[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]




 
 H.R. 4761, ``DOMESTIC ENERGY PRODUCTION THROUGH OFFSHORE EXPLORATION 
        AND EQUITABLE TREATMENT OF STATE HOLDINGS ACT OF 2006''

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

                          LEGISLATIVE HEARING

                               before the

                         COMMITTEE ON RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                        Wednesday, June 14, 2006

                               __________

                           Serial No. 109-55

                               __________

           Printed for the use of the Committee on Resources



  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html
                                   or
         Committee address: http://resourcescommittee.house.gov


                                 ______

                    U.S. GOVERNMENT PRINTING OFFICE
28-226                      WASHINGTON : 2006
_____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512ï¿½091800  
Fax: (202) 512ï¿½092250 Mail: Stop SSOP, Washington, DC 20402ï¿½090001

                         COMMITTEE ON RESOURCES

                 RICHARD W. POMBO, California, Chairman
       NICK J. RAHALL II, West Virginia, Ranking Democrat Member

Don Young, Alaska                    Dale E. Kildee, Michigan
Jim Saxton, New Jersey               Eni F.H. Faleomavaega, American 
Elton Gallegly, California               Samoa
John J. Duncan, Jr., Tennessee       Neil Abercrombie, Hawaii
Wayne T. Gilchrest, Maryland         Solomon P. Ortiz, Texas
Ken Calvert, California              Frank Pallone, Jr., New Jersey
Barbara Cubin, Wyoming               Donna M. Christensen, Virgin 
  Vice Chair                             Islands
George P. Radanovich, California     Ron Kind, Wisconsin
Walter B. Jones, Jr., North          Grace F. Napolitano, California
    Carolina                         Tom Udall, New Mexico
Chris Cannon, Utah                   Raul M. Grijalva, Arizona
John E. Peterson, Pennsylvania       Madeleine Z. Bordallo, Guam
Jim Gibbons, Nevada                  Jim Costa, California
Greg Walden, Oregon                  Charlie Melancon, Louisiana
Thomas G. Tancredo, Colorado         Dan Boren, Oklahoma
J.D. Hayworth, Arizona               George Miller, California
Jeff Flake, Arizona                  Edward J. Markey, Massachusetts
Rick Renzi, Arizona                  Peter A. DeFazio, Oregon
Stevan Pearce, New Mexico            Jay Inslee, Washington
Henry Brown, Jr., South Carolina     Mark Udall, Colorado
Thelma Drake, Virginia               Dennis Cardoza, California
Luis G. Fortuno, Puerto Rico         Stephanie Herseth, South Dakota
Cathy McMorris, Washington
Bobby Jindal, Louisiana
Louie Gohmert, Texas
Marilyn N. Musgrave, Colorado
Vacancy

                     Steven J. Ding, Chief of Staff
                      Lisa Pittman, Chief Counsel
                 James H. Zoia, Democrat Staff Director
               Jeffrey P. Petrich, Democrat Chief Counsel
                                 ------                                

                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on Wednesday, June 14, 2006.........................     1

Statement of Members:
    Cubin, Hon. Barbara, a Representative in Congress from the 
      State of Wyoming, Prepared statement of....................   101
    Jindal, Hon. Bobby, a Representative in Congress from the 
      State of Louisiana.........................................     2
        Prepared statement of....................................     4
    Pallone, Hon. Frank, Jr., a Representative in Congress from 
      the State of New Jersey....................................     5
    Pombo, Hon. Richard W., a Representative in Congress from the 
      State of California........................................     1
        Prepared statement of....................................     2

Statement of Witnesses:
    Angers, Jefferson M., Executive Director/CEO, Coastal 
      Conservation Association of Louisiana......................    81
        Prepared statement of....................................    83
    Burton, R.M. ``Johnnie,'' Director, Minerals Management 
      Service, U.S. Department of the Interior...................     7
        Prepared statement of....................................     9
    Castille, Colleen M., Secretary, Florida Department of 
      Environmental Protection...................................    41
        Prepared statement of....................................    43
    Cleveland, Terry, Director, Wyoming Game and Fish Department.    69
        Prepared statement of....................................    71
    Fry, Tom, President, National Ocean Industries Association...    85
        Prepared statement of....................................    86
    Lopez, Daniel H., President, New Mexico Institute of Mining 
      and Technology.............................................    58
        Prepared statement of....................................    59
    McCormick, Carolyn E., Managing Director, Outer Banks 
      Visitors Bureau, Dare County Tourism Board of Directors....    73
        Prepared statement of....................................    75
    Randolph, Charlotte A., President, Lafourche Parish, 
      Louisiana..................................................    54
        Prepared statement of....................................    55
    Sisskin, Dr. Enid, Director, Gulf Coast Environmental Defense    89
        Prepared statement of....................................    91
    Wagner, Hon. Frank W., Senator, Senate of Virginia...........    38
        Prepared statement of....................................    40

Additional materials supplied:
    Angelle, Hon. Scott, Secretary, Louisiana Department of 
      Natural Resources, Statement submitted for the record......    46
    Ducks Unlimited, Congressional Sportsmen's Foundation, et 
      al., Statement submitted for the record....................    53
    Swift, George, Interim President and CEO, The Chamber SWLA, 
      Letter submitted for the record............................   102


 LEGISLATIVE HEARING ON H.R. 4761, ``DOMESTIC ENERGY PRODUCTION THROUGH 
 OFFSHORE EXPLORATION AND EQUITABLE TREATMENT OF STATE HOLDINGS ACT OF 
                                2006.''

                              ----------                              


                        Wednesday, June 14, 2006

                     U.S. House of Representatives

                         Committee on Resources

                            Washington, D.C.

                              ----------                              

    The Committee met, pursuant to call, at 11:12 a.m. in Room 
1324, Longworth House Office Building, Hon. Richard W. Pombo 
[Chairman of the Committee] presiding.
    Present: Representatives Pombo, Jindal, Pallone, 
Faleomavaega, Peterson, Gibbons, Mark Udall, Abercrombie, 
Walden, Costa, Drake, Melancon, Boren and Pearce.

  STATEMENT OF THE HON. RICHARD W. POMBO, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    The Chairman. The Committee meets today for a legislative 
hearing on H.R. 4761, the Domestic Energy Production through 
Offshore Exploration and Equitable Treatment of State Holdings 
Act of 2006.
    I am going to recognize Mr. Jindal on our side since he is 
the lead author of the bill. But I did want to thank him, Mr. 
Peterson, Mr. Abercrombie, Mr. Melancon, Mrs. Drake, and others 
on the Committee that have worked so hard on this issue over 
the past year or two that it has been thrown in front of this 
Committee, and has become a bigger issue.
    I can say that obviously Mr. Peterson and Mr. Abercrombie 
have a bill that has a substantial number of cosponsors dealing 
with this issue. We have about two dozen bills that have been 
introduced in this session of Congress dealing with offshore 
oil and gas development, so it is obviously becoming a bigger 
and bigger issue, and something that it is high time that 
Congress finally deal with.
    Having said that, I am going to recognize Mr. Jindal to 
explain the legislation.
    [The prepared statement of Mr. Pombo follows:]

          Statement of The Honorable Richard Pombo, Chairman, 
                         Committee on Resources

    On behalf of the full committee, I would like to welcome everyone 
in attendance today and specifically our witnesses. The committee meets 
today for a Legislative hearing on H.R. 4761, ``The Domestic Energy 
Production through Offshore Exploration and Equitable Treatment of 
State Holdings Act of 2006.''
    The intent of this legislation, offered by Mr. Jindal and supported 
by Mr. Melancon and many other Members of the Committee, is to 
modernize the Nation's Ocean Energy Policy enhancing the country's 
ability to increase domestic production of oil and natural gas, and 
alternative energy from the Outer Continental Shelf (OCS) reducing the 
amount of foreign-oil imports required to meet the Nation's energy 
needs.
    The concepts in this bill were debated and passed out of this 
Committee on two occasions last fall. Further, the Committee has held 
several legislative and oversight hearings regarding the concepts in 
this bill.
    Last fall the Subcommittee on Energy and Mineral Resources held a 
legislative hearing on H.R. 4318, ``The Outer Continental Shelf Natural 
Gas and Relief Act of 2005.'' The legislation, offered by Mr. Peterson 
and Mr. Abercrombie, contains some provisions similar to the 
legislation we will be discussing today, but that bill only addresses 
the exploration and development of natural gas.
    The bipartisan efforts by Members of this Committee and other 
Members of Congress to find a way to provide reasonable access to the 
oil and natural gas resources in the OCS is in direct response to the 
needs of our constituents and American businesses.
    Today the United States has the highest natural gas prices in the 
world averaging $9 per thousand cubic feet (Mcf) at the Henry Hub in 
2005 compared to $2 - $2.50 per thousand cubic feet (Mcf) in the 
1990's. These high prices have severely impacted the ability of our 
chemical and manufacturing industries to operate at a profit here in 
the U.S. and have forced the closure of many domestic facilities and 
the loss of thousands of family wage jobs.
    In 2003, the Speaker's Task Force on Affordable Natural Gas and 
Chairman Greenspan predicted that high gas prices would have exactly 
this affect--plant closings and family wage job losses in the 
manufacturing, chemical and fertilizer industries--and increased costs 
to American families to heat and cool their homes. We were very 
fortunate that last winter was mild.
    Just recently Chairman Greenspan has again warned that high energy 
prices are starting to impact our economy and contribute to 
inflationary pressures on the dollar.
    We are more than 60% dependent on foreign sources of oil to meet 
our domestic energy requirements. This dependence has a direct impact 
on our trade deficit which increased by 2.5 percent in April 
specifically due to increased crude oil prices.
    We can provide Americans with lower energy costs by providing 
access to more of our domestic resources. Currently 85% of the outer 
Continental Shelf (OCS) of the lower-48 states is closed to development 
of natural gas and oil resources through the Presidential withdrawal 
and the annual Congressional moratoria.
    The Minerals Management Service (MMS) of the Department of the 
Interior says that the areas under moratoria likely contain between 94 
and 164 Trillion cubic feet (Tcf) of natural gas and between 21.25 and 
40.6 billion barrels of oil--enough resources to lower consumer costs 
for natural gas and oil for decades to come.
    It seems to me that we have bipartisan support within this 
Committee to provide access to the oil and/or gas resources in the OCS 
in a way that allows the differing views of coastal states to be 
addressed, some that want production and some that do not, that will 
allow us to produce more of our own energy resources domestically.
    I look forward to hearing from our witnesses and working with each 
of you to bring more domestic energy to the American people. I yield 
the balance of my time to Mr. Jindal to describe his bill more fully.
                                 ______
                                 

