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



                 DEPARTMENT OF THE INTERIOR AND RELATED

                    AGENCIES APPROPRIATIONS FOR 2002

_______________________________________________________________________

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS
                              FIRST SESSION
                                ________
   SUBCOMMITTEE ON THE DEPARTMENT OF THE INTERIOR AND RELATED AGENCIES
                     JOE SKEEN, New Mexico, Chairman
 RALPH REGULA, Ohio                  NORMAN D. DICKS, Washington
 JIM KOLBE, Arizona                  JOHN P. MURTHA, Pennsylvania
 CHARLES H. TAYLOR, North Carolina   JAMES P. MORAN, Virginia
 GEORGE R. NETHERCUTT, Jr.,          MAURICE D. HINCHEY, New York
Washington                           MARTIN OLAV SABO, Minnesota 
 ZACH WAMP, Tennessee
 JACK KINGSTON, Georgia
 JOHN E. PETERSON, Pennsylvania     
                     
 NOTE: Under Committee Rules, Mr. Young, as Chairman of the Full 
Committee, and Mr. Obey, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.
   Deborah Weatherly, Loretta Beaumont, Joel Kaplan, and Christopher 
                                 Topik,
                            Staff Assistants
                                ________
                                 PART 9
                           OVERSIGHT HEARINGS
                                                                   Page
 National Energy Strategy.........................................    1
 National Park Service, Natural Resources Initiative..............  119
 Special Trustee for American Indians, Trust Reform...............  181

                              

                                ________
         Printed for the use of the Committee on Appropriations
                                ________
                     U.S. GOVERNMENT PRINTING OFFICE
 71-708                     WASHINGTON : 2001

                                  COMMITTEE ON APPROPRIATIONS

                   C. W. BILL YOUNG, Florida, Chairman

 RALPH REGULA, Ohio                  DAVID R. OBEY, Wisconsin
 JERRY LEWIS, California             JOHN P. MURTHA, Pennsylvania
 HAROLD ROGERS, Kentucky             NORMAN D. DICKS, Washington
 JOE SKEEN, New Mexico               MARTIN OLAV SABO, Minnesota
 FRANK R. WOLF, Virginia             STENY H. HOYER, Maryland
 TOM DeLAY, Texas                    ALAN B. MOLLOHAN, West Virginia
 JIM KOLBE, Arizona                  MARCY KAPTUR, Ohio
 SONNY CALLAHAN, Alabama             NANCY PELOSI, California
 JAMES T. WALSH, New York            PETER J. VISCLOSKY, Indiana
 CHARLES H. TAYLOR, North Carolina   NITA M. LOWEY, New York
 DAVID L. HOBSON, Ohio               JOSE E. SERRANO, New York
 ERNEST J. ISTOOK, Jr., Oklahoma     ROSA L. DeLAURO, Connecticut
 HENRY BONILLA, Texas                JAMES P. MORAN, Virginia
 JOE KNOLLENBERG, Michigan           JOHN W. OLVER, Massachusetts
 DAN MILLER, Florida                 ED PASTOR, Arizona
 JACK KINGSTON, Georgia              CARRIE P. MEEK, Florida
 RODNEY P. FRELINGHUYSEN, New Jersey DAVID E. PRICE, North Carolina
 ROGER F. WICKER, Mississippi        CHET EDWARDS, Texas
 GEORGE R. NETHERCUTT, Jr.,          ROBERT E. ``BUD'' CRAMER, Jr., 
Washington                           Alabama
 RANDY ``DUKE'' CUNNINGHAM,          PATRICK J. KENNEDY, Rhode Island
California                           JAMES E. CLYBURN, South Carolina
 TODD TIAHRT, Kansas                 MAURICE D. HINCHEY, New York
 ZACH WAMP, Tennessee                LUCILLE ROYBAL-ALLARD, California
 TOM LATHAM, Iowa                    SAM FARR, California
 ANNE M. NORTHUP, Kentucky           JESSE L. JACKSON, Jr., Illinois
 ROBERT B. ADERHOLT, Alabama         CAROLYN C. KILPATRICK, Michigan
 JO ANN EMERSON, Missouri            ALLEN BOYD, Florida
 JOHN E. SUNUNU, New Hampshire       CHAKA FATTAH, Pennsylvania
 KAY GRANGER, Texas                  STEVEN R. ROTHMAN, New Jersey    
 JOHN E. PETERSON, Pennsylvania
 JOHN T. DOOLITTLE, California
 RAY LaHOOD, Illinois
 JOHN E. SWEENEY, New York
 DAVID VITTER, Louisiana
 DON SHERWOOD, Pennsylvania
   
 VIRGIL H. GOODE, Jr., Virginia     
                                    
                 James W. Dyer, Clerk and Staff Director

                                  (ii)


 
  DEPARTMENT OF INTERIOR AND RELATED AGENCIES APPROPRIATIONS FOR 2002

                              ----------                              

                                          Thursday, March 29, 2001.

     OVERVIEW OF ENERGY INFORMATION ADMINISTRATION 20-YEAR FORECAST

                                WITNESS

MARY J. HUTZLER, DIRECTOR, OFFICE OF INTEGRATED ANALYSIS AND 
    FORECASTING, ENERGY INFORMATION ADMINISTRATION, DEPARTMENT OF 
    ENERGY

                        NATIONAL ENERGY STRATEGY

                               WITNESSES

HON. HENSON MOORE, PRESIDENT AND CHIEF EXECUTIVE OFFICER, AMERICAN 
    FOREST AND PAPER PRODUCTS ASSOCIATION
HON. PHILIP SHARP, JFK SCHOOL OF GOVERNMENT, HARVARD UNIVERSITY
RED CAVANEY, CHIEF EXECUTIVE OFFICER, AMERICAN PETROLEUM INSTITUTE

                  Opening Statement of Chairman Skeen

    Mr. Skeen. The subcommittee will come to order.
    We are here today to talk about a very timely subject, that 
is, the need for a National Energy Strategy. We have assembled 
a distinguished group of witnesses to help us.
    What I hope to achieve is an understanding of why past 
strategies have been less than successful, what our energy 
policy should look like, and what the appropriate role of the 
Federal Government should be.
    Let me say at the outset that we are not here to pit 
traditional fuels such as oil, coal and natural gas against 
alternative or renewable fuels such as biomass, solar and wind 
power. We need them all. We need to focus on how to use 
traditional fuels more efficiently and how to reduce emissions 
from those fuels while we continue to explore alternative and 
renewable technology.
    We can't shy away from supply issues, either. Conservation 
will help, but it will not halt the ever-increasing demand for 
energy in this country and worldwide. We need continued 
adequate supplies of traditional fuels, and we need a realistic 
assessment of when new technologies such as fuel cells and 
hybrids will be available and economically feasible.
    We also need realistic expectations of how quickly and how 
much new technologies will penetrate the market. You can't use 
natural gas technology in an area where there are no 
transmission pipelines. You can't use wind energy where there 
isn't sufficient wind or sufficient land base to site wind 
farms.
    You can't use solar power in mostly cloudy climates, and 
you can't assume that when alternatively fuel cars come on the 
market, a large number of the general public will buy them. I 
also want to state that what the President and the Congress 
does or does not do impacts the lives of real people.
    On Monday, Phelps Dodge, a major mining company, announced 
the layoff of 85 workers in the Silver City, New Mexico area 
and indicated that further cutbacks may be coming if this 
energy crisis is not resolved. Just two years ago, I was 
hearing from mayors, school superintendents and business 
leaders in communities in my oil patch county about layoffs, 
lost tax revenues and bankruptcies due to rock bottom oil and 
gas prices.
    These people do not want endless battles between industry 
and environmentalists with meaningless sound bites and 
rhetoric. What they want and deserve is a balanced national 
energy policy.
    Let me turn to Mr. Dicks and Mr. Regula, Chairman Emeritus, 
for some brief opening remarks. Then let's hear from the very 
distinguished panelists that we have assembled here today, and 
thank you for coming and making this thing really pertinent.

                     Opening Statement of Mr. Dicks

    Mr. Dicks. Thank you, Mr. Chairman. Thank you for putting 
together this panel to begin the Subcommittee's review of our 
national energy situation. As you've indicated, this is not a 
traditional hearing on the President's fiscal year 2002 energy 
budget, since the details of his request have not yet been 
submitted to the Congress. Neither is it a hearing on President 
Bush's National Energy Strategy, since this is still being 
developed by Vice President Cheney and his commission.
    In fact, it is important for the members of the 
Subcommittee and the audience to understand that none of our 
witnesses this morning is here to represent the Administration 
on policy matters. That will come on May 3rd, when the new 
Secretary testifies.
    The hearing is important, however, as it gives us a chance 
to look at the current energy crisis in this country. This 
includes electricity blackouts and price spikes in the west, as 
well as the impact of recent OPEC decisions on gasoline prices. 
It also gives us a chance before the hearing, with the 
Administration, to talk with experts who can put the current 
situation in historic perspective and give us their advice on 
how this country should be setting its energy agenda for the 
future.
    First, Ms. Hutzler, from the Energy Information 
Administration, can brief us on the most current short and long 
term forecasts for energy supply, demand and price, and the 
factors which influence this forecast. Second, I hope our 
private sector panel will give us their candid advice of what 
the Congress should and should not do to make the future energy 
picture a more positive one. These witnesses represent very 
different points of view and experience.
    Two are former members of the House, Henson Moore from 
Louisiana, Phil Sharp from Indiana. They each have extensive 
experience from energy policy debates of the past. Phil is 
currently at Harvard, and continues his thoughtful analysis of 
energy policy which he began during his years in the House. 
Henson brings to the table his experience within the Department 
of Energy during the previous Bush Administration, and now 
represents the forest and paper products industry, a key 
consumer of energy within our economy, and a leader in 
innovative approaches to energy production and conservation.
    Mr. Cavaney, for the American Petroleum Institute, 
represents the major producers of energy. Each of our panelists 
is known to have strongly held and in some cases divergent 
views. I expect that I will support many of their positions but 
disagree with others. Nonetheless, I want to hear them all.
    In reading the opening statements, Mr. Chairman, I think 
one of the questions which members want to ask our panel is 
whether this country is in an energy crisis, which I'm anxious 
to hear the view of the witnesses. I want to tell you right now 
that there is an energy crisis on the west coast, and not just 
in California, the entire west coast, in fact, a large part of 
the west. Rolling blackouts and power bills that have doubled 
or in some instances tripled on the west coast are a crisis and 
threaten every citizen and every business.
    Now we are told that we may be facing further large 
increases in gasoline prices and supply shortages that will 
affect every family and every individual. It will hit 
particularly hard in the west. That is not a debatable question 
in the State of Washington. We are in a crisis in my State. 
What we don't know is how long it will last and how much worse 
it will get this summer.
    Unfortunately, we have a drought in the west at the same 
time, so we cannot take maximum use of our hydroelectric 
system, which has made this situation kind of the perfect storm 
of energy problems.
    We need to talk through these questions of a National 
Energy Strategy, but talk is not enough. I hope this Congress 
and this Committee will act aggressively to make sure that this 
country finally realizes the energy security and energy 
independence that we have been talking about for the last 30 
years.
    I look forward to our witnesses' statements and to working 
with our Committee proactively to solve these problems. And I 
must say, one of the conclusions that I've reached is that the 
Federal Energy Regulatory Commission is not doing its job at 
the current time, and that this has exacerbated the problem in 
the electric energy arena in the west. I think when the story 
is written about this, FERC is not going to get very high marks 
from anyone in terms of the role they've played in dealing with 
wholesale prices for electricity.
    Thank you, Mr. Chairman.
    Mr. Skeen. Mr. Regula.

                    Opening Statement of Mr. Regula

    Mr. Regula. I thank you, Mr. Chairman, and I'm pleased to 
see our witnesses. I might say, Mr. Dicks, that I think 
Congress has a substantial role to share in the responsibility 
for this energy crisis, along with FERC. We haven't exactly 
faced up to what we all knew was coming. I'd like permission to 
make my full statement a part of the record.
    Mr. Skeen. Without objection.
    [The written statement of Mr. Regula follows:]
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    Mr. Regula. We keep hearing about alternate fuels, and yet 
today, 85 percent of our energy comes from traditional fuels: 
coal, oil and natural gas. And I think some of our activities 
have made it difficult to extract these. Alternative and 
renewable fuels are only 7 percent of our total energy use. So 
I think that in the foreseeable future, we're going to see the 
continued use of the traditional fuels, the mineral fuels, and 
therefore we should, with proper environmental controls, make 
it attractive to extract these fuels.
    Gasoline consumption, even in spite of all the efforts to 
reduce miles per gallon, and we've had some success there, it's 
still 4 times what it was 50 years ago and it's probably going 
to get worse. Anybody that drives the highways is pretty well 
convinced that gasoline is going to be a problem, and anybody 
in business that uses fuel has discovered their fuel costs have 
really escalated.
    And in the world at large, 2 billion people, a third of the 
world's population, is presently without electric power. So 
it's an enormous market for the equipment that we build as well 
as the technology of clean coal. We've been on a program of 
clean coal and we've had some successes in developing 
technology. I think we need to do a lot more.
    Another area of technology that needs a lot of work is 
extraction. For every barrel we get out, we leave two in the 
ground. It seems to me that we need to improve that technology 
and capture more of the resources. We need to again, as I 
mentioned, work on the coal. While people think we will get 
away from the use of coal, I think given the fact that we have 
such an enormous reserve of coal in this Nation, probably in 
terms of BTUs more than all the world's oil, that we need to 
continue our efforts to develop technology.
    I was struck when I visited the Florida Power Plant, it was 
a greenfield plant, but they were getting everything but the 
squeal out of that ton of coal, and were doing it in a very 
environmentally safe way. They ended up with sulfur, which they 
were selling, they said they could use any type of coal and 
still reduce their emissions almost to zero.
    And of course, Ms. Hutzler, you're going to give us the 
prediction for the next 20 years, am I correct? You have a 
remarkable vision, I will say that, if you can tell us that. It 
would be interesting to go back 20 years ago and see what the 
predictions were in light of today's world that we live in. But 
it should be a very interesting hearing, and Mr. Chairman, I 
think it's a great panel you've put together here, and it will 
be instructive to all of us. Thank you.
    Mr. Skeen. Thank you. Thank you for being here.
    Ms. Hutzler, we'll start off with you, because in my part 
of the country, when you want a job done right, you get a woman 
to do it, then get the last word. Yes, ma'am. [Laughter.]
    You're on your own now.

                    Opening Statement of Ms. Hutzler

    Ms. Hutzler. Thank you, Mr. Chairman.
    Mr. Chairman and members of the Subcommittee, I appreciate 
the opportunity to appear before you today to discuss the 
current energy trend in the United States. The Energy 
Information Administration is an autonomous statistical and 
analytical agency within the Department of Energy. We are 
charged with providing objective, timely and relevant data 
analyses and projections for the use of the Department of 
Energy, other Government agencies, the U.S. Congress and the 
public.
    The projections in this testimony are from the short term 
energy outlook released this month, in March, and the annual 
energy outlook 2001, which we published in December 2000. The 
short term energy outlook provides quarterly energy productions 
through 2002 on a national basis, and the annual energy outlook 
provides annual energy projections through 2020 on both a 
national and a regional basis. Our long term projections are 
based on technological and demographic trends, current laws and 
regulations and consumer behavior.

                       THE ENERGY OUTLOOK TO 2002

    Energy markets in the United States today are characterized 
by high prices for both petroleum and natural gas, due in large 
part to tight supplies of both fuels. Reductions in oil 
production by OPEC and several non-OPEC petroleum exporting 
nations have contributed to low stocks, as this chart depicts, 
for the industrialized nation. And as you can see, we're 
projecting that stocks are going to stay below the normal 
range. The shaded part on that graph is the normal range.
    [The information follows:]
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    Ms. Hutzler. Tight natural gas supplies are also 
contributing to high electricity prices in California, along 
with high electricity demand relative to capacity, high 
generation outage rates, transmission bottlenecks and low 
hydroelectric resources. At its March 17, 2001 meeting, OPEC 
members agreed to reduce production quotas an additional 1 
million barrels per day, effective April 1st, 2001. This 
follows an earlier production quota of 1.5 million barrels a 
day announced in January that was effective February 1st.

                               CRUDE OIL

    Prior to the March 17th, meeting, the average imported 
price of oil was projected to fall slightly from its 2000 value 
of $27.70 per barrel. Based on these imported crude prices, we 
project an average price for motor gasoline this summer of 
$1.47 a gallon.
    The new production cuts by OPEC will be incorporated in our 
next short term energy outlook, which we will release on April 
6th, and will also have other updated information on stocks and 
demands as well.

                              HEATING OIL

    The heating season of October through March is nearly over, 
so retail heating oil prices have seen their seasonal peak. 
Warm spells in January and February and declining crude oil 
prices in December and January helped to ease heating oil 
prices, which had been declining from their winter peak of 
$1.41 cents per gallon in December. Nevertheless, heating oil 
prices remain high compared to history.

                              NATURAL GAS

    Natural gas prices began increasing in the summer of 2000, 
primarily due to high demand and low levels of natural gas 
storage. And that's what this chart depicts.
    [The information follows:]
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    Ms. Hutzler. The grayish areas on that chart are the normal 
levels, and then you can see our projections show that we're 
going to be close to the bottom and actually in some places, I 
think maybe right at the edge of the normal levels.
    As shown on the next chart since late June, spot prices 
increased more than $4 per 1,000 cubic feet.
    [The information follows:]
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    Ms. Hutzler. The wellhead price of natural gas is currently 
estimated to have more than doubled this heating season from 
the previous season's price. When the heating season ends, 
average wellhead prices are projected to decline averaging just 
over $4 per 1,000 cubic feet for the spring and the summer.
    Due to the projected high levels of demand growth for 
natural gas, particularly for electricity generation, the 
average wellhead price is projected to be about $4.70 per 1,000 
cubic feet in 2001, compared to an annual average of about 
$3.60 per 1,000 cubic feet in 2000.

                              ELECTRICITY

    Electricity demand is expected to grow at a rate of about 
2.2 percent in 2001 and 2002, compared to an estimated growth 
rate of 3.6 percent between 1999 and 2000. Slower growth is 
expected in part due to slower economic growth. Electricity 
demand for this past winter is expected to be higher than the 
previous winter, due to higher residential and commercial 
demand, and the cold temperatures in November and December.

                       ENERGY CONSUMPTION BY FUEL

    Today, petroleum, natural gas and coal make up about 85 
percent of the total energy consumed in the United States. We 
project that these fossil fuels will increase their share 
slightly over the next 20 years as the chart shows.
    [The information follows:]
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    Ms. Hutzler. Petroleum represents 40 percent of today's 
consumption. You can see it's the major fuel in terms of energy 
consumption in this chart. It's mainly used for transportation 
fuels and in the industrial sector, petrochemical feedstocks, 
plastic, and asphalt, areas where little substitution potential 
exists.
    Coal represents about a quarter of our consumption, and 90 
percent is used for electricity generation. We're expecting a 
45 percent increase in electricity generation over the next 20 
years, as all sectors increase their demand for electricity. 
While the largest portion of the additional generation is 
expected to come from natural gas, coal is expected to provide 
44 percent of total generation in 2020, a decrease from its 
current share of 52 percent. Natural gas consumption for 
electricity is expected to triple between now and 2020, 
resulting in a 62 percent increase in its total consumption.

                       ENERGY PRODUCTION BY FUEL

    The next chart I'm going to show you is on the domestic 
supply of fuels.
    [The information follows:]
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    Ms. Hutzler. As you can see on this chart, coal is our 
Nation's most abundant fossil fuel, providing 31 percent of our 
current domestic production. We expect domestic natural gas 
production to surpass coal by 2015, increasing its share of 
production from 23 percent today to 35 percent by 2020.
    Our domestic petroleum supply is expected to remain roughly 
flat for the next 20 years, resulting from decreasing domestic 
crude production and increasing production from natural gas 
plant liquids and refinery gains. However, because of our 
increasing demand for petroleum, net imports will increase from 
its 52 percent share today to 64 percent in 2020.
    The United States is and will remain one of the top oil 
producers in the world. We are third in the world behind Saudi 
Arabia and Russia. However, while we will be a significant oil 
producer, our consumption will be outstripping our production.

                    ELECTRICITY GENERATION CAPACITY

    My final chart highlights our regional projections for 
electricity capacity additions.
    [The information follows:]
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    Ms. Hutzler. Our forecast calls for 413 gigawatts of 
additional capacity needed by 2020, which is almost 1,400 300 
megawatt units. It is needed to meet our projected 1.8 percent 
annual growth in electricity demand, and projected capacity 
retirements about 9 percent of our current capacity. You can 
see that we are forecasting the need for large increases in 
capacity additions in the southeast, Texas, California and 
parts of the midwest.
    I would like to thank you, Mr. Chairman, and members of the 
Subcommittee, and I'd be happy to answer any questions that you 
have.
    [The written statement of Ms. Hutzler follows:]
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    Mr. Skeen. Thank you.
    Next we will hear from Henson Moore, a former member of 
Congress and a former Deputy Secretary of Energy. Welcome back, 
Kotter. [Laughter.]

                     Opening Statement of Mr. Moore

    Mr. Moore. Thank you, Mr. Chairman.
    I'd like to ask that the testimony I submitted be part of 
the record, and to the nervousness of my institution, there are 
people here watching me, I am going to deviate substantially 
from that testimony.
    Really, my comments today are not those of my industry. 
They're going to be those of mine from having been in public 
service, as you indicated, Mr. Chairman, involved in energy and 
looking back over where we are now and where we were when I 
last worked on it. Maybe there are a few observations I can 
make that might be of some help to the Committee.

                             ENERGY POLICY

    The first one is that energy is a chronic and a complex 
problem. We haven't solved it, it's still here, it's going to 
get worse. And it's not simple.
    I would urge the Administration and the Congress and 
Department of Energy not to spend an awful lot of time on 
developing a new energy policy. That's been done time and time 
again. The last time we did it was 1991-1992, we spent four 
years developing this. We had every national laboratory spend 
four years working on it, and developing all the facts and 
information behind it.
    And the issue is not what should you do. It is what can you 
do. So the question is not what you ought to do to deal with 
energy, there are no great mysteries to uncover, there are no 
quick fixes, there are no silver bullets. There's no way to 
avoid controversy. All the easy stuff's been done. And there's 
no way to avoid the valid concerns of the environment.
    Simply, the question is, what can you do to build political 
consensus to solve the problem. Basically, the last time we 
tackled this was the Energy Policy Act of 1992, which the 
gentleman on my right had a great deal to do with as then-
chairman of the Appropriations Subcommittee of the Energy and 
Commerce Committee. The question now is, what more can this 
Congress do to be able to address the questions from where we 
left off the last time we visited it in 1992.

                            ENERGY SUPPLIES

    In my humble opinion, there's no way to maintain the high 
standard of living of the American people, there's no way to 
maintain and have an expanding economy without adequate energy 
supplies. And if you talk about adding less energy, you're 
talking about a lower standard of living or less of an economy. 
It's just that simple.
    In my humble opinion, you need more of it all. You need 
more production of all we use now, you need more delivery 
systems of all we use now. You need more conservation of what 
we're using now, and you need more alternative sources of 
fuels.

        ELEVEN ISSUES TO CONSIDER IN A NATIONAL ENERGY STRATEGY

    Now, so much for the buy low and sell high easy advice. 
We've spent some time, and here's where my association gets 
very nervous, I say again, this is not the position of the 
industry. This is basically looking at what I could suggest to 
you all as something you ought to do to pick up from where we 
last visited this and what can be done about it. I've got 
basically 11 ideas or concepts that you might take a look at.

                          ACCESS TO RESOURCES

    One, you've got to address, the Congress does, access to 
and development of resources. It's been looked at before and 
it's going to be looked at again.
    Mr. Kingston. Mr. Chairman, I'm sorry to interrupt, I'm 
enjoying everything you're saying, but I'm having trouble 
finding where you are in your testimony.
    Mr. Moore. I'm not.
    Mr. Kingston. I figured, ex-member of Congress, I didn't 
think you'd stick to the script. [Laughter.]
    But it's real good stuff that you're saying. I want to be 
able to refer back to it.
    Mr. Moore. Congressman, I'm afraid you can just put that 
aside.
    Let me say, it wouldn't clear the writing people in my 
association. So basically you've got to do without and then 
you've got to come in here and say what you really think. So 
basically what I'm going to try to do is offer you some 
thoughts that the association really has no position on, or in 
some cases may not agree with.
    But the point is, you guys have got to agree with, you've 
got to look at, rather, and deal with access questions and 
natural resources. Same old issue that's been around before. 
You've got to look at it again and see what you think, what you 
think the American people will deal with.

                           ALTERNATIVE FUELS

    Second, I think that you've got to aggressively begin to 
implement the alternative fuel provisions of the 1992 Act. Did 
the Federal Government live up to its requirements on 
alternative fuels in its fleets of Federal vehicles? What's 
been done with the standards that were set to be looked at for 
possibility of private fleets? Go back and look at that and see 
where we are.

            CORPORATE AVERAGE FUEL ECONOMY (CAFE) STANDARDS

    Third, there's a possibility of needing to do something 
with CAFE standards on SUVs. I just bought one, 14 miles to the 
gallon, it's exempt from everything. You guys should take a 
look at that, is that what you want to see done, because the 
transportation sector is where you're going to get any 
conservation on the consumption of oil.

                         REFORMULATED GASOLINE

    Fourth, I think you need, and Red is the real expert here, 
one single reformulated gasoline formula. When you start having 
one for different parts of the country, your manufacturing 
capacity and your refineries can't deal with that, and you're 
not building new refineries. So this Congress needs to take a 
look at, do you want to have shortages in Illinois or do you 
want to have gasoline flowing across the country where it's 
needed and can be used in any market. So I think you need to 
look at that.

                      DEREGULATION OF ELECTRICITY

    Fifth, we did wholesale deregulation of electricity, or 
restructuring, as I'm supposed to say, for the electricity 
markets in the 1992 Act. You've got total chaos going on out 
there now, because we couldn't deal with retail at that point. 
We didn't have the political consensus to do that. Are you 
there now? That's something you need to deal with, are you 
going to deal with retail restructuring of electricity or 
continue with the California type problems.

                           TRANSMISSION LINES

    Sixth, my former colleague and good friend is going to 
raise in his testimony, and I join him in that, looking at the 
possibility of the need of eminent domain for electricity 
transmission lines at the Federal level. That's something you 
ought to look at and take a close, hard look.

                              NATURAL GAS

    The seventh, there are bottlenecks on natural gas, both 
interstate and intrastate. And I think that Mr. Dicks is 
absolutely correct, we need oversight hearings of the FERC to 
find out what's going on, why is this happening, and what can 
be done to relieve this. It doesn't do any good to drill and 
produce natural gas if you haven't got a pipeline to put it in.

                             NUCLEAR ENERGY

    Eighth, I think Congress has got to move to give support to 
the Administration to resolve the nuclear waste repository 
issue. Nuclear energy shouldn't be written off. But until you 
find some acceptable way to deal with the waste, no one's going 
to invest in a new nuclear power plant, much less even keeping 
one on line, or having its license extended. So that needs to 
be solved. The last time I took a look at it, I think it's up 
this year for a decision as to whether to open Yucca Mountain 
or not.

                     NUCLEAR REGULATORY COMMISSION

    Ninth, you need to take a look at and do some oversight 
hearings on the Nuclear Regulatory Commission. There are some 
30 nuclear power plants, is the number I've been given, that 
come up for extension of their license. You can strangle one of 
these plants and you can cause it to shut down if you're going 
to have a long, protracted regulatory process for that 
relicensing, or extension of that license of existing plants. 
That's something that again, Mr. Dicks talks about FERC, I 
think you could apply the same reasoning toward the Nuclear 
Regulatory Commission, take a look at what they're doing.

                          HYDROELECTRIC POWER

    Tenth, if you want to relicense a hydroelectric plant, it 
is extremely difficult and time consuming and expensive. In our 
industry, there are a lot of low head, small dams, 5, 10, 15, 
20, 30 megawatts. They're not going to go through that. It's 
too expensive. You can't make any money doing that.
    So again, the FERC needs to have oversight hearings by the 
Congress as to what have they done, what are they going to do 
about making this an easier process, and to see to it that 
these hydroelectric facilities can have their licenses renewed 
when they expire. There are a number of them coming up.

                        RESEARCH AND DEVELOPMENT

    And lastly, research and development and incentives, the 
kinds of things this Subcommittee deals with. You put a lot of 
money for a lot of years into a lot of R&D in the Department of 
Energy. There are also some incentives you funded. I think that 
you really need to take a close, hard look at what are we 
getting back for that money.
    Should it be concentrated on one technology over another? 
What more do we need to do to make those technologies really 
happen? Because you're the investors on behalf of the American 
people. And the deal, we will build anything you want, and they 
will study anything you want, but this Committee has an 
absolute duty to be looking at that, just as I think the new 
Secretary of Energy is doing, figuring out where are the 
investments and where should they be made and where are you 
going to get something out of it.
    And in that regard, I will return to my statement, 
Congressman, and give the one commercial that my industry has 
asked me to give, and that is, you have been funding now for 
three or four years a very promising technology that's now this 
year going into the prototype stage to gasify liquid wastes in 
our industry. If it works, it promises 30 gigawatts of 
electricity. That's 30 major baseload power plants worth from 
additional sites, rather from existing sites, and as I say, the 
first prototype plant is being built this year to see if the 
research that you have funded 50-50 with the industry will 
work.
    With that, Mr. Chairman, I'll pass.
    [The written statement of Mr. Moore follows:]
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    Mr. Skeen. You're still a very lively individual. 
[Laughter.]
    Next we'll hear from Phil Sharp, another former member of 
Congress and the former chairman of the Energy and Power 
Committee.

