[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]
H.R. 2187, TO AMEND TITLE 10, U.S.C., REGARDING MINERAL RECEIPTS
COLLECTED FROM NAVAL OIL SHALE RESERVES
=======================================================================
LEGISLATIVE HEARING
before the
SUBCOMMITTEE ON ENERGY AND
MINERAL RESOURCES
of the
COMMITTEE ON RESOURCES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTH CONGRESS
FIRST SESSION
__________
June 26, 2001
__________
Serial No. 107-45
__________
Printed for the use of the Committee on Resources
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COMMITTEE ON RESOURCES
JAMES V. HANSEN, Utah, Chairman
NICK J. RAHALL II, West Virginia, Ranking Democrat Member
Don Young, Alaska, George Miller, California
Vice Chairman Edward J. Markey, Massachusetts
W.J. ``Billy'' Tauzin, Louisiana Dale E. Kildee, Michigan
Jim Saxton, New Jersey Peter A. DeFazio, Oregon
Elton Gallegly, California Eni F.H. Faleomavaega, American
John J. Duncan, Jr., Tennessee Samoa
Joel Hefley, Colorado Neil Abercrombie, Hawaii
Wayne T. Gilchrest, Maryland Solomon P. Ortiz, Texas
Ken Calvert, California Frank Pallone, Jr., New Jersey
Scott McInnis, Colorado Calvin M. Dooley, California
Richard W. Pombo, California Robert A. Underwood, Guam
Barbara Cubin, Wyoming Adam Smith, Washington
George Radanovich, California Donna M. Christensen, Virgin
Walter B. Jones, Jr., North Islands
Carolina Ron Kind, Wisconsin
Mac Thornberry, Texas Jay Inslee, Washington
Chris Cannon, Utah Grace F. Napolitano, California
John E. Peterson, Pennsylvania Tom Udall, New Mexico
Bob Schaffer, Colorado Mark Udall, Colorado
Jim Gibbons, Nevada Rush D. Holt, New Jersey
Mark E. Souder, Indiana James P. McGovern, Massachusetts
Greg Walden, Oregon Anibal Acevedo-Vila, Puerto Rico
Michael K. Simpson, Idaho Hilda L. Solis, California
Thomas G. Tancredo, Colorado Brad Carson, Oklahoma
J.D. Hayworth, Arizona Betty McCollum, Minnesota
C.L. ``Butch'' Otter, Idaho
Tom Osborne, Nebraska
Jeff Flake, Arizona
Dennis R. Rehberg, Montana
Allen D. Freemyer, Chief of Staff
Lisa Pittman, Chief Counsel
Michael S. Twinchek, Chief Clerk
James H. Zoia, Democrat Staff Director
Jeff Petrich, Democrat Chief Counsel
------
SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES
BARBARA CUBIN, Wyoming, Chairman
RON KIND, Wisconsin, Ranking Democrat Member
W.J. ``Billy'' Tauzin, Louisiana Nick J. Rahall II, West Virginia
Mac Thornberry, Texas Edward J. Markey, Massachusetts
Chris Cannon, Utah Solomon P. Ortiz, Texas
Jim Gibbons, Nevada, Calvin M. Dooley, California
Vice Chairman Jay Inslee, Washington
Thomas G. Tancredo, Colorado Grace F. Napolitano, California
C.L. ``Butch'' Otter, Idaho Brad Carson, Oklahoma
Jeff Flake, Arizona
Dennis R. Rehberg, Montana
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C O N T E N T S
----------
Page
Hearing held on June 26, 2001.................................... 1
Statement of Members:
Cubin, Hon. Barbara, a Representative in Congress from the
State of Wyoming........................................... 1
Prepared statement of.................................... 2
Hefley, Hon. Joel, a Representative in Congress from the
State of Colorado.......................................... 3
Prepared statement of.................................... 5
Kind, Hon. Ron, a Representative in Congress from the State
of Wisconsin............................................... 3
Statement of Witnesses:
Culp, Pete, Assistant Director, Minerals, Realty and Resource
Protection, Bureau of Land Management...................... 6
Prepared statement of.................................... 7
Additional materials supplied:
Norton, Jane E., Executive Director, Colorado Department of
Public Health and Environment, Letter submitted for the
record..................................................... 15
H.R. 2187, TO AMEND TITLE 10, UNITED STATES CODE, TO MAKE RECEIPTS
COLLECTED FROM MINERAL LEASING ACTIVITIES ON CERTAIN NAVAL OIL SHALE
RESERVES AVAILABLE TO COVER ENVIRONMENTAL RESTORATION, WASTE
MANAGEMENT, AND ENVIRONMENTAL COMPLIANCE COSTS INCURRED BY THE UNITED
STATES WITH RESPECT TO THE RESERVES.
----------
Tuesday, June 26, 2001
U.S. House of Representatives
Subcommittee on Energy and Mineral Resources
Committee on Resources
Washington, DC
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The Subcommittee met, pursuant to notice, at 10:45 a.m. in
Room 1324, Longworth House Office Building, Hon. Barbara Cubin
[Chairman of the Subcommittee] presiding.
STATEMENT OF HON. BARBARA CUBIN, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF WYOMING
Mrs. Cubin. The legislative hearing by the Committee on
Energy and Mineral Resources will come to order.