    STATEMENT OF THE HON. BOBBY JINDAL, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF LOUISIANA

    Mr. Jindal. Thank you, Mr. Chairman. I have a longer 
statement I would like to submit for the record, with your 
permission.
    The Chairman. Without objection.
    Mr. Jindal. Mr. Chairman, thank you very much for your 
allowing us to have this hearing. I want to thank many of my 
colleagues on this Committee that have already joined us in 
cosponsoring this legislation. I will have time later in the 
questions to make various points, but for now I am just going 
to summarize for you the major provisions of H.R. 4761.
    The premise of the legislation is quite simply that we 
allow states to have more self-determination, more control over 
what happens off their coastal zones than they have today. 
Along with that decision--for example, we allow states to 
determine what happens 125 miles off their coast.
    Along with that discretion, however, we also want to give 
the states a portion of the royalties that are already being 
generated, and will be generated, off their coast. So we say to 
states you decide what happens the first 125 miles. For 
example, we allow states to decide whether they want to have 
oil leasing, whether they want to have gas-only leasing, 
whether they want to have oil and gas leasing.
    For those states that do choose to allow production, we do 
share with them proceeds. We give them 75 percent of the 
royalties from their state's boundary to 12 nautical miles. 
Everything beyond that we share with them. We phase in a 50-
percent sharing of those royalties.
    What we are trying to do here is to try to be equitable to 
states. As the Chairman already knows, and Members of this 
Committee likely know, there are certain states, like Texas and 
Florida, that receive royalties nine, 10 miles off their 
coasts. There are other states like Louisiana that don't 
receive those royalties. Other states receive 50 percent of the 
royalties on the Federal lands within their boundaries.
    And so the idea here is to treat states equitably. So those 
states that are allowing production, to allow them a share of 
those royalties that are being generated.
    There are several other provisions. For example, the 
allowance of gas-only leases. We also set up a royalties 
program for oil shale and tar sand programs. We have heard in 
this Committee the tremendous work being done in Canada and 
elsewhere to commercialize, to get energy production from these 
resources.
    There are several other provisions about the citing of 
pipelines, and there are also funds that are created in this 
bill. In addition to sharing royalties with the states there 
are funds that are created for education purposes, to begin to 
replace the skilled work force we are going to need for our 
future energy production needs.
    The bill thus tries to balance the states' legitimate needs 
and concerns with our nation's needs for reliable domestic 
energy supplies. The idea is that let us let states have the 
final say in what happens off their coasts, but at the same 
time let us share with those states the royalties generated off 
their coasts. This is obviously a very important issue for our 
farmers, for our paper, for our chemical industries, for our 
drivers.
    I will close, Mr. Chairman, from a Louisiana perspective. 
We provide the Nation with almost 30 percent of the energy that 
comes in off of our coast, yet we are losing 30 miles a year 
off of our coast. It is Louisiana's intention to use this 
money--and this is supported by our Democratic Governor, by 
several officials and several groups in the state--it is our 
intention to use this money to restore out coast. We are losing 
30 miles a year off our coast.
    The whole premise behind royalty sharing was to help reward 
those states, to mitigate them for the impact of energy 
production on their lands, off their coasts. We think a very 
strong case can be made for offshore energy production to help 
states like Louisiana and other coastal states, to help 
mitigate the impact of those activities.
    We will be hearing today from witnesses from Louisiana and 
other coastal states that can talk to you about energy 
production, why it is important, why we as a state are very, 
very enthusiastic about our support for this production.
    I know Mr. Melancon is not here. I was going to yield to 
him a little bit of my time. But I know he is a very strong 
supporter. I want you to know the entire Louisiana delegation, 
Democratic and Republican, stands united behind this 
legislation.
    And with that, I yield back the balance of my time. Thank 
you, Mr. Chairman.
    [The prepared statement of Mr. Jindal follows:]

 Statement of The Honorable Bobby Jindal, a Representative in Congress 
                      from the State of Louisiana

    Thank you, Chairman Pombo, for holding a hearing on this bill.
    Today we will consider ``The Domestic Energy Production through 
Offshore Exploration and Equitable Treatment of State Holdings Act of 
2006.'' I introduced this bill in February and I am pleased that in 
just four months this bi-partisan legislation has attracted the support 
of 108 Members of Congress. My bill will give states the discretion to 
decide whether to open their coast to drilling and whether to allow 
drilling for natural gas, oil, or both.
    With the price of oil and gas near record highs, it is apparent 
that we must act to alleviate the burden placed on American families 
trying to make ends meet. We must help the agriculture and 
manufacturing industries that fight to keep their factories and plants 
open and employ hundreds of thousands of hard-working Americans. The 
ramifications of high gas prices are already being felt on these 
industries. In the last six years twenty-one fertilizer plants have 
either been permanently closed or have temporarily closed their doors. 
It is estimated that 100,000 jobs in the chemical industry and 120,000 
jobs in the forestry industry have been lost largely as a result of 
rising natural gas prices. My home state of Louisiana alone has already 
lost over 5,000 petrochemical jobs.
    Because of our dependence on foreign sources of oil and gas, high 
prices are unlikely to fall. Unrest in Iran and Nigeria continues to be 
one factor in the skyrocketing cost of fuel. We have heard the 
president of Venezuela threaten to burn his oil fields and further 
reduce our oil supply. It is irresponsible to allow events thousands of 
miles away to cause a spike in the price of natural gas and oil when we 
have untapped resources within 200 miles of our shores and within our 
oil shale and tar sands.
    H.R. 4761 balances this goal in an environmentally responsible 
manner. Natural gas and oil drilling has occurred off our coasts in a 
safe and efficient manner for years. The technology and efficiency of 
the offshore oil and gas industry is such that states should be in the 
position to decide for themselves what type of energy activity to allow 
off their coasts. Since 1980, operators in the Outer Continental Shelf 
have produced more than 6.9 billion barrels of oil. During that time 
oil producers have had a solid safety record with an environmental 
exposure rate of just 0.001% or one barrel for every 93,000 barrels 
produced.
    Further proof of the safety of oil and gas drilling was provided 
last year. Hurricanes Katrina and Rita were two of the most destructive 
natural disasters to impact the Gulf of Mexico. Yet despite the 
ferocity of these storms, more spills occurred from natural seeps in 
the ocean floor than from the destruction wrought on the production 
rigs and platforms in the Gulf. The results of sample tests on Gulf 
fish conducted two weeks after Hurricane Katrina found no elevated 
exposure to hydrocarbon contaminants which would be present at elevated 
levels in marine life in the event of an oil spill.
    Moreover, receiving a fair share of oil and gas revenues, producing 
states would be provided with annual revenues that could be used for 
coastal restoration, hurricane protection, and levee improvements. In 
Louisiana, the revenues will be used for coastal restoration and 
hurricane protection.
    Let me turn to the impact of this bill on my home state of 
Louisiana. Louisiana and other producing states have tried repeatedly 
for over 50 years to get an equitable share of revenues produced from 
oil and gas production in the Gulf of Mexico. Even though the Gulf of 
Mexico produces thirty percent of our domestic supply of oil generating 
$5-$7 billion in oil and gas revenues every year, the state receives 
less than one percent of that money, or about $32 million in 2005.
    By contrast, we have spent nearly $82.1 billion on supplemental 
requests since Hurricanes Katrina and Rita. This bill would help reduce 
that assistance from the federal government after future disasters by 
providing Louisiana with the funding that would allow us to prepare for 
future disasters and mitigate the damages if such a tragedy should 
occur again. I am pleased to report that Governor Kathleen Blanco is 
supportive of this legislation. As a delegation we are united behind 
this bill.
    Thank you Chairman Pombo.
                                 ______
                                 
    The Chairman. Thank you. We recognize Mr. Pallone.

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

    Mr. Pallone. Thank you, Mr. Chairman. With this hearing, 
the Resources Committee is once again moving ahead with 
legislation that threatens our coastal resources, while taking 
the wrong approach toward addressing our nation's dangerous 
dependence on fossil fuels.
    Today's bill adds a twist to our usual debate. Not only 
does it gut coastal protections, but it could also seriously 
wound the Federal Treasury.
    Let me first reiterate what I say every time we have this 
debate about offshore drilling. Proponents of undoing offshore 
drilling moratoria often like to argue the economics, I should 
say, of the cost of oil and gas. But they neglect to mention 
the tremendous economic benefits of clean beaches and clean 
oceans.
    In my home state of New Jersey, tourism supports nearly 
500,000 jobs, and indirectly generates $16.6 billion in wages 
and $5.5 in state tax revenue. Much of that enormous economic 
engine is driven by our coastline, which we work very hard to 
protect. All it takes is one incident from an industrial 
drilling rig sitting in the ocean to put this entire economic 
engine at risk.
    Under the guise of giving states choices, the bill before 
us today undoes 25 years of bipartisan Congressional and 
Administrative moratoria that have provided critical protection 
for our coasts.
    H.R. 4761 undoes longstanding policy establishing Federal 
jurisdiction over waters beyond the state's seaward boundary, 
and stacks the deck against states trying to prevent drilling 
that would threaten their shores.
    I am extremely concerned that H.R. 4761 also continues to 
promote the fiction of gas-only drilling on the outer 
Continental Shelf, supposedly an environmentally friendly way 
of drilling. We should all be clear in one thing today, that 
there is simply no such thing as gas-only drilling.
    Proponents of this bill, like many other pro-drilling 
voices in the House, have sold their colleagues a bill of 
goods, in my opinion, trying to convince them that gas-only 
drilling can be done without spoiling the environment. Well, 
they forgot to mention that it is impossible to guarantee that 
you won't strike oil while drilling for gas.
    And what happens when you do hit oil? Well, according to 
Section 6 of this bill, the drilling company has specific 
rights to the oil. If states go through the complicated 
processes for objecting to the extraction of oil in these 
leases, as set up by this legislation, then the drilling 
company actually has a right to compensation from the Federal 
government.
    Mr. Chairman, how many more favors at taxpayers' expense is 
this Congress going to do for oil and gas companies?
    H.R. 4761 also puts serious hurdles in the way of my home 
state of New Jersey and others seeking to protect their shores 
from the potential impact of drilling. In order to exercise 
their so-called choice to prevent offshore drilling, New 
Jersey, a state with a part-time legislature, would have to 
affirmatively act every five years to prevent drilling.
    Moreover, it is unclear in this bill whether or not New 
Jersey would be able to prevent its neighbors from opening 
nearby coastlines to drilling. After our experience with 
medical waste from New York washing up on our beaches in the 
eighties, this is not something that we take lightly. Our 
shores in New Jersey and our beaches were completely closed. We 
lost billions of dollars primarily because of the actions of 
New York, and the same thing could happen here with regard to 
drilling by an adjacent state.
    I must also ask how this bill will help our energy crisis. 
This will do virtually nothing for the price of gas. It takes 
up to seven years to begin producing from offshore bases, from 
an offshore lease.
    Furthermore, the area currently under moratoria simply 
don't contain some major energy prize. The best areas are not 
under the moratoria, but are far from being developed. In fact, 
I would like to know why the gas industry is so keen on getting 
these moratoria areas open for drilling, when they have 
thousands of leases already in place, both on shore and off 
shore, that they haven't bothered to explore. If we are so 
concerned about supply, why aren't the companies pitching in 
and dealing with those areas?
    And finally, Mr. Chairman, I am extremely concerned about 
the cost of this bill to the Federal Treasury. The concept of 
splitting revenues that have always belonged to the taxpayers 
of the United States because these are waters managed by the 
United States would be completely upended here.
    How much would this bill divert from the Treasury? We don't 
know exact numbers yet, but I would like to point out that Mr. 
Jindal has issued a press release claiming that this bill would 
mean $50 billion over 30 years for Louisiana alone, to say 
nothing of the other five producing states, or any other state 
that opts for drilling. So this may benefit the state, but on 
the other hand it takes the money away from the Federal 
Treasury.
    And Mr. Chairman, this bill creates a new and dangerous 
concept of managing our offshore resources, and we should tread 
very carefully. I fought to protect my state's coastline for 
many years, and as part of that fight I intend to vehemently 
oppose this bill. I think it is wrong for our shores, it is 
wrong for our energy crisis, and it is also wrong for the 
Federal taxpayers.
    Thank you, Mr. Chairman.
    The Chairman. So does that mean you still have an open mind 
on it?
    Mr. Pallone. No.
    [Laughter.]
    Mr. Pallone. No, but thank you.
    The Chairman. I was just checking. Well, thank you for 
that.
    I would like to recognize our first panel. Johnnie Burton 
is the Acting Assistant Secretary, Land and Minerals 
Management, U.S. Department of Interior. If I could have you 
stand and raise your right hand, we customarily swear in all of 
our witnesses.
    [Witness sworn.]
    The Chairman. Thank you very much. Let the record show she 
answered in the affirmative.
    Welcome back to the Committee. Thank you for being here. We 
look forward to your testimony. I know that the Administration 
spent a great deal of time on this, and has looked at this 
issue quite extensively over the last several years. So when 
you are ready, you can begin.