                     Opening Statement of Mr. Sharp

    Mr. Sharp. Thank you very much, Mr. Chairman. It's a 
delight to be back with so many folks that I know and some that 
I haven't had the opportunity to get to know. I'm reminded of 
the 1992 effort, because it was a bipartisan effort, and I'm 
struck by how much I would agree with my former colleague and 
what he just said specifically.
    But my testimony is primarily addressed at some broader 
points. Like my colleague, I was in Congress for many years, 20 
of them, and I supported an enormous number of initiatives in 
energy, some of them actually proved useful and some didn't. 
Unfortunately, no one's keeping score from my point.
    But this Committee has played an absolutely essential role 
over that period of time as all of you know. And it's doubtful 
that I'm going to add to your understanding of the energy 
picture as a result. But let me try with a couple of broad 
things that I think it's important that the public and media 
understand about this debate that we're about to re-enter, 
because the rhetoric is frankly very much like it was for the 
last 25 years every time we considered energy, and so often 
seemed to miss the realities that we have to deal with.

                          COMPETITIVE MARKETS

    The first thing is that we do have an energy policy in this 
country, and it's to rely on the competitive markets. That is 
the central most important and powerful thing that we have to 
recognize. We of course don't leave it just to the markets, we 
do a lot of things that support and shape and restrict those 
markets, and sometimes for very good reasons we do that. We 
aren't just a laissez-faire policy in that regard.
    Those of you that are old enough to remember know that we 
spent 20 to 30 years with an ideological and political struggle 
over what to do about natural gas. We spent less amount of time 
over oil. And we finally ended economic regulation to the 
massive benefit of our economy, our consumers and our national 
security. And I hope we will not forget that in the process. 
Because today we're facing some very painful price rises in 
natural gas and in gasoline, and the temptation is naturally to 
say, well, let's just go back and regulate it, although 
fortunately we don't hear too many voices saying that, and I 
hope people will be wary of controls.

                  FEDERAL ENERGY REGULATORY COMMISSION

    The Federal Energy Regulatory Commission, no longer in gas, 
manages a price control system. But it does play an extremely 
important role in supporting our pipeline system and in making 
sure it doesn't strangle competition, making sure it doesn't 
interfere with protection of the consumer by the marketplace. 
And indeed right now, they have a very serious investigation 
underway with one of the major suppliers in southern California 
where the prices went so astronomically above the market level 
that many people suspect major market manipulation there. But 
this is in fact, and I hope will be, vigorously addressed.

                              PRICE SWINGS

    This is not to say that when we have price swings it 
doesn't create enormous pain. A couple of years ago it was for 
the producers. Now it's for the consumers. And in each case, 
we've had people right away want to re-regulate the market on 
behalf of one or the other class of citizens. But the real way 
for us to be compassionate for the poor in our society is, as 
the Congress well knows, is through the Low Income Energy 
Assistance Program and through the weatherization program and 
some others that many people here have voted for and strongly 
supported.

                              NATURAL GAS

    The great exception to our market policy, of course, has 
been electricity, for over 100 years, because we've never 
provided it through a competitive marketplace. But we are 
trying to move in that direction, and I think for a very good 
reason, and I'll address that in a moment. One of the things 
that the market clearly has been telling us for the last 
several years is the importance of natural gas, and this has 
led many people to believe that the whole future of our energy 
supply situation is really natural gas.
    And I would think it's just well worth remembering the big 
mistake we made in the 1970s, when we were operating under the 
assumption that natural gas supplies were probably going to run 
out very soon. And indeed, many of the mistakes of the 1970s 
energy policy derived directly from that bad assumption, which 
both Government and industry were making at the time. The 
danger today is that we make the counter-assumption that this 
is inexhaustible supply, we can absolutely rely on it, and we 
don't have to worry about any other fuel or any other activity.
    I think natural gas, will play a major role in our future 
and should, but to do that, even to do what, the modest 
improvement that people want requires expansion of production 
and requires expansion of facilities. That means in the Gulf of 
Mexico, that means in the Rockies, that means offshore, that 
means in Canada, that means in Mexico, that means bringing gas 
down from Alaska, Prudhoe Bay.
    The point being, not only is the market going to have to 
make lots of decisions to keep up the production, but the 
Government, at the State, local and Federal level, is going to 
have to issue a lot of permits to allow these activities to go 
forward if gas is to play any kind of role that people hope for 
today.

                       NOT IN MY BACKYARD (NIMBY)

    That leads me to some comments, I'll skip quickly, it's no 
news to anybody that NIMBY is another huge development of the 
last 30 years in this country. There are many good reasons to 
rule specific places off for production, or to require special 
mitigation. But the fact is, these add up, these decisions, to 
a real restraint on the marketplace to be able to serve our 
energy needs.

                        EMINENT DOMAIN AUTHORITY

    One action I would strongly urge the Congress to consider 
this year is to provide eminent domain authority to the Federal 
Energy Regulatory Commission for siting of interstate 
transmission electric lines. One of the reasons gas has been 
able to plan an expanding role is precisely because this 
authority has existed on pipelines for years, and has been used 
to good effect. New restraints have been found to try to 
protect property owners as the FERC has used its authority over 
the years. But we need it, as we need to expand our 
transmission system in this country.

                         INTERNATIONAL MARKETS

    Let me secondly, and I'll move more rapidly through this, 
to the fact that these markets are international. We'd make a 
great mistake if we think we can radically shift our 
involvement in the international markets. Our national 
security, our energy security depends on it. And we found in 
the 1970s there was no way to meet our rhetoric that we were 
going to make this country energy independent. The costs, 
regulation and subsidization and energy prices would have been 
so astronomical that none of you folks would be in office today 
had you supported it.

                      PRODUCTION AND CONSERVATION

    The third point I want to really make is that as this 
Committee is well aware, when we talk about adequate supplies, 
those can be served by decreases in demand, or constraints in 
demand, and efficiency as well as by supply. We had a foolish 
argument throughout the 1970s between those who said we had to 
produce our way out of the crisis and those who said we had to 
conserve out way out of the crisis. In the end, we did both by 
Government policy. The marketplace was a powerful force in 
doing both, and there is no question that we are better off 
precisely because of both.
    In terms of oil, if we talk about conservation, of course, 
we do have to, as my colleague mentioned, talk about the auto 
fleet, and we can talk about that more specifically if you want 
to in a few moments. Again, I would compliment this Committee, 
which has played historically a major role in seeing to it that 
there was Government support for the R&D that created or helped 
advance, especially in partnership with the private sector, 
many of the technologies that created the efficiencies we have 
today.
    And I can't resist saying that if we want to improve 
efficiency in this country, it's one more reason why we have to 
get the electricity markets into a competitive mode. It is one 
of the main reasons for doing it.
    Well, third, or fourth or fifth, as this Committee is 
painfully aware, we have powerful environmental imperatives 
that we have to meet. Again, the technologies you support help 
us there. I share the comments of some of my colleagues that I 
believe we ought to aggressively, as we have been, pursue 
renewable fuels. But there can be no, there's no scenario I'm 
aware of in which they can in the near future displace all of 
our other critical fuels. Therefore, it's imperative that we 
continue to invest in a diversified portfolio to improve the 
efficiency, the safety and the ability to get the other fuels, 
such as coal, nuclear and oil for this country.

                              ELECTRICITY

    Let me say just a couple of words on electricity and the 
priority there. This is where I think there are a number of 
things that one can say there is a crisis about. But this one 
is compelling, and we're not just talking about California. 
We're in the midst of a huge transformation in this country, of 
this industry, after 100 years of using regulated monopoly as a 
way to produce power. We're finding it very difficult to get 
from here to there. We're in the midst of a transition and 
policies have to be made at State and Federal local levels. The 
jurisdiction and division of authorities is a crazy patchwork 
that makes it very hard for the industry and others to proceed 
on this. We simply must take it very seriously.
    I chaired a task force for the Secretary of Energy, in 
1998. The task force was very diversified, there were people on 
it that actually knew a lot more about electricity than I do, 
otherwise you'd question the authority of it. In that report, 
we tried to make it very painfully clear that it is during the 
transition that we are at the greatest risk on the reliability 
of this system collapsing, and that we needed to get through 
that transition. We made over 24 recommendations in the report. 
I didn't make the recommendations, technical, smarter people 
than I made them. The California crisis has demonstrated the 
compelling need on this proposition. I outline in my testimony, 
as many of you already heard, sort of the main components that 
have gone into that crisis.

                           CALIFORNIA CRISIS

    One I want to stress, although it's not one alone, is that 
by letting the supply and demand balance in California and the 
western market get so tight, all the other problems mushroomed. 
The enormous weather problems wouldn't have been so severe, the 
equipment failures wouldn't have had the impact, the clearly 
flawed market rules would never have created the staggering 
financial problems that they created if it had never gotten so 
tight to begin with. And the rest of the country must take this 
lesson to heart.
    And let me just conclude by saying that while many of the 
decisions must be and should be in the hands of the government 
of California and they should not in any way be let off the 
hook to make some very tough decisions, as they are beginning 
to make them, nonetheless, the Federal Energy Regulatory 
Commission has statutory and historic responsibility over the 
wholesale market. This is a central problem throughout the 
west, as well as in California.
    I regret to say that it simply has to move more 
aggressively to intervene in the pricing of that, until we get 
the wholesale markets straightened out. That probably is at 
least through the summer months. I'm very pleased that the 
President has just announced his two appointments, which from 
everything I hear, they're very high quality, and it's very 
important that that agency be fully staffed, fully funded. 
Because it has a critical responsibility and the Congress can 
play a very important role in its oversight function here.
    But I would caution, as you legislate, naturally people 
from the west want to write into the laws specific remedies for 
the specific situation that exists now, specific pricing 
formulas. I would strongly urge, avoid the temptation as long 
as FERC acts. Because so many times we've learned that writing 
specifics into the law like that simply can't keep up with the 
rapid pace of change. They become counterproductive and work 
the opposite of what we've got in the end.
    Thank you very much, Mr. Chairman. I'm delighted to be back 
with you.
    [The written statement of Mr. Sharp follows:]
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    Mr. Skeen. Thank you.
    Our final panelist is Red Cavaney, the President and CEO of 
the American Petroleum Institute.

                    Opening Statement of Mr. Cavaney

    Mr. Cavaney. Thank you, Mr. Chairman.
    First of all, I'm here on behalf of our 400 members of the 
American Petroleum Institute. I might take just a moment to 
explain what we represent on the oil side of things. On the 
petroleum side, we represent everything from the upstream side, 
which is exploration and production, all through the downstream 
side, which is refining, distribution and marketing.
    On the natural gas side of the business, we represent all 
the production side. We do not represent the distribution side.

                           SOURCES OF ENERGY

    Mr. Chairman, I want to steal a comment that you made and 
underscore it in the very beginning, and that is that we need 
all the sources of energy that we have at our disposal. 
Speaking for our industry, we are literally maxed out on our 
capacity. We need more growth in order to fuel the demand. We 
also need conservation and energy efficiency. We need 
everything, all the tools that are on the table.

                              ENVIRONMENT

    One of the things that we see as a big obstacle ahead is a 
mind set that is becoming too much prevalent. That's the idea 
that there's a tradeoff, that you can either have energy or you 
can have a clean environment but you can't have both. Mr. 
Chairman, I submit to you that a lot has changed over the last 
number of decades. I'd like to submit for the record here, 
under Secretary Richardson's leadership at DOE, they put out a 
wonderful book called The Environmental Benefits of Oil and 
Gas. What this does, it shows over the last 10 years what 
technology has done to this industry in terms of minimizing the 
impact on the environment in order to both explore and then 
produce energy resources.
    [Clerk's note.--The information referred to was supplied 
and is retained in the Committtee files.]

                                 ACCESS

    Mr. Cavaney. So we think we are held currently to the 
highest standards in the world, and we're prepared to be held 
yet to stricter standards in order to have the privilege to 
access more of the land that's necessary in order to both find 
and produce the crude oil and the natural gas for which there's 
so much demand and for which our economic growth is absolutely 
dependent.

                            DOMESTIC ACCESS

    Let me start with access. First of all in access we need to 
do two principal things. We need to diversify our sources for 
national security reasons, both domestically as well as 
internationally, and we need more potential product from both 
of those sources, both domestically and internationally. 
Domestically, the principal thing that needs to be addressed is 
the permitting issue, it is a very, very difficult one. 
Permitting, number one, is the classic case of the conflicts of 
overlapping jurisdictions by the Federal Government, the State 
government, local government, as well as conflicts that 
developed within communities on the NIMBY phenomena that was 
mentioned earlier.
    Finally, in the domestic area, there is something that very 
directly could be done. We could go to all the BLM offices out 
in the west, in the Rockies, which is a particularly attractive 
area. And the one common theme you'll see in them all is 
they're all understaffed. There are not enough people there to 
process the permits, even if they wanted to. That is something 
within our reach, we can go through and look at those.

                           ACCURATE INVENTORY

    And, there is not an accurate inventory. Last Congress, in 
passing EPCA, did a wonderful thing in authorizing a study done 
by DOE and DOI to look at the areas that are out there and find 
out which are the most attractive areas specifically that have 
outstanding permits where there might be oil and gas, so that 
we can prioritize our efforts to look, and look at the various 
decisions that need to be made. We would urge that this 
Congress authorize funding for such a study. While they 
approved the study, the funding was not authorized in the last 
Congress.

                          INTERNATIONAL ACCESS

    Looking to the international side of the equation, there 
are two things that are obstacles to increasing the diversity 
of our supplies and obtaining more. Number one among those is 
unilateral economic sanctions. These are actions taken by the 
Federal Government, as well as some States, and even some 
cities in the United States, against foreign countries whose 
behavior we are attempting to influence. One thing we can say 
about unilateral sanctions is that the record is, there's not 
much success there.

                         UNILATERIAL SANCTIONS

    But the price that we're paying is whenever we apply 
unilateral sanctions, U.S. producers are kept out of those 
markets. We know from our own research, and it's well 
documented, that no project in these foreign countries has been 
stopped as a result of U.S. producers not there. All that 
happens is people from Italy, from France and the other 
companies end up taking the business. And because of the long 
lead time, we lose that business for decades.

                            DOWNSTREAM SIDE

    So even if we are successful, Mr. Chairman and members, in 
gaining all the crude oil and natural gas needed, we still have 
more challenges that you could help us with that we need to 
tackle in order to get the product to the consumer. And I'm 
speaking about the downstream side of the business. Right now, 
U.S. refineries have been operating at historical high levels 
of capacity. Last year, when there were opportunities to get 
more crude oil, to try to put more through the system, it 
couldn't be absorbed, because all the refineries were operating 
at maximum output. The demand is continuing to grow faster than 
we can handle it.
    One of the key problems that we've had is that there has 
been so much regulatory effort placed on the downstream part of 
the industry that we've not been able to permit or build a 
refinery in the United States for over 20 years. Luckily, 20 
years ago, we had about 30 percent excess capacity. So it has 
not been a key constraint on extraordinarily tight supplies, 
and in classic economics, in tight supplies what happens is the 
bid price is the last gallon that gets bid. So that's why you 
see these swings that are not good for the consumer, they're 
not good for the industry, they're not good for anybody, but 
they are an outcome of where we are today.
    So what do we need?
    Mr. Skeen. Let me stop you right here. We're going to take 
a short recess, we've got two votes going, on H.R. 104, and a 
journal vote. We will return shortly and resume questions for 
the panel.
    Sorry to do that to you.
    [Recess.]
    Mr. Skeen. We'll resume the hearing.
    First, we'll let Mr. Cavaney complete his statement, then 
we'll have questions for the panelists. Thank you for your 
forbearance. We've saved the world again by voting. [Laughter.]
    Mr. Cavaney. We as your panelists are pleased to do our 
part. Thank you.

                           REFINING CAPACITY

    As I was mentioning, in finishing up my remarks, we're 
looking at the downstream part of our industry, and that's the 
area that once you have the raw materials, crude oil, we still 
have some difficulties in terms of ensuring that the consumer 
has affordable fuel when and where they want it. These have to 
do with a couple of conditions. One of them is the fact that 
over the last 20 years, the industry has basically used up all 
of its spare capacity. We have not----
    Mr. Dicks. This is refining capacity?
    Mr. Cavaney. Refining capacity, yes, sir. And we've not 
built any refineries for about 25 years because of the 
permitting difficulties, and the rates of return have been less 
than desirable. So where we're faced today is the need to get 
some flexibility inherent in the manufacture of fuels from 
crude oil while we address how do we expand the capacity to 
meet future demands. So we hang in a very delicate position 
here for a couple of years, trying to serve our customers and 
do so in a very affordable and regular fashion.

                         REGULATION FLEXIBILITY

    How Congress can help is, number one, encouraging the 
Administration, and in some cases possibly even having to act 
legislatively by providing flexibility to some of the 
regulations. We are not, and have no interest in, rolling back 
any of the regulations. As a matter of fact, our pathway to 
future success is cleaner fuel, so that we can be the preferred 
fuel when the fuel cell replaces the internal combustion engine 
in personal transportation.

                             BOUTIQUE FUELS

    But what you do need is to have a less prescriptive 
environment where we can try and be resourceful. The second 
thing, and it was mentioned by Henson Moore, is in the fuels 
area. As a result of the Clean Air Act amendments and some of 
the requirements that are now being asked, States have put 
together implementation plans and municipalities have in 
essence created individual mixtures of fuels that are unique to 
their city.
    There are 15 different boutique fuels that now exist which 
significantly complicates our capacity to distribute fuels. If 
you look at the way the Nation's gasoline and diesel system was 
set up, over 70 percent of it travels by pipeline. It was 
designed when there was one type of fuel. That allowed us to 
put the refineries, not necessarily right next to the markets 
they served, but at a distance. We could cascade quickly, 
wherever there's a tight supply, we could get the surplus 
there, tamp down any concerns about price and the customer is 
always taken care of.
    But when you put in all these different fuels and they go 
from east coast to west coast, from north to south, what 
happens is a couple of refineries become dedicated to making 
those unique fuels and if something goes wrong with a pipeline 
or one of those refineries, or they take just normal 
maintenance time at a critical period, you can stand there and 
have nobody able to supply the fuel, because nobody else makes 
that spec and can't get it there fast enough to do so.
    So we would hope that, and we've talked to the 
Administration about this, that the time to look at possibly 
going to regional fuels, and ultimately maybe even as Henson 
mentioned, going to a national fuel. You can't make the leap 
immediately, but we should try and rationalize these things. 
That will be a big benefit to consumers, it will make our job a 
lot easier.
    Mr. Regula. Why boutique fuels? An automobile is an 
automobile in California or Ohio.
    Mr. Cavaney. What happens under the State implementation 
plans that, where they try and use a mix of emissions from 
stationary sources as well as mobile sources, one of the ways 
that the States add up the numbers is, they fiddle, basically, 
with the formula of making fuel using a model, because it will 
tell you what the emissions will be. So they get credits and 
they say, here you are. So what you really have is, like a 
doctor gives to someone, they make a prescription and say, this 
is the fuel you've got to provide. Anything other than that 
fuel is off-spec and you can't bring it into this market.
    So that's where we've gotten to. And again, when you had 
plenty of excess capacity, you could live with that. But now 
where we're at, it's a real problem, a very significant one.

                               PIPELINES

    And so finally, I would like to make a comment on 
pipelines. As I mentioned, most fuel travels by pipeline. The 
problem we have there again is permitting. The difficulty, when 
pipelines were designed, they were going to have one fuel. But 
now in many cases you have as many as 40 and 50 different 
fuels, because you have jet fuel going down there, home heating 
oil, gasoline, and diesel. They become much less efficient, 
because you've got to change. So the system is much less 
responsive to being able to get the supply where it's needed.

                           CONSIDERING ENERGY

    At the end of the day, what we think has occurred is that 
energy only seems to be looked at comprehensively when we're in 
a crises situation, about every 10, 12, 15 years or so. And we 
think that in forward energy be given a seat at the policy 
making table at all times, and that whatever kind of 
regulations or legislation goes forward, that at least people 
understand the impacts on energy. We think, Mr. Chairman, 
that's one of the things that will pay dividends and help 
preclude these kinds of things from being as horrendous in the 
future as they are potentially now and have been in the past.
    Thank you for the opportunity to appear before you.
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                RELIABLE, CLEANER, MORE EFFICIENT ENERGY

    Mr. Skeen. We thank you for giving us your views. In the 
long term, what are the most critical issues that need to be 
addressed in our national energy policy to ensure that we have 
adequate and reliable, yet cleaner and more efficient energy 
supplies? Can this be done?
    Mr. Cavaney. Yes. From our standpoint, access is first of 
all, you need to have the raw material in order to begin, Mr. 
Chairman. And you can extend the raw material by also looking 
to conservation and energy efficiency. So all of those, they 
need to be brought to bear.
    And at the end of the day, we think the current goals, 
environmental goals that are set on the regulations, are the 
kinds of things that benefit the consumer, and we can live with 
them. But we think that by providing more flexibility, the 
technology allows you nowadays to do a lot of things that you 
can do in terms of providing less pollution more efficiently at 
a lower cost. And obviously in a very competitive industry, 
those cost benefits get passed along to the consumer.
    Mr. Skeen. How do the rest of the panelists think about 
that? Having a reliable source and yet cleaner and more 
efficient energy?
    Mr. Sharp. What I think is, everybody has said the biggest 
problem here is, there isn't any one thing. There are multiple 
things that always require attention and that has been the 
biggest problem. Fortunately, the political situation is 
opening up so that the Administration and the Congress, and 
hopefully some of the State governments, can actually make some 
decisions that they have deferred for years, and that's one of 
the useful political things that happens when we have a crisis.

                    ELECTRICITY MARKET RESTRUCTURING

    But the one priority that I stressed in my testimony I'd 
like to come back to, it isn't the immediate responsibility of 
this Subcommittee, although what you do in the long run has a 
big impact. That's getting these electricity markets 
restructured. Nearly everybody in the industry now believes 
that both the industry and FERC has to move more rapidly, 
believe the State legislators and regulatory commissions need 
to move more rapidly if we're going to make these markets work.
    Because we're caught between two systems now. It cannot 
function well either way. We no longer have what were the 
assets of the monopoly regulated system. It had a number of 
disabilities that we hoped to overcome by moving to the market, 
but we aren't yet to a market.
    So I just hope that that will stay at the top of people's 
agendas. And I think the Administration understands that, with 
its new appointees to FERC.
    Mr. Skeen. Mr. Moore.

                           SUPPLY AND DEMAND

    Mr. Moore. Mr. Chairman, as I tried to say in the 
beginning, this thing is very complex. I think that's what 
you're hearing everybody else say. There isn't one thing you 
can do.
    We're so close to the margin on supply and demand of every 
form of energy we have that you can't write any one of them 
off. And we've got folks that would advise you to do that. Oh, 
forget about nuclear, oh, forget about drilling for oil, oh, 
forget about building pipelines or transmission lines. You do 
that, and we're going to see California replicated across the 
country. Because the margins are so close, you can't do that.

                            GETTING STARTED

    I think, as I tried to say before, you need everything and 
more of it. Access is a problem, siting is a problem, producing 
is a problem, delivery is a problem and consumption is a 
problem. So you can just delve in wherever you can build 
political consensus, on any one or all of these and find 
fertile ground to get something done that will help the country 
avoid these kinds of things in the future, which we're going to 
have.
    Phil and I, some of you and Ralph and others, Norm, we were 
here when all this stuff started in the 1970s. And here it 
comes back around now again in the early 2000s. It's going to 
be here, sure as shooting, from now on. I just think that what 
your job is, as I see it, if I were in your place, would be to 
look for what can you build political consensus to get done, 
building off of what we've done in the past. Because I'll say, 
they've got us surrounded. You can shoot any direction, and you 
can hit a good target. Anything you want to work on, you can do 
something to help the picture. There are no silver bullets out 
there, and there's no lack of targets to shoot at.

                          SHORT TERM SOLUTIONS

    Mr. Skeen. What are the two or three things that you would 
do in the short term to get us out of our current energy 
problem?
    Mr. Moore. I think some of those fell on the 11 points that 
I mentioned, everything from eminent domain, to looking at 
access, to overseeing FERC in its relicensing of hydroelectric 
and its siting of its permitting of power lines and definitely 
the bottlenecks of gas pipelines. Those are all things you can 
do in the immediate future that I think in the last eight to 
ten years that Congress hasn't seen a problem and probably 
hasn't spent as much time working on those things as it could.
    Mr. Skeen. Mr. Dicks.

                  ELECTRIC POWER IN THE WESTERN STATES

    Mr. Dicks. I'd like to ask each of the witnesses their 
view, if you want to comment, on the seriousness of the current 
electric power situation in the west. As you know, we've had 
further rolling blackouts last week, and California has just 
announced immediate increases in electricity charges up to 46 
percent. Rates for the Bonneville Power Administration up in 
the northwest could rise from 100 to 300 percent this fall.
    How serious is this situation in the western States, and 
how long do you believe the current problem will continue?
    Mr. Sharp. Well, first of all, everybody was wrong about 
the problem, which is not--it's a bit of humility for all of us 
to take into account. The presumption was that last summer 
would be tight, and by the time they got into the fall, I think 
even the major utilities, that are near bankrupt in California, 
believe they could recover if they could get action from the 
State government in the fall. But in fact, it only got worse, 
which is to tell you, act expeditiously.
    But very quickly, it appears that through the summer is the 
hard part, because that of course is the peak season. Now we 
have the hydro cycle completely off in the west, which you're 
much more familiar with than I am, but we are only in the 
winter.
    So the situation is clearly going to be tight. I think it 
behooves every State government to be encouraging and every 
utility to be encouraging, all kinds of direct actions that 
they can take to help on the reduction of demand. They'll do 
everything to increase supply. But there isn't a lot you can 
do.

                          DEMAND SIDE BIDDING

    But to demand, for example, there's something called demand 
side bidding. There are ways in which you can buy back power 
from some of your users during key hours. Some of this is going 
on. It just has to be very aggressively undertaken in 
California and elsewhere. I think that's what parties are 
trying to do out there now.

                    FINANCIAL PROBLEMS IN CALIFORNIA

    But it is imperative that California, and with the support 
of the FERC, get the financial thing stabilized. That blackout 
last week had nothing to do with the lack of productive 
capacity. It had to do with what we saw in the collapse of the 
Soviet Union, when people aren't paying bills, when contracts 
don't matter, the whole system doesn't function. We just take 
that for granted.
    It's unbelievable that in our modern society, we could have 
so many millions, actually billions of dollars worth of unpaid 
electricity, not by the consumer, but within the industry 
arrangements, so that a whole group of producers finally said, 
after not being paid since last November, we can't produce, 
we're not going to, if you don't pay us, we can't survive. And 
these are the small guys. The big guys are actually doing it 
without having their bills paid.

                             FERC CONTROLS

    So it appears that California may be getting there, but 
FERC has to also, and I think very quickly, it must do 
something about capping the wholesale market on a temporary 
basis. I would urge them not to do it beyond the summer and see 
where they are, because I don't think that's a good long term 
policy.
    Mr. Dicks. Well, and I think that's a very important point. 
The governors out there, at least the Democrats and the 
Congressional delegation of Washington, Oregon and California, 
are all calling for FERC to intervene, because the prices have 
gone up 20, 30 times what they normally would be for 
electricity. So in our opinion, I think the studies have been 
done, that the market is dysfunctional.
    Therefore, you've got to step in, put price caps of some 
sort, soft caps, whatever, try to do the right thing and get 
the situation back under control while at the same time 
emphasizing conservation. The utility in my district has gone 
on television and radio, and gotten an 11 percent reduction so 
far, which is pretty good. And they're trying to get up to a 20 
percent reduction.
    This would save them like $3 million per one percent of 
reduced load they have to go into the spot market and buy. So 
for the Administration to basically say, we can't do anything, 
we're just going to let California handle this on their own--
and it's not just California, it's the entire west--I don't 
think is a very credible long term answer.
    Mr. Sharp. If I could just add two things. One is, I think 
we're going to see the Administration moving, and the FERC has 
done some things under a soft cap. It's just insufficient, I 
think, in a lot of people's views. I personally believe we'll 
see a change in that policy.
    But the one thing that I would hope would not happen is 
that people believe that FERC putting on a cap on a temporary 
basis is the solution. It is in no way the solution.
    Mr. Dicks. You're absolutely right.

                     NEED TO ACT ON PRODUCTION SIDE

    Mr. Sharp. And the danger is, if political leaders in the 
west, and in California particularly, use that as an excuse to 
not act, the problem will get worse. That means they need to 
site, they still have some time, you can still do some siting 
of natural gas peaking units, they can still get those on-line. 
You know, they wouldn't let into San Francisco Bay last year a 
barge with a generator, because of clean air issues that it 
probably didn't actually violate the main Clean Air Act, 
anyway.
    But those kinds of actions, if you do not allow those 
things to happen on the production side and also move 
aggressively on the demand side, it's going to be very tight 
and people may be getting used to rolling blackouts out there. 
In my part of the country, they wouldn't be.
    Mr. Dicks. The point is, we're trying to do a lot of gas 
turbine engines all over the west coast to try to deal with 
this problem. People are looking at wind power, they're looking 
at a whole series of alternative fuels, conservation. So 
there's a multitude of things being done. I think Henson's 
point was, you've got all these things to do, you've got to do 
them all.
    And I agree with that. But because I see this as a 
dysfunctional situation that we in the west are probably 
responsible for, because we didn't build the plants that we 
should have built to not get into this tight situation we're in 
now, where just a little surge in demand and there's a huge 
spike in the prices. So we've got to get out there and build 
some additional capability.
    But also, as mentioned, we've got to get our hydro 
relicensed, that's a big time problem. We've got some nuclear 
out there, getting that relicensed is another regulatory issue. 
Your point about eminent domain on transmission lines I think 
is a very important issue, and that's going to be harder to do, 
but something that should be done, to help the reliability and 
those issues.
    We've gotten ourselves in a real mess out there, and the 
situation is not going to get better. It's going to be at least 
two years. And the drought, of course, in the northwest, it's 
the second worst water year in history. That's about 3,500 or 
4,000 megawatts right there that we would have.
    And then the other issue is the California situation, where 
you've got 50,000 megawatts of capacity but only 35,000 
megawatts are actually operational, and a lot of suspicion 
about that, the timing of these shut-downs, etc., etc. So I 
appreciate your comments.
    Henson, did you have anything?

