Outer Continental Shelf Oil 
and Gas Decisions in Alaska'' (National Academy Press, 1994).
     The MMS, partnering with DOE, should expand cooperative 
research with other agencies and industry seeking technical solutions 
to leading edge issues such as seismic imaging of subsalt areas and 
drilling in deep formations.
     The MMS, in cooperation with DOE, should encourage 
international cooperation in development of gas hydrates in an 
environmentally sound manner, with a goal of a pilot program in place 
within 10 years.
     A gas pipeline from Alaska to the lower 48 States would 
favorably encourage an increase in natural gas production by creating 
favorable economics for Federal OCS production in Alaska. The Policy 
Committee recommends that DOI work with other agencies to expedite all 
appropriate permit reviews for such a pipeline.
     To help develop information and enhance an informed 
public debate on whether or not there are grounds and support for a 
limited lifting of moratoria in existing moratoria areas, the MMS in 
consultation with industry and affected states, should identify the 5 
top geologic plays in the moratoria areas, and if possible, the most 
prospective areas for natural gas in the plays that industry would 
likely explore if allowed. The following process would be used:
      * Encourage congressional funding to MMS for the acquisition of 
seismic data to assist in narrowing down prospective areas. It is 
important that these data be non-proprietary, which would be the case 
if acquired exclusively by MMS.
      * Encourage congressional funding for environment and social/
human impacts studies for broad based or specific to 5 prospective 
geological plays.
      * Establish a site-specific stakeholder consultation process 
that would permit a sharing of information and discussion of concerns 
regarding the pilot areas.
     Although the following are not under the purview of the 
MMS and the Policy Committee, it is recommended that a national energy 
policy consider:
      * Continuing to expand and develop the national pipeline 
infrastructure, looking at corridor access, environmental, safety and 
regulatory issues, and capacity.
      * Encouraging dual fuel capacity for new electricity generating 
plants.
      * Encouraging the review by the Administration of cost-effective 
tax incentives to increase the production of natural gas.
      * Encouraging conservation and increasing efficiency in the use 
of natural gas, as a part of a national energy policy portfolio.

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