  STATEMENT OF JOHNNIE BURTON, DIRECTOR, MINERALS MANAGEMENT 
            SERVICE, U.S. DEPARTMENT OF THE INTERIOR

    Ms. Burton. Thank you very much, Mr. Chairman, Members of 
the Committee. I appreciate the opportunity to appear before 
you today to discuss H.R. 4761.
    As a nation, we need to expand our domestic production, 
while decreasing our dependence on foreign sources of oil and 
gas. We appreciate the interest and the attention this 
Committee has given to the nation's future energy needs, and we 
applaud your efforts.
    As you know, the oil and gas produced from the OCS plays a 
major role in supplying our nation's daily energy needs. It 
accounts for 21 percent of gas produced domestically, and 30 
percent of oil produced domestically.
    As a nation, offshore energy and Mineral Resource 
Management Agency, the MMS, has a focused and well-established 
ocean mandate: To conduct an environmentally sound program for 
the exploration and development of oil and gas, and renewable 
energy resources.
    The environmental record of the OCS oil and gas program is 
outstanding. There has not been a significant spill from a well 
on the OCS in the last 35 years.
    We are extremely mindful of how important this energy 
production is to our nation's economic well-being. Accordingly, 
we must thoroughly assess the impacts of all the changes to the 
OCS program proposed by H.R. 4761.
    We have begun the evaluation, but more time is needed. This 
bill is very comprehensive, it is extremely complex, and 
requires quite a bit of time to be analyzed. Therefore, today I 
will highlight our general view on three of the bill's most 
significant provisions related to the OCS oil and gas program.
    The sharing of OCS mineral revenue with state and local 
governments. Allowing states to opt in or opt out of OCS 
leasing and production. Leasing and permitting for gas-only 
exploration and production.
    Let me talk about revenue sharing first. H.R. 4761 would 
establish a multi-tiered program of OCS revenue sharing. For 
certain leases, 50 percent to 75 percent of the receipts would 
be shared as soon as production is available. For others, the 
percentage of receipts shared would increase over time, until 
they reach 50 percent in year 2022.
    The bill specifies procedures for allocating these revenues 
to coastal states, counties and county equivalents, and 
municipal political subdivisions. The OCS revenue could be used 
by the state any way they see fit.
    The Administration supports opening up additional oil and 
gas resources for development on the OCS that are currently not 
available for leasing, and could support appropriately 
structured revenue sharing from new areas. However, we have 
serious concerns about this bill because of its excessive 
short- and long-term costs.
    Therefore, we would like to offer to work with your 
committee, Mr. Chairman, to amend the bill to address these 
concerns.
    For nearly two decades, large areas of the OCS have been 
under a Congressional moratorium, Presidential withdrawal, or 
both. And the current Presidential withdrawal is in effect 
until 2012.
    H.R. 4761 would allow the Governors of coastal states, with 
the concurrence of their State Legislatures, to petition the 
Secretary of the Interior either to opt in and make areas off 
their coast available for gas-only production, or opt out and 
extend the Presidential withdrawal of their coast beyond 2012.
    The Administration has generally supported this concept, 
stating its support for the continuation of moratoria and 
willingness to discuss with individual states their wish to 
explore the possibility of having oil or gas activity conducted 
on the OCS off their coasts.
    The OCS is a public resource that belongs to all Americans, 
and they should be heard, as well. As we began the development 
of our five-year program, OCS program for 2007 to 2012, MMS 
asked the public to comment on whether the existing withdrawals 
and moratoria should be modified, or whether the program should 
be expanded to include other areas on the OCS.
    Subsequently, we published the draft proposed program for 
another round of public comment. Both times these comments were 
around 70 percent to 75 percent in favor of expanding OCS areas 
for oil and gas production. We will continue to reach out to 
the states and to all stakeholders. Such consultation is a 
central component to the Administration's approach.
    H.R. 4761 would amend the OCS Lands Act to allow for gas-
only leasing in areas currently withdrawn from leasing. If a 
company acquired a gas-only lease and made a discovery that 
included both oil and gas, the Secretary would need to 
determine that 40 percent of the BTU content of the field was 
attributable to the gas before the gas could be produced. The 
oil could not be produced if the Governors and Legislatures of 
the adjacent and neighboring states objected.
    If the BTU content did not meet the 40 percent gas 
criterion, the lessee could request that the Federal government 
repurchase the lease and reimburse the lessee for all the 
expenses on that lease. This arrangement significantly alters 
the traditional business relationship between government and 
the private sector.
    In an attempt to offset the potential loss incurred by 
industry if oil is discovered, it shifts most of the risks from 
the companies to the government. This provision would be 
extremely difficult to administer, and potentially extremely 
costly for the government.
    The obvious question, however, is are the oil and gas 
companies interested in gas-only leases. We asked this question 
in our request for information when we developed our 2007 to 
2012 plan. The majority of the numerous comments we received 
from industry were not in favor of gas-only leases.
    They cited the difficulty of predicting with certainty the 
amount and type of hydrocarbons located in frontier areas as a 
risk factor that would have to be overcome before gas-only 
leases would be a viable investment. Of course, if they were 
protected by a buy-back and hold-harmless provision, as this 
bill does, then industry may very well be interested.
    In conclusion, Mr. Chairman, this bill has many technical 
provisions that would fundamentally change how we manage OCS 
leases. While we have not yet fully analyzed these provisions, 
we are concerned that some of them may cause problems. Changing 
the underlying statutory authorities for processes that have 
been very effective in the Central and Western Gulf of Mexico 
may have unintended consequences.
    Mr. Chairman, we would be very happy to work with your 
staff to address these and other issues. The Department of the 
Interior remains committed to the production of the nation's 
energy resources in an environmentally sound manner as a 
critical component of the President's energy policy.
    Under the oversight of the MMS, the OCS will remain a solid 
contributor to the nation's energy needs. Again, we appreciate 
the continued support and interest of this Committee for MMS's 
efforts.
    Mr. Chairman, that concludes my overall statement, and I 
would be happy to answer questions.
    [The prepared statement of Mr. Burton follows:]

            Statement of R.M. ``Johnnie'' Burton, Director, 
      Minerals Management Service, U.S. Department of the Interior