                            TIMBER INDUSTRY

    Mr. Moore. Well, Congressman, you're very familiar with our 
industry. And I'd point out we've done a quick assessment. 
We've got 10 mills closed down right now, 3,600 employees 
furloughed, most of them in the west. And it's because of our 
energy prices. We can't make money at the current energy 
prices, you're right, it is dysfunctional. We're out of the 
business.
    To make it worse, we've got three of those members who are 
co-generators and have been selling electricity, continue to 
operate to co-generate electricity and sell it to the 
California market, and they haven't been paid. So they're 
talking about shutting down, which is going to exacerbate the 
problems in California. You can't keep running a mill and 
having people not being paid.
    So you're right, it is a dysfunctional situation.

                                  FERC

    Mr. Dicks. Do you think FERC ought to act?
    Mr. Moore. I don't know what needs to be done on a short 
term problem like that. But basically, somebody has to get 
people paid. And the energy prices have to return to something 
a businessman can count on, or they will just get out of the 
business in that area.
    Mr. Dicks. Thank you, Mr. Chairman.
    Mr. Skeen. Thank you. Mr. Regula.
    Mr. Regula. Ms. Hutzler, you are predicting what will 
happen. Do you also predict solutions? [Laughter.]

                              FORECASTING

    Ms. Hutzler. Actually, when you're looking at mid and long 
term markets, you do think that competitive markets could work, 
so that if the prices and supply can balance out, then you can 
choose the kinds of things that you're forecasting.
    Of course, in the short term bottlenecks can exist, and 
we've seen that. So the long term concept is more that the 
permitting, if these companies have time to plan and they know 
the demand is there, and obviously things work out in terms of 
the permitting, that that kind of situation is feasible, given 
our resource base. So we do have resources in this country, 
particularly in coal, also in natural gas, to make these 
predictions actually become a possibility in the future if in 
fact the demand is there, the producers know the demand is 
there.

                                  COAL

    Mr. Regula. Given the amount of coal we have, should we 
intensify our efforts to find technologies to burn coal, vis-a-
vis Tampa Power or retrofits?
    Ms. Hutzler. Currently, we have the pulverized coal 
technology. Usually one must use a scrubber, because that's 
already in the Clean Air Act, to help with NOX 
emissions. And it is still cheaper than the other clean types 
of fuel.
    If you bring the price down, then they will become more 
competitive. But you do have to control the systems technology, 
too, to deal with the current legislation that is in place. 
Now, of course, if you get more stringent in terms of 
environmental controls, then that----
    Mr. Dicks. Ma'am, would you use the microphone so people in 
the audience can hear? You have a very soft voice.
    Ms. Hutzler. If there are additional environmental controls 
on SOX/NOX or even mercury, then that 
brings into the situation additional technology to deal with 
it.

                             NEW TECHNOLOGY

    Mr. Regula. One more question. How do we overcome the 
infrastructure problems, and you've all alluded to this, in 
this country, to enable new technology to achieve market 
penetration, such as fueling for alternative fuel vehicles and 
access to natural gas for heating and cooling? And what is the 
role of Government, if any? Do you think the marketplace can 
accomplish this?
    Mr. Cavaney. One of the most important things that 
Government can do is basically work to move the obstacles out 
of the way. We're seeing, for example, speaking about 
transportation, extraordinary gains in fuel cell technology, 
where some people are forecasting that within the decade, we'll 
actually see personal transportation with fuel cells, and it 
looks like clean gasoline may end up being the preferred fuel, 
which then takes care of some of the things and also helps 
further improve the environment by getting the fuels and the 
emissions down lower.
    Ultimately, if you get to there, it will take a long time 
to turn the stock over, because autos tend to be in inventory, 
shall we say, or personal use, for 12, 13, 14 years. But it's 
the beginning. Right now, most of that has been done in the 
private sector.

                   GOVERNMENT ROLE IN NEW TECHNOLOGY

    So we see some of the major gains in the precompetitive 
area, we think there is a role for the Government to look at 
some of the initial stages and make some of those significant 
investments and try and develop the road signs. But once 
they've put together something that's attractive enough that 
the private sector gets on board, working together with the 
private sector to remove the obstacles, I think leads you to 
the fastest pathway to implementing these new technologies.
    Mr. Sharp. I would simply add, Mr. Cavaney is absolutely 
right about obstacles, that oftentimes Government can help 
eliminate. The truth is that some technologies are available, 
and if we want them faster, we simply have to engage in some 
kind of incentive from the Government to help make it happen. 
We've all been a part of supporting things that didn't work. So 
I say this with some reluctance.

                              TAX CREDITS

    But right now, wind has unquestionably moved into the 
marketplace, much more rapidly than was anticipated, because we 
had the production tax credit, which we pay a penny and a half. 
We found that that technique was a better one than an 
investment tax credit. We put a lot of investment tax credits 
out there for solar and for wind and we thought that a lot of 
the capital was wasted.
    But when we turned to a production tax credit, where you 
only get help if you produce and get into the marketplace, we 
discovered that it had a big impact. Now the risk of that is it 
takes whatever technology is the most immediately available, 
which was wind. It tends to discriminate against solar 
advancement, if you talk to the solar people. But there are, I 
think, some legitimate places to have tax credits to help bring 
technology in more rapidly, on a temporary period of time.

                          EFFICIENCY STANDARDS

    And in some instances, efficiency standards where it's just 
not worth it of the consumer to know about and make the 
decisions. But if we take action on refrigerators, we actually 
have a big impact on the marketplace, over time, as long as you 
allow the industry enough time.

                 DECIDING IMPORTANCE OF NEW TECHNOLOGY

    Mr. Moore. Your extensive regulatory history, I mean your 
appropriations history, not regulation, that's somebody else, 
in your extensive history of doing that, you know the answer to 
these questions. Basically, new technology is not in use 
usually for one or two reasons. It isn't proven or it costs too 
much. And so how do you get at that? Does Government have a 
role to play in dealing with those things? That's what you guys 
are paid to do and elected to do, sit down and figure out, if 
this is so important to the future of the country, the country 
is willing to do something to make that happen sooner than it 
would otherwise happen.
    And the one that I mentioned we're working on, in 
partnership with the Government, is precisely the case. When 
you ask a company to take on a capital research project, 
they're going to rank that with their other projects. If it 
comes out 45th and they've got money for 2 or 3, this one 
doesn't get there. And that's a role you all play in figuring 
out what are the right ones to put appropriations into the 
Department of Energy so they can in turn build research 
partnerships or CRADAs with organizations to design that.
    And then just as Phil said, even when you do that, it still 
may not be profitable. So then you look at, well, are there 
incentives that can make some of these things work? And there's 
a good record on that, where some have failed miserably and 
some have been of help. It's just the age old question. The 
only reason why it's not there is not because of some cabal to 
keep it out, or because of stupidity, it's basically dollars 
and sense. It just doesn't make dollars and sense to use it.
    Mr. Skeen. Mr. Nethercutt.
    Mr. Nethercutt. Thank you, Mr. Chairman.
    Welcome to the witnesses. I find your testimony 
interesting.

                               CALIFORNIA

    I'm from Washington State. And I'm one who feels as though 
California has brought a lot of their problems on themselves. 
And they haven't felt pain at the retail side, certainly the 
wholesale side, but not the retail side, like we have in our 
northwestern States. So we're bailing California out, with all 
due respect to California.
    So I'm delighted to see that they've raised prices in 
California on the retail side. I think that will inspire 
conservation, it will give people in California some sense that 
they've got to do something in order to get some new supplies 
on-line. They haven't had a refinery built or a new power plant 
built for years.
    I'm sympathetic and empathetic but my goodness, California 
had better get on the stick. They've made such a mess of 
deregulation, in my judgment, that it's poisoning the rest of 
us.
    Having said that, I listened to your testimony about 
crisis, you used that word, several of you, and also the word 
emergency. You also talk about access. And then I heard you 
talk about permitting.

                         ACCESS AND PERMITTING

    Help the Committee understand from a national energy policy 
standpoint how far you would recommend we go in the case of 
getting more access to power supplies, and more, faster 
permitting. How far are you willing to go? Are we in a position 
where I hear you use crisis and emergency to the point where we 
want to say that we suspend or waive or whatever other verb we 
want to use, some of our environmental laws? Or maybe put a cap 
on the time that it takes FERC or other agencies that approve 
of new power supply or new generation, give them a limit on how 
long it's going to take. It takes years and millions, in some 
cases, to get any kind of permitting done.
    So it's great to talk about permitting and access. But how 
far do you recommend we go as a Congress? If you're inclined to 
answer.
    Mr. Skeen. Don't tell him. [Laughter.]
    Mr. Nethercutt. Anybody want to take a stab at that?
    Mr. Cavaney. We have taken a long look at this, because 
we're faced with the need to make some massive investments to 
continue serving our customers. Rather than look at and suspend 
or eliminate some of the environmental rules and regulations 
that are on the books, we think that you can keep the goals in 
place, but give people the flexibility and don't be so highly 
prescriptive about what's there. Or at the end of the day, six 
months can make a difference on a permit, give a waiver for a 
small amount of time or some things like that.
    We don't think we need to change the general direction. 
What we need to do is get a better focus on the allocation of 
Government resources. Like I mentioned on the subject of 
permitting, one of the problems we know for access is just the 
lack of people there to process the permits. In the energy 
business, the one thing you learn very quickly after looking at 
this is, almost everything is long term. You can't do anything 
quickly.
    So what that really does is it puts pressure on you all and 
your colleagues, though, to make decisions pretty quickly, 
because the clock is already ticking. You may not see the 
benefits for three to five years from some of these decisions. 
But again, if you delay making the decision, nothing will 
happen. In the meantime, though, there is a big problem that 
needs to be addressed. Congress has addressed it, but it's one 
you need to be continually sensitive to. Higher prices, which 
are the manifestation of these tight supplies, are going to be 
with us for a while.

                         LOW INCOME ASSISTANCE

    People at the low end of the income chain are those who are 
least able to cope with that. And they're going to be facing 
this for a couple of years.
    So things like the LIHEAP fund that was funded in 
increasing amounts has a very appropriate place and should be 
given priority considerations. The Committee may want to also 
look at, are there other disadvantaged groups that because of 
how they're uniquely positioned are going to have a difficult 
time getting through this, and try and look at ways how we can 
cushion things for them in the temporary period while you go 
about helping us get the flexibility we need to make those kind 
of investments.

                             PREDICTABILITY

    The last piece I would add is, you need flexibility going 
forward, but you also need predictability. So the sense to 
which you can help Congress and the Administration come up with 
flexible things which have a longer term horizon, the more 
likely you're going to get the investment capital in earlier to 
do the things that need to get done, and the more you'll make 
the gamble or the bet on new technology investments, an 
attractive one, because they know they've got a chance to work 
it off, and that's what they need.

                               PRICE CAPS

    Mr. Nethercutt. And I think that's the issue relative to, 
the incentive to go out and invest millions of dollars to get a 
new source of supply. And that's the fallacy I see, at least in 
the short term, with caps. I don't think that short term caps 
generate the ability to have investors invest in long term 
solutions. That's my concern. That's why it's been frustrating.
    I know we have a disagreement in our region over this, and 
I think a legitimate disagreement. But that's the problem I 
see, and I think that's the problem the Administration sees.
    Mr. Dicks. But you take the caps off new production.
    Mr. Sharp. If I could respond to that. One is, any cap or 
proposal to eliminate new production facilities right off the 
bat. But secondly, of course, if you put very low caps, it's a 
disaster. The point is to keep the highest things from 
happening. And I certainly agree with the fundamentals, as I 
mentioned, of the Secretary of Energy's statement that you 
don't get new supply and you don't get demand reduction with 
price caps.
    But the problem is that the prices are way above what any 
investor today ever thought they could get or thinks that they 
could get. The problem today is that people are waiting in line 
to build new plants in the west, but State governments, not the 
Federal Government, has to permit them.
    Mr. Nethercutt. I agree.
    Mr. Sharp. And finally, in California, it appears that they 
understand it. They appear to be about to do something about 
it. I hope that's the case.

                               JONES ACT

    Mr. Nethercutt. Let me ask you about the Jones Act as an 
option. We have farmers in our district, the Fifth District of 
Washington, who are paying, or are going to have to pay, 
exorbitant prices for fertilizer. Natural gas is part of the 
product that makes fertilizer. Would you be willing to 
recommend, or do you think it's a good idea, to suspend the 
Jones Act to allow the gas from Alaska to come down in foreign 
bottoms in order to help alleviate this problem of getting 
liquid natural gas and other products to California and the 
west coast? Do you think that makes sense, or would you 
recommend against it?
    Mr. Sharp. I come from the midwest, and we never were fond 
of the Jones Act in the midwest. It didn't matter to us. I just 
learned the hard way that that was an issue. Good luck to you 
if you try to change it in Congress.
    You can get dozens of examples of ways in which we've 
intervened in the marketplace that make it more awkward, 
difficult, costly. Sometimes it's worth doing. But I have a 
hunch that's not one of them.
    Mr. Nethercutt. Thank you for your testimony.
    Mr. Skeen. Mr. Hinchey.
    Mr. Hinchey. Thank you very much, Mr. Chairman, and thank 
all of you very much. This has been a very interesting couple 
of hours here.

           IMPACTS OF REMOVAL OF ENERGY EFFICIENCY STANDARDS

    I was interested, among other things, by the charts that 
you used. One of them, they all caught my attention in various 
ways, but this one particularly, because it demonstrates that 
the use of both petroleum and natural gas declined in the 
second half of the decade of the 1970s, and then shot up again 
beginning at about 1981, 1982.
    So I conclude from that, and I don't know if you would 
verify this, that the removal of the energy efficiency programs 
and alternative energy incentives that were put in place during 
the 1970s caused this particular phenomenon, whereas the use of 
petroleum is going down, natural gas was going down, they both 
started back up again, petroleum much more dramatically, I 
would say as a result of the removal of those energy efficiency 
standards, renewable energy incentives, things of that nature.
    Ms. Hutzler. I'm not sure it had to do with removal of 
renewable energy standards at all.
    Mr. Hinchey. To what would you----
    Ms. Hutzler. First, we had high prices, which brought it 
down. That was the major thing. Then you couldn't use, for 
instance, natural gas for electric utility generation. That 
changed later, and now of course that's where the biggest 
demand increases are that we're forecasting and we're seeing 
currently.
    Mr. Hinchey. Yes, but that didn't change in 1981. That 
didn't change until much later.
    Ms. Hutzler. Right. But there were restrictions to only use 
gas for certain areas.
    Mr. Hinchey. And the prices haven't changed. The prices 
have remained high.
    Ms. Hutzler. They went down after--we had low prices in 
the----
    Mr. Hinchey. We went down in the recession of the 1980s, 
but that didn't happen in 1981. I'm interested in that 
phenomena, that change, the dip and the increase up. That's 
what interests me. And I wonder what the explanation for that 
might be.
    Ms. Hutzler. That was shown on the energy consumption 
chart.

                      FACTORS IN CALIFORNIA CRISIS

    Mr. Hinchey. In any case, it's an interesting question, I 
think, and I think it's one that needs further examination.
    I think the situation in California is a little bit more 
complicated than we sometimes want to believe. California led 
the Nation in energy conservation prior to 1995. They had 
engaged in a program that allowed their energy use to grow at 
the rate of just over 1 percent a year, which was half the 
national average. That came about as a result of energy 
efficiency programs that were implemented there which were the 
best in the country.
    But in 1995, Southern California Edison sued, and the 
Federal Energy Regulatory Commission overturned the energy plan 
for California, which abandoned all of those energy 
conservation efforts. After that, energy use soared. In fact, 
in the last year of the decade, it went up by 3.5 percent, 
whereas prior to that, it had gone up by only 1.1 percent a 
year.
    So I think that there are other aspects of that situation. 
And the idea that California had not added any generating 
capacity for a long, long time is just false. In the decade of 
the 1990s, California added more than 4,000 megawatts of energy 
generating capacity, which is a little over 9 percent of the 
installed capacity in the State.
    So the situation in California is a little bit more complex 
than the headlines and the newspapers would lead us to believe. 
And if we're going to arrive at a solution to this problem, I 
think we need to be a little bit better informed about these 
issues. I'm talking about the people on this side of the table, 
especially, need to be better informed about what is really 
going on here.

                              DEREGULATION

    I think that as each of you have made the point in various 
ways, the question of deregulation has so disrupted this 
marketplace, and left us in a condition not quite of chaos, but 
of certainly confusion, and that is very true in a number of 
ways. First of all, under the previous regime of the investor 
owned utilities, you had a stake that was held by the investor 
owned utilities in energy planning by their customers. They had 
a real stake in the kind of portfolio that they held for each 
of their customers.
    Part of that was energy conservation and alternative energy 
and a whole host of things. But with deregulation, that went 
out the window. Nobody had that stake any more. There was 
nobody doing the planning, nobody doing the organizing. That 
has gone by the boards. And that needs to be replaced by 
something, either by legislation that comes out of this 
Congress or regulations out of the Federal Energy Regulatory 
Commission, or individually by public utility commissions 
across the country.
    But the lack of that planning capacity which was held by 
each of those investor owned utilities overseen by a utility 
planning commission in each of the States was an essential part 
of holding down the waste of electricity and energy in the 
country, and the diversification of portfolios. I wonder if any 
of you would want to comment on that?

                       CALIFORNIA ELECTRICITY USE

    Mr. Sharp. I'll be glad to. First of all, in California, 
you're absolutely correct. The per resident use of electricity 
was actually in decline from 1990 to 1995, but after 1995 to 
now, it has been going up, the per resident use. And part of it 
is the loss of the demand side management programs the State 
imposed on the utilities and a variety of State programs which 
also got cut back during the same time when they restructured. 
I don't think there's any question that that's true.
    I think part of it also is true, though, that this 
wonderful prosperity we have enjoyed during the 1990s has led 
to, one of the descriptions in California is the increased size 
of houses that are being built. The homes are larger, the 
number of appliances the average house has has grown 
enormously, more computers, more televisions, more everything 
else. So the per person electricity use has gone up.
    But a part of what California now is doing is a part of the 
response which needs to be done across the country. That is to 
recognize the push for efficiency in a whole variety of ways 
that you can help to do.

                                MARKETS

    I also think the market can help on that. And in fact, one 
of the good things that came out of beginning to break up the 
monopolies is we have now more people in business who at least 
in the commercial and industrial sector, much more than in the 
past, will go in and actually have the incentive, they can make 
money by helping a company manage its reduction in energy. That 
is one of the good things that came out of this. But we lost 
some things out in California, unquestionably.
    Mr. Skeen. Mr. Peterson.
    Mr. Peterson. No one else cares to comment on that?

                       GDP GROWTH AND ENERGY USE

    Mr. Cavaney. I can offer that typically when we look at GDP 
growth, for every 2 percent of GDP growth nationally you have 
about a 1 percent increase in energy usage. That's pretty much 
where it is.
    California's GDP growth over the last five years was 29 
percent, its energy usage went up 24 percent. So there was an 
incredible dynamic going on in that State during that period of 
time. And the fact that when they entered that 1995 period, 
they didn't have a lot of spare capacity to begin with, really 
made this a more difficult problem.
    So you're absolutely right, I think there was a very 
complex mixture in here that really needs to be looked at if 
they're going to, in the long term, get the mix right.

                     CALIFORNIA ENERGY PLAN IN 1995

    Mr. Hinchey. And the fact that the FERC overturned their 
energy plan in 1995, which had as its major component energy 
conservation, and alternative energy sources, must have played 
a role in that, I would assume.
    Mr. Cavaney. I particularly don't know, but I know there's 
certainly a role for cost effective conservation and energy 
efficiency in any effort to try to deal with energy.

                               FUEL CELLS

    Mr. Hinchey. Let me ask you just one last question. With 
regard to fuel cells in transportation, what kind of efficiency 
do you anticipate early on?
    Mr. Cavaney. I think like anything, the early stages will 
probably not get you where you want to realize, but we think 
clearly you're going to see energy efficiency through fuel 
cells that will be better than what you get out of internal 
combustion engines. That bodes well for the consumer, because 
that should help alleviate some of this pressure, and you can 
equate affordability with availability.
    Mr. Skeen. Mr. Peterson.

                               GENERATION

    Mr. Peterson. Thank you very much. I find this very 
interesting.
    About a year ago, maybe it was--we attended a number of 
briefings on the direction we were taking with generation. The 
Electric Institute put out a, I think it was an eight year 
bubble where there was going to be a tremendous amount of 
natural gas used. Then at the end of the eight year bubble, 
clean coal technology was assumed to come back in and pick up 
the slack.
    A short time later, we attended a briefing in the Senate 
that Kay Bailey Hutchinson put on. A speaker there predicted 
that this huge commitment to generation was on unsubstantiated 
reserves. And it appears he knew what he was talking about.
    As I look at all your charts here, I find it scary. I'm 
going to tell you, there's a lot of discussion about 
California, but I think the east coast, with natural gas prices 
this of concern. I don't think we yet know the impact we've had 
on our economy with gas prices this year. If it continues next 
year, the amount of money senior citizens will have to pay to 
light and heat their homes will push them out of their homes. I 
have people coming to me just absolutely astounded with their 
energy bills the last three or four months.
    As I look at the numbers here, we talk about a 45 percent 
increase in generation. I don't know what period of time that 
was in.
    Ms. Hutzler. It's through 2020.

                              NATURAL GAS

    Mr. Peterson. But I also know that in my district and all 
over the country, we're turning on gas generators everywhere. 
And some of them, I'm told, take a foot or two foot high 
pressure gas line. That's a lot of gas.
    I guess my concern is, are we going to have any gas to put 
in the ground this summer to prevent skyrocketing prices next 
year? I have businesses that have survived, smaller businesses 
that use a lot of gas, that have survived this winter, but they 
will not survive the second winter with these kinds of 
unpredicted gas prices. There's one of the largest paper 
companies in the world that have used up their expected profits 
by January, just from energy costs that were unanticipated.
    So my concern is where are we with natural gas? Now, you've 
predicted, Mary, that we'll have a 3.1 percent increase in 
production in 2000, a 3.3 in 2001 and a 2.5 in 2002. Then next 
year alone, though, we have a residential increase of energy 
needs from 1.27 commercial, and 1.4 industrial, that's 3.6 in 
overall energy needs, overall. So at 3.6 growth in energy 
needs, and we're only looking at a 3.1 percent this year and 
3.3 next year of gas availability increase, and we've allocated 
all of this gas to all of these new generating plants. If we 
have a hot summer, I think we have ourselves in a terrible 
position to next winter, economically, for our home heating.

                     WORKING NATURAL GAS IN STORAGE

    Ms. Hutzler. Well, right now, we do have very tight natural 
gas supplies, and we have very little in our working gas 
storage that my chart showed.
    [The information follows:]
    [GRAPHIC] [TIFF OMITTED] T1708A.066
    
    Ms. Hutzler. As times goes on, though, we think that's 
going to be lessened, and we'll get more and more into storage. 
But it's going to take us a while to get back to where we need 
to be in terms of normal levels of storage. So therefore, we're 
forecasting that gas prices are going to be fairly high for 
quite a few years now.
    In our long term forecast that we predicted last fall, we 
had estimated the gas price going back to its long term trend 
around 2004. But that was when we thought it would only hit 
about $3.30 in terms of its high point. Now it's going to be 
much higher, over $4. So it's going to take us longer to get 
those prices down.

                           ON-LINE GENERATION

    Mr. Peterson. Do we have good data on how much generation 
is coming on-line? And they build them very quickly.
    Ms. Hutzler. Yes, these turbines can be built very quickly. 
We do get reports from generating companies as to the amount of 
capacity coming on-line and what they're predicting for the 
future.
    In a deregulated environment, however, you have to be very 
careful about announcements. If they're under construction, 
then you can count on those. But a lot of times, capacity is 
announced and it doesn't actually come on-line.

                   IMPACT OF LOW NATURAL GAS SUPPLIES

    Mr. Peterson. Am I wrong? I'll ask all the panelists to be 
concerned about the gas as I'm looking at it as an overall 
economic issue. I have a lot of business, and major businesses, 
who cannot stay in business and compete with steel, with making 
clay products, anybody who uses a lot of energy, they're 
looking at bottom lines wiped out already for a whole year, and 
maybe at losses. The greenhouse growers are absolutely 
anticipating a profit-less year, the people who are going to 
raise our plants in part for agriculture. They were not 
prepared to pay those kind of energy prices, because this 
happened so quickly.
    Mr. Moore. Congressman, I think your concerns are right on. 
While I've been away from this now for about eight years, in 
terms of really sitting down and working on it on a day to day 
basis, we concluded at the end of 1992 that to depend upon 
natural gas for your baseload electric generation in this 
country would be a real mistake for that very reason. The gas 
wasn't there, the gas had higher and better uses, for home 
heating, higher and best uses as feedstocks in the chemical 
industry. And to suddenly shift your base load away from coal, 
away from nuclear, away from hydroelectric to where all you're 
building and all you're planning on using is natural gas, 
you're going to wind up with chronic high natural gas prices 
from now on.
    And I don't think it's there. That goes back to my memory 
of having worked on this some eight to ten years ago. But 
basically part of what you're seeing today is the only thing 
you can site, the only thing you can throw up real quickly is a 
modular natural gas generating facility. That's okay for peak 
loads. But when you start building your basic load out of that, 
then I think your fears are well placed.
    Mr. Sharp. If that price stays up, that's going to change 
rapidly in the electricity sector, too, so that projection is 
going to have to change. Unfortunately, there's no quick way 
out. But prices are moderate, but still not enough. And they're 
expected to go down. And the hope is, one of the things that 
the industry is dealing with that we think, and Mr. Cavaney 
knows better, is that the whole cycles in which they store have 
changed now, so that probably we're going to see storage in the 
spring and the fall in ways we never did before, we used to see 
it in the summer as the industry adjusts to this. That should 
be useful, but that doesn't solve the problem.

                             LEASING DELAYS

    But one thing is, there had been a lot of delay in leasing. 
There's Lease Sale 181 out there right now that should be 
decided by December. Either you do it or you don't. But those 
are the kinds of things that would always get delayed, two, 
four, six, eight years in the absence of a crisis. That sale 
alone would take a few years to develop. But that one loan will 
add a major new increment of gas supply for the United States. 
Not enough to cover all our needs.

                        OIL EXPLORATION BUSINESS

    Mr. Cavaney. I'd like to add just a little more insight on 
this. Basically, the oil exploration business is a cash flow 
business. If you've got the money, you drill the next well. 
People forget that in 1997 and 1998, the industry was at below 
depression levels, unprecedented. Had no cash, the small 
operators, which are the bread and butter in the U.S. of our 
domestic production, by and large over 60,000 of them went out 
of business.
    So when we started to recover in late 1999 and early 2000, 
any of the initial money they made basically got to help pay 
off the bank debt, get them going, and it really wasn't until 
just recently we've seen the investment go back to the level it 
needs. We are now seeing evidence that gas production is coming 
back. The resource base is there to meet reasonable demand over 
time.
    But like I mentioned earlier on the crude oil side, we are 
in a very tight period here, and will be in the short term. But 
it does not indicate that there is a real long term problem 
there, assuming access can be taken care of. But if access 
isn't addressed, then you do have another thing to deal with.

                    NATURAL GAS ALONE NOT THE ANSWER

    Mr. Moore. If I could add to it again, again, it's making 
the mistake, when you look at gas, of thinking there is one 
miracle fuel that can solve all our problems. Gas ain't it. And 
there isn't any other one, either.
    So you have to keep that in mind. The proponents of gas 
would have you believe all we have to do is drill more gas, get 
some more gas and that will take care of all our problems.

                                COAL USE

    Mr. Peterson. Well, in America, we are some 80 percent self 
sufficient with gas, and we have 40 percent of the coal 
reserves of the world. Can we work our way through this without 
stopping the decline of coal use? I mean, coal's gone down. Can 
we continue to just let coal slide?
    In Pennsylvania, if you were a smelter and you used a lot 
of fuel, and you had the ability to use gas or coal, if you 
didn't use your coal in 12 months, your permit was canceled. 
That was a Pennsylvania problem. So people who would have went 
back to coal when these gas prices came, maybe could have 
stayed profitable. The energy consumption right now of coal to 
gas is $1 to $6. That's a huge differential.
    And does any of our clean coal technology focus on smaller 
companies, or is it all on power generation?
    Ms. Hutzler. Well, first of all, our coal share is going 
down, our forecast. But in absolute values, it's going up. 
We're getting more out of our existing coal plants, and we are 
forecasting some to be built in the future.

                              COAL VS. GAS

    But the reason why the gas is favored right now is that the 
capital costs for a combined cycle gas plant are about half the 
amount of a coal plant. And in deregulated markets, the smaller 
capital cost is preferred, because of the riskiness of getting 
the capital, number one, also because of the time to build. A 
gas plant can come on-line much quicker than a coal plant.
    Also in terms of the permitting, you can get permits for 
the gas quicker than coal. Then you've got all the 
environmental uncertainties for coal. If you're going to do 
something on the carbon side, the only way we can deal with 
carbon today is that you have to switch fuels. There's 
technology to deal with it today that's cost effective or 
that's even totally there in terms of doing the job.
    Then there are lots of other uncertainties in terms of coal 
regulation dealing with mercury, additional SOX/
NOX that just put it into an uncertain environment 
compared to gas.