The Subcommittee is meeting today to hear testimony on H.R.
2187, to amend Title 10, U.S. Code to make receipts collected
from mineral leasing activities on certain naval oil shale
reserves available to cover environmental restoration, waste
management, and environmental compliance costs incurred by the
United States with respect to the reserves.
Mrs. Cubin. I would like at this point to apologize to the
Committee for my tardiness. I was on the floor for the swearing
in of the new member from Virginia and I sincerely apologize
and especially to you, Chairman Hefley, for being so late.
As you know, under Committee rule 4(g) the Chairman and the
ranking minority member can make opening statements. If any
other members have opening statements they can be included in
the hearing record under unanimous consent.
I will make my opening statement. At today's hearing the
Subcommittee will take testimony on a small piece of
legislation that has been too long in the making. Our
colleague, Joel Hefley of Colorado, and his delegation mates,
worked years to effect a legislative transfer of management
authority from the Department of Energy to the Department of
Interior for lands within the Naval Oil Shale Reserves Numbered
1 and 3 in the Piceance Basion.
After much wrangling over jurisdiction and the like, Mr.
Hefley persuaded the House to adopt an amendment to the
National Defense Authorization Act for Fiscal Year 1998 which
mandated this transfer. Moreover, that law specifically
established a trust fund to be tapped in the future for
environmental restoration activities, such as the clean-up of a
spent oil shale tailings facility near Anvil Points, Colorado.
The monies were to come from oil and gas lease receipts the
Interior Department collected from an initial lease sale and
subsequent royalties on natural gas production. After the
Interior and Energy secretaries certify to Congress that number
one, the environmental clean-up is completed, and number two,
the DOE's infrastructure cost for well-drilling done prior to
the transfer has been recovered, then the lease receipts
remaining and those collected thereafter will be distributed in
a normal manner; that is, as you all know, the State of
Colorado will receive half of the gross receipts for
educational purposes or other use governed by state law.
This was quite a fight to get non-westerners in Congress to
understand that this is how public land mineral revenues are
treated--by operation of law. And I comment Mr. Hefley for
tirelessly pursuing this for his constituents and for all
Coloradans.
Unfortunately, the trust fund established in 1998 in the
act is not self-actuating and that is why we are here today.
H.R. 2187 is designed to pull the trigger, as it were, on the
mechanism established in the defense authorization act.
Since I am on the board of the NRA I think these are cute
little things that my staff put in this statement.
Apparently the original provision merely loaded the chamber
and cocked the hammer. This bill will amend Title 10 of the
United States Code to authorize the BLM to reach into the trust
fund which now has about $8.5 million in it and which is
replenishing at the rate of about $1 million per year and use
the funds to study and complete the clean-up needs.
I understand the administration supports to concept but
will seek a tightening of the authority to allay fears that BLM
could begin contract dirt-work before knowing all the costs for
restoration of NOSR-3. So be it. I agree with the author of
this bill and I think it is high time we set about doing the
clean-up work for which the trust fund was established in the
first place.
[The prepared statement of Mrs. Cubin follows:]
Statement of The Honorable Barbara Cubin, Chairman, Subcommittee on
Energy and Mineral Resources
At today's hearing the Subcommittee will take testimony on a small
piece of legislation that has been too long in the making. Our
colleague, Joel Hefley of Colorado, and his delegation mates, worked
years to effect a legislative transfer of management authority from the
Department of Energy to the Department of the Interior for lands within
the Naval Oil Shale Reserves Numbered 1and 3 in the Piceance Basin.
After much wrangling over jurisdiction and the like, Mr. Hefley
persuaded the House to adopt an amendment to the National Defense
Authorization Act for Fiscal Year 1998 which mandated this transfer.
Moreover, that law specifically established a trust fund to be tapped
in the future for environmental restoration activities, such as the
clean-up of a spent oil shale tailings facility near Anvil Points,
Colorado. The monies were to come from oil and gas lease receipts the
Interior Department collected from an initial lease sale and subsequent
royalties on natural gas production. After the Interior and Energy
Secretaries certify to Congress that: 1) the environmental clean-up is
completed, and 2) the DOE's infrastructure costs for well-drilling done
prior to the transfer has been recovered, then the lease receipts
remaining and those collected thereafter will be distributed in the
normal manner.
That is, the State of Colorado will receive half of the gross
receipts for educational purposes or other use governed by State law.
This was quite a fight to get non-westerners in Congress to understand
that this is how public land mineral revenues are treated - by
operation of law - and I commend Mr. Hefley for tirelessly pursuing
this for his constituents and all Coloradans.
Unfortunately, the trust fund established in the 1998 Act isn't
self-actuating and that is why we are here today. H.R. 2187 is designed
to ``pull the trigger'' on the mechanism established in the defense
authorization act. Apparently, the original provision merely loaded the
chamber and cocked the hammer. This bill will amend Title 10 of the
United States Code to authorize the BLM to reach into the trust fund
which now has about $8.5 million in it (and which is replenishing at
about $1 million per year) and use the funds to study and complete the
clean-up needs.
I understand the Administration supports the concept but will seek
a tightening of the authority to allay fears the BLM could begin
contract dirt-work before knowing all the costs for restoration of
NOSR-3. So be it. I agree with the author of this bill, it is high time
we set about doing the clean-up work for which the trust fund was
established in the first place.