    Mr. Chairman and Members of the Committee, I appreciate the 
opportunity to appear here today to discuss H.R. 4761, introduced by 
Representative Jindal. We as a Nation need to continue to work on 
expanding our domestic production while decreasing our dependence on 
foreign sources of oil and gas, and we appreciate the interest and 
attention the Committee has given to meeting the nation's future energy 
needs. We applaud your efforts in trying to accomplish these important 
goals.
    H.R. 4761 is a comprehensive and complex piece of legislation, 
addressing a number of energy related issues. The bill would amend the 
Outer Continental Shelf Lands Act (OCSLA), making significant changes 
to the way in which we administer the Outer Continental Shelf (OCS) oil 
and gas program. The bill also contains provisions that would 
potentially affect the programs of several of the Department of the 
Interior's bureaus, as well as those of other agencies, including the 
Federal Energy Regulatory Commission, National Oceanic and Atmospheric 
Administration and the Environmental Protection Agency.
    The Administration supports opening up additional oil and gas 
resources for development on the OCS that are not currently available 
for leasing, and could support appropriately structured revenue sharing 
from new areas. However, we have serious concerns about this bill 
because of its excessive short and long term costs. Therefore we would 
like to work with the Committee to amend the bill to address these 
concerns.
    Because of H.R. 4761's complexity, the Department is still in the 
process of thoroughly analyzing the bill. Therefore, as discussed 
below, I will focus on three of the bill's most significant provisions 
and look forward to working with the Committee and sponsor of H.R. 4761 
on these and other issues in the legislation.
    As you know, the oil and gas produced from the OCS plays a major 
role in supplying our daily energy needs, accounting for 21% of 
domestic natural gas production and 30% of domestic oil production. The 
Western and Central Gulf of Mexico are the only actively explored and 
producing offshore areas, and therefore the most prolific, providing 
20% of the natural gas and 27% of the oil produced domestically. The 
Gulf of Mexico contribution to domestic production is expected to rise 
within the next several years to about 23% of natural gas and 40% of 
oil.
    As the Nation's offshore energy and mineral resource management 
agency, the Minerals Management Service (MMS) has a focused and well 
established ocean mandate--to conduct an environmentally sound and safe 
program for the exploration and development of oil, gas, marine 
minerals and renewable energy resources. The environmental record of 
the OCS oil and gas program is outstanding. There has not been a 
significant platform spill in the last 35 years.
    We are extremely mindful of the importance of this energy 
production to our nation's economic well being, especially in these 
times of high energy prices and potential instability in world oil 
supplies. Accordingly, we must thoroughly assess the energy and 
economic impacts of all of the changes for the OCS program proposed in 
H.R. 4761.
    As stated above, I would like to share our general view of three of 
the bill's most significant provisions related to the OCS oil and gas 
program:
      sharing of OCS mineral revenues with states and local 
governments;
      allowing states to ``opt in'' or ``opt out'' of OCS 
leasing and development; and
      leasing and permitting for natural gas-only exploration 
and production.
Revenue Sharing
    As drafted, H.R. 4761 would establish a phased-in program of OCS 
receipts sharing from designated leases based on their distance from a 
coastline and when they were issued and/or when they went into 
production. For certain leases, 50 to 75 percent of the receipts would 
be shared as soon as production would occur; for others, the percentage 
of receipts shared would increase over time until reaching 50 percent 
in 2022. The bill specifies procedures for allocating these receipts to 
coastal states, counties or county equivalent and municipal political 
subdivisions.
    The OCS receipts shared could be used for any purpose as determined 
by state law, including a reduction in taxes. No recipient of funds 
under this provision would be required to account to the Federal 
government for the expenditure of the funds except as otherwise may be 
required by law.
    The Administration would welcome the opportunity to work with the 
Committee on provisions that could provide greater access to new oil 
and gas resources on the OCS. However, the Administration has 
previously expressed its opposition to legislative provisions such as 
those in H.R. 4761. This is a particular concern because the bill, as 
drafted, would divert significant OCS revenues from existing leases in 
Federal waters for broad uses by coastal states. The revenue sharing 
provisions of H.R. 4761 are inconsistent with the President's budget 
priorities and would have a significant, long-term impact on the budget 
deficit. However, the Administration is willing to enter into a 
dialogue on revenue sharing.
Allowing States to Opt In or Opt Out of OCS Oil ands Gas Activities
    For nearly two decades, large areas of the OCS--the Atlantic and 
Pacific coasts, parts of Alaska and the Eastern Gulf of Mexico--have 
been under a Congressional moratorium or Presidential withdrawal, or a 
combination of both, that precludes most OCS oil and gas activities. 
The current Presidential withdrawal is in effect until 2012.
    H.R. 4761 would allow governors of individual coastal states, with 
the concurrence of their state legislatures, to petition the Secretary 
of the Interior either to make areas off their coasts available for 
gas-only or oil and gas leasing and related activities or to withdraw 
areas off their coasts from consideration of leasing. The 
Administration has generally supported this concept, stating its 
support for the continuation of moratoria but allowing individual 
states that wish to explore the possibility of having oil and gas 
activities conducted on the OCS off their coasts to ``opt out'' of the 
moratorium or withdrawal.
    Although coastal states may have a predominant voice in whether oil 
and gas activities will be permitted off their coasts, we need to bear 
in mind that the OCS is a public resource belonging to all Americans 
and they should be heard as well. To this end, MMS, in seeking initial 
public comment on the 2007-2012 OCS 5-year leasing plan and the 
accompanying environmental impact statement, asked the public to 
comment specifically on whether the existing withdrawals or moratoria 
should be modified or whether the program should be expanded to include 
other areas in the OCS. About 75 percent of the more than 11,000 
private citizens who commented supported a plan that offers increased 
acreage for offshore oil and gas production and development. 
Subsequently, when we published the Draft Proposed Program for comment, 
nearly 70 percent of the 39,500 responses received favored expanded 
access to OCS oil and gas resources. Those opposed to expansion or to 
current activities were mostly concerned about oil spills and 
pollution. The technology used today combined with our regulations were 
put to the test by the 2005 hurricanes. Although there was structural 
damage, the catastrophic pollution that could have ensued did not 
happen. All subsea valves that shut the wells held firm. The 
environmental record of this industry in the last 35 years has been 
remarkable.
    We have received letters from senior citizens expressing their 
``strong support'' for opening additional areas of the OCS. One senior 
citizen wrote ``I'm writing to express my strong support for developing 
more domestic oil and natural gas resources off our coasts--in the 
country's Outer Continental Shelf (OCS)--by providing for more acreage 
for lease in the government's next five-year leasing program for 2007-
2012. ... Higher energy prices of the past two years have forced me to 
make hard choices. And I worry that high energy prices will harm our 
economy affecting the value of pensions and making it more difficult 
for Social Security to help make ends meet.''
    We have also received letters from Chambers of Commerce throughout 
the country. The Indiana Chamber of Commerce wrote, ``The Indiana 
Chamber of Commerce and our members are experiencing high energy costs, 
resulting in a negative impact on production and transportation in 
Indiana.'' The Arkansas Chamber of Commerce stated, ``Over the last 
five years the price of natural gas has risen 140%. There is no doubt 
this increase has played a role in the reduction of manufacturing jobs 
available to Arkansans.''
    We will continue to reach out to States and the public, whether 
they support or oppose the Draft OCS Leasing Proposal. Such 
consultation is a central component of the Administration's decision-
making approach.
Natural Gas-Only Leasing
    H.R. 4761 would amend the OCS Lands Act to allow for natural gas-
only leasing in areas currently withdrawn from leasing. That is, if a 
company acquired a gas-only lease and made a discovery that included 
both oil and gas, the lessee could not produce the oil if the governors 
and legislatures of the adjacent and neighboring states objected. Under 
certain conditions specified in the bill, the lessee could request that 
the Federal government repurchase the lease. The lessee would be 
reimbursed for the cost of the lease plus any costs the lessee had 
incurred in relation to activities associated with the lease. If the 
tract were reoffered as an oil and gas lease within 30 years of the 
repurchase, the lessee or the lessee's designee would have the right to 
repurchase the lease.
    This provision raises a host of issues involving resource 
evaluation, engineering, conservation, efficient use of resources and 
safety. This arrangement would significantly alter the traditional 
business relationship between the government and the private sector by 
shifting much of the risk from the companies to the government, raising 
fair market value concerns. Implementation would be difficult and 
costly for the government.
    An equally important issue is: Are the oil and gas companies, who 
are the potential purchasers of gas-only leases, interested in these 
types of leases? We asked this question when we requested comments on 
our plan to develop the 2007-2012 OCS leasing program. We received 
numerous comments from industry, and the majority was not in favor of 
gas-only production leases. They cited the difficulty of predicting 
with certainty the amount and type of hydrocarbons located in frontier 
areas as a risk factor that would have to be overcome before gas-only 
leases would be a viable investment. Of course, if they were protected 
by a buy-back and hold-harmless provision, as this bill provides, 
industry might be interested; but the additional costs of such 
provisions would thus be inappropriately borne by the taxpayers. Thus, 
while gas-only leasing sounds appealing, as a practical matter, it may 
remain difficult to implement in a manner that reflects sound public 
policy.
Conclusion
    The bill has many provisions that would fundamentally change how we 
manage the OCS and the Mineral Leasing Act. While we have not yet fully 
analyzed these provisions, we are concerned that some of them may cause 
problems. For example, sections 8 and 13 would rewrite the processes 
for reviewing exploration plans and development plans on the OCS. Our 
current processes have evolved over years into what is today a very 
efficient and effective process, particularly in the Central and 
Western Gulf of Mexico where most OCS production occurs. Changing the 
underlying statutory authorities for these processes may have 
unintended consequences. We would be happy to work with Committee staff 
to address these and other issues.
    The Department of the Interior remains committed to the production 
of the Nation's energy resources in an environmentally sound manner as 
a critical component of the President's balanced, comprehensive policy. 
Under the oversight of the Minerals Management Service, the OCS is and 
will remain a solid contributor to the nation's energy needs in the 
upcoming years. In this time of uncertainty, MMS stands ready to 
respond, and is prepared to apply our best science, technical 
experience, and sound management principles to benefit the nation. 
Again, let me express my appreciation for the continued support and 
interest of this committee for MMS's efforts, and reaffirm our 
commitment to working with your staff to arrive at a solution 
satisfactory for all concerned.
    Mr. Chairman, this concludes my statement. It would be my pleasure 
to answer any questions you or other members of the Committee may have 
at this time.
                                 ______
                                 