                       HYDROELECTRIC REPERMITTING

    Mr. Peterson. I guess one quick final question, and I'm 
over my time, Mr. Chairman. Why is it difficult to repermit a 
hydro plant? [Laughter.]
    I'm speaking of environmental threat, to pollution and to--
--
    Mr. Dicks. In the northwest, for example, you've got all 
kinds of other environmental issues that they want addressed by 
the hydro facility. Maybe they weren't addressed initially. You 
have salmon issues, you've got a whole series of issues that 
make it much more expensive to get it relicensed. That's why 
the companies, then, are caught in this dilemma. If they 
relicense it and it's two or three times as expensive as 
existing power, that's not a very good----
    Mr. Peterson. But the vast majority of our hydro does not 
have salmon downstream, up or downstream.
    Mr. Dicks. In the northwest----
    Mr. Peterson. In the northwest, but I mean, in the rest of 
the country, that's not a problem. If we can't work our way 
through hydro power being relicensed, I think we're going down 
the chute, in my view. That's my own personal view.
    Mr. Dicks. I think we have 7,500 megawatts out there that's 
at risk.
    Mr. Skeen. You're right, it's over.
    Mr. Peterson. Thank you very much.
    Mr. Skeen. Mr. Wamp.

                          NATURAL GAS PROFITS

    Mr. Wamp. Mary, you say we have tight supplies on natural 
gas, and a lot of discussions have centered around that being 
related to the spike in price. But several distributors and 
local government officials just brought me some data three 
weeks ago, showing a doubling of profits on natural gas for a 
lot of people in the energy sector, between last year and this 
past year. I just wonder, we have a GAO study underway right 
now, if you're saying it's totally tight supplies, or if an 
industry or sector of the industry said, we have no new coal-
fired plants under construction, we have no new nuclear plants 
under construction, so we are becoming the only game in town 
and we're going to take some profits.
    Can you say at all that there's any kind of unreasonable 
cornering of the market going on here, because we've had the 
environmental policies and frankly, an unbalanced energy 
production field over the last several years?
    Ms. Hutzler. We've done just a small piece of analysis and 
this is an aggregate to statistics. But when we looked at the 
amount of drilling going on, once prices picked up for natural 
gas, drilling did go up substantially. There are a huge number 
of rigs out there, more than we've ever seen before drilling 
for the gas. We've looked at the price relationship and the 
drilling relationship, and we find that they correlate very 
well.

                    PRICE AND DRILLING RELATIONSHIP

    When prices are high, exploratory drilling and development 
drilling correlate in terms of a three year rolling average 
price. But you're going to be getting into the drilling that's 
more certain in these types of markets.
    So the drilling has actually been going on, and the 
investment seems to be taking place for that drilling. 
Production, though, seems to have lagged behind demand. It 
could be that we're just seeing very huge demands and even with 
the amount of drilling going on, we're just not keeping up with 
the production to keep our storage there and meet the need.

                          DYSFUNCTIONAL MARKET

    Mr. Wamp. Mr. Dicks called it a dysfunctional market a few 
minutes ago. If you don't have other generation capacity in the 
marketplace, you end up with a dysfunctional market, where you 
don't really have the competition to hold everybody in check in 
terms of pricing, right? Some of you are shaking your head. You 
agree with that?
    Mr. Sharp. Yes. If we don't have sufficient generation you 
get too tight, you've got problems. If we've got distribution 
problems, we've got all kinds of problems.

                          DIVERSITY OF SUPPLY

    Mr. Cavaney. I think, and we work very closely among all my 
colleagues in the other energy producing sectors, the one 
lesson to learn is that you need all the energy you can get. 
Surprising enough, it's relatively fungible, because there's a 
lot of entities that have fuel switching capacity. So when 
natural gas gets tight, sometimes they can go use residual fuel 
to offset it, or some of them can switch over to coal. There's 
even the biomass that's used, particularly in Henson's 
industry.
    So I think reliance on anything is risky, and that's why 
one of our key views is we ought to get diversity of supply. 
The more diversity you have, I think the more options that you 
have and the better protected the consumer is at the end of the 
day. We need all the energy sources we've got. So we ought to 
be shepherding all of them towards more efficient use and more 
practical use.

                           ENERGY DEPENDENCE

    Mr. Wamp. Let's talk about that for a second. Last year, we 
had hearings, and I can't remember the exact figure, somebody 
in the room probably knows it, it's something like, for every 3 
percent reduction in demand in our country, you will see a 25 
percent reduction in price for energy. It's so out of balance. 
There's no other sector of our economy that has those kinds of 
ratios.
    But it's something like a 3 percent reduction in demand. We 
heard this over and over again last year. Anybody remember the 
exact numbers?
    The Department of Energy kept coming in for our hearings 
last year, and that one figure blew me away, and I don't have 
the hard data. But it's an incredible number, because we're so 
dependent that prices are inflated artificially because we're 
so dependent. When you look at this balanced approach, what is 
the science behind it?

                             ENERGY BALANCE

    Mr. Peterson talks about these huge coal reserves. What 
about the science behind the supply that we have control of, 
Kazakhstan? I think they have more petroleum now that maybe it 
will throw some into the mix globally and increased supplies.
    What's the science behind the balance that we're going to 
need to achieve over the next 10 years in terms of supplies 
that we can tap, versus Hinchey's desire to have energy 
conservation, renewables. If you had five, you'd say 20 percent 
each? What is balance? Is it arbitrary, or is it that 
everything needs to be involved? Or should we say we have such 
coal reserves that coal is going to be the primary driver of 
our resources because we have those natural resources?
    Mr. Cavaney. I think at the end of the day, one of the 
things we've learned in the energy industry over several 
decades is, you really have to rely on the market to come up 
with that ultimate answer. There isn't a formula that will get 
you there.
    But what I think Congress can do, we've talked about 
before, if Congress can help remove some of the obstacles, 
whether it's hydro, like we talked about, or whether it's coal 
or whether it's natural gas, you can help remove, so that those 
particular energy sources become their most efficient. Then, 
among those most efficient, the consumer will make the choice 
and obviously benefit. But too often, it's these obstacles that 
are there that cause the problems.

                               ECONOMICS

    I'd like to comment on the price phenomena that you talked 
about, it's a classic economical response. Whenever you're 
dealing with a commodity, the prices always determine if the 
demand is there by that last increment that you bid for. So you 
get changes in supply and it has huge impacts on the cost. 
You'll see it in agricultural products, you'll see it in our 
products and any other classic commodity.

                              KYOTO TREATY

    Mr. Wamp. CNN News said yesterday that the Bush 
Administration has abandoned the Kyoto treaty. Last time I 
heard, the treaty failed in the Senate unanimously, so you 
can't abandon a treaty you never agreed to. But you show an 
increase in fossil production in the future. What would the 
Kyoto accords or the protocol do to that production line out to 
year 2020? It would sharply come down, would it not?

                             EMINENT DOMAIN

    One closing argument. You said about eminent domain. Let me 
respectfully say, in my part of the world, the arrogant abuse 
by the natural gas industry of eminent domain is not well 
received among private property owners. And if you want 
electricity, to use FERC eminent domain in the future, tell 
them there's a good way to go about running over people's 
property and there's a bad way. You show up and you tell them 
what you're doing, you don't just do it, and you're so arrogant 
that you say, I have the right to do this and we'll tell you 
about it the day before it happens. Please.
    Mr. Sharp. I couldn't agree with you more. I was on the 
other side of this, defending constituents against FERC on a 
number of pipeline situations in the past, so you're absolutely 
correct.
    But I would just remind you that if the pipeline doesn't 
get built, you can forget all the other discussion we're having 
here about high prices, about----
    Mr. Wamp. We understand that.
    Mr. Sharp. You know that well.
    Mr. Wamp. It's just hard on those people.
    I yield back. Thank you.

                              FORECASTING

    Mr. Hinchey. Mr. Chairman, let me just ask one additional 
question. This has to do with forecasting. The Shell Company, 
which is pretty good in this business, has told us that they 
expect fossil fuel use to peak out in about 30 years, and then 
to begin a slow, gradual decline. What do you think the future 
looks like in the second half of this century?
    Mr. Skeen. Who knows? [Laughter.]
    It's a good question.
    Mr. Cavaney. I'm not a practicing economist, nor do I have 
any data to do this. But there's enough discussion around it. 
If you look at petroleum, crude oil specifically, its principal 
market is transportation. As you transform transportation into 
things like fuel cell vehicles and the like, which will be a 
long way out, but at some point you will cross a nexus where it 
has in fact peaked.
    That's just one company's opinion. Other companies may be 
off by 10 or 15 years. But I think generally the trend, 
sometime beyond say mid-century or later, you will see a shift 
here. And that's why the technologies like fuel cells are 
important.

                            METHANE HYDRATES

    There's also other things. There's some incredible 
technology on a thing called methane hydrates, which the U.S. 
is essentially the Saudi Arabia in this area. These are methane 
gas trapped under very high pressure along our sea beds. And 
the technology, if you can utilize that, is a whole new area.
    So there's so much time between now and then that I think 
that's why there's a reluctance for a lot of really hard and 
specific consensus data about what the trends are.
    Mr. Sharp. I just really think it's critical to remind 
ourselves, we had projection after projection for the last 50 
years on all these sectors. I think you can go probably find 
some of them that accidentally turned out to be right.
    But the fact was that whether it was coming from industry 
or Government, the scenarios of pricing over five or ten years 
were very often wrong. The scenarios of which technologies 
would come into the marketplace were wrong, and it's the reason 
why we have to have a broad portfolio of opportunities, both in 
fuel and technology.
    I will go back to your point of energy conservation. 
Between 1970 and 2000, one of the estimates is that we, through 
efficiency, really, conservation is not really what happened, 
but efficiency, saved two and a half times the amount of the 
additional fuels that we produced. The point is, that's a huge 
source of energy for us, and sometimes it's cheap and sometimes 
it's not. It requires capital turnover to do it.
    One thing we don't know about this natural gas market, 
we'll find out, but if the economists are right, we should see 
some significant differences next winter and the winter after 
that and the winter after that on the demand side as a result 
of these prices. Terrible, ugly and painful as they are, a 
whole bunch of people are making at least some decisions which 
will marginally add up to less demand.
    Mr. Peterson. Wood stoves are selling again. Try to buy 
some cured firewood. You can't buy it in Pennsylvania.
    Can I ask one more question? I guess on the gas side----
    Mr. Skeen. This is the last one.
    Mr. Peterson. Okay, sir. I'll be good. [Laughter.]

                               RETAIL GAS

    On the gas side, my producers told me that they pre-sell 
most of their gas, 70, 80 percent of their gas is pre-sold. 
They were like $2.75, $2.85 a 1,000. Then we had the spikes of 
8, 9 and 10 for a while. But they said their average take for 
the year was less than $3.50 a 1,000 on the average.
    But yet I don't know of anybody buying retail gas that 
didn't have a double, sometimes two and a half times increase. 
How did we get there? My producers didn't get it. How did we 
get there? I guess that's the part that I don't understand.
    Mr. Sharp. It's just a matter of contracts. It depends on 
whether your guy had a good contract or a bad contract as a 
producer, as it turned out. I mean, the contracts aren't all 
alike. They're negotiated, they're decided upon and the traders 
in between, when the price was low, they took a bath, the 
traders in between when the price was high, they got rich.
    That is the way the whole economy works, and we all wish we 
could control it.
    Mr. Peterson. We need the traders in there. They're not in 
the coal business.
    Mr. Sharp. I hate to be the old line Democrat that was 
accused of being a socialist who said, that's the wonder of the 
capitalist system. It usually has wonderful benefits.
    Mr. Hinchey. We're all in shock. [Laughter.]
    Mr. Skeen. I think at this point I'd like to place in the 
record a resolution from the State of New Mexico on the energy 
diversity issue.
    [The information follows:]
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    Mr. Skeen. Next I want to thank you all for coming. I look 
forward to working with you in the future on this difficult and 
critical issue of our energy policy. This hearing is adjourned, 
and thank you all so very much.
                                           Thursday, March 8, 2001.

      NATIONAL PARK SERVICE, NATURAL RESOURCE CHALLENGE INITIATIVE

                               WITNESSES

DENIS P. GALVIN, DEPUTY DIRECTOR, NATIONAL PARK SERVICE
MICHAEL A. SOUKUP, ASSOCIATE DIRECTOR, NATURAL RESOURCE STEWARDSHIP AND 
    SCIENCE
DON L. NEUBACHER, SUPERINTENDENT, POINT REYES NATIONAL SEASHORE
JOHN TREZISE, DIRECTOR, OFFICE OF BUDGET, DEPARTMENT OF THE INTERIOR

                   Opening Remarks of Chairman Skeen

    Mr. Skeen. Let me welcome you before the Interior 
Subcommittee. This is our first oversight hearing for the year. 
You have the honor of being the folks we are most anxious to 
hear from.
    We have had only one change in the subcommittee. Let me 
welcome my friend and Congressman, Martin Sabo, but Martin is 
not here.
    Mr. Dicks. But he will get here and he will be a valued 
member of our subcommittee.
    Mr. Skeen. Today, we are going to hear testimony from the 
National Park Service on the new Natural Resource Challenge 
Initiative. For the last two years, this subcommittee has 
supported an effort to improve the deteriorating condition of 
the national parks natural resources. We are about to hear how 
we are using these funds, the Park Service resources and what 
systems the Park Service is putting in place for accountability 
so that we can measure progress over time.
    Mr. Denis Galvin is Acting Director of the National Park 
Service. Mr. Galvin, would you please introduce your 
colleagues. After he makes his opening remarks, you may begin 
your statement.

                      Opening Remarks of Mr. Dicks

    Mr. Dicks. First of all, I want to congratulate Chairman 
Joe Skeen on assuming the chairmanship of this subcommittee. He 
is one of our outstanding members and I am proud to be able to 
serve with him in his first hearing as chairman of this 
committee.
    I want you to know I think the Natural Resource Challenge 
Initiative is a very good program. I do believe that we need to 
bring science back into the national parks in a significant 
way. I think this initiative is already starting to do that. We 
have many challenges out there with endangered species, with 
invasive species and with air and water quality problems.
    There are many areas where science is desperately needed. 
Our staff has done a lot of good research on this and one of 
the things we have found is when the Park Service is challenged 
in court on the basis of decisions, their science has proven to 
be correct. I know it is something they are concerned about and 
I think this is a good start for our hearings this year because 
the Park Service and the condition of the parks is a national 
priority. President Bush made the maintenance of the parks a 
priority in his campaign. In the last year, the amendment which 
Mr. Regula, Senator Gorton and Congress adopted, which I 
authored with Mr. Obey, was adopted because it provided 
substantial additional funding for maintenance in the parks.
    I think these two issues dovetail and having good science 
to base decisions on is something that is clearly a priority.
    I am pleased to be here today and look forward to hearing 
from the witnesses.

               Opening Remarks By Deputy Director Galvin

    Mr. Galvin. Thank you, Mr. Chairman; thank you, Mr. Dicks.
    I am accompanied this morning at the table by Dr. Michael 
Soukup who is our Associate Director for Natural Resources and 
by Don Neubacher, Superintendent, Point Reyes National Seashore 
because one of the things we want to emphasize here is this is 
a field and park oriented initiative.
    Also here this morning with me are Sue Masica, Associate 
Director for Administration, Bruce Sheaffer, Comptroller, Doug 
Morris, Superintendent of Shenandoah National Park who can 
provide some local examples of the effect of the support of 
this committee in the last two years resulting in the natural 
resource challenge.

                           Budget Initiative

    Mr. Dicks, you did mention President Bush's blueprint and 
his budget initiative. I want to point out that in that 
initiative, the blueprint budget funds this initiative, the 
Natural Resource Challenge, and ``increases the National Park 
Service operations by $20 million to accelerate inventories, 
control non-native species, and preserve endangered and 
threatened species habitat on park lands.'' I think that one 
sentence adequately summarizes what this challenge is about.
    This budget is the third year of a five-year action plan 
focusing on natural resources of national parks and it is 
designed to increase our understanding of those natural 
resources. It does not detract from our commitment to visitor 
services and our commitment to provide recreational 
opportunities. The scientist E.O. Wilson has said we need to 
come to recognize the natural resources of this Nation as part 
of our heritage just as we do our historic and scenic resources 
in the parks.

                       PURPOSE OF THE INITIATIVE

    As Mr. Dicks pointed out, part of this initiative is to be 
better able to explain and document our decisions both in 
court, to the visiting public and to society at large. To do 
that, we must understand and actively manage natural resources.
    To quote some facts, 2.6 million acres of the national park 
system now have invasive weeds on them. The Natural Resource 
Challenge is designed to actively attack those invasive weeds. 
One of the purposes is to achieve scientifically sound 
management of the parks and 90 percent of this money actually 
winds up in parks. We also want to make parks more friendly to 
the scientific community at large, to provide scientific 
information at low cost and use the parks as scientific 
laboratories.
    I think you have all heard the story, but it was research 
on a bacterium from Yellowstone National Park that resulted in 
the laboratory technique that made DNA copying practical, that 
underpinned the DNA fingerprinting techniques attributed to the 
success of the human genome project. We do not know what else 
is out there that is of value to society in general and this 
Natural Resource Challenge is a small step in the direction of 
finding that out. This is a partnership initiative and we 
expect to have elements of the initiative directly oriented 
towards educating the public about natural resources.
    I would be remiss in not thanking the subcommittee for the 
support it has provided in the last two years. You have funded 
generously requests made for this Natural Resources Initiative 
and this morning we can report on what those funds have done 
for this initiative of the National Park Service.

          U.S. Geological Survey/Biological Resources Division

    I want to assure you that this initiative was designed with 
the Biological Resource Division of the Geologic Survey in 
mind. In fact, it was designed with their active participation. 
If I were to simplify our relationship, this initiative depends 
on the Biological Resource Division to provide research 
information. This is not a research initiative. While it is 
based on science, it is used for resource management in the 
national parks. So this is work largely done in the parks but 
it depends on research information done by others, the 
Biological Resources Division and a network of universities in 
which the Biological Resources Division is a part.

                       EXOTIC AND INVASIVE PLANTS

    There are a number of examples of what we have done with 
the funds you have generously provided in the last two years. 
We have decided to attack exotic and invasive plants in the 
national parks, not on a park-by-park basis, but by 
establishing a series of inner park exotic plant management 
teams. With the fiscal year 2000 funding, we have established 
four teams around the country. They will attack the worst weed 
problems in 41 parks, or 11 percent of the parks in the system.

              COOPERATIVE ECOSYSTEM STUDIES UNITS (CESUS)

    We have established 10 interagency Cooperative Park 
Ecosystem Units at universities throughout the United States. 
While there are 10 major units, this is a network of 70 
universities which provide a wide range of information to park 
managers to enable them to run parks on better information.
    This network of universities provides more than just 
biological information. The network based at the University of 
Montana has provided a study of the public perception of 
wildlife issues at Yellowstone, a peer review of the elk 
management plan for Rocky Mountain, and a lynx study at Grand 
Teton. The Colorado Plateau Unit based at Northern Arizona 
University at Flagstaff has 50 projects up and running.

                            LEVERAGE FUNDING

    The money that you have provided has also enabled us to 
leverage funding from others. For every dollar that we are 
spending on eliminating exotic plants in the State of Florida, 
the State has provided a dollar, and $1.75 million in challenge 
funding for vegetation mapping is being matched with U.S. 
Geological Survey funding, they do the mapping for us, and $1.2 
million in fire management funding because the Wildland Fire 
Initiative has a need for good vegetation maps. We have a need 
for good vegetation maps and the Geological Survey is in the 
business of creating maps, so this initiative with funds coming 
from all three directions enhances and accelerates our ability 
to provide good vegetation mapping.

                            LEARNING CENTERS

    We have established a network of learning centers. One 
thing I would like to emphasize about the learning centers is 
this is not a building program. The funding that comes from 
this initiative simply provides people to each park. The 
learning centers are competitively selected. Don Neubacher, 
when I conclude my remarks, will be able to tell you a bit more 
about his learning center. It uses existing buildings and the 
idea of the learning center is to have a place where the 
research function done by the universities and BRD are housed 
in the main building as the education function, where local 
schools, universities and elder hostels can come and learn what 
the researchers have found out about the various parks.
    One of the first five Learning Centers is located at Point 
Reyes National Seashore. That is in an existing historic 
building. Cape Cod National Seashore's Learning Center will be 
housed in a building we recently acquired from the Air Force at 
a radar station that has been shut down. Rocky Mountain 
National Park Learning Center is on a historic ranch. Great 
Smoky National Park recently was given a property whose value 
is about $2 million. A private couple gave Purchase Knob 
property which included buildings to the Great Smoky Mountains 
National Park to establish the learning center. The one in 
Alaska at Kenai Fjords will be at Alaska Sea Life Center which 
is in an existing facility.
    Some of the other programs that have been undertaken which 
are high priority programs are a three-year program of 
intensive lake trout gill netting to reduce exotic lake trout 
to a manageable level to preserve the native Yellowstone 
cutthroat trout population, one of the great populations of the 
world.
    The exotic plant management teams I mentioned are stationed 
at Rock Creek Park and Carlsbad Caverns National Park, and I 
paused there, Mr. Chairman.
    Mr. Dicks. You paused on the Great Smoky too, I noticed.
    Mr. Galvin. Haleakala National Park and Florida 
International University serving Florida parks.

                         RICHARD SELLARS' BOOK

    I see many of the members have Richard Sellars' book in 
front of them. That book is a very objective history of natural 
resource management and science in the national parks and it 
tells a story that this organization should not necessarily be 
proud of. I think we have had consistent failures, inattention, 
lack of consistency and accountability in this program 
throughout our history. The Natural Resource Challenge sets out 
to correct that and in fact, we have instituted a series of 
competitive programs, you have required annual reports which we 
will provide. Each park is required to do an annual report if 
they get money from the National Resources Challenge.
    [The written statement of Mr. Galvin follows:]
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    I think I will turn now to Don Neubacher who can give you 
the perspective of a park superintendent and the place of the 
Natural Resource Challenge in his park in the overall scheme of 
running Point Reyes National Seashore.
    [The justification follows:]

             Point Reyes National Seashore Learning Center

    Simply put, the Challenge has allowed me to greatly enhance the 
park's resource management capability and strategically build a base of 
resource information for good decision-making. The park's new learning 
center will leverage outside support from universities and provide 
cost-effective research, and also give the park the capacity to share 
with the public the science information we gather from research 
projects. The Challenge has also provided us with funding to complete 
our basic resource inventories and it has given us access to funding 
for critical resource projects. Most importantly, the Challenge has 
stimulated new and creative ways of sharing--resources and workloads--
among parks in my area and with outside groups, and it holds the 
promise of one day providing us the ability to systematically monitor 
all our critical natural resources (vital signs) over time to ensure 
the long-term preservation and health of the park.

                NEED FOR THE NATURAL RESOURCE CHALLENGE

    Mr. Neubacher. Thank you very much and thanks for the honor 
of coming to the committee today. I'm in from California where 
we had a major storm over the weekend, so I am happy to be here 
in sunny D.C.--and our lights were out in over 50,000 homes in 
California over the weekend.
    What I want to do is elaborate a little bit on Mr. Galvin's 
comments, highlight some of the goals and objectives of the 
Challenge and also give you a bit more detail of the four major 
programs found in the Challenge.
    I do want to start by saying as a Field Superintendent, I 
administer about 100,000 acres in Central California. I want to 
state, and it is sad that to a certain extent, we have not been 
the best stewards of the natural resources of the park areas. I 
am representing many superintendents on that note.
    I can give you example after example of lost ground in 
protecting America's parklands. For example, in my park over 
the last 10 years, 30 percent of all the plant species are 
exotic and those infestations are increasing. The good news is 
that the Natural Resources Challenge is giving us the 
capability to fight off those species.
    The main reason we have not been good stewards is that most 
superintendents do not have the resource tools, adequate 
resource management capability, and good information to make 
good decisions. That is what this Initiative is all about.

                        BUSINESS PLAN INITIATIVE

    The other thing we have is a public or constituency that is 
becoming more and more interested in the rationale behind our 
decisionmaking. They love parks and they want us to make the 
right decisions regarding parks overall. By the way, this 
subcommittee was very supportive of the business plan 
initiative that we did for 27 parks. That initiative showed us 
that the biggest gap in funding parks was in the resource 
management arena between where we are now today in terms of 
funding and where we should be. The resource management gap was 
bigger than our infrastructure needs, our visitor service needs 
and other needs the Park Service has. Resource funding is the 
biggest need that was demonstrated in the business plan 
initiative.
    For me and many other superintendents, the Natural Resource 
Challenge is the initiative or program that will give us the 
capability to ensure the future ecological integrity of our 
park. It has broad-based support and I am hoping most of the 
superintendents in your districts are supportive.
    The reason it is based in support is the fact it was 
developed by the field. Many superintendents got together with 
many resource managers three or four years ago and we put 250 
people together in work groups and created this Natural 
Resource Challenge. So everybody had a hand in developing the 
best possible techniques, the most cost efficient and strategic 
techniques for getting our resource problems on the way to 
being solved. Basically, it is my belief it truly gives us what 
we need to get the job done.
    We have given you a few handouts and I want to go through 
some of the goals of the National Resource Challenge and I will 
go through the four major program areas.

                                 GOALS

    The first chart illustrates what I call the guiding 
principles or goals that came out of these work groups we put 
together four years ago. The first goal we need is to have 
resource inventories. I would say most parks, if not 90 
percent, do not have the datasets, soil maps, or vertebrate 
inventories to actually manage their resources carefully. They 
do not have the basics and last year in fiscal year 2000, you 
funded resource inventories and now we have the potential to 
get all those done in seven years.
    The information follows:] 
    [GRAPHIC] [TIFF OMITTED] T1708B.007
    
                       MONITORING PARK RESOURCES

    The other thing we want to do is monitor those resources. 
For example, we need to know if wildlife populations are going 
up or down and whether species are in good or bad shape. For 
example, that can be good news in many cases. In my park, I 
have red-legged frogs that are a listed species. We found out 
based on some inventory work and monitoring data that frogs are 
very healthy in the park and it gave us the ability to move 
forward on a lot of properties with visitor services projects 
because our frog populations are in pretty good shape. We have 
one of the largest populations of red-legged frogs anywhere, in 
California.

                      RESTORING DEGRADED RESOURCES

    Another one of the major goals is where we can restore 
degraded resources--some parks have former mines, former 
quarries, and we also have some grazing in parks that we want 
to change a bit. Becuase of resource impairment, we want to 
restore these resources and we have specific programs budgeted 
to get these things accomplished.

            SOUND SCIENCE FOR EFFECTIVE RESOURCE MANAGEMENT

    The third and maybe the most important element or goal of 
the challenge is to have sound science for resource management. 
More and more we are getting lawsuits and questions about our 
ability to make good decisions and the rationale behind these 
decisions. Let me give you another example.
    We have Tule elk in Point Reyes National Seashore. We have 
one of the largest herds left anywhere in central California. 
We held a public meeting to restore Tule elk to our wilderness 
area. At the first meeting, the public was overwhelmingly 
negative about doing this and we had to back up, get some good 
science and years later we came back to the public with 
information on population dynamics, home ranges and all the 
possible impacts. In the final meeting, we had overwhelming 
support from the local and regional communities because we had 
resource data we could share with the American public.

                          OUTSIDE RESEARCHERS

    The other thing we are trying to do in the Challenge is 
work with outside researchers. We have not been that good in 
the past in bringing researchers from institutions, getting 
them to do work in our parks, and giving us the information we 
need. That is a major goal or challenge.
    Another thing we are trying to do is ensure that all the 
resource information we have, using different communication 
techniques is shared with the American public.

                         PARAMETERS FOR SUCCESS

    The second chart illustrates some of the parameters for 
success. I want to say strongly this is a very strategic 
approach over a five-year period. For example, the inventories 
come before most of the monitoring. Being systematic will 
ensure that at five years and further, we will have 
accomplished everything we want.
    [The information follows:] 
    [GRAPHIC] [TIFF OMITTED] T1708B.008
    
    We are also trying to leverage funds from private and 
outside sources. For example, I met with a major foundation in 
California to use private funds to fund a lot of our coastal 
monitoring programs. I do believe we will receive the funds 
from that major foundation.
    We are trying to ensure there is competition in proposals 
that are submitted for Challenge funding. For example, Mr. 
Galvin mentioned the exotic management teams. Here is a 
proposal we put together for California that represents 14 
parks. It is about 100 pages and gives you an idea of how 
sophisticated the proposals need to be to actually get the 
funding.
    [The information follows:]

   Exotic Plant Management Team Proposal Summary 14 California Parks

    The proposed California Exotic Plant Management Team would be 
hosted by Point Reyes National Seashore, due to its central location 
relative to other participating parks, the strength of its existing 
exotic plant management program, and its ability to provide housing and 
other logistical support. Partner parks benefiting from the proposal 
include: Corbel, Devil's Postpile, and Muir Woods National Monuments; 
Gold Gate, Whiskeytown, and Santa Monica National Recreation Areas; 
John Muir National Historical Site; and Channel Islands, Lassen 
Volcanic, Redwood, Sequoia and Kings Canyon, and Yosemite National 
Parks. The parks represent all parks within the San Francisco Bay, 
Mediterranean, Sierra, and Klanmath Inventory and Monitoring networks. 
The region is a hotspot of biodiversity that is at risk due to the 
invasion of exotic plants. The proposal is to focus on 33 highly 
priority exotic taxa and remove particularly critical plants that 
cannot be removed by existing park personnel or volunteers. The 13-page 
proposal and its voluminous appendices describe in detail the existing 
exotic plant species invasions and control effort of each of the park 
units, contributions of partners, proposed program organization and 
operations, proposed budget, targeted species and control methods, and 
relationship to each park's strategic plan performance targets. The 
proposal is for approximately $303,000 to $3,000 per year over five 
years.

    [The Biography of Mr. Neubacher follows:] 
    [GRAPHIC] [TIFF OMITTED] T1708B.009
    
    Mr. Skeen. Let me interrupt you there.
    I would like to recognize Mr. Regula who was the Chairman 
of this committee. We owe him a great deal and thank you for 
being here this morning.
    We are going to vote and we will be right back.
    Mr. Regula. Mr. Chairman, I would like to put some 
questions in the record.
    Mr. Skeen. Fine.
    If you will excuse us.
    [Recess.]
    Mr. Skeen. Let us go to questions.
    Mr. Dicks, do you have any questions?
    Mr. Dicks. Thank you, Mr. Chairman. I appreciate your 
kindness.