______
I now recognize the ranking minority member, Mr. Kind, for
his opening statement.
STATEMENT OF HON. RON KIND, A REPRESENTATIVE IN CONGRESS FROM
THE STATE OF WISCONSIN
Mr. Kind. Thank you, Madam Chair. You will not be getting
any potshots from me on this legislation today. I could not
resist.
I want to thank Mr. Culp for your presence and your
testimony here today and commend Mr. Hefley for the work that
you have done, along with your colleagues in Colorado--Mr.
Udall and I believe Mr. McInnis has been very active, too, in
moving this legislation forward. I think it has been a good
bipartisan effort by the delegation in Colorado.
Hopefully we will be able to achieve the stated purpose of
what you are trying to do. I think there is still a little bit
of work to do with OMB, with the administration side, but thank
you again for your testimony and the work you have put in on
the legislation. I look forward to the testimony.
Thank you, Madam Chair.
Mrs. Cubin. Thank you, Mr. Kind.
The chair now recognizes the Honorable Joel Hefley, the
Fifth District of Colorado, to tell us about his bill.
STATEMENT OF HON. JOEL HEFLEY, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF COLORADO
Mr. Hefley. Thank you, Madam Chairman. I will take a shot
at it.
You do not need to apologize to me for your tardiness here.
It worked perfectly because I could chair a mark-up down the
hall and got that out of the way and I appreciate it way it
worked. We were kind of scrambling there.
I do want to thank you for holding a hearing on this so
soon after its introduction on June 20. It is my hope that with
the passage of this legislation we can begin work on NOSR
Numbers 1 and 3 and never have to bother this Subcommittee
again with this subject matter. Gosh, we have been at this a
long time and it seems like far too long for the purpose of it.
I was author of the legislation, as you indicated, that
transferred these two oil shale reserves from the Department of
Energy to the Bureau of Land Management back in 1998. After a
10-year, 10-year debate on the issue, even the Clinton
administration came to agree that there was little future in
using oil shale to fuel battleships and that these two reserves
could be more useful to the public not as a Navy property but
as a BLM property managed for multiple use particularly and for
oil and gas leasing.
The state agency charged with promoting such development
estimated as much as $125 million in oil and gas reserves could
be generated by the two sites, to be split equally between
Colorado and the Federal Government. The early returns seem to
confirm this, as the first lease sale in the fall of 1999
generated $7 million. That amount has since risen to about $8.5
million. At the same time, it was acknowledged that clean-up
work needed to be done on the two sites, particularly at Anvil
Point on NOSR-3, which was the site of a Bureau of Mines
experiment years before.
It was also acknowledged that a cost estimate for the
clean-up could only come through negotiations. Strangely,
whoever held the site seemed to feel it was an environmental
hazard to all while whoever no longer had the site felt it was
a matter of minimal danger, perhaps of no danger at all.
Because it of this it was agreed that the state Department of
Public Health and the Environment could serve as a mediator
between the two agencies and that the clean-up could be
conducted to state standards.
All of this moved along until late 1999 when the BLM
approached my office for help in funding the clean-up. An
Interior solicitor had concluded that a specific authorization
was needed to allow the BLM to access the leasing monies needed
for the clean-up.
This was further complicated by the question of just who
the proper authorizing Committee was. The transfer came about
through the Defense authorization of 1998, an Armed Services
bill, but House Resources is the normal authorizing Committee
for the BLM. But Interior Appropriations has often handled such
matters in the past under BLM standing authorization.
The bill before you, a Resources bill, will supply BLM with
the authorization it needs to undertake the clean-up at Anvil
Point and begin to realize the program first adopted in 1998.
The authorization would be for 5 years, meaning the clean-up
could be completed within that time. If it were completed
earlier, the two secretaries could certify as much and the
distribution of revenues could begin.
It is my understanding the administration has suggested an
amendment to deal with some concerns they have about this
legislation. I have looked at that amendment and the only
problem I guess I have with it is that I want to see dirt moved
and things begin to happen soon and this study that they are
suggesting in the amendment will take upwards a year and the
BLM will speak to that. It may be that they would have to do
this, anyway. I just hate anything that would slow the process
up, but maybe this will not.
I do think it clarifies underlying law and the BLM assures
me they should be able to accomplish this clean-up within these
strictures.
About a year ago we were talking to Colorado BLM Director
Ann Morgan about the problems surrounding the NOSR transfer. We
thought we did this 3 years ago, we said. Her response was,
``Welcome to public lands management.'' And unfortunately, I
think she is right.
With that, I thank you again for holding this hearing and I
ask the Committee's support of the bill.
[The prepared statement of Mr. Hefley follows:]
Statement of The Honorable Joel Hefley, a Representative in Congress
from the State of Colorado
Madame Chairwoman, I'd like to thank you for holding a hearing on
this bill today, so soon after its introduction on June 20. It's my
hope that, with passage of H.R. 2187, we can begin work on NOSRs 1 and
3 and never have to bother this subcommittee on this subject again.