    The Chairman. Thank you. In your testimony you talk about 
the bill's state opt-in or the opt-out provisions. And you say 
that we need to bear in mind that the OCS is a public resource 
belonging to all Americans.
    With that statement, is it your opinion, or are you 
testifying to the fact that all Americans should be allowed to 
dictate what happens in our coastal areas over the wishes of 
our coastal states?
    Ms. Burton. Mr. Chairman, all Americans are represented by 
their Federal government, and the Federal government 
theoretically speaks for the public. So when we ask that 
question, we assume that the answer we receive is the one to be 
considered by the Federal government to be carried out.
    The President has made it very clear that he wants the 
state to have a voice in that dialogue. And this is why he is 
saying the American public may want more drilling in offshore, 
and the Administration agrees, but it won't happen unless the 
states express their interest in having OCS explored off their 
shores.
    The Chairman. Which is, to a large degree, the intent of 
the legislation that we are holding this hearing on.
    Ms. Burton. I agree, sir.
    The Chairman. Another issue that you bring up is the 
revenue sharing. I am a little confused by your testimony on 
that, because when it comes to on-shore leases, we share 
revenues with the states in which those leases are located. But 
there seems to be an objection to sharing revenue when it comes 
to offshore.
    And I think we all realize that at this point it seems very 
unlikely that we are going to expand to anything offshore, even 
in existing areas where offshore has been allowed, unless there 
is some kind of revenue sharing. From a budgetary standpoint, 
is the Administration willing to forgo all new revenue in order 
to avoid revenue sharing with the states?
    Ms. Burton. Mr. Chairman, I am at the point that I cannot 
answer specific details on revenue sharing. All I can tell you 
is that the budget deficit is something that is very important 
to address, and that revenue from offshore has gone a long way 
to helping in that direction. If we were to give up existing 
revenue or projected revenue, that would be very difficult.
    The Administration is saying we understand revenue sharing 
may be something that is valuable, certainly is to the state; 
we want to discuss it. But we would be more interested in 
discussing brand-new areas that are not factored into 
projections at this time.
    These are things we need to discuss further, and we feel 
that this bill may be what we need to start a dialogue.
    The Chairman. Well, I understand the argument or the debate 
that you have put forward, and what you are testifying to. But 
I think when you go back and talk to the bean-counters down at 
the Administration, I think it would be valuable for you to 
point out to them that they are making the exact same argument 
that our friends on the left make when it comes to tax cuts; 
that it costs too much money to have a tax cut, so therefore we 
shouldn't do it.
    By crippling future revenues, by doing revenue sharing, you 
increase the economy, you increase the amount of revenues that 
have come into the government. The statistics on that are very 
clear. And it has proven that since we have started leasing 
programs, that if you don't have any leases you have zero 
revenue. And if you do have leasing, and you share that revenue 
with the states, you have not only increased the economic 
activity, but also an increased amount of revenue to the 
Federal government.
    And quite frankly, the argument that they are making on 
this bill is the same argument that our friends on the left 
make when it comes to capital gains taxes. So I think maybe you 
can, when you go back down and talk to the folks that make 
those suggestions, that you can point out to them that it is a 
very similar argument that they try to debunk on a capital 
gains tax reduction.
    Having said that, I am going to recognize Mr. Faleomavaega 
for his questions.
    Mr. Faleomavaega. Thank you, Mr. Chairman. I am surprised 
that I am given such an early opportunity; I thought my more 
senior colleagues on the other side would, but that is all 
right. Thank you very much.
    I would like to ask Ms. Burton, the basic underlying 
philosophy, as you well know, Mr. Burton, we have a problem 
here. How do you strike a balance between keeping the 
environment clean, and at the same time making a sincere effort 
to look for resources? Energy resources as we know out of OCS 
is one of the big, big issues among the states and the Federal 
government. How the revenues are to be shared.
    I noted in your statement that you do have some very 
serious problems with the proposed legislation. Have you, if I 
might quote the gentlelady's statement here, the bill has many 
provisions that would fundamentally change how we manage OCS 
and the Mineral Leasing Act. Am I correct in that statement, 
Ms. Burton?
    Ms. Burton. Yes, sir.
    Mr. Faleomavaega. While we have not yet fully analyzed 
these provisions, we are concerned that some of them may cause 
problems. Can you outline what exactly are some of those 
fundamental problems that you currently have with this proposed 
bill?
    Ms. Burton. Mr. Chairman, I do feel that I have addressed 
the three major issues, which was revenue sharing and 
potentially gas-only, in terms of the cost to the Treasury. 
There are other provisions in the bill that we need to analyze 
more fully, so I hesitate to get in detail. But I can give you 
maybe a couple of small examples.
    For example, it would mandate two sales in area, sale 181, 
one in less than seven months and another one five months 
later. This would be very difficult to administer because we 
give industry at least a six-month's notice of a coming sale so 
they can, first of all, they form partnerships to buy those 
leases, so to give them time to do that. They also acquire data 
to analyze the areas that they may be interested in. Again, 
that takes time.
    There is also a budgetary side from company. They plan 
their budgets so many years ahead of time, and they may not 
have in their budget right now what it takes for two more sales 
that close together.
    The other thing is that the area is not very big. We are 
pretty convinced that the first sale we have in that area will 
probably sell the majority of the leases, and that the second 
sale would bring back some more revenue, but not a whole lot. 
And we question the effort that will have, and the money that 
will have to be spent to get two sales so close together, when 
the second one may not really bring anything.
    So these are, they are little things, and these are things 
that we can work with the Committee to fix. There are several 
other areas, but not having been privy to the depth of the 
analysis that needs to be done, I hesitate to mention specific 
things.
    Mr. Faleomavaega. You mentioned the time factor here. Can 
you give us an approximate timetable in terms of how long it 
will take for the Administration to review the provisions of 
the proposed bill? In a six-month period, or three months? How 
long do you think it will take for the Administration?
    Ms. Burton. We are working on it right now, Mr. Chairman, 
and it will take us a few more weeks.
    And the reason for that--and I need to apologize to the 
Committee for not having a full analysis done. But part of the 
reason we are in the position we are today is that if you 
recall, Congress passed a law last August, the Energy Policy 
Act, that gave us to MMS alone about 30 different tasks to 
accomplish, with very tight timelines.
    The economists of our group are very involved in helping do 
this analysis, and we have to prioritize their tasks. And up to 
now we have put preparing everything that had to do with 
royalty aspect of the Energy Policy Act as priority one.
    We also, as you know, have to prepare for a legal challenge 
with one of the companies regarding the threshold in the 
incentive and the royalty relief provisions. And so all of 
those things took a lot of time. And we didn't turn to this 
bill until we were asked to testify, frankly, or just before we 
were asked to testify.
    So I suspect that it is going to take us another several 
weeks, maybe four or five weeks, before we have a chance to 
really look into detail.
    Mr. Faleomavaega. I note with interest that our newly 
appointed Secretary of the Interior, Governor Kempthorne, is 
very committed at least in reaching out to the communities and 
talking about energy and environmental issues in a more public 
and in a more open fashion, which I think on this side of the 
aisle we are very happy to hear that.
    But there are some critical factors that I wanted to ask 
you. My good friend from Pennsylvania talks about exploration 
of gas that Canada is doing right now, questions of 
environment. And yet all this has been done very well in terms 
of making sure that our environment is kept clean, and at the 
same time they are obtaining this critical resource to meet the 
critical energy needs of Canada. And the question is, why 
aren't we doing the same thing in our country?
    My good friend from New Jersey, and I am sure Members in 
the Florida delegation, have also raised the issue again of the 
environment. This affects their recreational industry in the 
worst way if something should ever happen while we explore OCS.
    What assurances can we make to make sure that we can do 
both? Or can we do both?
    Ms. Burton. Mr. Chairman, all I have is past experience. 
And the last 35 years have shown us that we can explore and 
produce offshore without any major problem to the environment.
    I think the hurricanes that hit the Gulf Coast last summer 
and caused a certain amount of destruction, as you know, did 
not cause any spill of significance offshore. The significant 
spill occurred on shore, when storage tanks were upended by the 
storm. But offshore, even though many platforms were destroyed 
and damaged, there was no significant spill, because we have 
valves under the sea floor that were shut and held firmly.
    This industry has come a long way in the last 40 years, 
dare I say the word since the Santa Barbara spill, which is 
really what caused a lot of concern. And rightfully so.
    I think we have come a long way, and this industry is doing 
a great job of protecting the environment. And we watch over 
them very tightly.
    Mr. Faleomavaega. Thank you, Mr. Chairman. Thank you, Ms. 
Burton.
    The Chairman. The gentleman's time has expired. Mr. Duncan.
    [No response.]
    The Chairman. Mr. Peterson.
    Mr. Peterson. Thank you very much, Mrs. Burton, it is a 
delight to have you here. I want to commend you for the 
difficult job you have, and the professional way which you 
approach it.
    You made the statement, just again the 35 years since we 
have had an oil spill. Do you have any record of a gas well 
polluting a beach?
    Ms. Burton. Mr. Chairman, gas does not pollute the beach. 
It does go into the air, and you might say that there might be 
some air pollution, but it is quickly dispersed. Gas can be 
burned, also.
    It really does not pollute. So it is a good fuel, from that 
standpoint.
    Mr. Peterson. Isn't it true that gas seeps out of these 
earth cavities all the time because of the gas pressure? It 
bubbles up in the ocean every day?
    Ms. Burton. It does. It does, Mr. Chairman. There are seeps 
in the floor of the ocean that are continually releasing gas, 
and oil, I might add.
    Mr. Peterson. And oil.
    Ms. Burton. In fact, the last study done by the Academy of 
Science shows that about 150 times more hydrocarbons are put in 
the sea, in the ocean, than caused by any kind of exploration 
or production.
    Mr. Peterson. I am told that seeps along shorelines that 
were problematic went away when they relieved the gas pressure 
and produced oil or gas there, and took some of that pressure 
off. That it actually stopped being a problem. Is that an 
accurate statement, do you think?
    Ms. Burton. I have heard that, too. And I think that this 
was particularly verified in offshore California.
    Mr. Peterson. Do you know of any other country in the world 
that prohibits production on their outer-Continental Shelf? 
Like we do?
    Ms. Burton. To my knowledge, Mr. Chairman, there are some 
such prohibition in Canada. But frankly, very few countries 
prohibit production or exploration offshore.
    Mr. Peterson. Well, you said in some parts of Canada?
    Ms. Burton. I believe off the coast of British Columbia 
there is some moratoria.
    Mr. Peterson. But I know they drill right off the 
Washington State coast, they drill right off the Maine coast.
    Ms. Burton. They do.