                   PROGRAM AND FUNDING ACCOUNTABILITY

    I want to thank you all for your testimony. I think it gave 
us a good overview of the program.
    Let me ask you this. At the end of the five years, you are 
going to have this program. Will that be 2003?
    Mr. Galvin. 2004.
    Mr. Dicks. How are you going to insure that this program 
stays in place and that we do the appropriate monitoring? There 
have been initiatives in the past and there was a lot of 
enthusiasm and all of a sudden, the money is added to the base, 
the enthusiasm fades and the superintendents do what they want 
with the money. How are you going to make sure this is 
implemented and you stay with it so we do not have to come back 
here in another ten years and say why did this fall apart?
    Mr. Galvin. That is a very good question, Mr. Dicks. It is 
a question that we wrestled with when we were designing the 
Natural Resource Challenge. I am going to let Dr. Soukup answer 
most of it.
    With respect to your specific question about monitoring, 
which is one of the most difficult things to do, inventorying 
is a big job but not a difficult job. It is just a job that 
takes a long time and is labor intensive. Knowing what to 
monitor is a good deal more difficult. I think the principal 
answer to your question on that is that we intend to monitor 
via a network of parks as opposed to monitoring everything in 
every park. Within the sort of general systems of parks, what 
you are monitoring in the Sierras or Cascades of the West Coast 
has some relationship one park to another, so some of the money 
is being distributed on the basis of networks, not on the basis 
of individual parks.
    Dr. Soukup.
    Dr. Soukup. I think there are two parts to the answer. The 
first is sort of a strategic approach.
    We hope that park superintendents will sort of broaden 
their perspective with experience in this area. We think that 
success in this area, and the success with new information, and 
understanding what we have and what it is doing will become 
part of our culture as visitor services has been for so long.
    Failing that, we are carefully managing the money. We are 
holding some money out of park bases and looking at annually 
what parks are spending it for. So we are sort of tracking the 
money and keeping it in a more centralized pool that goes to 
parks, and with achievements continues to go to parks in 
perpetuity as long as the money does not drift to other 
activities.
    With that sort of two-pronged approach, we think it is 
going to stick.
    [Biography for Dr. Soukup follows on page 156.]
    Mr. Dicks. I would like to hear from a superintendent. How 
are we going to make sure we keep this going? If you don't have 
a database in every park, how are you going to keep it going? I 
do not like this idea of a generalized approach. I think you 
have to do it park by park. Each park has to have a database, 
each park has to keep their monitoring up, and use the money 
they get to maintain the system. Isn't that the way you should 
do it?

                                NETWORKS

    Mr. Neubacher. No, you are correct. Let me tell you why we 
are doing it from the network approach. There are a lot of 
efficiencies or economies of scale. For example, if you are 
going to do bird inventories, it is better to have one contract 
with eight parks rather than eight separate contracts. So it is 
efficiency of scale. Each park is going to have its own bird 
inventory but then it is a network approach of getting that 
done. Again, these are based on bioregions, so the contractor 
you hire will be the one that is most knowledgeable about this 
particular region. You get an economy of scale by having one 
contract and forcing park superintendents to do it together 
overall.

                              CONTRACTING

    Mr. Dicks. So you are going to contract this work out 
instead of being done by Park Service personnel or by USGS?
    Mr. Neubacher. It could be done by USGS or BRD if they have 
the expertise in that particular area. A lot of parks, 
including mine, are using either universities or other 
nonprofit groups that might have expertise. For example, in my 
case, I have the Point Reyes Bird Observatory, a nonprofit 
group. They are very good and they do work on the entire West 
Coast. They are the most talented group to get the job done. 
They are actually very reasonable on top of that.

                            STAFF BIOLOGISTS

    Mr. Dicks. You do not have biologists on your staff that do 
some of this monitoring?
    Mr. Neubacher. Yes, we do. I have a science advisor and 
that person brokers with different institutions to get the best 
possible proposal and best product for our park, so I have 
staff. I need expertise next to me that will make sure we are 
getting these products done well and that we get good data from 
a lot of these contractors.

                   PARK RESOURCES INVENTORY DATABASES

    Mr. Dicks. Are you going to have a database?
    Mr. Neubacher. Yes.
    Mr. Dicks. With all this information?
    Mr. Neubacher. Very much so.
    Mr. Dicks. Are you going to update it each year?
    Mr. Neubacher. That is correct. That is why I need staff on 
the park level too.

                          FIELD LEVEL FUNDING

    Mr. Dicks. How much money do you get for your park?
    Mr. Neubacher. On resource inventories, our network gets--
    Mr. Dicks. Under this Initiative?
    Mr. Neubacher. About $100,000 and then depending on future 
budgets, we have set up the strategy and our network will get 
about $800,000 a year for monitoring funds.
    Mr. Galvin. Mr. Dicks, looking at the big picture of some 
we have right now, about 90 percent of it goes to parks.
    Mr. Dicks. So the money is getting out into the field?
    Mr. Galvin. Absolutely, yes. The point is it does not go to 
park bases. That is why Don Neubacher cannot use these funds 
for other purposes. I think the checks and balances are there 
and I think we will be very accountable.
    Mr. Dicks. Hopefully we will not have problems like we have 
in the past.

           COLLABORATION WITH OTHER LAND MANAGEMENT AGENCIES

    Mr. Skeen. Mr. Wamp?
    Mr. Wamp. You all compared the Resource Challenge with the 
missions and responsibilities of the other major land 
management organizations--Forest Service, BLM, Fish and 
Wildlife, et cetera. Your role, their role, are we just now 
taking on a challenge that they have been more responsible for 
in their land areas in the big scheme of things?
    Mr. Galvin. I am glad you brought up the question about the 
big scheme of things because it is worth looking at the role of 
the National Park System in that larger scheme. None of these 
problems can be solved without understanding that larger scheme 
and without collaboration.
    We know that the park system is the most protected system 
in our hierarchy of public lands. On the other hand, we also 
know that a lot of the influences on the resources in those 
parks comes from outside the park--air quality being a good 
example.
    We see the parks as kind of a center of a hierarchy of 
information that includes the other public lands, that includes 
academic institutions, et cetera. As the most protected system 
we have, it provides opportunities that do not exist in other 
parts of the hierarchy but the resources are common to all of 
those units of public lands. It is clear that collaboration is 
required if we are going to understand these systems and 
protect them.

                     COMPETING NEEDS AND PRIORITIES

    Mr. Wamp. But the others do not have the visitors that you 
have. Does this compete at all with your visitor needs which 
obviously we hear about? You have that major challenge, and 
then the third question is backlog maintenance because Chairman 
Regula for many years continued to keep that at the forefront. 
How does this investment compete with backlog maintenance, or 
does it help us solve that problem over time because we are 
better stewards of our resources? How does it compete with 
visitors' needs and how does it get into the backlog 
maintenance area?

                            VISITOR SERVICES

    Mr. Galvin. To talk about visitors, I think there is an 
enormous opportunity here. We have been doing a lot of talking 
to various people--the Smithsonian, the National Endowment for 
Humanities, people like Peter Raven and Dr. Wilson at Harvard--
and they are excited about the people who come to national 
parks and the opportunity it provides for the National Park 
Service to inform the public about issues like biodiversity, 
about natural resource issues that are illustrated in parks. 
They are also excited about the hands-on educational 
opportunities that these parks provide for what is called 
informal learning opportunities.
    We have active programs with schools. This Initiative 
includes active collaborations with universities. So we do not 
see this as inimical to our visitor services mission. If you 
look at our history, we have become a very good visitor 
services agency. That gives us a lot of trust in the public.
    We know from surveys we have done that the park ranger is a 
very positive image for the public. So we view that as an 
opportunity to get people engaged in resource management, to 
get them to understand the resource management problems and we 
are not anxious to trade away that trust and good feeling that 
the public has with that.

                          BACKLOG MAINTENANCE

    With respect to the backlog problem, President Bush's first 
budget is very generous. In fact, its major focus with respect 
to the park system is the deferred maintenance backlog and 
infrastructure problems in the parks. Before you came in, Mr. 
Wamp, I noted that in his budget blueprint, he specifically 
mentions this natural resource challenge. Just to talk big 
numbers, this is $20 million and the infrastructure problem is 
being addressed at over $400 million. So I do not think this is 
a significant impact on our ability to handle infrastructure 
problems.

                  GREAT SMOKY MOUNTAINS NATIONAL PARK

    Mr. Wamp. I would point out in closing that there is 
probably not a greater example of the conflict between resource 
issues, species, the environment and the visitor problem than 
the Great Smokies because the visitor traffic is so high, 
because the environment is degraded by automobiles that wait in 
line for four hours to get in and out of the park at the peak 
season, because the species are actually being lost. It is a 
real problem.
    I applaud the Initiative and look forward to supporting it 
in the coming years through this subcommittee's activities. 
Hopefully in the summer of 2002, the entire committee will come 
to the Great Smokies. That is my goal here, and make that our 
summer focus of next summer in 2002 to come east and come 
visit.
    Mr. Galvin. I am glad you mentioned Great Smokies because I 
think the visitation is very heavy there, but it remains an 
extraordinary biotic system. You know we are doing this 
biodiversity inventory down there which is an attempt to find 
out virtually everything that is in that park.
    One of the real exciting things about that project is a lot 
of it is being done by local school kids. Glen Bogart, the 
principal of the nearby school, has a program that between 
kindergarten and the eighth grade brings those kids into the 
park 50 times. I think it is a wonderful example of how you can 
use this challenge, and our efforts to understand the resources 
better, directly in a local school system and get an engaged 
and well informed populace as part of the whole park system 
there.
    Mr. Wamp. We will meet at Purchase Knob.
    Mr. Galvin. I mentioned Purchase Knob before you came in--a 
$2 million property donated to the park to become a learning 
center.
    Mr. Wamp. Thank you.
    Mr. Skeen. Mr. Kolbe.
    Mr. Kolbe. Thank you and I am delighted to be here at your 
first hearing, Mr. Chairman.

       RELATIONSHIP WITH THE USGS, BIOLOGICAL RESOURCES DIVISION

    I would like to ask a few questions about the work you do 
and the relationship you have with the Biological Resources 
Division of USGS. If my memory serves me correctly, we created 
that a few years ago, or it was created a few years ago in 
order to try to give some independence to the biological work 
being done and remove park managers from the decisionmaking 
process so there would be truly independent, scientific 
decisions. I think that is a fairly accurate statement of it.
    In light of that, and you have had enough time now, how 
would you characterize the relationship you have with the 
division?

                    RESEARCH AND RESOURCE MANAGEMENT

    Mr. Galvin. I am going to let Dr. Soukup elaborate on this 
but I think the simplest way to define our relationship is we 
see BRD as a source of research. This is not a research 
initiative. We do not expect the National Park Service to be 
doing research. We consume research which we need scientists to 
do. We need people who understand and can evaluate research but 
we still look to BRD to be the source of research.
    The Chief Scientist at BRD has been actively involved in 
the design of this initiative and BRD staff members sit on the 
board of these various competitions that we use to award money 
to parks, so we do not see this as being inconsistent with the 
existence of BRD.
    Mr. Kolbe. BRD is the research, is that what you are 
saying?
    Mr Galvin. Right.
    Mr. Kolbe. And your natural resource challenge is?
    Mr. Galvin. Is mostly on the ground. It is identifying 
plant and animal populations in parks, monitoring their health, 
attacking invasive species, developing a series of 
relationships with universities so we can get low cost 
research, not necessarily to solve park problems but to find 
out things about parks.
    Mr. Kolbe. Sounds a lot like research to me if you are 
monitoring and gathering data.
    Mr. Galvin. Mike can speak more eloquently.
    Mr. Kolbe. To include in that, are you going to make sure 
you do not have duplication? How are you going to avoid 
duplication? Have you given some thought to that? Have you had 
some discussion with BRD as to how you are going to avoid the 
duplication?
    Dr. Soukup. Yes, we have had a lot of discussions. In fact, 
many of the early discussions when BRD was formed as NBS 
originally, those discussions took place intensively. The idea 
of the division of labor was fairly carefully drawn. I will 
give you an example of inventorying and monitoring.

                       MONITORING AND ROLE OF BRD

    On the monitoring front, BRD designs the protocols, they do 
the research and they pull together the research that is known 
about any particular parameter or any special thing that seems 
to be important to look at in terms of how we are managing our 
parks and whether the parks are doing well or not. To be 
monitoring is a bit of a performance management system. We need 
to know how we are doing. We cannot go into the arenas we do 
saying we manage whatever it is we have, we think. We have to 
know what it is we have and how it is doing. Monitoring is the 
tool for doing that and we go to USGS for the protocol 
development. They tell us how to do it, but the day-to-day or 
weekly sampling, it is not cost effective to do it any place 
else but in the park and by park staff.
    They agree with that. Their research potential is not 
enhanced by having to do the routine stuff. It is really not 
fair to ask them to do that. They understand that.
    Mr. Kolbe. When USGS appears before this same subcommittee, 
do you feel confident they will give us essentially the same 
answer?
    Dr. Soukup. I believe so.
    Mr. Kolbe. So they have told you they support what you are 
trying to do? Do you think it complements what you are doing?
    Dr. Soukup. The whole design is to make us better partners 
with them. I believe they will testify and have testified in 
the past to that effect. We are very interested in maintaining 
a very, very close and tight relationship with them. We have an 
investment in them and are anxious to maximize that investment.

                                 CESUS

    Mr. Skeen. Mr. Peterson.
    Mr. Peterson. How do the cooperative ecosystem studies 
work?
    Mr. Galvin. Again, I will let Dr. Soukup answer most of 
that question but first, it is an interagency effort, not just 
the Park Service--BLM, Fish and Wildlife Service, BRD are 
usually involved. They respond to a request for proposals, the 
universities do, that is published in the Commerce Business 
Daily and are selected in a peer review by the responsiveness 
of their proposal.
    Dr. Soukup. It also relates back to the previous question. 
Part of the design was to ensure that we had daily contact with 
BRD, contact with their researchers in a college and university 
atmosphere to look at research agendas in a joint fashion. We 
feel we need to be at their side so they do not lose interest 
in us over time and help us craft an annual research agenda.
    We invited the other land managers and the other science 
agencies like EPA, and so forth, into actually going to those 
campuses and being a part of the Federal team that looks at the 
Federal research agenda jointly so that we can avoid 
duplication, look at issues from a holistic point of view and 
maybe start to practice our Federal land management in a more 
cohesive and coherent fashion.

        COOPERATIVE ECOSYSTEM STUDIES UNITS COORDINATING COUNCIL

    Mr. Peterson. Is it basically by request or is there a 
prioritization of those requests?
    Dr. Soukup. We have a CESU Coordinating Council and all of 
the agencies who have joined the effort are on that council. 
They have established a strategic plan of how they would like 
to fill out the system. Each agency has the option to join any 
individual unit at their own discretion. Some agencies are 
interested in many of them and some only one or two. So we have 
sort of a strategic approach with a lot of flexibility in any 
given situation.
    Mr. Peterson. But you are not necessarily going to do what 
is requested if this group does not prioritize it?
    Mr. Neubacher. No. We have a general framework and we may 
not do all of them in this framework. Each agency has to decide 
whether or not they think it is in their best interest. We set 
the priorities in our network for the research we need to get 
done.
    If we go to the CESUs, we have already negotiated the 
overhead rate and they have a list of universities so that we 
can quickly do a cooperative agreement with that university and 
get that person on the ground. They know the expertise, of all 
the possible researchers and the most talented and cost 
effective researcher that can come and do the job.

                              FUTURE CESUS

    Let me give you a specific example. The University of 
Washington is one of the future CESUs. We have sort of an 
acting broker that is working with that university. I went to 
them and said I needed expertise on the history of Marconi 
Communications Systems. We have two potential national 
landmarks in Point Reyes National Seashore but we do not know a 
thing about Marconi, to be honest with you, so we had to get 
the additional expertise. We didn't even know who to talk to. 
Then we found out the University of Washington knew exactly who 
to talk to. They brokered the contract for us and now we have 
an expert at Point Reyes giving us the information to tell us 
what we need to protect this historic resource over time.
    Mr. Galvin. I think Don's example points out we get more 
than biology from the CESUs too. We use them for history, 
archeology, zoology and other things.

                         UNIVERSITIES AND CESUS

    Mr. Neubacher. Basically, it is another tool for me to get 
to the right person to get the job done effectively and 
efficiently. We have had a bottleneck in the past of getting 
good research accomplished. We are finding the universities are 
giving us pretty good products for a very good price, rather 
than just straight private contractors. So we are going to a 
lot of public institutions and finding it very cost effective 
in my opinion.
    Mr. Peterson. It is an educational project for them that is 
a win-win, right?
    Mr. Neubacher. For example, sometimes if we can just give 
them office space, a laboratory and a place to live, they will 
come out and do the research. It is another way we are 
brokering research through the CESUs. I think in the end, we 
will get a hundredfold increase in research just by having 
these different tools available to superintendents to get the 
science accomplished.

                        IMPACT OF CESUS IN PARKS

    Mr. Peterson. Give us an example too of how it really 
impacts a park.
    Mr. Neubacher. On the Marconi example, again, we are now 
getting the National Register nomination done, we are learning 
which things we need to save over time so we can preserve it 
correctly. Until recently, we were floundering about, all this 
equipment given to us by MCI and RCA and what we really needed 
to do with it. Now we are getting information that tells us 
exactly what is important to save and preserve.
    Another example of what we are getting through different 
institutions is research information. I mentioned the red-
legged frogs before. We are using different institutions on 
that project. They are doing work for us, getting it 
accomplished and then letting us know what we can do in the 
park, whether it is development or visitor services, so we are 
not impacting the frog. I think it is going to be a great tool 
down the road. It is just unfolding at this point in time.
    Mr. Peterson. Thank you.
    Mr. Galvin. Just for the record, there are currently eight 
of these around the country and they include a network of 40 
partner universities. Some of the lead universities on the 
Colorado plateau are Northern Arizona University in the desert 
southwest, the University of Arizona, Great Plains is hosted by 
the University of Nebraska; the North Atlantic Coast at the 
University of Rhode Island; the Pacific Northwest at the 
University of Washington, the University of Montana, Miami, 
Tennessee and as I said, in addition to that, there are partner 
institutions, as many as 12 associated with some of these. So 
you can really go to the particular expert in this larger 
network of universities.
    I also want to point out that BRD is on the campus as a 
participant in all of these.
    Mr. Skeen. Mr. Nethercutt?
    Mr. Nethercutt. Thank you.
    Gentlemen, welcome. I am sorry I am late, we had other 
hearings today.

                     PROGRAM PERFORMANCE AND REVIEW

    I want to ask you some general questions if I may. I know 
for years the parks have focused almost exclusively on 
providing visitor services. The Congress has reacted favorably 
to the National Resource Initiative because for the first time, 
the Park Service has acknowledged the lack of a consistent, 
credible information base on the condition of their natural 
resources and that has led to resource deterioration.
    How will you ensure that this change in attitude will 
result in measurable, on the ground results?
    Mr. Galvin. To start with, the Congress has required an 
annual report. We intend to provide that. I noticed you have 
our 1999 Natural Resources Year in Review. Also, there is an 
element of competition that is built into this program that is 
new to the National Park Service. Don previously entered into 
the record one of the park proposals to establish an exotic 
plant management team. So a considerable amount of work and a 
considerable amount of scientific peer review goes into to 
making these decisions.
    We also discussed with Congressman Dicks before you came 
in, Mr. Nethercutt, the notion that some of this money is being 
kept outside of the parks. It is allocated to the parks every 
year so it is spent in the parks, but there is some judgment 
and some competition and some accountability required for all 
of these individual programs to ensure that.
    I think we would be the first to admit, as Mr. Dicks 
observed earlier, that one of the great dangers is that this 
money will float off to other purposes, not bad purposes by the 
way, high priority purposes, but if we are going to make 
progress on this initiative, this money needs to stay in this 
category.

                      USE AND ACCESS RESTRICTIONS

    Mr. Nethercutt. I appreciate that and I sense it is off to 
a good start but out west, at least in my experience, there is 
some concern that increased attention will result in increased 
rules and regulations and restrictions, and maybe a restriction 
on access. I am wondering how you intend to address that or 
prevent it.
    Mr. Galvin. I think you put your finger on it in your 
opening question. I think the product of all this is 
information and the possession of accurate information 
sometimes goes the other way. For example, a third party 
petitioned the Alaska Game Commission to establish a buffer 
zone around Denali where no hunting of wolves would be 
permitted. We had a longstanding wolf research program going on 
in the park that proved that the wolf population was healthy 
within the park and did not need a buffer zone around the parks 
to be protected. The possession of that kind of information 
allowed us to take a defensible position in favor of hunting 
outside the park.
    We have reviewed upwards of 450 air quality permits. Our 
air quality program is over 20 years old and is a very high 
quality program and we possess a lot of information about air 
quality. Ninety-nine percent of those permits were approved 
without comment by the National Park Service because we knew 
they would not adversely affect the parks.
    So I think the possession of good information allows park 
managers to make good and defensible decisions that do not 
necessarily interfere with recreation activities or visitor 
services.
    Mr. Nethercutt. Therefore, can I conclude your intent is 
not to enhance regulations or restrictions, but to make sure 
there is access and to be sensible about it?
    Mr. Galvin. Absolutely.

                    NATURAL RESOURCE CHALLENGE GOALS

    Mr. Nethercutt. What is the ultimate goal of the Natural 
Resources Challenge for the National Park System?
    Mr. Galvin. We had them up earlier. There are four.
    Mr. Nethercutt. Forgive me if you have gone over this.
    Mr. Galvin. That is fine. I am perfectly happy to go over 
them again.
    Mr. Neubacher. I think the most important goal for the 
initiative is to get good information so we can make good 
rational decisions. As Mr. Galvin pointed out, often those 
decisions help us move forward. Often we are locked up by 
different groups and compliance issues or lawsuits, so we 
cannot move forward.
    The second and probably most important goal is to basically 
know what resources we have and to monitor those resources over 
time to ensure long term health.
    The third thing we are trying to accomplish by the 
initiative is to make sure we can restore degraded resources. 
We have old quarries, and old mines that need to be restored 
that are no longer in use.
    A major goal we talked about was the establishment of CESUs 
and the learning centers to welcome outside researchers to 
parks so we can get cost effective, often inexpensive, often at 
no cost to us, science from institutions. We want to be 
researcher friendly.
    The last thing is we want to make sure this challenge has 
the ability to educate the American public. We want to share 
this knowledge with school kids and adults, either through 
websites or actual direct programs in parks. We have a lot of 
science the public deserves to know about.
    Mr. Galvin. On that last point about making parks more 
friendly to science and research, I think Dr. Soukup has an 
excellent example of a practical thing we have done that has 
had immediate results.

                        RESEARCH PERMIT PROCESS

    Dr. Soukup. We are trying to become much more hospitable 
and trying to bait them in and get more science for parks. We 
can do that very effectively by getting outside research. 
Traditionally, more than 80 percent of the research has been 
done by outside, academic groups in nonfederal kinds of 
activities. That has always been a mainstay and we want to 
encourage that. We need so much information and if we can get 
it cheaply, it is worth it to encourage that.
    One way we have recently encouraged researchers is we have 
automated and put our permit process up on the Internet. Now it 
is possible to actually apply for a research permit within 15 
or 20 minutes of activity. That is a major step forward. It is 
up to us now to process those permits very quickly and get back 
to people and have more people coming in and really building up 
our information base for very little cost.

                        PROFESSIONAL DEVELOPMENT

    Mr. Nethercutt. It seems as you do that, you are going to 
need to have good people. The Park Service has a history of 
promoting from within. Considering this outreach that is 
ongoing and the certainty we want lots of people to use the 
parks for scientific reasons and otherwise, would you agree a 
twofold strategy might be the wisest to really work on building 
a strong natural resources team by lots of professional 
training through existing staff but also recruiting outside the 
Service to get good people to come in who will be there for a 
time that will build a history, a legacy and a continuing 
interest in the park?
    Dr. Soukup. Absolutely. You put your finger on a very 
important thing, and that is having some institutional memory 
and sophistication within our ranks. We have done a number of 
things under the umbrella of this challenge. One is we have 
developed a Resource Careers Initiative that has looked at the 
level of intensity, sophistication and skill needed in those 
positions out in the field and has modeled position 
descriptions that will encourage people with advanced degrees, 
for instance, to take some of our resource management jobs.
    That is a real upgrading of our ability to identify issues 
and call the right people when we have needs for either 
research or action.
    Mr. Nethercutt. Is that strategy in place?
    Dr. Soukup. Yes, it is in place now.
    Mr. Nethercutt. Will you measure how we are doing maybe a 
year from now when you come back?
    Dr. Soukup. We are going to put that in our annual report 
which is almost finished. We hope to have an annual report to 
you very quickly.
    Mr. Galvin. Most of our jobs are announced through all 
sources so they go to all institutions across the country. I 
can give you an example. We just hired a wildlife biologist at 
Point Reyes from the outside. She has a degree from Harvard, a 
degree from Cornell and a Masters degree from Berkeley, a 
tremendous talent. That is the caliber of people that want to 
work for the National Park Service. By going to all sources, we 
bring in this talent that we never really had to that degree 
before.
    Mr. Nethercutt. I hope along with that great academic 
education, she would have some common sense.
    Mr. Galvin. Very much so.
    Mr. Nethercutt. Thank you. I may have some questions to 
submit to the record if you don't mind.

                FUNDING OF BIOLOGICAL RESOURCES DIVISION

    Mr. Skeen. Mr. Dicks.
    Mr. Dicks. We talked about the Biological Resource Division 
of the USGS. There is some concern that the USGS is going to be 
cut back. If you will be relying on them to do some of, or part 
of the basic research, what happens if the Biological Resources 
Division is cut by 10 percent?
    Mr. Galvin. We are concerned about that too. Since the 
budget is not finished yet, we don't know all the details, 
particularly with respect to another bureau. We are worried 
about our ability to generate information and BRD is an 
important source for us. There is no question about it.
    Mr. Dicks. If the committee who has been a strong advocate 
for this proposal wants to make certain this thing continues to 
work, we are going to have to look at what happens to USGS?
    Mr. Galvin. I think that is right.

           BRD SCIENCE CENTERS AND COOPERATIVE RESEARCH UNITS

    Mr. Dicks. Give me a little more information on these 
cooperative ecosystem study units. Do they conflict with 
research conducted by the BRD science centers or cooperative 
research units?
    Dr. Soukup. We have been concerned about that and have 
tried to make every effort that we could to make sure they are 
included. For instance, at the Northern Arizona University 
unit, the BRD is on campus there and there is a coop unit 
member there who has helped draft that unit's strategic plan on 
how they address issues.
    We believe both the coop units and their science centers 
have very strong programs that are very, very responsive and 
will be a primary source of activity in the areas where they 
are available and have expertise. Where they do not have 
expertise, we feel it is important to have access also to the 
rest of the university universe that is very large, broad and 
can augment what they do.

                         VITAL SIGNS MONITORING

    Mr. Dicks. You received separate increases for park vital 
signs and for water quality monitoring. Can you explain why 
there are two different monitoring elements?
    Dr. Soukup. I think we have been able to work fairly 
effectively in the past with USGS in their program but also 
they have money earmarked in their budget for the Clean Water 
Action Program. The funds we have are to get some of the on the 
ground stuff that has to be done in the parks up and running 
very early.
    We can do that because we know a bit more about water 
quality monitoring than we do about the rest of the actual 
ecosystem.
    Mr. Dicks. What are the park vital signs aimed at?
    Dr. Soukup. It is aimed at choosing the minimal series of 
things to study that will tell us the maximum amount of 
information about the state of the resources in the park. 
Monitoring can be very expensive and we are not going to have 
funds to measure everything. We will try to pick out the key 
parameters that will give us the most information about the 
condition of the resources.
    Mr. Galvin. I might add, do that over a series of parks so 
that we do it efficiently as Don pointed out earlier.
    Mr. Dicks. My friend Mr. Nethercutt was talking about 
common sense. For example, you have the Olympic National Park 
and the area around it is the Olympic National Forest. Then you 
have the State Department of Natural Resources. These are all 
in different watersheds so we have various players.
    We make some decisions on the private lands or State DNR 
lands on habitat conservation plans, a program I have strongly 
supported. This is one way to give certainty out there so 
people know what the situation is. In our State, we have even 
pushed multispecies habitat conservation plans so people get 50 
to 100 years of certainty.
    It seems to me, as we did with the President's Forest Plan 
in the Northwest, where there were high levels of protection 
and we had good information, we could maybe require a little 
less on the private lands because we knew what we were doing on 
the DNR lands, the Forest Service lands and what was in the 
Park Service. I would think that would be taken into account in 
the area where we have the red-legged frog problem because we 
have had a huge program in California to deal with.
    It seems to me by increasing the science and knowing what 
actually is there in terms of these endangered species, that 
information is valuable to the other landowners in the areas 
where they try to develop their plans and to the agencies that 
have to evaluate them and their adequacy.