Madame Chairwoman, three years ago, as part of the fiscal year 1998
defense authorization, we transferred Naval Oil Shale Reserves 1 and 3,
located near Rifle, Colorado, from the Department of Energy to the
Bureau of Land Management. That transfer completed--or so we thought--a
10-year effort to make that switch. By 1998, virtually everyone--
including the Clinton administration--agreed that the NOSRs could be of
better use to the nation if they were transferred to the Bureau of Land
Management and their subsurface estates opened to oil and gas
development. The Colorado Oil and Gas Association, the agency charged
with promoting such development in the state, estimated as much as $125
million in oil and gas revenues could be generated by the reserves in
future, to be split equally between Colorado and the federal
government. The first competitive lease sales at the site, in 1999,
gave reason to believe these projections might be accurate. The sales
generated a proffered bonus of $7.5 million, a figure which has since
grown to approximately $8 million.
It was understood at the outset that before the oil and gas
revenues could be shared, environmental remediation was needed at one
point on NOSR 3--Anvil Points, the site of an old Bureau of Mines
experiment. Since whoever held Anvil Points felt the site was an
environmental hazard and whoever held it previously felt it was a site
of minimal concern, a cleanup cost was never specified but the bill
stated that BLM would first cleanup the site, drawing from the revenue
stream generated by lease sales. The amount of the cleanup was to be
determined through discussions between the departments of Energy and
Interior, with mediation by the Colorado Department of Public Health
and the Environment. The authorization was to run for five years or
once the secretaries of Energy and Interior had certified Anvil Point
was clean, whichever was earliest. At that time, revenue could then
begin to be issued to the state and federal governments.
Or so we thought. In late 1999, the Bureau of Land Management
approached my office for help in funding the cleanup. A solicitor's
reading of the language in fiscal year 1998 had concluded that BLM
needed a specific authorization to spend its own leasing receipts on
the cleanup. The matter was further complicated by the question of just
who held responsibility for supplying such authorization--the Armed
Service Committee, under whose jurisdiction the transfer was made;
House Resources, the nominal authorizing committee for the Bureau of
Land Management; or Interior Appropriations, which often resolved such
issues under the BLM's standing authorization. No resolution was
reached during the 106th Congress.
My bill, H.R. 2187, would provide the authorization for the
Secretary of Interior to access the NOSR 3 environmental trust fund to
enable contract work agreed upon by the BLM and the state of Colorado
to be performed for the next five fiscal years, limited by the funds
available from leasing. If further work is necessary beyond 2006, a new
authorization will be required.
While all these discussions have been going on, the BLM and the
state of Colorado have conducted internal estimates of what needs to be
done at the Anvil Points site. Four options--ranging from minimal
remediation to a ``worst-case'' scenario involving complete removal of
the tailings--were outlined with costs ranging between $3 million and
$12 million, with annual monitoring expenses of approximately $30,000.
It is realistic to believe the environmental cleanup can be done with
the money on hand.
So that is where we are today. A year ago, someone mentioned to
Colorado state BLM Director Ann Morgan that we thought we'd taken care
of all this three years ago in the defense authorization. ``Welcome to
public lands management,'' she said. Unfortunately, I guess she's
right.
______
Mrs. Cubin. Thank you, Mr. Hefley.
The chair now recognizes Mr. Pete Culp and welcomes him in
front of this Committee again. He is the assistant director of
Minerals, Realty and Resource Protection for the Bureau of Land
Management. Welcome. We recognize you to give your testimony.
STATEMENT OF PETE CULP, ASSISTANT DIRECTOR, MINERALS, REALTY
AND RESOURCE PROTECTION, BUREAU OF LAND MANAGEMENT, ACCOMPANIED
BY CARLTON LANCE, LEAD, HAZARDOUS MATERIALS MANAGEMENT PROGRAM,
COLORADO BLM
Mr. Culp. Thank you, Madam Chairman. I appreciate the
opportunity to appear here today to discuss H.R. 2187, a bill
to make available certain mineral leasing receipts for
environmental restoration work at the Naval Oil Shale Reserve,
known as NOSR-3 near Rifle in Garfield County, Colorado. I am
accompanied by Mr. Carlton Lance, who is BLM Colorado's
Hazardous Materials Program lead.
The department supports this legislation but, as Mr. Hefley
indicated, we recommend that the bill be amended to establish a
two-step process for access to money from the fund. For the
first step we recommend that the bill be amended to grant us
immediate access for up to $1.5 million for completion of the
additional analyses, site characterization, and geotechnical
studies. On the completion of these studies we will be able to
determine the ultimate clean-up that is necessary, the clean-up
alternative, and a more precise estimate of the cost.
For the second step we would be required to submit the
findings of the initial study to the Congress before obligating
the remaining funds for the clean-up work. Specifically, the
recommendation is the bill be amended to specify that 60 days
after the findings have been submitted to Congress the
secretary would then have access to the funds required for the
clean-up without the need for further congressional action.
However, should the total estimate exceed the available fund
balance, BLM would be prohibited from taking any further
action. And what this does is give the administration and the
Congress an opportunity to consult on the cost and funding of
the ultimate clean-up.
The administration believes that because the clean-up
method remains uncertain, prudence dictates that the
administration and Congress should be apprised of the potential
cost before the clean-up begins.
It is language in existing law that transferred the NOSRs,
particularly NOSR-3, from DOE to DOI in 1997 that requires the
enactment of this legislation to provide us with access to the
funds that are already in the Treasury.