    Mr. Peterson. And on the gas only, we were visited recently 
by an uninvited, they just came and asked if they could meet 
with us, the Canadian officials, because Canada is very 
concerned, you know. They pay high gas prices because of us. 
They produce, and we don't.
    And we all know that we are drilling twice as many wells as 
we used to, and producing no more gas.
    So if drilling a hole in the ground is a problem, you are 
better off to drill in new fields where you get high volumes of 
gas than in old fields that are pretty well depleted and don't 
last very long.
    But Canada, you know, they were up to, I am told, they told 
us they are now at 17 percent of our gas production. They were 
at 12 for years, but they are up to 17. And they pay the 
second-highest gas prices in the world because of us, because 
we are connected and we use the same system.
    I guess Canada has drilled gas only in Lake Erie since 
1913. They have drilled thousands of wells there, and produced 
gas only, and have had no problems. In fact, most Americans--
you know, the lake is not very wide--don't even know that they 
are drilling. And if they are slant-drilling--because they are 
selling us that gas, that is gas we buy--they are probably 
producing American gas. Just like we now have Cubans that are 
going to be producing gas off the coast of Florida, that gas 
that America should have.
    I just find it almost unbelievable that with gas being the 
clean fuel--no knocks, no socks, very limited CO2--and yet we 
have expanded the use of it, but we have continued to lock up 
the OCS. We have not leased 181. We have not leased the Powder 
River Basin. So we have spent all our energy on ANWR, and if 
produced, it is going to take 10 years to get it to us.
    I mean, it just seems to me like a policy that is creating 
a catastrophe for this country economically. Because gas is the 
mother's milk of all industry. Petrochemical uses it as an 
ingredient; 55 percent of their cost, polymers and plastics, 45 
percent of their cost is gas, fertilizer as high as 70 percent, 
and it is half-gone. Brick-makers, glass-makers tell me they 
won't be here if it continues. U.S. Steel told me their energy 
costs are up $600 million, and if we don't stabilize gas 
prices, they will only do their paper-shuffling in America. 
They won't bend and make steel.
    I guess, I don't know, gas being almost the perfect clean 
fuel, how we lock it up as a national policy makes any public 
sense.
    Ms. Burton. Well, Mr. Chairman, I can't entirely disagree 
with that. In fact, I do agree with it.
    But I would like to go back on a point that you touched, 
that in Lake Erie they are producing gas only.
    Once you have discovered a gas field, it is easy to produce 
gas only, because that is all that is there, and you know it. 
And you can keep on drilling for it until you exhaust the 
resource.
    The problem I have now, and the reason I am cautious in 
talking about gas only, is that we are talking about frontier 
areas, areas where no one has gone, to speak of.
    Now, when we know there are areas that have only gas and 
they can be produced, we need to provide access to those. But 
when you provide access to areas that are not known, that is 
where you may have a problem of finding oil, as well as gas, 
and how to handle that.
    Mr. Peterson. Well, it is interesting. I don't know who 
responded to you. I have talked to hundreds of drillers who 
have drilled in the OCS, and that is what their business is. 
They are willing and ready.
    I know big oil was not happy when I introduced my bill, Gas 
Only, because it was the first time someone said we are going 
to lease gas only, not oil. And like it put a dark light.
    I am not opposed to oil production. I grew up five miles 
from Drake's Well, the first oil well in the world. I have 
watched the oil industry all my life. It is a small thing there 
now, because we are not big volume like the other states, and 
we are a small player, but we do produce a lot of gas yet.
    Gas is usually deeper than oil. The big gas reserves are 
usually below oil. You drill through oil in my area to get to 
the gas every day. That is common.
    There are a few fields where gas and oil are combined, and 
if you produce the gas you will never get the oil because you 
will take away the pressures that push the oil out. I mean, 
there are a few problems.
    But I am told by the people in the industry that the 
majority of what they think is on the east coast of this 
country is gas. It is predominantly gas, and it is very good 
gas, and a lot of gas. And I guess I have been troubled, not 
with you, but with this Administration being willing--who comes 
from industry, many of them--being willing to continue to lock 
up the fuel that is the mother's milk of this country.
    And I sometimes have said this, and I am going to say it 
again. I wish the White House staff would get their head out of 
the Florida sands and deal with this issue and how it faces 
this country. Because this is not a state-by-state issue; this 
is an American issue. And if we don't have gas affordable, we 
will not have all the industries I spoke of.
    The Chairman. Mr. Pallone.
    Mr. Pallone. Thank you, Mr. Chairman. Mrs. Burton, I wanted 
to ask a few questions about the cost issue, and also about the 
President's position on the moratorium. And finally, on the 
drilling in the non-moratoria areas. Because my point is that 
there are still a lot of areas offshore that are not under 
moratoria, that are not being utilized right now.
    You did say, and I took it down, that excessive and long-
term cost to the Federal government could result from this 
legislation. And that is really what I wanted to key in on. I 
mean, I actually took down the Chairman's comment. I don't know 
if he described the Democrats as saying it costs too much to 
have a tax cut, and therefore we shouldn't do it.
    I couldn't agree with you more, Mr. Chairman. And that is 
my same point here, you know. Other than the income tax, the 
second----
    The Chairman. If the gentleman would yield, I was making 
fun of that.
    [Laughter.]
    Mr. Pallone. Oh. Well, I personally took it as something 
that was quotable. So in any case, and I would agree that that 
is true.
    And I would also like to apply it in this context, because 
I think that the second-largest source of revenue, other than 
the income tax, is from oil and gas lease sales. And I think 
the problem is it is going to be a huge burden on the Federal 
taxpayer. And the budget deficit you said is very important, 
and it would only be aggravated by all this. So I agree with 
the Chairman, I agree with you. But I would like to have more 
details.
    I mean, Mr. Jindal said that, I forget, what was it, $50 
billion that you said over 30 years would go back to the State 
of Louisiana? What kind of figures do we have here in terms of 
the loss of revenue to the Federal government from this 
proposal? Do you have any ballpark or idea?
    Ms. Burton. Mr. Chairman, I do not have a specific number. 
I think that intuitively we know that if we have to buy back 
leases, and if we have to pay for the cost of a well that had 
been drilled, if we have to pay for the cost of the seismic 
surveys that may have been run on that lease, we do know those 
things are expensive. And so the Administration is not knowing 
what the breadth of the repurchasing activity would be. We are 
worried about the potential of fairly high numbers, but we do 
not have a number at this point.
    Mr. Pallone. Well, can we ask you, through the Chairman, to 
get back to us in writing with what you estimate the costs 
would be at some point?
    Ms. Burton. Certainly.
    Mr. Pallone. I mean, obviously you are going to make an 
effort, if that is OK.
    The Chairman. If the gentleman would yield, I think the 
problem that they are going to have is there is really no way 
of estimating what they don't know.
    Mr. Pallone. Right. But why don't you at least make an 
effort and get back to us, with the Chairman's permission? I 
would appreciate it. All right.
    Now, the other thing is I am very confused about what the 
Administration's position is on the moratorium. At one point 
you said that the President, I don't know if you used the word 
``President'' or ``Administration,'' favors continuation of the 
existing moratoria, correct?
    Ms. Burton. Not quite, Mr. Chairman.
    Mr. Pallone. What did you say?
    Ms. Burton. If you would forgive me. What I did say is that 
the President supports and the Administration supports the 
existence of the moratoria, as long as the states want it.
    Mr. Pallone. So in other words, you would advocate the 
moratoria unless the individual states want to opt out, in 
which case you would support their opting out?
    Ms. Burton. That is correct, Mr. Chairman.
    Mr. Pallone. OK. Well, I am not sure I understand how that 
dovetails with the costs and everything else. It seems like we 
are all over the lot here, but I will leave you alone on that 
one for now.
    Let us go to the other issue that I mentioned, because I am 
running out of time. What percentage of leases offered by MMS 
in current non-moratoria area have been leased by the oil and 
gas industry? And of those leases, what percentage are 
currently in production?
    This goes to my point that there are a lot of offshore 
leases or offshore areas that are not under moratoria, that are 
not being developed or even leased by the industry. And I don't 
understand why they are looking to the Atlantic and the 
California coast, when there are already a lot of areas out 
there that haven't been put into production.
    Ms. Burton. Mr. Chairman, this is a difficult question to 
answer, but I will try to tackle it from different angles.
    There are 8,000 leases offshore in the Gulf of Mexico 
today. Two thousand of them are productive; the others are in 
various phases of either being explored or being kept in order 
to find out where there could be a pool of oil or gas.
    When a company drills, it drills on the information it 
received mostly from seismic information. They don't always 
hit, in the first place.
    In the second place, when they do hit, they need to drill 
other delineation wells to find out how big that pool is. They 
can't always get all the finance together to do it within the 
primary term of the lease, and they have to have a well that 
proved commercial production for the lease to be expanded. 
Otherwise the lease is returned to the pool of unleased area 
for us to put back on the block, so to speak.
    So it is normal for them to lease more than what they are 
going to drill first time around, to protect their assets. If 
they find a good well on one block, they want to make sure they 
have the surrounding blocks, so somebody else doesn't come and 
outbid them, and take away what they have found. So it is 
normal to have more blocks drilled than producing.
    Having said that, I want to also mention that industry has 
found fantastic resources in the Gulf of Mexico that none of us 
thought were there, in the deep water. We don't know enough in 
the frontier areas to know whether or not the resources are 
there. We do estimates based on book information, if you will. 
But until the bit is in the ground, we won't know whether there 
is commercial hydrocarbons in a particular area or not.
    The Gulf of Mexico has been drilled extensively for 50 
years. It stands to reason that now that they are drilling 
almost to the line of the exclusive economic zone, which is 200 
miles out, in the Central Gulf and the Western Gulf, I mean, it 
is just a logical conclusion that eventually they have drilled 
everything they can. They need to go somewhere else, and they 
need to plan way ahead of time, those companies do.
    So if we don't give them more access to more areas, Africa 
is willing to give them that access. So is South America, so is 
Russia. And so there are a lot of other places they can go. And 
this is why it is really important to give them enough of an 
area to project 10, 15, 20 years out what they are going to do.
    Mr. Pallone. I know I have run out of time. But it just 
seems to me, on the one hand you say that, you know, the 
President is in favor of continuing the moratoria. But then at 
the same time you suggest that we should, you know, be going 
out and leasing and producing in these areas. So it seems 
inconsistent to me.
    But in any case, I appreciate your comments. Thank you, Mr. 
Chairman.
    The Chairman. Mr. Gibbons.
    Mr. Gibbons. Thank you very much, Mr. Chairman, and Ms. 
Burton, welcome to the Committee. We are happy to have you 
here.
    Let me ask a question. It seems that our knowledge of the 
outer Continental Shelf is based on old seismic technologies, 