             RED-LEGGED FROG--POINT REYES NATIONAL SEASHORE

    Mr. Galvin. There is no question about that. Going back to 
my discussions with Mr. Wamp and Mr. Nethercutt, this all has 
to be seen as a series of collaborations, a series of 
concentric circles. Parks are the most protected so they 
provide an opportunity to glean information in this most 
protected area. The red-legged frog is an excellent example. We 
might have Don talk a bit more about why the populations are so 
healthy at Point Reyes.
    Mr. Neubacher. One of the reasons we believe they are 
healthy, is because our air quality is extremely high, 
phenomenally high. Also, there are no residues from any 
pesticides or anything like that so we have a very clean 
system. We have one of the largest populations of red-legged 
frogs probably anywhere in California.
    To get back to your original question, what we see now 
because we have probably the national expert on red-legged 
frogs, who happens to be a BRD employee at Point Reyes National 
Seashore, the private sector, State and local sector calls Mr. 
Fellers and asks for his information on red-legged frogs. So he 
is providing information broadly to help communities.
    Mr. Dicks. About key habitat.
    Mr. Neubacher. About key habitat, nonbreeding habitat.
    Mr. Dicks. What kind of habitat do you have to have for a 
red-legged frog?
    Mr. Neubacher. Clean habitat, number one, pond habitat a 
couple of months out of the year and ten months out of the 
year, they go to riparian or sort of moist habitats and pretty 
much stay there. That is called nonbreeding habitat.
    The one thing we are finding is they will move. We put 
little transmitters on them and we see they will move up to one 
or two miles. They are a bit more frisky than we thought in 
terms of movement. So we are learning a lot about them. We are 
also helping people outside of parks to have good information. 
The Fish and Wildlife Service calls on almost a regular basis 
asking Mr. Fellers what he thinks about a particular project.
    Again, since we have a healthy population, in some cases 
outside development can occur because it is not going to have 
an impact on this particular frog. It has been very helpful to 
have this data. We didn't have this data five years ago.
    Mr. Dicks. You did not have the information, these 
evaluators did not have the information about what high quality 
habitat looks like and now with the monitoring of the frogs as 
they move around, you get a better picture of the range in 
which they operate. If you have to recreate this kind of 
habitat in other areas, you have an idea of what it looks like?
    Mr. Neubacher. Very much so. Mr. Fellers has gotten 
involved in mitigation measures on other projects, so he is 
providing expertise outside the Park Service to other agencies 
and other groups.
    Mr. Dicks. When you talk about the set-a-sides, the 
thousands and thousands of acres that public entities are 
buying to preserve this habitat, it is good to have an example 
of this.
    Thank you, Mr. Chairman.
    Mr. Skeen. Mr. Kingston.

              NATURAL RESOURCE CHALLENGE NETWORK STRATEGY

    Mr. Kingston. I apologize for being late. Everyone has 
conflicts, so I guess it is nothing new.
    I wanted to ask about cluster groups because as I 
understand some individual parks are fine, then others are in 
clusters. How is that working? What are the advantages of it? 
Out of the 384 national parks, how many are participating?
    Mr. Galvin. We have not answered the last question but it 
is in my prepared statement. There are 270 parks that have 
significant natural resources. It is better than three-quarters 
of all the parks in the system. There are actually about 350 
management units. If you take National Capital Region, for 
instance, there are a bunch of different management or natural 
units in National Capital Central, so it is 270 or about 350 
roughly speaking. I will ask Mike to answer the rest of your 
question.
    Dr. Soukup. We sort of have a two level approach. The 
cluster or network approach we think is really going to be very 
efficient for the smaller parks that probably will never be 
able to afford or need the investment in the entire program.
    We started out thinking we were going to have a monitoring 
program in every park and we started with a prototype 
monitoring program of about a dozen larger parks we actually 
invested in fairly extensively to try to do the whole thing in 
one park. We found that was going to be a lot more expensive 
than we thought we could ever afford. So we have maintained 
those prototype parks, parks doing kind of the whole series of 
vital signs that we think are important to measure.
    When we saw how expensive that would be in the future, we 
designed networks. I think there are 32 networks we have 
identified. Those are parks that have similar kinds of habitat, 
similar kinds of resources.
    Mr. Kingston. Is that biogeography?
    Dr. Soukup. Biogeography, basically geography plus the 
similar kinds of plants and animals in the parks. So we will be 
able to sort of capitalize on the strengths of different parks 
by putting a very small staff in that network wherever there is 
advantage. We will design it in each case differently to really 
make that sort of a group effort.
    We are finding that there is fallout we did not expect. 
There are advantages of having these parks work together on 
these kinds of issues that are really paying off.
    Mr. Kingston. One of the things we get hit with in 
appropriations is every agency wants to sometimes do the same 
thing and move in the same direction, so internally, you are 
managing these requests and in your evaluation, you are 
determining where the most critical needs are and what are the 
strongest proposals, the strongest problems. You are weighting 
it so the clusters, the networking and we know which ones 
should be funded first?
    Dr. Soukup. Right. We have a mechanism for competition in 
most of these programs. We are picking out the parks that are 
ready for it, the ones that have the highest need for it and we 
are doing it in sort of a strategic way.

                  MAINTAINING CENTRAL RESEARCH CATALOG

    Mr. Kingston. You have sort of a central catalog?
    Dr. Soukup. Yes.
    Mr. Kingston. A member of Congress could look at that and 
see where you are. It is similar to the way it is done for the 
military in terms of funding so that you can see the five-year 
funding plan?
    Dr. Soukup. Right. We have them cued up, we have the next 
batch ready and we chose early on generally to have significant 
progress early on so that we can see how it works and then go 
from there.
    Mr. Kingston. There have been cases where not having the 
proper information has led to some damage or loss of some of 
the natural resources, correct?
    Dr. Soukup. Right.
    Mr. Kingston. What are some examples of that, just so we 
could put a face on it?
    Mr. Galvin. Let me give you an example. Incidentally, the 
networks are up there on the map, the 32 vital signs monitoring 
networks.
    An example that is very personal to me because it occurred 
at kind of a watershed change, not as a result of the Natural 
Resource Challenge, but it is an example of when some kind of 
information can really change your prospective of something.
    I started my career in Sequoia in the early 1960s. The 
staff there had been trained to put out all fires by 10 
o'clock. Another piece of anecdotal information was there were 
no new Sequoia trees growing in Sequoia National Park. I 
vividly remember sitting around at coffee break one morning 
with the Chief Ranger and the Assistant Chief Ranger and other 
guys older than I and having them talk about some researcher 
who was in the park telling us that fire was an important part 
of Sequoia's environmental system.
    It has now become dogma in that but it is kind of an 
example of where information really has changed the management 
regime radically. Mike might have some other examples.

                 AMPHIBIANS--KINGS CANYON NATIONAL PARK

    Mr. Kingston. Kings Canyon is right next to Sequoia.
    Mr. Galvin. Right. It is actually the same management unit.
    Mr. Kingston. I am not familiar with the red-legged frogs, 
but there is a biologist who has been studying amphibian 
disappearance in Kings Canyon and unable to put the thumb on 
exactly why, but there is a definite disappearance. The reason 
that is significant is because there is no encroachment, no 
pesticide runoff or air pollution that is easily identified.
    This committee has funded an initiative coordinated by the 
USGS to get a grip on that. How would that tie in because you 
do have a loss of a natural resource there? Is that on your 
radar screen yet, or would that be an example of losing 
something, and that is why we need to have this cataloging?
    Mr. Galvin. The whole condition of amphibians in the 
Sierras is definitely on our radar screen. I think the 
statement about red-legged frogs in Kings Canyon also applies 
at places like Yosemite which is just north of that. There also 
seems to be a difference in their health between the west and 
east side of the Sierras which is interesting. Perhaps Mike can 
elaborate.
    Dr. Soukup. I think in different parts of the country you 
are finding there are different causes. It is hard to 
generalize between toxic impacts and perhaps some of the 
rainfall issues, acid rain and those kinds of things. I have 
heard maybe half a dozen different theories in different 
locales.
    The more information you have, the more you can sort 
through those things. Where they are disappearing in some 
cases, you can take action and in some cases you are not going 
to be able to do anything about it.
    Mr. Kingston. If I was to look at your central catalog, I 
could see Kings Canyon, Sequoia, Yosemite and here are some of 
the problems and examples, and then you weigh how critical 
those problems are for funding. That gives an accountability to 
the individual park superintendents and all of us.

                  DIVERTING FUNDS TO OTHER PARK NEEDS

    How do we know that some of this isn't diverted to regular 
maintenance? What keeps a superintendent from saying this 
really is a long-term thing?
    Mr. Galvin. We were aware of that problem in designing the 
challenge. It is a definite problem. It is not because the 
tradeoffs are to nefarious or evil purposes; it is because 
managers need to make decisions about conflicting priorities. I 
am a mechanical-civil engineer and I have made my career 
building sewage treatment plants, so I know the competing 
priorities. We were aware of that when we designed this 
challenge. I would say there are a couple of answers to your 
questions.
    First, these projects are mostly done competitively, so a 
park doesn't get money without going through a competitive 
network and they are peer-reviewed by outside peers outside of 
the park.
    Also, some of the money is kept outside of parks so that it 
simply cannot be moved to other purposes. While all the work is 
done in parks, the actual decision on the allocation to parks 
is made on an annual basis outside of the parks.
    One other answer to your question is that all of this stuff 
is done collaboratively so BRD is involved, a network of 
universities is involved. We are hoping we get much of this 
work at low cost simply by researchers who want to work in 
national parks and we try to make that system more open and 
simple.

                           WORKLOAD INVENTORY

    Dr. Soukup. One of the points of your question is the 
workload inventory aspect and the prioritization of that 
workload inventory, which I think is very enormous. If you look 
at exotic plants, we have a prioritization system that really 
looks at the weed species in a way of what is most harmful now 
and what are the things we really have to look at.
    Our system was recently published in Conservation Biology 
and Practice. It has had peer review and we are very 
comfortable with a lot of those workload inventories and exotic 
plants are a good example.
    The problem of funding is a real one and if you read the 
history in the book, Preserving Nature in the National Parks, 
you will see our programs rising and falling in natural 
resources, not rising very high and falling very rapidly.
    Two things are happening. One, the pressures on 
superintendents are often in the visitor services. I thought 
that Mr. Galvin was going to say the bears don't phone in. 
Really, some of these issues are more subtle than problems in 
the campgrounds and problems with the highways and roads and 
structures. They are real and require a long-term focus and 
long-term investment.
    That is sort of what we are doing with this challenge, 
starting the process of changing the agency, not only into a 
very good visitor services agency but also one that is really 
expert in managing resources and doing it in a very logical and 
strategic way.

                  NPS RESEARCH AND RESOURCE MANAGEMENT

    Mr. Kingston. Thank you.
    Mr. Skeen. Mr. Hinchey.
    Mr. Hinchey. Let me apologize for not being here at the 
outset but there are competing hearings going on at the moment 
so I am shuffling back and forth to some extent.
    I wanted to ask you about the several components to the 
research activities going on in the park and how they might 
complement each other, or in some cases perhaps compete with 
each other.
    As I understand there is the BRD, the CESUs, learning 
centers and sabbaticals, and all of these activities are taking 
place under the rubric of research. I wonder if you can 
describe each of them and say how each fits into the overall 
research program?
    Mr. Galvin. I would say the common ground in all of those 
is information. There is a dearth of information in this area. 
The more ways we can reach out to gather information, the 
better off we are. One sort of basic distinction we made 
earlier is that the National Park Service as an organization is 
in the business of resource management.
    That is not to say we don't need people with a scientific 
background on our payroll but it is to say that they are not 
generally speaking, doing original research. They are applying 
the research done by others.
    BRD's role is to provide biological research. This 
Initiative has been designed to be complementary to the role of 
BRD.

                     COOPERATIVE ECOSYSTEM STUDIES

    The Units, of which there are ten and a network of as many 
as 40 universities attached to them, and BRD is involved in 
those, is a way to maximize the kind of information a park 
superintendent needs. Don used a couple of examples earlier of 
going to the University of Washington not for natural resources 
information but for cultural resources information. So we get 
out of the cooperative ecosystem studies units access to a 
broad range of experts including biology and the management of 
BRD that is resident in those.

                              SABBATICALS

    Sabbaticals, I think I will let Dr. Soukup talk about.
    Dr. Soukup. One overriding theme is we need more 
information and we want to do it in a cost effective way. There 
are thousands of sabbaticals taken every year by university 
professors where the university pays the salary and the faculty 
member studies something or thinks about something for a year. 
We think national parks are great places to do that. If they 
will come and think about our issues or maybe help us write a 
management plan or an approach to an issue, we will try to 
provide them logistical support and so forth.
    It is a very, very low cost program, basically a poster 
that we give to universities and a website. The rest of it is 
sort of a matchmaking service where we say, a researcher with a 
sabbatical is seeking interesting issues, a park with 
interesting issues is seeking a person with a sabbatical. We 
are already getting a tremendous amount of interest. I hope we 
can maximize the amount of professors we bring in.

                         CANON SCHOLARS PROGRAM

    The other program we are proud of is the Canon Scholars 
Program where Canon USA has given us $2.5 million to give 
awards for 32 post-doctoral degree programs. So we will have 32 
new PhDs that are looking at issues. Each year we have a 
competition that is mediated by the American Association for 
the Advancement of Science. They are given on merit and these 
students will be attacking problems that are identified by park 
superintendents.
    All of these programs are really designed to give us the 
maximum amount of information at the lowest possible cost and 
get people thinking and doing their research and educating 
about national park issues.
    Mr. Hinchey. The park in a way becomes a kind of laboratory 
where you have research taking place. It can be biological 
research as well as other research into natural resources?
    Dr. Soukup. Absolutely, the whole span. We believe that in 
the future, parks will be incredibly important as natural 
laboratories and laboratories for all kinds of studies. When 
those are done, it is up to the Park Service to develop the 
results of those publications and information into a functional 
understanding we can take into these issues and know and have a 
lot of skill that we can bring to these issues that will be 
good for everyone. We can be much more effective and much more 
precise in our requirements in managing national parks if we 
have a good understanding of how these things work.

             POINT REYES NATIONAL SEASHORE RESEARCH PROGRAM

    Mr. Neubacher. The one thing we didn't mention was using 
the learning center as another tool to get researchers into 
parks by providing them some facilities, office space, lab 
space and computer access.
    At Point Reyes National Seashore with these different 
tools, whether CESUs, learning centers, direct cooperative 
agreements with institutions, I have about 70 research projects 
going on today. Most of those I am not paying for because I 
have these different tools. I am giving them a little incentive 
basically and leveraging those institutions to come in to do 
research. That includes very prestigious universities like the 
University of California, Stanford, the University of 
Washington, to more local universities like San Francisco 
State.
    They want to use parks as laboratories and we are making 
them more available using these different tools.
    Mr. Hinchey. They will then publish papers and publish 
their results in some way. Do you anticipate a formal synthesis 
of these results to have them presented in a way that is 
understandable and useful?
    Mr. Neubacher. That is part of the learning center concept 
where we have a resource educator that takes that information 
and makes it available to the public and to park managers 
because a lot of it is very technical. To answer your question, 
very much so.
    We are also directing the type of research we want to get 
done. At Point Reyes and in other parks, we have a research 
catalog, so when a university gets our product or our list of 
needs, they know some of the research we would like to see 
accomplished over time.
    Some universities may want to do something else and that is 
fine but we are also trying to get our backlog of research and 
resource management accomplished.

                           AMPHIBIAN RESEARCH

    Mr. Hinchey. Are you doing any current research on 
amphibians?
    Mr. Neubacher. Very much so. Dr. Gary Fellers, who is 
working in Sequoia-Kings Canyon and happens to be centered at 
Point Reyes National Seashore, is nationally and 
internationally known. He has also worked in China. His work on 
red-legged frogs and other amphibians is really cutting edge.
    We are getting closer to figuring out what is happening to 
those populations. The frogs are healthy at Point Reyes but in 
most of the Sierras they are still in a declining mode. I do 
think we will get to an answer.
    Mr. Hinchey. Thank you very much.

                              NPS HOUSING

    Mr. Skeen. There is one question I would like to ask. On a 
tour of these facilities in these parks and so forth, the 
housing is abominable.
    Mr. Galvin. That is true, Mr. Chairman. I am happy to 
report that in this budget, there is a rather significant 
increase in our ability to rehabilitate housing, not to build 
new housing.
    Mr. Skeen. It was very evident for the folks who work in 
the parks and also students and so forth.
    Mr. Galvin. That is a problem.
    Mr. Skeen. It is a sad situation for those people with the 
housing situation.
    Mr. Galvin. Yes, sir, that is true.
    Mr. Skeen. Other than that, I do not have any other places 
to scratch.
    Mr. Galvin. We thank you very much, Mr. Chairman, for 
holding this hearing. In many years of appearing before this 
subcommittee, this is the most time that has ever been devoted 
to a vital subject, and that is resource management in the 
national parks. Thank you for that opportunity.
    Mr. Skeen. Thank you for your expertise. We appreciate it. 
We do not have anything to beat you up with.
    Mr. Galvin. Well, that is different from the past too.
    Mr. Skeen. I knew you would appreciate that.
    Thank you for your time and effort. Leave Carlsbad Caverns 
alone.
    Mr. Galvin. We will help Carlsbad Caverns, we won't leave 
it alone.
    Mr. Skeen. Thank you.

   BIOGRAPHY MICHAEL SOUKUP, Ph.D. ASSOCIATE DIRECTOR NATIONAL PARK 
                                SERVICE

    Michael Soukup is the Associate Director, Natural Resource 
Stewardship and Science. Dr. Soukup is responsible for the management 
of natural resources in all units of the National Park Service. He 
directs technical support programs for parks in air quality, water 
resources, geological resources, biological resources, environmental 
compliance, information management, and social science. His objective 
is to bring emphasis within the National Park Service on active, 
science-based management of natural resources. He is particularly 
interested in enlisting the energy and resources of the Nation's 
universities as an active partner in providing science for parks.
    Previously, Dr. Soukup served as Director of the South Florida 
Research Center at Everglades National Park and then as Director of the 
South Florida/Caribbean Field Laboratory of the National Biological 
Service at the University of Miami and Florida International 
University. He also served as Regional Chief Scientist in the North 
Atlantic Region in Boston, and as a research limnologist. Dr. Soukup 
has received commendations for his work in objectively translating 
science to decision-makers for sound natural resource protection.
    He has published on a range of subjects since receiving his B.S. 
degree from the University of Richmond, Virginia, in 1967, and his 
doctorate from the University of Massachusetts, Amherst, in 1975.

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                                         Wednesday, March 21, 2001.

                     OFFICE OF THE SPECIAL TRUSTEE

                               WITNESSES

THOMAS N. SLONAKER, SPECIAL TRUSTEE FOR AMERICAN INDIANS, OFFICE OF THE 
    SPECIAL TRUSTEE
M. SHARON BLACKWELL, DEPUTY COMMISSIONER OF INDIAN AFFAIRS, BUREAU OF 
    INDIAN AFFAIRS

                    Opening Remarks--Chairman Skeen

    Mr. Skeen. Good morning. Mr. Slonaker, congratulations on 
your selection by President Bush to continue as a Special 
Trustee for American Indians, and Sharon Blackwell as the new 
Deputy Commissioner of Indian Affairs. I welcome you before the 
Interior and Related Agencies Subcommittee.
    As you know, I've served for many years on this Committee, 
and along with my friend, Ralph Regula, was instrumental in 
putting forward an aggressive agenda to address the 
longstanding problems associated with the management of the 
resources that are held in trust by the Department of the 
Interior for American Indians and Alaska Natives. I have long 
been an advocate for the Native American community, not only 
for the Tribes in my State of New Mexico, and by the way, we've 
got about as many as anybody else as far as the country, and 
we're very proud of them, but also from a national perspective.
    It's critical that the trust reform efforts initiated by 
this Committee continue. It's imperative that your efforts 
result in a permanent fix to the trust system. As a result of 
the lawsuits currently being litigated in the courts and at the 
urging of this Committee, the Department has maintained the 
Indian trust issue as one of the highest priorities. I trust 
that Secretary Norton will continue to give priority 
consideration to trust reform.
    It has recently come to my attention that allegations have 
been raised alluding to the conflicts between the Office of 
Special Trustee and the Bureau of Indian Affairs and the Office 
of Trust Fund Management, and if true, such conflicts may 
jeopardize your efforts at trust reform. The Committee expects 
you to work on these bureaucratic problems immediately and move 
forward in a coordinated and cooperative manner. Also, if there 
are problems with a high level implementation plan, we want to 
know about them now so that any needed changes are identified 
and made.
    I want to maintain the cooperative relationship that exists 
between your office and this Committee. Together we must 
complete the difficult job of fixing these trust systems.
    So there we are. Welcome, and let me turn to my friend and 
Ranking Member, Mr. Hinchey. Thank you for being here and 
representing the leadership. Thank you for holding down the 
base. Welcome to the Committee.

                       Opening Remarks--Mr. Dicks

    Mr. Hinchey. Thank you very much, Mr. Chairman. Thank you 
for your chairmanship of the Committee.
    I do have an opening statement on behalf of Mr. Dicks that 
I would like to read for the record. I'd also like to recognize 
the presence of Mr. Dale Kildee, who is a member of the 
authorizing committee here, and who has a long-term interest in 
this particular issue. I know he is here specifically to hear 
the testimony and the questions and to gather information. 
Dale, we welcome you here and thank you for your interest in 
this.
    Mr. Dicks' statement is as follows. Mr. Chairman, the 
Federal Government's execution of its trust responsibilities to 
American Indians has been a difficult issue long before you and 
I came to this Committee and long before our witnesses began 
their Government service. When the GAO briefed our staff last 
week, they brought with them one of the first reports on Indian 
trust management problems, which was issued in 1928. They also 
included a front page story on Indian trust fund losses similar 
to the one which appeared in the Washington Post last Saturday. 
But that article is dated 1876.
    The intractable nature of this problem has been a source of 
intense scrutiny by this Subcommittee over the years. I believe 
Congress has responded. We have encouraged the Department in 
its latest trust management reform efforts, and we have 
allocated large sums towards the cost of modernizing the Indian 
trust accounting and management structures at the Department 
and at the BIA. This included an additional $27 million in 
emergency funding added in conference just last fall.
    Up until last week, based on reports from the Department 
and testimony from the new Secretary, I thought we were making 
good progress. Then I read in the Post that senior Department 
advisors have informed the Special Trustee that, ``Trust reform 
is slowly but surely imploding.'' Needless to say, we are all 
disappointed if this is true.
    We are also disturbed to find this out at a time when 
things seemed to be moving positively. Mr. Chairman, we cannot 
afford to fail again in our responsibilities to these Indian 
Tribes and individuals. I look forward to these hearings, so we 
can get the views of the Department, BIA, and the Special 
Trustee as to exactly what is going on and what we need to do 
to fix any problems which are out there.
    Mr. Hinchey. And Mr. Chairman, I also want to join you in 
thanking Mr. Slonaker for his service to the Nation in this 
particular capacity. We're very grateful to him for that. And 
also to welcome Sharon Blackwell, who is the Deputy 
Commissioner for the Bureau of Indian Affairs. Ms. Blackwell, 
we thank you too very much for your service, and we welcome you 
here.
    Mr. Skeen. Welcome to you both.
    Mr. Slonaker, and Ms. Blackwell, for the sake of time and 
to ensure that all members have ample time for your questions, 
would you please summarize your statements, and your complete 
testimony will be included for the record. It's kind of a 
shoddy way to treat you, after going through all that work, but 
it will be on the record from now on.
    Go ahead.

                   Opening Statement--Special Trustee

    Mr. Slonaker. Thank you, Mr. Chairman. Thank you for 
inviting me to testify today and to all of you who are members 
of the Committee.
    Let me just tell you first of all that I was sworn in last 
June. I've had now approximately eight months or so to appraise 
this situation. I am charged with, as you know, under the 1994 
Act, among other things, oversight of the trust reform effort, 
as I call it, within the Interior Department.
    Let me just remind you as a moment of background what we're 
talking about here. I came from the commercial trust sector 
before I retired, and then for some reason decided to take this 
job.
    Mr. Skeen. You're a glutton for punishment. [Laughter.]
    Mr. Slonaker. What we're talking about here is a pretty 
good sized trust department, by commercial standards. The BIA 
has 56 million acres of land under its responsibility for 
leasing and revenue production. Approximately three-quarters of 
that land is for tribal revenue and the other quarter is for 
individual Indians. The central job here is producing accurate 
records and making sure that the transactions take place in a 
suitable fashion.
    In addition to the land assets, there's about $3 billion 
worth of what I call liquid assets, money actually in the 
accounts, but invested for the benefit of, of course, Tribes 
and individual Indians.
    Let me get to trust reform progress. There has been 
progress. Unfortunately, the public reports at times tend to 
exaggerate the negative. In any event, last year, for example, 
the financial accounting system for the trust system was put in 
place, and that's been up and running for about a year. The 
system is doing very well. In December of this past year, the 
land title portion of the project known as TAAMS, which is the 
Trust Asset and Accounting Management System, was put in place 
and made the system of record in four of the twelve BIA 
regions.
    The final regulations were published in January of this 
year for leasing and grazing on Indian lands, trust funds and 
Indian probates. These are very important regulations and the 
reason for it is that the central core of this whole task is to 
bring uniformity to trust process and procedure, so that we can 
take advantage of systems that give the best service at the 
ground for the beneficiaries, which are both of course Indian 
Tribes and individual Indians.
    Trust training courses have begun for people in the field 
from all sectors of those parts of the Interior Department that 
are involved with trust improvement. And pursuant to decisions 
made by former Secretary Babbitt, and Secretary Norton, we as a 
Department are proceeding with a plan to present to Congress 
the feasibility of using a statistical sampling approach for 
individual Indian accounts that may provide the basis for an 
historical accounting, or for the settlement of the Cobell 
litigation, given the state of trust records, which I think you 
all know about, and the enormous cost per account for a total 
reconciliation.

                     HIGH LEVEL IMPLEMENTATION PLAN

    Let me tell you about the challenges ahead. There are three 
major projects within the High Level Implementation Plan, which 
was revised early last year, and which is the blueprint for 
trust improvement. There are 11 projects, one's been completed, 
there are 11 total projects in that, plus 4 breach projects 
which need to be finished pursuant to a court order.
    In my opinion, there are three, though, TAAMS, which I 
mentioned already, BIA data cleanup, which is closely related, 
you have to have clean data to make a good system work, and 
probate reduction, which is a very important ingredient also 
for having good data and properly accounting to Indian 
beneficiaries. In my opinion, strong management is critical for 
this whole plan. And that's what more of is needed.

                               NESSI MEMO

    You alluded to a letter released recently from the BIA's 
Chief Information Officer, Dom Nessi, who had written a 
confidential note to me in late February, outlining some 
fundamental concerns that he had with the high level 
implementation plan, along with issues he had with management 
of what we call HLIP, plus the difficulties of TAAMS and the 
BIA data cleanup project, specifically. Dom's been a project 
manager for TAAMS and BIA data cleanup since the inception of 
those projects. In recent months, after becoming the Chief 
Information Officer for BIA, Dom gave way to another project 
manager who now reports to him.

    [``Correction: Mr. Nessi has not been the project manager 
since the inception of these programs. He became the project 
manager in November 1998.'']

    As a Special Trustee overseeing trust reform or trust 
improvement within the Interior Department, I agree with some 
of Dom's points in his letter. But on some I disagree. Dom's 
letter wasn't news. It wasn't news to me. I had already 
reviewed issues related to Dom's letter on several occasions 
with Secretary Norton and certain other senior members of the 
Department.
    In fact, in the last three quarterly reports, which are the 
three that have been issued on my watch as Special Trustee, I 
referenced some of these problems. The Department is 
considering what actions should be taken. I think in the last 
three months we have reached a fairly critical area in some of 
these projects, namely the three that I mentioned. I will also 
of course discuss alternatives on several occasions with the 
Secretary.
    I do believe strong management of certain projects has been 
lacking, particularly with respect to planning, staffing, 
budget management, the lack of systems development experience 
and progress measurement. Accountability, quite candidly, is 
also lacking at times as well.
    I said in my confirmation hearing that good management was 
the key to the Department's obtainment of its goal for trust 
reform. And having had time to observe all the projects under 
HLIP, my reading at this point is that the Department needs to 
provide better management in certain of those projects. I must 
note, however, in all fairness and candor, that I don't want to 
leave you with the impression that this is a negative picture. 
Substantial progress has been made on all of the other 
projects, even within the projects that I mentioned.
    I believe that the BIA has a significant challenge which 
will test its leadership to accept new and improved procedures 
and systems if trust reform is to be completed satisfactorily. 
I also want you to know that I take seriously my responsibility 
for ensuring that funding is spent properly and that sufficient 
work is done and staffing plans are developed properly prior to 
the release of funds to any of the projects. In some cases, 
I've held funds until the following year, so that project work 
plans can be properly addressed prior to funding.
    You should also know, finally, that just the other day, in 
fact, just yesterday, I learned from the BIA of a range of 
security issues related to trust operations, including security 
provisions for operations at the Office of Information 
Resources Management in Reston. So we've got another issue that 
we need to deal with in the Department, which will potentially 
impact our funding needs as well.

                           COBELL LITIGATION

    Let me just close on a final note. We have a substantial 
amount of litigation going on in the background, or maybe 
sometimes in the foreground, of this whole trust improvement 
project, known now as the Cobell v. Norton litigation. The time 
spent on responses required for Cobell litigation, which I've 
noted in the quarterly report on the last two occasions to the 
court, adversely impacts the time and energies of the BIA and 
OST managers who are all the principal directors of trust 
reform.
    Last summer, after I was confirmed and sworn in, I began 
negotiations with the plaintiff's attorneys to try to at least 
settle trial one, which is reform of the system. We got to the 
point where we had pretty solid, I thought, a pretty solid list 
of agreed-upon principles. That whole process broke down during 
the drafting of the consent decree, which of course the court 
would eventually have to approve.
    My hope is that those can be restarted. I think this thing 
has to be negotiated to a conclusion in all aspects, and I know 
that the Secretary feels the same way. So in conclusion, I 
would just say, there's a great deal to be done. This by no 
means is a negative story, but it's got issues that we need to 
deal with, the Department needs to deal with. I do want to 
thank this Committee. I want to thank its former Chairman, who 
I hoped to see this morning, and the staff for the support and 
assistance provided to the Department in this critical 
endeavor.
    Thank you, Mr. Chairman.
    [The written statement of Mr. Slonaker follows:]
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    Mr. Skeen. Very good report.
    Any questions? Ms. Blackwell.