We just note briefly that the NOSR is a 21,000-acre reserve
that was originally established in 1924 under an executive
order. It is in the Piceance Creek Basin of northwestern
Colorado. It was originally created as a future fuel source for
the Navy and this reserve and others were originally managed by
the Department of Defense and then subsequently transferred to
DOE.
Since the 1980's there has been development of oil and gas
in NOSR-3 and that development, as has been noted, has
generated $8.5 million in the fund that is available now for
environmental restoration. Future revenue growth is also
projected.
The Congress did transfer the administrative responsibility
for the NOSR to DOI and BLM in 1998 and specified that the
receipts for sales, bonuses and royalties from natural gas be
placed in a Treasury account, used first for the reimbursement
of environmental restoration, then to repay the original costs
of the Department of Energy for development of the NOSR and
ultimately to be split under the Mineral Leasing Act between
the Federal Government and the State of Colorado.
The shale pile that we are concerned about was built up
over 40 years of experimental development of the oil shale. It
consists of approximately 300,000 cubic yards of material. It
is roughly 1,000 feet long and 350 feet high and it is located
in a narrow ravine adjacent to West Sharrard Creek, a tributary
of the Colorado River.
The Colorado Department of Public Health and the
Environment, as Chairman Hefley noted, and a BLM contractor,
the Dynamac Corporation, have conducted preliminary analyses of
the site and have determined that the pile is a source of
arsenic and other heavy metals that are leaching into surface
and groundwater and has a large potential for future
disruption. So with enactment of this legislation we will be
able to move forward with cleaning up the pile and I will be
pleased to answer any questions you have.
[The prepared statement of Mr. Culp follows:]
Statement of Pete Culp, Assistant Director, Minerals, Realty & Resource
Protection, Bureau of Land Management
Madame Chairman and members of the Committee, I appreciate the
opportunity to appear here today to discuss H.R. 2187, a bill to make
available certain mineral leasing receipts for environmental
restoration work at the Naval Oil Shale Reserve (NOSR) 3 near Rifle in
Garfield County, Colorado. I am accompanied by Carlton Lance, BLM
Colorado's Hazardous Materials Management Program lead.
The Department of the Interior supports this legislation, but
recommends that the bill be amended to establish a two step process for
access to monies from the fund. For the first step, we recommend that
the bill be amended to grant BLM access to up to $1.5 million from the
fund for completion of the additional analysis, site characterization,
and geotechnical studies. The completion of these studies is required
to determine the ultimate cleanup necessary for the site. For the
second step, the bill would require the Secretary to submit the
findings of the study to the Congress before obligating funds for the
cleanup work. Specifically, we recommend that the bill be amended to
specify that sixty days after these findings have been submitted to
Congress, the Secretary would then have access to the fund for the
cleanup activities at NOSR 3 without need of any further Congressional
action. However, should the total estimated cost exceed the available
fund balance, BLM should be prohibited from taking any further action.
This will give the Administration and Congress an opportunity to
consult on the cost and funding of the proposed cleanup work. The
Administration believes that, because the cleanup method remains
uncertain, prudence dictates that the Administration and this Congress
should be apprised of the potential costs before the cleanup work
begins.
BLM wants to begin necessary on-the-ground environmental
restoration activities at NOSR 3 as soon as possible, but cannot do so
until this preliminary work is completed. Due to language in existing
law that transferred administration of NOSR 3 from the Department of
Energy (DOE) to the Department of Interior (DOI) in 1997, enactment of
legislation is necessary to provide BLM with access to existing funds
in a Treasury account specifically designated for these environmental
restoration purposes.
Background
NOSR 3 is a 21,000-acre reserve created by executive order in 1924
and located in the southeastern portion of the Piceance Basin in
northwestern Colorado. The site--like NOSR 1 which is also in Colorado
and NOSR 2 in Utah--was originally created as a future source of fuel
supplies for the U.S. Navy and to preserve the resource. The reserves
were originally managed by the Department of Defense and were
eventually transferred to DOE.
In the early 1980s, private oil and gas companies began to develop
natural gas reserves in the surrounding areas and, in 1985, DOE
initiated a natural gas drilling program in NOSR 3. In 2000, production
from 76 wells on approximately 7,000 acres at NOSR 3 was roughly 8.7
million cubic feet of gas per day. Sold competitively on the open
market in 2000, those sales generated approximately $1 million in
revenues for the United States. Future revenue growth at NOSR 3 is also
expected--with 26 Applications for Permit to Drill (APDs) pending at
the site and industry projections for 140 additional wells to be
drilled within the next three years.
In addition to mineral resources, NOSR 3 contains substantial
surface resources as well, including recreational, livestock grazing,
watershed, paleontological, wildlife habitat and visual resources. It
also includes natural habitats for several sensitive plants and
animals.
Transfer of NOSR 3 Administrative Authority
Congress, in the National Defense Authorization Act for Fiscal Year
1998 (P.L. 105-85), transferred administrative jurisdiction of NOSR 3
from DOE to DOI. Included in the legislation authorizing the transfer
is language specifying that all receipts from sales, bonuses, and
royalties be placed into a treasury account to be used for
reimbursement of environmental restoration, waste management, and
environmental compliance costs incurred by the United States. The 1998
measure specifies that enactment of additional legislation is necessary
for the Federal Government to formally access the funds for the
environmental cleanup activities. Furthermore, the 1998 Act also
provides that no monies received from BLM leases may be shared with the
State of Colorado until costs (including environmental restoration
costs) incurred by the United States related to the site have been
reimbursed. To date, approximately $8.5 million in lease sales have
been deposited into this special treasury account. The account
continues to grow with additional lease royalties and future sales.