technology that was used back in the fifties and sixties, and 
et cetera. Why haven't we done a new inventory using more 
modern seismic scientific effort to learn about the geology of 
the outer Continental Shelf?
    Ms. Burton. Mr. Chairman, this is certainly a conundrum. We 
don't know very much outside of the areas that are being 
explored today.
    And the reason for that is that, first of all, the 
technology is seismic science has improved enormously in the 
last 20, 30 years, and the interpretation of the seismic 
interpretation they receive. So seismic surveys have to be run 
in those areas. This is extremely costly, extremely costly.
    The government has never done it. We get our information 
frankly from industry. We let them run the seismic information, 
then we buy it for a nominal fee, just the cost of reproduction 
basically. Then our scientists interpret it. Now, our 
interpretation may not be the same as industry, but we get the 
same raw data to start with.
    In the areas that have been under moratoria for so long, 
industry had no reason to go and run seismic at the cost of 
millions of dollars if they didn't also know that they could 
put that knowledge to good use, and drill and produce. So until 
you open an area, you will have grave difficulty, great 
difficulty getting someone to run the seismic crews out there, 
because that is expensive.
    We were asked to run an inventory on the last Energy Policy 
Act of 2005. We did the best we could, but we did it with data 
already in our libraries frankly, because we didn't have the 
money to go and hire a survey ship and have them run the lines.
    Mr. Gibbons. Well, it seems like it is a tremendous Catch-
22.
    Ms. Burton. It is.
    Mr. Gibbons. Constantly we are hearing from the opponents 
of drilling that it doesn't contain, or the area doesn't 
contain any gas or oil resources, when in fact there is no 
knowledge of what is there to begin with, and it requires you 
to open it up in order to do this testing and the seismic 
activities that would allow for us to make that knowledge base 
available.
    Let me ask another question. I mean, MMS has a very 
rigorous program of monitoring what happens on drill rigs, et 
cetera, from leaks to management of the drilling and 
exploration activities out there.
    Are the number of drill rigs in this country adequate for 
the opening and exploration of these areas? Would we have to 
wait a period of time for the drill rig? Because some of these 
are very expensive and time-consuming, I know, to make, to be 
able to provide those drill rigs for what we would see down the 
road as an opportunity.
    What is the status of our drill rigs today?
    Ms. Burton. Mr. Chairman, I think that there are probably 
people in the audience that know a lot more than I do about 
this. But I do hear from industry, and I do know that they have 
a very difficult time getting the equipment they need and the 
drill rigs, particularly to drill in very deep water. You need 
some very, very special equipment. It is very hard to get.
    And I think the price--I may be off here, someone might 
correct me, but I think the price of a drill ship to drill in 
very deep water today is reaching $150,000 to $200,000 a day. 
It is expensive, because the law of supply and demand. There 
aren't very many of them, and they are asked to perform all 
over the world. And so they will go where they can put their 
ship to work right away, and we compete worldwide for that 
equipment. It is difficult to obtain.
    Mr. Gibbons. Well, having visited one of those deep-water 
drill rigs, I was amazed at the cost. You know, half a billion 
dollars' investment just in the ship alone, let alone the costs 
per day. And the difficulty of drilling in 10,000 feet of water 
before you ever get to the sea floor, at which point you have 
to drill thousands of feet below that. I mean, it is a very 
expensive process. It is one of the reasons why we put in 
royalty relief for very deep-water drilling, is to encourage 
companies to look at this as an alternative in areas where we 
believe there might be renewable resources.
    But Mr. Chairman, I appreciate the time you have given me, 
and I apologize for taking much more. But we have a lot of area 
to cover, I am sure, in getting a better understanding of deep-
water exploration, as well as the science behind knowing what 
is out there in this outer Continental Shelf.
    Ms. Burton. True, Mr. Chairman. This is why we gave 
incentive to industry, if you will recall.
    The Chairman. Mr. Udall.
    Mr. Mark Udall. Thank you, Mr. Chairman. Ms. Burton, do you 
have a copy of the bill in front of you there?
    Ms. Burton. Yes.
    Mr. Mark Udall. On page 108 there is Section 24. And the 
provision there talks about notwithstanding any other provision 
of law, the Department of Interior is prohibited from charging 
fees applicable to actions on Federal on-shore, and I want to 
emphasize here on-shore and offshore oil and gas, coal, 
geothermal, and other mineral resources, including 
transportation or any production from such leases. And if such 
fees were not established in final regulations prior to the 
date of issuance of the lease.
    And I think I am right in reading that section as applying 
to both on-shore and offshore leases. Because clearly, on shore 
is in there. And I think I am right in also reading that 
section as barring any changes in fees that now apply to those 
leases.
    What does the Administration think about that section, and 
the position that has been taken there?
    Ms. Burton. Mr. Chairman, this is certainly a sensitive 
issue. The Administration feels that fees should be imposed on 
industry for the services we render them in giving them the 
various permits that they ask for.
    We understand that Congress has a right to tell us whether 
it is acceptable or not, so we will do whatever legislation 
tells us to do. But at this time, we think we should have some 
fees to help defray the cost of running the program.
    Mr. Gibbons. Will the gentleman yield for a moment, Mr. 
Udall?
    Mr. Mark Udall. Well, let me ask one more question.
    Mr. Gibbons. I was just going to answer your question about 
this paragraph.
    Mr. Mark Udall. Well, is this something that you would 
propose? Is this something that you would propose, being the 
Acting Director, what is in this section, Section 24?
    Ms. Burton. Mr. Chairman, I don't really work with these 
kind of things. This is more of a financial question, so I 
don't think I would be involved in that.
    Mr. Mark Udall. Who would do that then, in the Department?
    Ms. Burton. The Budget Office.
    Mr. Mark Udall. The Budget Office, OK. Is it possible, Mr. 
Chairman, to get an answer on that as to what the 
Administration view is? I would very much like that.
    The Chairman. Sure.
    Ms. Burton. Mr. Chairman, I do believe that in the 2007 
budget there was a proposal to have fee recoveries. So the 
Administration has essentially shown what it will do.
    Mr. Mark Udall. Ms. Burton, I was glad to see that in your 
statement on page four you noted that the OCS is a public 
resource belonging to all Americans. And I think that is 
exactly right. Just as people in Louisiana are entitled to a 
say about the public lands, entitled to a say about the public 
lands in New Mexico, my constituents have the right to a say 
about the management of the OCS.
    And what I am really wondering here is, and I think you 
called it a fundamental change, in terms of revenue. Mr. Jindal 
has said over 30 years, the loss to the Federal government 
would be $50 billion. Obviously the President of the United 
States has enunciated a deficit reduction policy which is 
impacting the Congress in all sorts of ways.
    This $50 billion would have a huge impact on that. And it 
would be very helpful, I think, if you all were able to weigh 
in on whether you think this should happen, whether you think 
this $50 billion should flow out, how you are planning to 
replace it if you are planning to replace it. If you are not 
planning to replace it, then where are you going to make the 
cuts to the tune of $50 billion? And what specific programs?
    So it seems to me when you are making these big fundamental 
changes, that you should be willing to really step forward and 
answer some of the crucial questions that are entailed in this 
piece of legislation that you are supporting.
    Ms. Burton. Mr. Chairman, I think we have mentioned that we 
have very serious concerns about the cost of this bill, and we 
are willing to work with the Committee to arrive at what might 
be a more----
    Mr. Mark Udall. Is it fair to say you aren't supporting 
this legislation at this point?
    Ms. Burton. I don't think I said that, Mr. Chairman. There 
are lots of good things in this bill.
    We have a problem with the cost and the revenue sharing 
part of it. It would be a costly provision. And we are willing 
to work with the Committee to try and address our concerns.
    Mr. Mark Udall. And the idea that $50 billion is going to 
come from the Federal government and flow to Louisiana, at this 
point you don't have a position on that.
    Ms. Burton. We have concerns.
    Mr. Mark Udall. OK, thank you.
    Mr. Abercrombie. Will the gentleman yield to me?
    The Chairman. The gentleman's time has expired.
    Mr. Mark Udall. If I do, I am certainly happy to yield.
    The Chairman. The gentleman's time has expired. I will 
yield to Mr. Abercrombie.
    Mr. Abercrombie. Thank you very much. Can you explain, I 
don't understand what you mean by it would be costly. What is 
costly to you? Revenue sharing with the states, how is that 
costly to you?
    Ms. Burton. It is costly to the Treasury.
    Mr. Abercrombie. OK.
    Ms. Burton. And the Treasury helps run this government.
    Mr. Abercrombie. That is not costly. That is--I am 
astounded. That is the Bush position, that the government wants 
more revenue from the states or from the people? Is that 
correct? That is what you mean by costly?
    Ms. Burton. This is revenue that is paid by the oil company 
for developing the resource.
    Mr. Abercrombie. Yes?
    Ms. Burton. This is the royalty share.
    Mr. Abercrombie. Yes?
    Ms. Burton. Which comes to help run the government.
    Mr. Abercrombie. Yes. That is, in other words, taxes. So 
the Bush position is you would like more of the taxes.
    The Chairman. All right, reclaiming my time.
    Mr. Abercrombie. OK.
    [Laughter.]
    Mr. Abercrombie. I couldn't resist. I understand what you 
are saying.
    The Chairman. What they failed to point out on this, Neil, 
is that most of this is revenue that would not be generated 
unless we did a bill like this to begin with.
    Mr. Abercrombie. Yes, I understand. But in the end, though, 
you are trying real hard.
    [Laughter.]
    The Chairman. I recognize Mr. Walden.
    Mr. Walden. Thank you, Mr. Chairman. I wanted to follow up 
on that very point, Ms. Burton.
    What sort of incentives, if any, are needed to encourage 
private developers to go out and access whatever reserves may 
be out there? I mean, do you think new incentives are 
necessary?
    Ms. Burton. Mr. Chairman, today, no. I don't think new 
incentives are necessary. I do think access to the resource is 
necessary.
    Mr. Walden. OK.
    Ms. Burton. And so we are very, the Administration is very 
supportive of anything that would open the resources.
    However, we have a responsibility to decrease the deficit. 
And so we have to be very careful----
    Mr. Walden. I understand that.
    Ms. Burton.--of how the money----
    Mr. Walden. Yes, I understand that argument and all. I 
guess I just share the concern of some on this Committee about 
America's dependence on foreign oil.
    Ms. Burton. We do, too.
    Mr. Walden. About the chasing offshore of our plastics 
industries, about the farmers in my district complaining not 
only about their diesel costs in their tractors and trucks, but 
also the fertilizer costs. It is about to take them upside-down 
financially.
    I want to know from you, we will hear testimony later this 
morning or this afternoon, one of the witnesses who says oil 
and gas development is a dirty and destructive business that 
damages coastlines, harms ecosystems, and directly threatens 
our tourism, fishing, and real estate economies, which is an 
often-repeated concern, especially of those who are in coastal 
communities.
    From your perspective, based on the history of this type of 
development offshore, is that an accurate statement?
    Ms. Burton. Mr. Chairman, I don't think so. I think that 
the development and the production of oil and gas offshore has 
been done better and better and better over the years. You are 
not talking about 50 years ago. We are talking today, and today 