              Opening Statement--Bureau of Indian Affairs

    Ms. Blackwell. Good morning, Mr. Chairman and members of 
the Committee. Thank you for this opportunity to appear here 
today for the first time to discuss the Bureau of Indian 
Affairs' work on the reform of the Indian trust management, and 
to confirm the BIA's commitment to correct where needed and to 
strengthen throughout the administrative processes for 
fulfillment of this Nation's trust responsibility to Indian 
Tribes, Indian individuals and Alaska natives.
    Mr. Chairman, due to the support and guidance of this 
Committee and its staff, and with the interest of Congress, the 
BIA and other agencies in the Department of the Interior have 
been able to address decades-old policies and procedures and to 
make meaningful changes in our administrative management of 
Indian lands, resources and fiscal accounts. Last October, the 
Bureau celebrated its 175th anniversary. That occasion caused 
us to look at the history of the BIA's unique role in Federal 
Indian policy. That history contains some dark chapters of 
neglect in formulating uniform and consistent management 
practices of trust lands and revenues, and in accounting to 
Indian resource holders.
    Suffice it to say that the legacy left by the failed 
allotment policy of the 1800s was long in creation, and will 
take not only careful planning and strong leadership by all 
senior members of all agencies in the Department of the 
Interior, but also will take strong partnerships between all 
branches of the Federal Government to correct. It will also 
take time to gain the confidence of the Indians which we serve.

                          TRUST REFORM EFFORTS

    The trust reform touches literally every aspect of the work 
that we do in Indian affairs. While we have made substantial 
progress in a number of areas, we readily acknowledge that 
there remains much yet to be done.
    The $32 million increase that the Bureau of Indian Affairs 
received for trust work in fiscal year 2001 has been 
distributed to the 12 Regional Offices and on to the 87 field 
installations in Indian Country to carry out the day to day 
administration of trust and restricted lands. The surface 
leasing program for this generates over $100 million annually 
to Indian owners. The distribution of the trust money to the 
regions was based on factors such as caseload, number of trust 
and restricted tracts, and number of fractionated owners. It 
was designed, Mr. Chairman, to ensure that the funds were 
placed in programs with the greatest need to support the 
Department's trust reform initiative.
    The funds are being used to hire much needed additional 
staff in the areas of real estate services, appraisals, and 
land title records. The goals are not complex, very simple, but 
they are long overdue to ensure that Indian leases are timely 
processed by professional real estate personnel, that rental 
valuations are prepared by qualified and certified appraisers, 
that ownership records are up to date and accurate, and that 
rentals and other compensation is correctly computed and timely 
paid.

                               APPRAISALS

    With the utilization of the fiscal year 2000 monies for 
trust reform, 1,500 backlogged appraisals in one region alone 
were made to permit a stagnated leasing process to be completed 
for that reservation. A BIA technical appraisal board was 
instituted to oversee the appraising process for consistency 
and to set standards that match contemporary practices in the 
private real estate sector.
    We are analyzing the realignment of the appraisal function 
nationwide under the BIA Director of Trust Responsibilities, 
and we will report to you on that aspect of trust reform as it 
proceeds.

                                PROBATE

    As Mr. Slonaker mentioned, the BIA regulations on 
agricultural leasing, grazing, the management of Individual 
Indian Monies accounts have been analyzed, revised, and final 
regulations were published on January 22, 2001. Additionally, 
new regulations were published which expands the BIA probate 
program to permit some redistributions to be made in-house for 
the first time in many, many years by BIA attorneys, with the 
assistance of probate specialists in the field where the Indian 
owners are located.
    The Department's responsibility for probating the estates 
of deceased Indians who own trust lands results from statutes 
that are almost 100 years old. Primary responsibility for this 
duty falls on the Administrative Law Judges in the Indian 
Probate Division of Interior's Office of Hearings and Appeals. 
We lovingly refer to that as OHA.
    The expanded BIA probate program will for the first time 
permit us to address those estates that have no factual 
disputes and can be summarily determined without the need of a 
formal hearing and the timeframes within the existing 
regulation before an OHA judge. The BIA has worked closely with 
the Office of Hearings and Appeals to coordinate this very 
careful work.
    More than 200 probate staff members of both agencies 
attended training this winter on the existing OHA regulations, 
the coordination of duties and administrative procedures to be 
worked out under the new regulations. Both agencies are engaged 
in developing a shared system for tracking probate proceedings 
nationwide.
    We will monitor the effect of the new probate regulations 
carefully. We are prepared to engage in further rulemaking if 
necessary to ensure the success of the streamlined probate 
program. A joint management team is developing a concept for 
the design of the probate module for TAAMS that will permit 
timely recording of title information. We anticipate that the 
probate design requirements will be completed in June.

                                 YOUPEE

    As you are aware, in 1997, the Supreme Court found the 
escheat provisions of the Indian Land Consolidation Act 
unconstitutional in Youpee v. Babbitt. The effect of this 
decision is that BIA, OHA and the Special Trustee's Office of 
Trust Funds Management must redistribute 178,000 fractionated 
escheated interests from the Tribes to individual land owners. 
In August, 2000, the BIA completed a pilot project at the 
Pawnee Agency in Oklahoma to monitor the time and cost of that 
agency's Youpee workload. It amounted to revision of 
approximately 400 title records. We are examining that data and 
have targeted July 2001 to complete development of a nationwide 
plan to implement BIA's work to redistribute the Youpee title 
interests.

                           TAAMS--LAND TITLES

    On December 29th, in fact, year 2000, the ownership or land 
titles module of TAAMS was deployed in four of the BIA twelve 
regions. New ownership information obtained at the completion 
of the probate process or resulting from conveyance in those 
regions is recorded in TAAMS and is utilized for the realty 
programs. Deployment of the land titles module and a second 
tier of Regional Offices is proceeding as we engage contractors 
and BIA staff to review the existing title records for 
accuracy, and then encoding into the system.
    We have learned that statutory authorities that govern 
Indian land titles is tribal specific in many instances, and 
thus requires a unique approach from region to region. This is 
very careful work. But we are committed to doing it right the 
first time.

                             TAAMS--LEASING

    In January 2001, a team of experienced and skilled BIA 
staff representing the major BIA disciplines in leasing 
functions, forestry, minerals, range, rights of way and 
commercial leasing, was assembled and sent to Dallas to 
complete the design of the leasing module of TAAMS. They are 
working alongside the software contractor to ensure that this 
important and crucial feature of TAAMS reflects the best 
practices and regulatory requirements. Our deadline for 
completion of this stage in the development of TAAMS is May 31, 
2001.
    This effort also includes an analysis of the data stored in 
the legacy system at the pilot site in Billings, Montana, and 
conversion of that data to the TAAMS system. Due to the 
extraordinary efforts of these dedicated employees, we are on 
schedule and plan to begin the system design testing within 
weeks.

                             BIA PERSONNEL

    Mr. Chairman and members of the Committee, it is with great 
pleasure that I introduce to you today Bruce Maytubby, who was 
selected because of his extraordinary experience, and most 
importantly, because of the respect of his peers in the field, 
24 years of Federal service with the BIA at both the agency, 
regional and central office level in Indian trust management. 
Mr. Maytubby is with us from Dallas today, someplace back 
there.
    Mr. Skeen. Welcome.
    Ms. Blackwell. Given the magnitude of the tasks completed 
and the magnitude of those to be accomplished, it's not 
surprising that managers become frustrated from time to time. I 
will confess to that occasional indulgence as well. However, I 
am confident that when completed, TAAMS will be a comprehensive 
user designed and thus a user friendly system for checking and 
recording the trust management activities for the Department of 
the Interior.

                                 TAAMS

    When fully implemented, TAAMS will interface with the TFAS 
system utilized by the Special Trustee's Office of Trust Funds 
Management. Senior officials from both agencies are engaged on 
the development of a draft Memorandum of Understanding and an 
accompanying handbook that identifies the respective 
responsibilities and duties of the two separate agencies and 
their day to day interactions. We intend an aggressive 
interagency training program to ensure that communication lines 
between TFAS and TAAMS, between BIA and OTFM are clear and the 
working relationship between the agencies is productive.

                             MMS INTERFACE

    The same effort is underway with Minerals Management 
Service. MMS is proposing as a part of its reengineering 
project under the HLIP to make a system change in October 2001 
that will affect data input into TAAMS. We have begun to meet 
with management staff. In fact, the BIA design team technical 
staff met with the MMS technical team on February 27 of this 
year to discuss the MMS system to ensure that the MMS changes 
will interface with TAAMS and there will be no hindrance or 
dilemma with the operational system.

                     TRUST POLICIES AND PROCEDURES

    Responsibility for the overhaul of the Department's trust 
policies and procedures was transferred to the BIA's 
responsibility in August, 1999. The January 2001 publication of 
the four sets of final regulations was the result of the work 
of BIA teams of managers in the respective areas of reform. 
After extensive regional consultation sessions with Indian 
tribal representatives, scoping work on revised regulations 
that address contemporary commercial leasing practices and 
mineral leasing has begun.

                              IIM ACCOUNTS

    Additionally, comments received on the proposed regulations 
for the administration of adult Individual Indian Monies 
accounts prompted us to withhold finalizing those provisions. 
We will engage in further consultation during this year. We 
will re-propose those provisions based upon our further study.

                        REGULATIONS AND TRAINING

    Internal guidance for the administration of the duties 
under the new regs and training is being outlined. This week, 
all BIA social workers will hold their first training for their 
responsibilities under the new regs and the development of an 
operational handbook.
    The managers for the trust policies and procedures have 
developed a comprehensive schedule for examination of the 
regulations and procedures of other agencies outside BIA. 
Minerals Management Service notably is one, as is the Bureau of 
Land Management, to name only two of the Departmental agencies 
that have trust reform work within their jurisdiction.
    The project managers are also examining existing Federal 
laws to suggest statutory revisions where needed to effect a 
more efficient delivery of trust services. Some of these 
statutes are over 100 years old, and it is time that we looked 
at the intent and the purpose, and make those recommendations 
to you.

                   INDIAN LAND CONSOLIDATION PROGRAM

    The recent amendments to the Indian Land Consolidation Act 
provide a good statutory solution for more effective 
administration of the multiplicity of fractionated heirship 
interests created by the Dawes Act of 1887. Support from this 
Committee in funding the third year of the Indian Land 
Consolidation pilot has permitted us to continue the effort to 
halt the geometric progression in the number of owners and to 
reverse the harsh effects of the allotment era.
    To date, over 29,000 ownership interests have been sold at 
market value and 310 IIM accounts at the pilot agency have been 
closed. We will continue the project in the Midwest Region 
reservations.

                              BIA STAFFING

    Finally, the Department has undertaken not only the 
responsibility for institutionalizing trust reform but to take 
actions to ensure that old problems do not re-occur. We are in 
the process of analyzing the staffing requirements for all 
aspects of delivery of trust services, including the needs of 
the Tribes who contract for the management of trust programs. 
These trust related services include enforcing the terms of 
leases and taking actions against trespassers, monitoring 
timber sales, mineral exploration and development, oversight of 
supervised trust accounts by BIA social workers and the 
maintenance of trust records. The work is comprehensive and 
cannot be accomplished without your continued interest.
    We have made important and meaningful progress in reforming 
the Department's operations of trust programs. With equal 
confidence, I advise you that there remains much, much to be 
done to increase our efficiency and to gain the confidence of 
the Indian landowners.
    Thank you again for this opportunity to address you. I'd be 
pleased to respond to any questions that you may have.
    [The written statement of Ms. Blackwell follows:]
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    Mr. Skeen. We really appreciate your excellent run-down.
    I have to confess to you that I used to be a person with 
the BIA, right out of college, an engineer at Zuni. We didn't 
lose the water, we kept the dam going. But I was sure glad to 
hear that you've got a great program and will make this thing 
work. I appreciate the effort that all of you are making.
    Ms. Blackwell. Mr. Chairman, we have a job for you after 
this one. [Laughter.]
    Mr. Skeen. Same job as when I was there. [Laughter.]
    I really appreciate what you're doing. You're still dealing 
with some of the problems we had even in those days. It's been 
slow, with a few train wrecks in between time.
    Mr. Hinchey.
    Mr. Hinchey. Mr. Chairman, thank you.
    The problems we're discussing here predate even your tenure 
at the BIA.
    Mr. Skeen. I'll tell you this, if you've got a job to be 
done, get a woman to do it, they usually do it very well. But 
we men get the last word, and it's yes, ma'am.
    Ms. Blackwell. Thank you, sir.

                              IIM ACCOUNTS

    Mr. Hinchey. This is a problem of long duration. I can 
recall the previous Administration, having the Secretary here 
talking about this issue, and him saying that the management 
aspects of this problem would be settled on his watch. I know 
he meant that, and we knew he meant it when he said it. But it 
hasn't been done. We still haven't achieved that aspect of 
dealing with the problem. So we're still on the threshold, it 
seems to me, of where we need to be.
    I'd just like to explore with you if I may some of the 
issues that were raised by some of the people who were quoted 
in the Washington Post story of this past Saturday. Paul Homan, 
who was your predecessor, Mr. Slonaker, is telling us that the 
Government cannot find at least 50,000 of some 300,000 Native 
Americans who have trust accounts. Is that true?
    Mr. Slonaker. No. I think that is actually a reference to 
the fact that we have a group of people for whom we have 
accounts but we don't have addresses. That is being pursued and 
that number has been, I don't know just where the number is 
currently, does anybody know where the number is currently? But 
that number has been reduced. That's an ongoing project.
    [The information follows:]

    Approximately 65,000 accounts (27% of the Individual Indian 
Monies accounts) are for account holders whose whereabouts is 
unknown and for whom OST has no current address.

    Mr. Skeen. It's a tough assignment.
    Mr. Slonaker. It is a tough assignment. We've got some 
pretty sophisticated contractors working on it.
    Mr. Hinchey. People move about, and it's very difficult to 
locate them. That's true of anyone in this society.
    Mr. Slonaker. That's true. But it's a serious problem, 
nevertheless.

                              BIA CULTURE

    Mr. Hinchey. Is there a culture in the BIA, or are there 
aspects of the culture in the BIA that mitigate against 
resolution of this problem?
    Mr. Slonaker. Is that addressed to me, sir?
    Mr. Hinchey. Well, it's addressed to both of you.
    Mr. Skeen. There's a land mine or two in there. [Laughter.]
    Mr. Hinchey. At least one or two, yes.
    Ms. Blackwell. I would say that there is a definite culture 
in the BIA. The BIA is for the most part now, in contemporary 
times, staffed by Indian people. Many of the BIA staff members 
have an interest in seeing this project through to completion 
and to successful completion. Each of us have in our past the 
horror stories that you no doubt are aware of, dating back 100 
years. I think this BIA today is committed to being of 
assistance in righting some of those problems. That would be my 
assessment.
    No, I would not, I am not prepared to say that the culture 
of the BIA is against trust reform.
    Mr. Slonaker. May I put some perspective on that?
    Mr. Skeen. You certainly may. Go ahead.

                          REGIONAL ACTIVITIES

    Mr. Slonaker. I think that you need to add to the 
perspective that you've had what are now 12 regions, and you 
have 87 Agency Offices. All have a tendency over the years, 
many, many years, as you know, to do things in a way of their 
own. Even though they all may be doing leasing activities, for 
example, they do it in a different fashion.
    Mr. Hinchey. It was a kind of a feudal system, wasn't it? 
You had people acting in accordance with their own sort of 
lights in a particular context. And because of the variations 
in the way that it was being done, some of it was being done 
correctly, and a lot of it was being done improperly.

                             PRIVATE SECTOR

    Mr. Slonaker. There's some truth to that, I think. Let me 
give you this perspective. In my private sector career, I had 
responsibility for bringing together a whole group of private 
banks into one banking system. They had the very same problem. 
There was a certain feudalism, there was a certain desire to do 
things their way, and by God, they weren't going to give way to 
any central authority.
    With good management, that can be overcome. And it needs to 
be overcome, for the sake of the beneficiaries. Because as I 
mentioned before, you need to have a strong central system of 
delivery and you need to have a strong central service process.

                                 TAAMS

    Ms. Blackwell. May I add a note, too? I think that the 
TAAMS program, the TAAMS system is going to give us that kind 
of system, that modern system that will create lines of 
communication.
    Mr. Hinchey. How long will it be before we have that 
system?
    Ms. Blackwell. We are proceeding, as I said before, we're 
proceeding to, through the leasing module. We will be 
integrating the probate module, I think our long term plan is, 
I think the completion of this is scheduled for three more 
years. Is that correct? I can----
    Mr. Hinchey. The completion of the TAAMS system is 
scheduled for three more years?
    Ms. Blackwell. Of all the modules completed and the testing 
and deployment and implementation. I guess I would like to 
emphasize that this design is being done by the users, so that 
it will be what we hope to be user friendly.

                             TAAMS PROGRESS

    Mr. Hinchey. But we have people who have been working with 
the system who are saying that it's not working, and the 
situation isn't getting better. The Nessi memo, for example, 
says the electronic Trust Assets Accounting Management System 
is a bust, that the Government doesn't know with reliability 
how much money has come in or gone out on behalf of Native 
Americans. Is that right?
    Mr. Slonaker. I don't think that's accurate. I think Dom 
Nessi has made significant progress with the TAAMS system. I 
think the TAAMS system, its heart and its software looks pretty 
good. I candidly think this is, I hate to be repetitive, I 
candidly think this is a management problem to get the job 
done. This is not really rocket science. But what really needs 
to be done is that people need to get some good planning 
involved and get the project really soundly based, and they 
need to get--Bruce was introduced, but Bruce Maytubby has 
another job. So at some point, Bruce needs to go back to that 
job. We need a sustainability in this project.
    So as I say, it comes down to management concerns.
    Mr. Hinchey. Well, that's the way it seems to me. It seems 
to me exactly what you just said. It's not rocket science. So 
this ought to be done. It ought to be done in a fixed period of 
time. It's an understandable problem. It's finite. You can get 
your hands on it. You ought to be able to determine what is 
needed, apply those resources and accomplish the objective.

                         PSYCHOLOGICAL CLIMATE

    Nevertheless, that doesn't seem to have happened. And there 
are people making allegations as late as just the other day 
that it still isn't happening. This causes me to believe that 
there's a psychological problem that's impeding the operation 
of the managerial assets that you're attempting to employ. And 
if that's the problem, then it's much deeper and much more 
difficult to resolve. And that would seem to be the case.
    And that's what I'm asking both of you to respond to, help 
us identify those psychological problems, the aspects of the 
culture that put roadblocks in the way here. Who's responsible 
for those? Why are they doing it, and what do we need to do to 
overcome them to get this job done?
    Mr. Slonaker. I would disagree to some degree with you that 
there are psychological roadblocks. I think there are cultural 
roadblocks, as you alluded to just a little while ago. But I 
think candidly, this is a question of bringing the management 
resources to bear and getting people with real systems 
implementation experience involved long term with this 
particular project, I'm talking about TAAMS in particular. I 
don't want to lead you to believe that this is true of every 
project in the High Level Implementation Plan, because it 
isn't.
    Mr. Hinchey. I don't know how much time I have, Mr. 
Chairman, maybe it's up already?
    Mr. Skeen. You're doing great. [Laughter.]

                               RESOURCES

    Mr. Hinchey. This is an oversight hearing and not 
specifically a budget hearing, because we don't have the 
President's budget yet. But the question is going to arise, if 
not this morning then later on in the context of the budget 
hearings, as to whether or not you have enough resources to 
carry this out.
    I think that the Chairman and all of us on this Committee 
want to see this job done. We don't want to be back here at the 
end of this Administration three years from now complaining 
that it still isn't fixed when we know that it can be fixed, 
and you know that it can be fixed, and you've identified the 
way to fix it.

                          ACCOUNTING OF FUNDS

    Mr. Nessi's memo is still alarming in other ways. You 
disagree with him in the sense that we don't know how much 
money has come in or gone out on behalf of Native Americans. 
You think that we can identify how much has come in and gone 
out?
    Mr. Slonaker. In terms of money, no, we can't do a full 
accounting.
    Mr. Hinchey. You can't do a full accounting?
    Mr. Slonaker. No. There's no way. You know the condition--
--
    Mr. Hinchey. How close can we come?
    Mr. Slonaker. You know the condition of the records for 
many, many years, so you cannot fully account, in my opinion.
    Mr. Hinchey. How close can we come?
    Mr. Slonaker. Well, the best evidence we have is to go back 
to Arthur Andersen's study that was done on tribal accounts a 
few years back. They identified, I think it was about 84 
percent, they documented 84 percent of the dollar transactions, 
this was for tribal now, and about 15 percent they could 
identify the transaction occurred but they couldn't identify 
the documentation.
    Whether that's applicable to Individual Indian Monies 
accounts or not is a key question. And that's what a sampling 
project could help us understand if we can get it done for a 
reasonable amount of money and time. But I don't think there's 
a real good answer to your question.

                           PROSPECTIVE RELIEF

    Mr. Hinchey. It would appear as if that's the case. I'm 
told that the Arthur Andersen analysis that was given to this 
Committee speculated that over $400 million would be required 
to resolve this issue, and in the end that would fail, because 
all the data just isn't available.
    Mr. Slonaker. That's right.

    [``Clarification: In 1996, Arthur Andersen estimated a cost 
of reconciliation of the IIM accounts. At the time, Arthur 
Andersen estimated that between $108 million and $281 million 
would be needed to complete a 20-year review of account data. 
Information collected since these estimates indicates that this 
cost could be well in excess of $300 million.'']

    Mr. Hinchey. We don't have all the data?
    Mr. Slonaker. I think that's right.
    Mr. Hinchey. But you can do it prospectively?
    Mr. Slonaker. I'm sorry?
    Mr. Hinchey. You can do it prospectively. Even if you can't 
identify all the lost resources, and all the people who have 
been hurt, all the people who have been in essence cheated out 
of the money that they ought to have gotten, even if you can't 
do any of that, you can take it from here forward?
    Mr. Slonaker. Oh, absolutely. You can fix the system, yes, 
indeed.
    Mr. Hinchey. And you can make sure that the system treats 
people fairly from here on in?
    Mr. Slonaker. That's right. And actually, for the last 
several years I think it's probably fair to say that. It's 
going back into the deep history.

                            HLIP DEVELOPMENT

    Mr. Hinchey. So returning to Mr. Nessi's memo, he says that 
instead, that no in-depth analysis was performed and before the 
plan was put in place, he wrote, instead posturing for the 
court and between Department of Interior organizations seemed 
to be the primary influence on objectives. Is that too harsh?
    Mr. Slonaker. I believe it is.
    Mr. Hinchey. Was there a lot of that going on?
    Mr. Slonaker. Well, I wasn't there, sir. But based on what 
I've been able to observe, you know, Sharon and I are newcomers 
to this game.
    Mr. Hinchey. I know that.
    Mr. Slonaker. But from what I've been able to observe, I 
think certainly now the HLIP plan is a pretty good blueprint. 
Is it perfect? No plan's perfect. It's gone through one 
revision already. Was the planning bad two or three years ago 
for some of these key projects at least? It probably wasn't 
what it should be. But I think the plan going forward from 
here, if it's properly executed and managed, has a very high 
degree of success rate.

                               NESSI MEMO

    Mr. Hinchey. And you have, I would assume, gone back and 
had discussions, or are about to, or are contemplating 
discussing the allegations that are made in the Nessi memo with 
the people who were responsible for carrying this out prior to 
your arrival on the scene here? I know that, Ms. Blackwell, 
you've been here for just, I don't know how long, but a matter 
of weeks, I'd assume.
    Ms. Blackwell. It's about ten months.
    Mr. Hinchey. So a relatively short period of time. Have you 
had an opportunity to go back and discuss with the people who 
may have been impediments to progress within the organization, 
and tried to analyze what's going on and develop a way to 
overcome those attitudes?
    Ms. Blackwell. Yes. In fact, that is ongoing for us. As I 
mentioned before, this is such a comprehensive project, the 
plan is aggressive and ambitious. And each day as we move to 
another portion of the plan, we find that we're engaging other 
people within the Department of the Interior, agencies that 
prior to this time, for instance, had not been much aware of 
their trust responsibility for Indians, for the careful 
management of Indian resources. It does involve constant, 
constant management decisions and we need, we have a Trust 
Management Improvement Council that meets biweekly. I would 
suggest that Tom Slonaker and I are trying to meet on the off 
weeks to work through the issues.
    Also encouraging OTFM and BIA employees in the field to 
work together to identify issues and where policy decisions 
need to be made, to send those to Washington so we can get them 
decided and we can move on.
    Mr. Hinchey. Thank you very much.

                                  HLIP

    Mr. Skeen. Well, the recent press article describing a 
senior BIA official's criticism of the Department's plan for 
trust reform alluded to a lack of analysis behind the 
Department's High Level Implementation Plan, known as HLIP. 
Didn't you testify that in fact, much time and analysis has 
been put into HLIP? And can you describe for the Committee the 
analysis and funding efforts that went into HLIP?
    Mr. Slonaker. I can't really, I wasn't there when it was 
put together. So I can tell you that from what I've been able 
to discover, as I said a minute ago, the plan had some 
weaknesses in its early stages. But it was revised last year. 
The revisions to the TAAMS and in fact, the original authoring 
of the TAAMS part and the data cleanup were largely drafted by, 
so I'm told, by Mr. Nessi. And some alterations have had to be 
made to all of those projects.

    [``Correction: Mr. Nessi became the TAAMS project manager 
in November 1998. He had no role in writing the original HLIP 
dated July 1998.'']

    But there is an HLIP plan in place right now, revised early 
last year, that I think is a reasonably good blueprint. It's a 
good blueprint and it doesn't deserve to be substantially 
overhauled.
    Mr. Skeen. Thank you.
    Mr. Kingston.

                                PROBATE

    Mr. Kingston. Thank you, Mr. Chairman.
    Ms. Blackwell testified that there were 15,000 estates that 
were backlogged in probate. You had said that there were, on 
the conversion of the historical data, you're still working on 
that. You also mentioned that you had some contract assistance.
    In the context of some of this, Mr. Slonaker, coming from 
the private sector, I think as I hear this on one hand, it's 
like getting the IRS to change their computer system where you 
just can't. It almost seems to be whole. We keep spending money 
and never getting anywhere. I was on the committee when we were 
going through this, Treasury Post Office Committee. And I think 
about that.
    But I also think about when the Pentagon went after Y2K 
compliance and actually had deadlines and had accountability 
and subdivisions. It almost seems to me that you're somewhere 
in between. You have a blueprint, but it's not filled with 
deadlines in this contracting out assistance on the 15,000 
estates. That seems to me something that possibly could be 
contracted out with a beginning or an end to it. I'm not 
certain on that, but just wanted you to respond to it.
    Ms. Blackwell. I believe I mentioned 1,500 appraisals that 
are in preparation, are necessary before the leasing. But I 
would like to address the plan that you mentioned.
    Mr. Kingston. I think it's 15,000 estates. I'm just looking 
at page four.
    Ms. Blackwell. Let me address that, and I'll check the 
number.

    [Clerk's note.--Mr. Kingston was referring to the number of 
estates on the issue of probate cited on page 4 of the written 
testimony submitted by M. Sharon Blackwell, Deputy Commissioner 
of Indian Affairs. The Deputy Commissioner was referring to the 
number of backlog appraisals cleared. The High Level 
Implementation Plan's Probate Sub Project is addressing the 
backlogs, including the use of contracted services.]

    Mr. Kingston. The only reason why that caught my eye is 
because it would appear to me that that, some of those 15,000 
you know, possibly could be divided out and contracted.
    Ms. Blackwell. Yes. And that's exactly the plan that we're 
engaged in. The probate process as outlined in my written 
testimony is relatively complicated. There are backlogs in 
preparing the probate packages at the agencies. And there is a 
backlog of actually posting the results of the probate, once 
the estates have been completed. That is being done by contract 
work.
    What we hope to, we don't want the backlogs to occur. So we 
have put our new probate program in place so that they can 
start taking people as they come in the door. That is outlined 
more carefully in the HLIP. I'd be happy to get that for you if 
you'd like.
    Mr. Kingston. Yes, because I think as Mr. Hinchey said, you 
have a two-pronged attack. One is from this day forward, making 
sure you don't get backlogged, the other one is actually 
dealing with the backlog. In that backlog, though, you're using 
contract or whatever outsourcing tools you need to.
    Ms. Blackwell. Yes.

                            PROBATE STAFFING

    Mr. Kingston. The only reason why I mention that is we see 
so frequently in bureaucracies, the Department of Agriculture, 
there's a farm disaster and they get assistance in there to 
help get the money to the farmers, and then they don't want to 
get rid of the employees either: they just build it as a new 
baseline to their budget. While it does appear that you've been 
underfunded on working with this problem, I think this 
Committee also wants to make sure that this just doesn't become 
the floor from a point forward.
    Ms. Blackwell. I believe that our backlogs are being 
addressed to meet your concern. And I'll be happy to get that 
provision in the HLIP that describes the contract work that's 
being done on the backlogs in the probate area and other areas. 
We're mindful of that as well.

    [Attached is the Probate Backlog section of the revised 
High Level Implementation Plan, dated February 29, 2000. Pages 
42-43 specifically address the use of contracted services for 
the elimination of the probate backlog.]
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                              APPOINTMENTS

    Mr. Kingston. Are you two interim? I'm confused. Are you 
interim, now permanent or how did--you're a political 
appointment?
    Ms. Blackwell. No, I'm not a political appointee. I'm a 
career employee.
    Mr. Kingston. Okay. And you were appointed in May, but 
President Bush has kept you on, is that correct?
    Mr. Slonaker. Yes.
    Mr. Kingston. Okay. So are your teams in place? You've been 
here 10 months, you've been here since May.
    Mr. Slonaker. Yes, in my case.
    Mr. Kingston. Do you feel like you have your teams in place 
to do everything you need to do?
    Mr. Slonaker. I do.
    Mr. Kingston. Do you have other political appointees under 
you, or appointments that you make? Are you running or you 
still waiting to get----
    Mr. Slonaker. Speaking for my office, I'm running. But I 
have the good luck to have had, for example, a Principal Deputy 
who is Tom Thompson, sitting right behind you, who was actually 
the acting Special Trustee for over a year before I got here. 
So he's brought me up to speed pretty quickly. But the staff we 
have is in place, and pretty much so, and is effectively 
running.