Environmental Cleanup Issues
The primary current environmental concern at the NOSR 3 site is a
spent shale pile that was developed through 40 years of deposition from
oil shale mining and processing activities. The pile consists of
approximately 300,000 cubic yards of material, and is roughly 1,000
feet in length and 350 feet high. It is located in a narrow ravine
adjacent to West Sharrard Creek--a tributary which flows to the
Colorado River in less than two miles. The Colorado Department of
Public Health and Environment (the primary environmental regulator for
the state) and BLM's contractor, Dynamac, have conducted analyses of
the site and have concluded that the pile is the source of arsenic and
other heavy metals contamination leaching into surface and groundwater.
The pile's constituents also have been determined to be hazardous
through direct physical contact. In addition, there are potential
questions regarding the physical stability of the pile due to its steep
slope, lack of vegetation, and proximity to the West Sharrard Creek.
According to the Colorado Department of Public Health and Environment,
these findings are considered threats to human health and the
environment. Ancillary facilities in the area, such as open adits,
sheds, and gravel roads, also require remedial actions.
Restoration Proposals
In 2000, BLM contracted with Dynamac Corporation to conduct an
initial evaluation of the site and provide various restoration
alternatives and cost scenarios. The following four alternatives were
proposed and analyzed: 1) removal and disposal at an off-site Treatment
Storage and Disposal Facility (TSDF); 2) removal and disposal to an on-
site location; 3) in-place stabilization; and 4) beneficial reuse. A
future detailed analysis of these proposed alternatives will have to be
completed in accordance with CERCLA and a preferred alternative
selected before BLM can report its findings to Congress. If the cost of
the preferred alternative does not exceed the balances available in the
designated account, BLM will then access the necessary funds and
proceed with work under the oversight of the State of Colorado.
Preliminary costs for the various alternatives range from a high of
$19.8 million for removal to an off-site TSDF location, down to $1
million either for in-place stabilization or beneficial reuse.
Additional site characterization is necessary to provide conclusive
estimates of the remediation work necessary at the site and their
costs.
Conclusion
Enactment of legislation is necessary to allow BLM to proceed with
the pressing environmental cleanup projects at the NOSR 3 site. In
turn, completion of these necessary tasks will put the Federal
Government and the State of Colorado one step closer to sharing in the
benefits of the receipts from the development of natural gas at NOSR 3.
Madame Chairman, thank you for your consideration of this important
legislation. I would be pleased to answer any questions that you or the
other members of the Committee may have.
______
Mrs. Cubin. Thank you very much.
I would like to start first by asking about the arsenic and
other heavy metals that you say are leaching into the
groundwater at Sharrard Creek. Do you or does the BLM know how
much arsenic is being leached at this time? And does that pose
any immediate environmental threat to the Colorado River?
Mr. Culp. We know that there is arsenic leaching. Our
contractor determined that but we do not know the precise
amount. The threat, I believe, is more in the nature of
potential, particularly if the pile were to collapse or be
impacted by heavy rains, that kind of thing.
Mrs. Cubin. I do not mean to be too elementary but how big
is this pile?
Mr. Culp. Well, it is about three football fields long and
350 feet high. It is--
Mrs. Cubin. Oh, it is a big pile.
Mr. Culp. It is a big pile, yes, ma'am.
Mrs. Cubin. There has been other big piles around here but
not that big.
The BLM anticipates that there will be other environmental
compliance activities and restorations and hazardous material
clean-ups on NOSRs-1 and 3, in addition to this one. Do you
have an estimate, just a ballpark figure, of what monies will
be required to clean up those other sites?
Mr. Culp. We do. There is some other work to roads. There
are old transformers, battery stations, et cetera that will
need to be cleaned up and that estimate is about $750,000. That
will be included in the clean-up process.
Mrs. Cubin. The last question I have. The national Defense
Authorization Act of 1998 provided that Colorado be able to
share in the royalties after the secretaries of Interior and
Energy jointly certified certain things that we have spoken of
earlier. Do you have any idea when Colorado is going to be able
to start sharing in those royalties?
Mr. Culp. Not precisely, Madam Chairman, although we do
have a rough projection that ultimately the reserve could
generate as much as $100 to 120 million of revenue from oil and
gas so that the ultimate revenues to the Federal Government,
even after the clean-up and the repayment of DOE's investment
costs, would be substantial both for the Federal Government and
the state.
Mrs. Cubin. For you, Mr. Hefley, I have had leg counsel
draft a substitute to your bill which appears to satisfy the
OMB in that another study would be done before committing to
the Anvil Points clean-up. If such a study can be done within,
say, 6 months or a reasonable time like that, do you think you
would be able to support that substitute, or do we need to talk
behind closed doors later?
Mr. Hefley. Madam Chairman, the sooner the better. The BLM
seems to feel, and they can speak for themselves, seem to feel
that it will take up to a year and that a year is a good term
and I have no basis to argue with that but I would encourage
them, if we get started on this thing, to complete this study
as soon as possible so that we could move forward with it. It
has hung on there too long and I will let them speak for
themselves about the timing but I would not object to your
substitute amendment because I think that we need everybody on
board as we move forward and I think that does it.
Mrs. Cubin. Did you want to respond to that, Mr. Culp, to
the 6 months?
Mr. Culp. Well, I would just say we will move as quickly as
we can. It may take, as the Chairman said, approximately a year
to finish the study phase.
Mrs. Cubin. Well, we want you to have all the time you need
so it can be done right.
Mr. Culp. If we can finish it quicker, we will.
Mrs. Cubin. Thank you.
The chair now recognizes Mr. Kind.
Mr. Kind. Thank you.
Mr. Culp, I understand further studies are being
recommended or required for the clean-up but do you have a
preliminary cost estimate right now, what the clean-up is going
to entail?
Mr. Culp. Actually, we had an initial study done by the
Dynamac Corporation and they looked at a range of clean-up
alternatives, ranging from a beneficial reuse of the pile,
which does not seem feasible, to shipment to an off-site
facility some distance away, a facility that is authorized to
take that kind of material. The cost estimates between those
two are from $1 million to $19 million.
At the moment we believe that the much more feasible
alternative is in the middle and would be the development of a
disposal site that is within the NOSR and reasonably close to
where the pile is now but in an environmentally safer place.
Roughly in the vicinity of $6 million for that alternative.
Mr. Kind. And I understand there is roughly $8.5 million
from lease receipts that are sitting in reserve right now that
would be applied?
Mr. Culp. That is correct.
Mr. Kind. Is there any containment being done right now on
the tailings pile to ensure there will not be any run-off or
leakage into the Colorado River?
Mr. Culp. Carlton, can you help on that? This is Carlton
Lance, our environmental protection specialist.
Mr. Lance. No, there is currently not at this point in
time. The pile is at an angle of repose--very, very steep, and
not vegetated. It is exposed to all kinds of precipitation and
run-off, which is carrying small particles from the pile into
the adjacent West Sharrard Creek, which is less than half the
distance from you to me.
Mr. Kind. And there have been some positive tests for
arsenic in the groundwater?
Mr. Lance. Arsenic and other heavy metals. And, as Mr. Culp
also said, another primary concern of the State of Colorado is
the proximity of this pile to the West Sharrard Creek. It is
very close, like I said, half the distance between you and me
right now. And the West Sharrard Creek is starting to meander
into the shale pile, which is causing the shale pile to sluff
off into the creek and eventually end up in the Colorado River.
Mr. Kind. Who created the tailings pile to begin with? If I
understand this right, you inherited this from the Department
of Energy, who inherited it from the Department of Defense. Who
created the tailings pile to begin with?
Mr. Culp. It was created during the experimental work to
develop oil shale by contractors who, at the time, were
primarily working for the Bureau of Mines.
Mr. Kind. There were private contractors involved?
Mr. Culp. Yes.
Mr. Kind. Okay. It is also my understanding that BLM
awarded a competitive lease to the highest bidder, Barrett
Resources, who paid a bonus of $7.5 million but as part of the
sale, Barrett now acquires ownership of DOE infrastructure.
What type of infrastructure are we talking about?
Mr. Culp. Mr. Kind, DOE actually drilled the original gas
wells in the reserve, so it is the wells, it is the pipelines
within the field, the tanks, et cetera.
Mr. Kind. Okay.
Mr. Hefley, have you had any conversations with our
appropriators in regards to this legislation? Have you gotten
any feedback from the Appropriations Committee and how they
feel about this?
Mr. Hefley. No, I have not. In reality, I do not think they
have to appropriate this. I think that is already done by the
lease process that we had here. But we do need an ability to
access those funds and that is what this bill would do.
Mr. Kind. Concern about any points of order being raised in
light of setting up this separate reserve for this stated
purpose? Is there potential for a point of order to be invoked?
Mr. Hefley. It is possible but I have heard of no one who
wants to do that.
Mr. Kind. Okay.
Mr. Hefley. We have had a checkered history with oil shale
in Colorado and I do not know, Barbara, is you have gotten into
it in Wyoming, as well, but I can remember when Mr. Tancredo
and I served in the legislature. My gosh, there was going to be
an oil shale boom.
I remember before that, Tom, I looked at a ranch out there
very near this place to buy years ago, over 30 years ago, and
they said oh, there is going to be this great oil shale boom.
In fact, we built highways to the Western Slope based on the
fact that we need those highways because of the oil shale boom.
So it has been kind of a boom and bust experience over the
years. At first, no one paid much attention. It is kind of like
with the gold mining, silver mining, and other things we had in
Colorado. You did not pay much attention to the slag piles. You
just kind of shoved them out there where it was convenient.
Now we are much more environmentally sensitive to those
kinds of things and the arsenic and the heavy metals in the
Colorado River, the river that supplies not only for Colorado
communities like Grand Junction but all the way to Los Angeles,
you want to minimize the run-off from these kinds of things if
you can.
So this is something I think that desperately needs to be
cleaned up. There are a lot of slag piles in Colorado that need
to be cleaned up, as a matter of fact, from various mining
operations where we just simply were not very environmentally
conscious at that time.
Mr. Kind. Thank you.
Thank you, Madam Chair.