                           CULTURAL BARRIERS

    Mr. Kingston. Coming from a trust department of a bank, 
when you had spoken earlier to Mr. Hinchey about the cultural 
barriers, what did you mean by that, that you would not have in 
the private sector?
    Mr. Slonaker. I think there is, I notice more of the 
resistance to change than I would have expected in similar 
circumstances in the private sector. But clearly, the private 
sector has that phenomenon too. So it's a matter of degree.
    It's the small location that does business, in this case 
for beneficiaries, that's been accustomed to doing that 
business in a certain way for a long time, and there's a 
resistance to a change in the process. There's a resistance to 
the change in having part of the work done off their ground by 
a central system. So those are not uncommon issues in the 
private sector, either.
    Mr. Kingston. I have to do a little preaching, Mr. 
Chairman. I read this article in one of the flight magazines a 
couple of months ago of a company that needed to go to a 
different kind of computer system. So he brought all his 
employees in and said, we are going to pretend like we're on a 
ship going to a destination. Our ship is actually sinking, but 
it's not going down quickly, but we have to start transferring 
everything to the other ship, and the other ship is going to be 
floating parallel next to us. That way it will be a very smooth 
transition.
    He was just patting himself on the back, what a great idea 
this is. By the time we get to England or wherever we're going, 
everything's going to be fine. They got to England and found 
out that in the private sector, everybody had an excuse not to 
transfer their luggage to the next ship, so to speak, because 
of the resistance to change. So he said, so I came up with 
another idea. I just shot our ship and sunk it, and said, you'd 
better get on the other ship or you're dead. [Laughter.]
    And found out, in that kind of a context, the resistance to 
change, the culture of the organization changed dramatically. 
And frankly, some of the people decided they were culturally 
unable to make the change. But those that did move over, it was 
a much stronger organization.
    I know you don't have that kind of power in a Government 
agency. But I thought it was a really interesting lesson as we 
deal with change in our society and in our Government, that you 
have to put some deadlines, you have to put some urgency in it, 
because if you don't, you never get there.

                               DEADLINES

    Do you have sub-deadlines all over the place?
    Mr. Slonaker. Yes.
    Ms. Blackwell. Yes. Yes, we do.
    Mr. Kingston. Do you feel that you're going to make those 
deadlines?
    Ms. Blackwell. For the most part, I think we've been very 
successful in meeting the deadlines. We are careful, and I am 
particularly concerned that we not become so engrossed on 
meeting a deadline that we hurry a system like TAAMS, as 
expensive and as important as it is. But we're meeting those 
deadlines. A little bit of slippage from time to time, but so 
far nothing major.
    Mr. Kingston. I think that would be one thing this 
Committee would be real interested in, is just seeing the 
deadlines met.
    Mr. Skeen. Let's pass the plate.
    Mr. Dicks.
    Mr. Dicks. First of all I want to welcome the witnesses, 
and I regret that I was unable to be here at the start. We have 
these conflicting hearings, but I am very concerned about this 
issue. I want to thank Mr. Hinchey for being here.

              COBELL LITIGATION--POTENTIAL FOR SETTLEMENT

    Looking at the large number of unreconciled accounts, and 
the poor quality of the documentation currently available, some 
sort of negotiated settlement seems to be in the best interest 
of the Indian Tribes and individuals with disputed accounts. 
Last year, this Committee again encouraged settlement efforts 
and we were told that things looked promising last fall.
    What happened to derail the settlement process and what are 
you doing now to get settlement talks back on track?
    Mr. Slonaker. Yes, we had settlement talks for probably 
four to five months. We had, as I said earlier, two pages of 
points on which there was I would say substantial agreement. 
The process then went to the drafting of the consent decree by 
the Justice Department. I think it's probably appropriate for 
me to say in this forum, Mr. Dicks, that the process at that 
point broke down.
    Having said that, I firmly believe there should be 
initiatives on both sides to resume those negotiations. I 
believe the Secretary feels the same way.
    Mr. Dicks. So you're not objecting to try to getting--can 
you tell us what basically was the problem in drafting of the 
consent decree? What was the issue that hung things up?
    Mr. Slonaker. I cannot, sir. I think you should ask the 
Department of Justice.
    Mr. Dicks. All right. They're not represented here?
    Mr. Slonaker. No, sir.

                         ACCOUNT RECONCILIATION

    Mr. Dicks. All right. Your staff indicated to the Committee 
that it took $20 million to reconcile the first five records 
covered by the Cobell litigation. Is this accurate? And if so, 
what does that say about continuing efforts to document the 
remaining individual Indian accounts?
    Mr. Slonaker. It took a little over $20 million, I believe 
was the number, for the 5 named plaintiffs plus their 
predecessors, a total group of, I think it was 36 individuals. 
What it says, sir, is that reconstructing these records is a 
very expensive process.
    Mr. Dicks. Expensive. Congress has tried to be very 
generous in funding the reform project, including approval of a 
$27 million emergency appropriation which we included in the 
fiscal year 2001 conference agreement. Do you agree that 
adequate levels of appropriations are not the problem?
    Mr. Slonaker. I agree they are not the problem.

                            MANAGEMENT NEEDS

    Mr. Dicks. What is the problem, then, just the difficulty 
of the task?
    Mr. Slonaker. Management.
    Mr. Dicks. I understand you took up this story that was in 
the Washington Post about the trust reform is slowing but 
surely imploding. If this isn't true, I understand you 
testified that that is not accurate, is that correct?
    Mr. Slonaker. I agree with some of the things in that 
article, well, specifically Mr. Nessi's letter, which that 
article is alluding to, and I don't agree with some other 
things. It was not news to me. It was not news to the 
Department, I don't think.
    Mr. Dicks. And your argument is that management is required 
to fix this problem?
    Mr. Slonaker. More management resources. Funding is not the 
issue.
    Mr. Dicks. So it's people?
    Mr. Slonaker. Yes, sir.
    Mr. Dicks. But sometimes you have to pay for people, too, 
don't you? Do you have the billets? Have they given you all the 
billets you need, you just can't fill them? Is that the 
problem?
    Mr. Slonaker. I believe they've got the billets.

                            SUCCESS OF TAAMS

    Mr. Dicks. What about the computer system, this TAAMS 
system, is it broken? We've had more failed computer systems 
before this Committee than maybe any in Congress, except for 
the Defense Department. Is this going to work? Is it failed or 
not failed?
    Mr. Slonaker. There's absolutely no reason why TAAMS can't 
work. TAAMS has good software. TAAMS simply needs to get 
implemented. We need to get the project done.
    Mr. Dicks. How long is that going to take?
    Mr. Slonaker. What was your estimate before, Sharon?
    Ms. Blackwell. My estimate is that we are still in the 
design stage with some of the modules. I believe my estimate, 
certainly that we've reported in the HLIP, runs through 2005. 
That includes----
    Mr. Dicks. To 2005 in order to get the computer system, the 
management system in place? Four fiscal years? We're in 2001 
now?
    Ms. Blackwell. To 2005, including data cleanup. Sir, what 
we've found is that over the years, there have been stand alone 
systems that have been developed in some of the regions. This 
requires us to look at data, clean it and convert it. That is, 
again, our intent is to put good stuff into TAAMS. That is 
taking, in addition to that, in addition to the cleanup, we are 
also anticipating that the testing, we are wedded to the idea 
to have the testing to be at the level so that we are comforted 
in turning it on in each of the regions.
    And as Mr. Slonaker suggests, that has taken longer, I 
believe, than the Special Trustee had anticipated. But I 
believe that it is a careful and prudent way. We have 
implementation in four of the regions. We have plans throughout 
the remainder of this year to implement the remaining eight 
regions, the title portion of TAAMS. And we are in the design 
stage----
    Mr. Dicks. This doesn't sound good to me. And I'm not an 
expert on this. But if it's going to take you four additional 
years before you have confidence in this system, and you've got 
these other systems that haven't been integrated, it sounds to 
me like you're going to have problems here, that this may not 
work.
    Mr. Slonaker. Could I----
    Mr. Dicks. There's no reason for Congress to be very 
confident in this operation thus far.
    Sir?

                             TAAMS SCHEDULE

    Mr. Slonaker. Let me clarify the dates a little bit. I 
believe the 2005 date is driven, as Sharon has just said, by 
data cleanup considerations. If we're talking about TAAMS, 
specifically, the system will be delivered, our expectation is, 
to Billings, which is really the Rocky Mountain Region, 
probably some time in the early part of June, at which point it 
will undergo user acceptance testing. The system at that point 
has every prospect of being close to becoming the system of 
record in that region.
    Now, this is a stretched out implementation, because the 
plan that the folks associated with the project have, including 
Dom Nessi and Chet Mills, who's the Project Manager, is to 
introduce this in 3 waves across the 12 districts.
    Mr. Dicks. Three waves?
    Mr. Slonaker. In three different sets of implementations.
    Ms. Blackwell. Tiers.
    Mr. Slonaker. And I think it gets to the third of those in 
2003, early 2003, May of 2003. But I want to leave you with one 
other thought. A major system like this never stops undergoing 
new versions----
    Mr. Dicks. You're right.
    Mr. Slonaker [continuing]. Revisions, more data cleanup, 
more refinement, more attributes. So I think the 2003 date is 
probably a more meaningful date for you. I suppose the other 
date that's meaningful is the early summer date that I 
mentioned in this year.
    Mr. Dicks. What will this give us, then? Will we know 
everything that's happened in the past and be able to track 
everything that's happening in the future? Or just everything 
in the future?
    Mr. Slonaker. Basically everything in the future. It's a 
prospective system. Basically what the TAAMS system will do is 
to record all the leasing information, do all the accounts 
receivable for that sort of thing, pass all the transactions on 
to the accounting system which has been up and running for over 
a year. So those two in effect will be coupled together.
    That will be the core of the systems of what I call this 
trust department.
    Mr. Dicks. Thank you, Mr. Chairman.

                           LITIGATION EFFECTS

    Mr. Skeen. Thank you. How is the litigation affecting your 
ability to finish this job?
    Mr. Slonaker. I think we might both swing at that one. 
[Laughter.]
    You know, my candid opinion is the litigation has probably 
sparked reform, pushed it some, through the Department. But the 
dark side of that is that the motions practice that's going on 
right now between the plaintiff's attorneys and the Justice 
Department is, and the activities of the Special Master, who of 
course is part of the court, all of those activities are taking 
a significant amount of time from the folks who really, in the 
BIA as well as even in my office, who are active in either 
monitoring or directing trust reform. So I'm worried about it. 
I'm very worried about it. I've spoken twice now in the last 
two quarterly reports of the court.
    I don't know what to do about it, other than to try to 
negotiate a settlement.
    Mr. Skeen. They give you a problem but they don't give you 
any way to handle it.
    Mr. Slonaker. That's right.
    Mr. Skeen. Typical Government operation. Mr. Hinchey.

                            FORMER EMPLOYEES

    Mr. Hinchey. Mr. Chairman, thank you. I just have a couple 
other questions that arise from the statements of BIA employees 
or former employees.
    Ms. Infield, for example, who is described as a senior 
computer specialist at the BIA, said the accomplishments of 
putting the new titles together really don't mean very much, 
because the title history data are incomplete. And that even if 
the TAAMS system is successful, when it's up and running, it 
will not be clear about who gets the money, because it still 
will not be clear about who owns the resources, who owns the 
land. If you don't know who owns the land, you don't know who 
gets the money.
    Mr. Slonaker. Mr. Maytubby may want to answer that 
question.
    Ms. Blackwell. I think Mr. Maytubby, who works hands-on on 
this, may be able to.
    Mr. Hinchey. Please. You've just been the designated 
hitter.
    Mr. Skeen. Strike one.
    Mr. Maytubby. Mr. Chairman, I'm a bit of a fish out of 
water up here.
    Mr. Skeen. We're a little low on water. [Laughter.]
    Mr. Maytubby. There's plenty outside. I'm a little 
perplexed by Ms. Infield's comments, because the title history 
component of the Bureau's programs is going to be incorporated 
into TAAMS. So that's a little bit confusing to me.
    Mr. Hinchey. So you will know who previously owned and who 
now owns the property?
    Mr. Maytubby. That's correct. We will know who owned, who 
the current ownership is, and we will have a historical record 
of the chain of title of those tracts of land.
    Mr. Hinchey. And that will be accomplished in accordance 
with the dates that were just discussed here a few moments ago?
    Mr. Maytubby. Yes, sir.

                                RECORDS

    Mr. Hinchey. The fact that the records are scattered among 
100 field offices, and in some cases allegedly have been 
destroyed is not going to be an impediment to your compiling 
that information?
    Mr. Maytubby. There's no question that it has been an 
impediment. I think what Ms. Blackwell has spoken to, the data 
cleanup effort, that is encompassed in that data cleanup 
effort. That is part and parcel of what the data cleanup effort 
is about. It's reconciling these documents that we have 
scattered around the country with the automated systems that we 
have, legacy systems that we have in place, and being able to 
put those, a combination, a clean record on TAAMS. That's the 
challenge.

                             TAAMS Location

    Mr. Hinchey. The TAAMS system is located in Billings? Is 
that what you said?
    Mr. Maytubby. The actual hardware of the system is located 
in Dallas, Texas.
    Mr. Hinchey. Dallas, Texas.
    Mr. Maytubby. Correct.
    Mr. Hinchey. So what you're in the process of doing is 
going through all these 100 field offices, is that the correct 
number?
    Mr. Slonaker. Eighty-six.
    Mr. Maytubby. Eighty-six field offices, and what we're 
engaged in is finalization of the software by May 31st or 
thereabouts, to deploy in the Rocky Mountain Region up in 
Montana. That will be our pilot site.
    Mr. Hinchey. Okay. Who's doing the software for you?
    Mr. Maytubby. Artesia Applied Terravision.
    Mr. Hinchey. And that will be ready on a pilot basis at 
some point in the spring?
    Mr. Maytubby. Yes, what we talked about, I believe Mr. 
Slonaker mentioned June of this year.
    Mr. Hinchey. Then that will be applied on a pilot basis in 
the Billings site?
    Mr. Maytubby. That's correct.
    Mr. Hinchey. So at the Billings site, you will have 
compiled all the information that is relevant to that 
jurisdiction?

                              Data Cleanup

    Mr. Maytubby. The data cleanup effort, as Ms. Blackwell 
said, we were really looking at a five-year effort with data 
cleanup. I think the issue is that as we bring these sites on, 
we're going to clean up as much of the records as we can, but 
we recognize that much of the cleanup can be accomplished more 
effectively when TAAMS is in place.
    So we'll clean up as much as we can prior to TAAMS coming 
on-line, and then we'll look at post-cleanup.
    Mr. Hinchey. You have physical pieces of paper which you 
are bringing into a central location to apply to the TAAMS 
computer operation, is that what it is?
    Mr. Maytubby. It's actually automated data.
    Mr. Hinchey. Okay. It's outdated automated data?
    Mr. Maytubby. It resides in different systems, different 
legacy systems as well as some paper data. But the actual 
encoding of the new information will reside out at those field 
locations.
    Mr. Hinchey. How many field locations, 86?
    Mr. Maytubby. Eighty-six across the Bureau, I believe.

                             TAAMS Location

    Mr. Hinchey. Will all the data be centralized in any way? 
Will there be a central location for it?
    Ms. Blackwell. It will be a part of the national system, 
the national electronic system that is TAAMS. We are seeking, 
our mission is to make uniform across the BIA the ownership 
records and all of the realty records, and will be accessed by 
realty personnel in the field locations as they engage in the 
conveyancing and other realty activities.
    Mr. Hinchey. So all of the data from all of the field 
offices will be accessible through Dallas?
    Ms. Blackwell. At some point, all of the information will 
be accessible from across the Nation and the hardware is 
located and the software producers are located now in Dallas. 
That decision may be left for another time.
    As it turns out, our contractor was in Dallas, Texas, and 
that's where our design people are temporarily living.
    Mr. Hinchey. Well, the questions I'm asking may seem a 
little bit obscure. What I'm trying to get at essentially is 
this. This is a problem that has been going on for a century or 
more. Part of the reason why that has been true is because you 
had a variety of ways of dealing with this problem, depending 
on who was in charge at what particular location. And very 
little oversight from Washington or for that matter, any place 
else.
    I'm just concerned, I'm interested to know if this is going 
to be a centralized system, if there's going to be proper 
oversight, if you will have a policy that will be uniform 
across the country, or if you will have arbitrary decisions 
continue to be made by individual people on the scene at 
specific sites, one of these 86 locations, that are going to be 
at variance from a central policy?

                     TAAMS--Centralized Procedures

    Ms. Blackwell. No, sir. The aim, the entire goal of this 
project is to make uniform the entry into the TAAMS system and 
to make it consistent across the country. Varying kinds of 
tracking systems have been developed at locations, sometimes 
because of the unique statutory requirements with regard to 
that system. And the conversion of that data is taking us some 
time.
    But at the end of the day, and that was my 2005 
recollection, at the end of the TAAMS day, we will be able, we 
hope, to access an Indian landowner, we'll be able to access 
information regarding his land holdings from a field location. 
That's our goal.
    Mr. Hinchey. That's your goal and you think you'll be able 
to accomplish it.
    Ms. Blackwell. I think so.

                          TAAMS--System Access

    Mr. Hinchey. Someone in Montana interested in land holdings 
that were in their family, say, in South Dakota, will be able 
to access that information, and know where it is, what 
condition it's in, what the resources are and what kind of 
revenues have been realized from those resources over a 
specific period of time?
    Ms. Blackwell. Yes. Someone from Montana will be able to 
access the interest that he or she holds in the surface of an 
allotment, but the minerals are held in reservation by the 
United States, and also the interest perhaps inherited by 
another relative in eastern Oklahoma. The TAAMS will tell us 
whether or not that person is half blood or more, because 
depending on those unique Federal statutes, land is only 
restricted for members of the Five Civilized Tribes that are 
half blood or more.
    These are the kinds of things we're working with in order 
to get a uniform and consistent body of information to be 
available to Indians from these BIA site locations.
    Mr. Skeen. We have a vote on, and I want to tell you how 
much we appreciate your being here. We have four votes.
    I think that you've enlightened us about all we can stand. 
[Laughter.]
    So I think we'll entertain a motion to adjourn.
    Mr. Slonaker. Thank you, Mr. Chairman.
    [Questions for the record follow:]
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                           W I T N E S S E S

                              ----------                              
                                                                   Page
Blackwell, M.S...................................................   181
Cavaney, Red.....................................................     1
Galvin, D.P......................................................   119
Hutzler, M.J.....................................................     1
Moore, Henson....................................................     1
Neubacher, D.L...................................................   119
Sharp, Philip....................................................     1
Slonaker, T.N....................................................   181
Soukup, M.A......................................................   119
Trezise, John....................................................   119


                               I N D E X

                              ----------                              

                        National Energy Strategy

                                                                   Page
Access and Permitting............................................    99
Access...........................................................    72
Accurate Inventory...............................................    73
Biography of:
    Mary J. Hutzler..............................................    43
    Philip Sharp.................................................    71
    Red Cavaney..................................................    91
    W. Henson Moore..............................................    56
Boutique Fuels...................................................    75
California Crisis................................................    60
California Electricity Use.......................................   103
California Energy Plan in 1995...................................   104
California.......................................................    99
Coal Use.........................................................   108
Coal vs. Gas.....................................................   109
Coal.............................................................    97
Competitive Markets..............................................    57
Considering Energy...............................................    76
Crude Oil........................................................    11
Deciding Importance of New Technology............................    98
Demand Side Bidding..............................................    94
Deregulation.....................................................   102
Diversity of Supply..............................................   111
Domestic Access..................................................    72
Downstream Side..................................................    73
Dysfunctional Market.............................................   110
Economics........................................................   112
Efficiency Standards.............................................    98
Electric Power in the Western States.............................    93
Electricity Generation Capacity..................................    19
Electricity Market Restructuring.................................    92
Electricity......................................................15, 60
Eleven Issues to Consider in a National Energy Strategy..........    46
    Access to Resources..........................................    46
    Alternative Fuels............................................    46
    Corporate Average Fuel Economy Standards.....................    46
    Reformulated Gasoline........................................    47
    Deregulation of Electricity..................................    47
    Transmission Lines...........................................    47
    Natural Gas..................................................    47
    Nuclear Energy...............................................    47
    Nuclear Regulatory Commission................................    47
    Hydroelectric Power..........................................    48
    Research and Development.....................................    48
Eminent Domain Authority.........................................    59
Eminent Domain...................................................   112
Energy Balance...................................................   111
Energy Consumption by Fuel.......................................    15
Energy Dependence................................................   111
Energy Policy....................................................    45
Energy Production by Fuel........................................    17
Energy Supplies..................................................    45
Environment......................................................    72
Factors in California Crisis.....................................   102
Federal Energy Regulatory Commission.............................    57
FERC Controls....................................................    94
FERC.............................................................    96
Financial Problems in California.................................    94
Forecasting.....................................................96, 112
Fuels Cells......................................................   104
GDP Growth and Energy use........................................   104
Generation.......................................................   104
Getting Started..................................................    93
Government Role in New Technology................................    97
Heating Oil......................................................    11
Hydroelectric Repermitting.......................................   109
Impact of Low Natural Gas Supplies...............................   107
Impacts of Removal of Energy Efficiency Standards................   101
International Access.............................................    73
International Markets............................................    59
Jones Act........................................................   101
Kyoto Treaty.....................................................   112
Leasing Delays...................................................   108
Low Income Assistance............................................   100
Markets..........................................................   103
Methane Hydrates.................................................   113
Natural Gas Alone Not the Answer.................................   108
Natural Gas Profits..............................................   110
Natural Gas.................................................11, 58, 105
Need to Act on Production Side...................................    95
New Mexico Senate Resolution.....................................   115
New Technology...................................................    97
Not In My Backyard (NIMBY).......................................    58
Oil Exploration Business.........................................   108
On-line Generation...............................................   107
Opening Statement of:
    Chairman Skeen...............................................     1
    Mr. Cavaney..................................................    72
    Mr. Dicks....................................................     2
    Mr. Moore....................................................    45
    Mr. Regula...................................................     4
    Mr. Sharp....................................................    57
    Ms. Hutzler..................................................     8
Pipelines........................................................    75
Predictability...................................................   100
Price and Drilling Relationship..................................   110
Price Caps.......................................................   100
Price Swings.....................................................    58
Production and Conservation......................................    59
Refining Capacity................................................    74
Regulation Flexibility...........................................    74
Reliable, Cleaner, More Efficient Energy.........................    92
Retail Gas.......................................................   113
Short-Term Solutions.............................................    93
Sources of Energy................................................    72
Supply and Demand................................................    92
Tax Credits......................................................    98
The Energy Outlook for 2002......................................     9
Timber Industry..................................................    96
Unilateral Sanctions.............................................    73
Working Natural Gas in Storage...................................   105
Written Remarks of:
    Mr. Regula...................................................     5
    Mary J. Hutzler..............................................    22
Written Statement of:
    Philip Sharp.................................................    62
    Red Cavaney..................................................    77
    W. Henson Moore..............................................    49

                   NPS, Natural Resources Initiative

Amphibian Research...............................................   155
Amphibians--Kings Canyon National Park...........................   151
Backlog Maintenance..............................................   140
Biography of:
    Dr. Soukup...................................................   156
    Mr. Galvin...................................................   129
    Mr. Neubacher................................................   136
BRD Science Centers and Cooperative Research Units...............   148
Budget Initiative................................................   120
Business Plan Initiative.........................................   130
Canon Scholars Program...........................................   154
CESUs............................................................   142
Collaboration With Other Land Management Agencies................   139
Competing Needs and Priorities...................................   139
Contracting......................................................   138
Cooperative Ecosystem Studies Units (CESUs)......................   121
Cooperative Ecosystem Studies Units Coordinating Council.........   143
Cooperative Ecosystem Studies....................................   154
Diverting Funds to Other Park Needs..............................   152
Exotic and Invasive Plants.......................................   121
Exotic Plant Management Team Proposal Summary 14 California Parks   135
Field Level Funding..............................................   139
Funding of Biological Resources Division.........................   147
Future CESUs.....................................................   143
Goals............................................................   131
Great Smoky Mountains National Park..............................   140
Impact of CESUs in Parks.........................................   144
Learning Centers.................................................   122
Leverage Funding.................................................   122
Maintaining Central Research Catalog.............................   151
Monitoring and Role of BRD.......................................   142
Monitoring Park Resources........................................   133
Natural Resource Challenge Goals.................................   146
Natural Resource Challenge Network Strategy......................   150
Need for the Natural Resource Challenge..........................   130
Networks.........................................................   138
NPS Housing......................................................   155
NPS Research and Resource Management.............................   153
Opening Remarks by Deputy Director Galvin........................   120
Opening Remarks of:
    Chairman Skeen...............................................   119
    Mr. Dicks....................................................   119
Outside Researchers..............................................   133
Parameters for Success...........................................   133
Park Resources Inventory Databases...............................   138
Point Reyes National Seashore Learning Center....................   130
Point Reyes National Seashore Research Program...................   155
Professional Development.........................................   147
Program and Funding Accountability...............................   137
Program Performance and Review...................................   144
Purpose of the Initiative........................................   120
Red-Legged Frog--Point Reyes National Seashore...................   149
Relationship With the USGS, Biological Division..................   141
Research and Resource Management.................................   141
Research Permit Process..........................................   146
Restoring Degraded Resources.....................................   133
Richard Sellars' Book............................................   123
Sabbaticals......................................................   154
Sound Science for Effective Resource Management..................   133
Staff Biologists.................................................   138
U.S. Geological Survey/Biological Resources Division.............   121
Universities and CESUs...........................................   143
Use and Access Restrictions......................................   145
Visitor Services.................................................   140
Vital Signs Monitoring...........................................   148
Workload Inventory...............................................   153
Written Statement of Mr. Galvin..................................   124
Additional Committee Questions:
    General Questions............................................   157
    Inventory and Monitoring Networks............................   158
    Program Accountability.......................................   158
    Science-Based Park Management................................   159
    Diverting Funds to Other Park Needs..........................   159
    Integrated Databases.........................................   160
    Competing Needs and Priorities...............................   161
    Professional Development.....................................   161
    Inventory and Monitoring Networks............................   162
    Relationship to U.S. Geological Survey/Biological Resources 
      Division (BRD).............................................   162
    Cooperative Ecosystem Studies Units (CESUs)..................   163
    Cooperative Ecosystem Studies Units Coordinating Council.....   165
    Role of NPS Personnel at Cooperative Ecosystem Studies Units.   165
    Education Component..........................................   166
    Exotic Species...............................................   166
    Exotic Plant Management Teams (EPMTs)........................   167
    Inventory and Monitoring.....................................   169
    Significant Discoveries......................................   169
    Vital Signs Monitoring.......................................   170
Questions submitted by Congressman Dicks:
    Limitations on Visitor Use...................................   171
    Management Accountability....................................   171
    Inventory Project List.......................................   171
    Funding for Natural Resource Challenge.......................   172
    Basic Research and Resource Management.......................   174
    Administration's FY 2002 Budget for U.S. Geological Survey...   174
Questions submitted by Congressman Regula........................   175
Questions submitted by Congressman Moran:
    Preliminary Findings.........................................   177
    Response Plan and Studies Followup...........................   178
    External Threats to Parks....................................   178

              Office of the Special Trustee, Trust Reform

Account Reconciliation...........................................   235
Accounting of Funds..............................................   213
Appointments.....................................................   233
Appraisals.......................................................   198
Appraisals.......................................................   206
BIA Culture......................................................   211
BIA Personnel....................................................   199
BIA Projects.....................................................   204
BIA Staffing.....................................................   201
Biography of:
    Ms. Blackwell................................................   209
    Tom Slonaker.................................................   196
Cobell Litigation--Potential for Settlement......................   234
Cobell Litigation................................................   185
Cultural Barriers................................................   233
Data Cleanup.....................................................   239
Deadlines........................................................   234
Former Employees.................................................   237
High Level Implementation Plan--Probate Backlog Section..........   218
High Level Implementation Plan...................................   184
HLIP Development.................................................   214
HLIP.............................................................   215
IIM Accounts...................................................200, 210
Indian Land Consolidation Program................................   201
Indian Land Consolidation........................................   206
Indian Trust Management Reform to Date...........................   188
Institutionalizing Trust Reform..................................   207
Litigation Effects...............................................   237
Management Needs.................................................   235
MMS Interface....................................................   200
Nessi Memo.....................................................184, 214
Next Steps.......................................................   190
Opening Remarks from:
    Chairman Skeen...............................................   181
    Mr. Dicks....................................................   182
Opening Statement:
    Bureau of Indian Affairs.....................................   197
    Special Trustee..............................................   183
Policies and Procedures..........................................   206
Private Sector...................................................   211
Probate Staffing.................................................   216
Probate...................................................198, 205, 215
Prospective Relief...............................................   213
Psychological Climate............................................   212
Questions for the Record from:
    Mr. Dicks....................................................   266
    The Subcommittee.............................................   241
Records..........................................................   238
Regional Activities..............................................   211
Regulations and Training.........................................   200
Resources........................................................   213
Scope of DOI Trust Asset Management Responsibility...............   192
Success of TAAMS.................................................   235
TAAMS..........................................................200, 211
TAAMS:
    Centralized Procedures.......................................   240
    Land Titles..................................................   199
    Leasing......................................................   199
    Location...................................................238, 239
    Progress.....................................................   212
    Schedule.....................................................   236
    System Access................................................   240
TAAMS Implementation and Data Clean-Up...........................   204
Tribal--Federal Relations........................................   207
Trust Policies and Procedures....................................   200
Trust Reform Efforts.............................................   197
Written Statement of:
    Mr. Slonaker--Special Trustee................................   186
    Ms. Blackwell--Bureau of Indian Affairs......................   202
Youpee...........................................................   198

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