Mrs. Cubin. The chair now recognizes Mr. Tancredo.
Mr. Tancredo. Thank you, Madam Chairman.
I understand, Mr. Culp, that industry has shown a lot of
interest in some of the unleased lands within NOSR-1 and -3 and
that the BLM has done some preliminary studies on those
properties. Could you tell me when you expect the plan to be
completed and when the lands can be made available for leasing?
Mr. Culp. Yes, I can. We are in the early stages of a new
land use planning process for the area under the Federal Land
Policy and Management Act that we need to complete to do
additional leasing and we expect that within approximately two
to 3 years there will be more leasing.
Mr. Tancredo. Thank you. I have no other questions, Madam
Chairman.
Mrs. Cubin. Mrs. Napolitano was here first.
Mrs. Napolitano. Thank you, Madam Chair.
It is with great interest that I am listening to you
gentlemen talk about the removal of a contaminated site in
Colorado because I have been working on a bipartisan basis to
try to remove the uranium contaminated pile in Moab.
That kind of brings to mind your discussion or your
statements that the site has been owned and operated by
Interior, prior, Defense, and prior, Bureau of Mines. Were
there any private owners that were involved in this mining
operation?
Mr. Culp. There were private contractors that--
Mrs. Napolitano. Owners.
Mr. Culp. I do not believe there were private owners.
Mrs. Napolitano. And the total removal cost over the 5
years will be approximately about--what was the figure?
Mr. Culp. The most likely alternative we think is about $6
million.
Mrs. Napolitano. 6. Now does that include the
transportation? I am assuming you are moving this pile onto a
nonleaching site, a rock bottom or something to that effect. Am
I correct?
Mr. Culp. That is correct.
Mrs. Napolitano. The cost would be more involving the
actual transportation, if I remember correctly because we have
been through this from the other end. Is that fair enough, that
amount of money that you are talking about? Because if you are
talking about a pile that is exceedingly large--what did you
say?--three football fields and 350 feet--to be able to move
it, is the site already found?
Mr. Culp. We are looking at alternatives and we believe
there will be a suitable site within the reserve.
Mrs. Napolitano. Right within the reserve?
Mr. Culp. Within the reserve. You are absolutely correct
that the distance that you have to move the material is--
Mrs. Napolitano. Is the cost.
Mr. Culp. Is the primary cost-determining factor.
Mrs. Napolitano. That is why I am questioning the amount
that you have indicated might suffice. But this is going to be
enough for it to be done properly?
Mr. Culp. To illustrate how sensitive it is to distance,
the upper cost estimate that came out of our study, which was
close to $20 million, looked at a location that was 250 miles
away?
Mr. Lance. Yes, outside the State of Colorado. The vast
majority of that is transportation costs and that was to go to
a TSDF facility.
Mrs. Napolitano. That is why I am asking have you found the
site and how proximate to--
Mr. Lance. We are looking at a site, a potential site right
now within about two to two and a half miles away from the pile
where it currently--
Mrs. Napolitano. But it has not been determined.
Mr. Lance. With that type of transportation, the cost would
be minimal. And the area that we are looking at is a 60-acre
tract of land with a pile on it 15 feet high for 60 acres that
would suffice for disposal.
Mrs. Napolitano. The next question I have, and it is more
of a statement, is I am looking at information given to us by
our staff that DOE owned the wells. Am I correct? So the output
was their own? I am talking about they owned the wells
outright?
Mr. Culp. They did own the wells, yes, when they were first
put in in the 1980's.
Mrs. Napolitano. It says the agency appeared to be losing
money because the appropriated dollars to contract drilling and
production operations exceeded receipts from the sale of gas.
And that is a very important point to me because we have been
discussing with gas operators that the Federal agency should go
into the royalties in kind, if you will, and that, to me, is
very salient, what you are saying here. We have not operated at
a profit before.
Do you have any comment on that?
Mr. Culp. Well again, that was DOE's operation during that
period. I could just say that overall, our revenues for
managing oil and gas on Federal lands are about 20 times what
we--this is on a national basis now--about 20 times what it
costs us to administer the program, so it is a--
Mrs. Napolitano. A losing proposition?
Mr. Culp. A revenue positive proposition.
Mrs. Napolitano. Oh, positive.
Mr. Culp. For the government, yes.
Mrs. Napolitano. Interesting.
I am just very glad that you are taking a very active role,
Congressman Hefley, on this issue because to a lot of us, it is
important that we be able to address contaminated sites. They
are possible time bombs when it comes to rains or other types
of activity that will disseminate that to nearby areas and
affect not only people but other areas that are so sensitive.
Thank you.
Mrs. Cubin. And I thank Ms. Napolitano. Your district
drinks some water from the Colorado River, as well, a lot
farther down the pike but still.
We do not have any other questions. I would like to thank
the panel for their testimony and look forward to moving this
bill, making the changes that are necessary that are suitable
to you and to the administration so we can get some dirt moved
and start the clean-up. I know that is what everyone has in
mind.
So the Subcommittee on Minerals and Energy Resources is
officially adjourned. Thank you.
[Whereupon, at 11:20 a.m., the Subcommittee was adjourned.]
[A letter submitted for the record by Jane E. Norton,
Executive Director, Colorado Department of Public Health and
Environment, follows:]
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