the technology is fantastic.
    The regulations have been honed so that now industry has to 
really be very careful about what it does, and it realizes that 
as it does a better job, it really benefits them, as well as 
all of us.
    Mr. Walden. And we just suffered through, in the Gulf 
Coast, the worst hurricane, or nearly hurricane, certainly 
back-to-back we have probably seen in many decades. Could you 
describe for me the kind of environmental degradation that 
occurred from oil and gas platforms and all? How severe was 
that?
    Ms. Burton. Mr. Chairman, there was lots of destruction of 
the infrastructure, and there was no spill, no significant 
pollution.
    Mr. Walden. No spill?
    Ms. Burton. No significant spill. Let me rephrase that.
    Mr. Walden. What does that mean?
    Ms. Burton. That means that there was not a spill offshore 
in Federal waters that had to be cleaned or had to be dealt 
with.
    What there was was when a platform was toppled, and there 
was some diesel stored on board that went into the water.
    Mr. Walden. On the platform.
    Ms. Burton. On the platform. The wells did not lose, we 
didn't lose control of any wells. Now, there was damage, 
certainly. But everything was secured in such a way that 
although there is a lot of repairs to be done, in pipelines as 
well as wells, there was no significant spill and pollution to 
where we were never called for cleanup. Neither was the Coast 
Guard.
    Mr. Walden. OK. I mean, you are drilling down 10,000 feet 
before you hit the ground where you start drilling, correct?
    Ms. Burton. Yes.
    Mr. Walden. Give me examples of where that is happening. 
Are there any spills in that context?
    Ms. Burton. Mr. Chairman, occasionally there is an 
accidental spill. It might be two, three, four barrels, maybe 
200 barrels. That is really nothing compared to seeps that 
occur on the floor of the ocean.
    So I think the record of this industry is one of the best 
of the industrial world.
    Mr. Walden. How long have you been doing this kind of work? 
You seem to know this inside and out.
    Ms. Burton. Mr. Chairman, before I came to the Federal 
government I was working for the State of Wyoming. Wyoming gets 
about 50 percent of its resources from the oil and gas 
industry; I was very familiar with them. And before that, I was 
involved personally in that industry.
    Mr. Walden. All right. So you have a lot of experience 
here. I guess what I am trying to get at is, are there 
environmental concerns this Committee should have about 
authorizing additional exploration on the outer Continental 
Shelf? You can sure hear the concern that is out there.
    Ms. Burton. Mr. Chairman, we do hear the concerns, and we 
try very hard to talk to people who have concerns and show them 
the record. Let the record speak for itself.
    Should we have concerns? We always have concerns. Whenever 
you do anything that has the potential----
    Mr. Walden. Sure, but there is not a modern record of----
    Ms. Burton. That is correct. I think that the record is 
extremely good.
    Mr. Walden. And speaking of the record, I would just like 
to note that I understand New Mexico gets $700 million a year 
in royalty revenues, and that is over about $21 billion over 30 
years, from its oil and gas development. So I guess it is OK to 
share those revenues with a state that is on shore, but may be 
questionable offshore.
    Thank you, Mr. Chairman.
    The Chairman. Thank you. Mr. Costa.
    Mr. Costa. Thank you very much, Mr. Chairman. I appreciate 
the opportunity to listen to the discussion here.
    I want to make a point, and then ask a question. As it 
pertains to this legislation if in fact it were to become law, 
or some variation of it, to the potential leases that would be 
available or impacted off the coast of California, I hope you 
can comment on that. You know, oftentimes, and this is a very 
heatedly debated issue in California, as you know, oftentimes I 
think people overlook the point that currently, I believe, we 
have 26 or 27 operating platforms off the California coast, 
principally below Santa Barbara, that have been operating for 
over two decades.
    And if this legislation were to become law, besides its 
impacts to the various states, what potential leases would be 
available, are sought after, off the California coast? Can you 
answer that question?
    Ms. Burton. Mr. Chairman, no, I can't answer that question, 
because we have had no leasing for 20 years, so I don't know 
what the interest is.
    Mr. Costa. No, I understand that. You have not made any 
estimation of what area might be impacted?
    Ms. Burton. The area where the platforms are producing 
today, that whole basin from about mid-California coast on 
down----
    Mr. Costa. Right, kind of Santa Barbara south.
    Ms. Burton. Yes. There are resources there, if that is what 
you are asking.
    Mr. Costa. No, we know that.
    The Chairman. Would the gentleman yield to me for a second?
    Mr. Costa. Yes.
    The Chairman. Under this legislation, unless the State of 
California voted to opt out of the moratorium, there would be 
zero available off the coast of California.
    Mr. Costa. No, we understand that. That is the caveat. But 
in the event that that were to occur, I am trying to get an 
idea of what the resource is there, Mr. Chairman.
    Ms. Burton. I am afraid, Mr. Chairman, I am not prepared to 
answer that. I don't know.
    Mr. Costa. OK. How about the amount of leases that 
potentially would be available? And not stating what would be 
contained in the resources of those leases, but how much leases 
would be available. You used the figure in the Gulf of Mexico 
that there were 8,000 leases, and 2,000 were currently being--
--
    Ms. Burton. I don't know, Mr. Chairman.
    Mr. Costa. Could you find that information for us?
    Ms. Burton. Certainly, certainly.
    Mr. Costa. And get that to the Committee?
    Ms. Burton. Yes, sir.
    Mr. Costa. And I appreciate the flattery of responding to 
me as Mr. Chairman, but we have one Chairman of this Committee 
at this time. I am just a Member from California.
    Ms. Burton. I am aware of that. I just thought I was to 
address the Chairman. I am sorry.
    Mr. Costa. Thank you very much. I yield the balance of my 
time.
    The Chairman. Ms. Drake.
    Ms. Drake. Thank you, Mr. Chairman. Mrs. Burton, welcome. 
It is always a pleasure to be with you and to hear your 
expertise.
    With the new Secretary at the Department, is it safe for us 
to assume that we are going to move as aggressively forward on 
the leasing programs, the 2007/2012 five-year leasing programs? 
Any change you see in that? Or things will be business as 
usual, under the new Secretary?
    Ms. Burton. I am not at the point of giving you a firm 
answer, because the Secretary has been here only two weeks, and 
I haven't met with him on this particular issue. Decisions are 
to be made fairly quickly, so we will find out very quickly if 
the Secretary has other thoughts about the proposed program.
    Ms. Drake. Certainly we would like to know that.
    Ms. Burton. Certainly.
    Ms. Drake. OK, thank you. We have talked a lot about the 
environmental dangers, and that there hasn't been any 
significant spill in over 35 years. Is it safe to say there is 
more danger to the environment by moving oil in by tanker than 
by the rigs and the drilling and the outer-Continental Shelf?
    Ms. Burton. The records certainly show that. In fact, the 
National Academy of Science tells us that there is 13 times 
more danger in moving the product than in producing the 
product.
    Ms. Drake. Thank you for that. And we have done a lot of 
discussion today about the revenue sharing. You know, when I 
sold real estate I had one theory, and that was if you can buy 
it yourself, buy it. If you can't buy it without a partner, it 
is better to have a partner and have part of something than all 
of nothing.
    And the whole discussion that has taken place, Mr. 
Chairman, has made me think of that. Because we know we have 
this resource that is sitting there. Is it better to just let 
it sit? Or is it better to have part of something?
    And my real question for you goes to, don't you think there 
is much greater possibility of states wanting to participate in 
this if they know they have a benefit? They have the same 
pressures that the Federal government has, as far as budgets 
and deficits and revenues. So don't you think it is a needed 
thing in order to encourage our states?
    Ms. Burton. Certainly it is an idea that has lots of merit. 
And I think the Administration is willing to talk about revenue 
sharing, but maybe in the context of new areas. And I am not 
here to give you any particular detail, because I don't know. 
That is beyond me. All I know is that we are willing to work 
with the Committee.
    Ms. Drake. Thank you. And I would just say one last thing. 
And that is, I would really be concerned about the issue of 
fairness. If Virginia now could have revenues that a state that 
has been, that these leases have taken place, would not get. So 
I just want you to put that in the back of your mind as you 
continue to work on this issue.
    Thank you, Mr. Chairman, I yield back.
    The Chairman. Mr. Melancon.
    Mr. Melancon. Thank you, Mr. Chairman.
    The Chairman. Excuse me. Before you yield back, I missed my 
button here. You had a little time. I needed to ask something 
as a follow-up to the question Mrs. Drake had. Is that OK?
    Mr. Costa. I will recognize him.
    The Chairman. OK.
    Mr. Melancon. Thank you, Mr. Chairman. Thank you, Mrs. 
Burton, for being with us today.
    I guess my first question would be that has the 
Administration looked at all the industries that we lose 
because they can't afford to buy gas in this country, that pick 
up and leave? The jobs that go with them. The investments, the 
tax dollars that come to the Treasury, as well as the fact that 
we are asking, have been asking for about every month and a 
half, for billions upon billions of dollars for rebuild in the 
Gulf Coast.
    Don't you think it would be better, let us go ahead and 
give these folks the monies that they need as part of the 
revenue sharing to keep industry, to keep jobs, to rebuild the 
coast that is so important to the entire industry or energy 
sources for this country? Have they looked at those numbers? 
Have they put them into the equation yet?
    Ms. Burton. I assume, Mr. Chairman, that someone has some 
very specific numbers. I am not privy to them, I do not have 
them. But I want to tell the Representative that we understand, 
and we have seen the damage done to Louisiana coast. Our own 
staff, 600 of them, had to be evacuated from New Orleans, and 
we are now working hard to rebuild their office. So we do know 
the damage, and we do know the needs that exist there.
    I am sure that somebody is putting those numbers together. 
It is not my group. It is not in my department, or in my 
agency, I should say, so I really don't have those numbers.
    Mr. Melancon. Would you go back and ask your folks in your 
agency is they would generate those numbers, and get them back 
to the Committee chair as quickly as possible?
    Ms. Burton. Mr. Chair, Representative, I will certainly 
pass that on to the Department. I doubt that it will be our 
bureau that will do that, because we don't deal particularly 
with the on-shore coastal impact. We do know it exists, we see 
it, but we are very specific to drilling offshore.
    Mr. Melancon. Well, if you could find out who it is that 
has that pencil and that calculator, and get them to work on it 
real quick, I would appreciate it.
    Ms. Burton. All right.
    Mr. Melancon. I guess the misconception or the 
misunderstanding of offshore oil and gas drilling is phenomenal 
to me within this beltway. And I have offered before, Mr. 
Chairman, I would ask you to use your authority to possibly 
establish a CODEL, and let us take the people in this Committee 
that have to make these decisions and let them see an offshore 
rig. Let them see a deep water rig. Let them understand the 
technology. Then they can make a whole lot better decisions 
before they vote.
    It is a very clean industry. It is a very good industry. I 
know it is big oil, and little people. But we are talking about 
energy independence now. And little people get hurt worst when 
the price of gasoline is three and five dollars at the pump.
    Mr. Gohmert, I understand, has a--I think he is calling it 
what, Bobby, the State Hypocrisy Amendment. And I have asked 
him to let me sign on to it. You don't want to produce oil, 
gas, that is fine; maybe we will figure out a way to let you 
reimburse the states that do want to produce oil and gas for 
the exposure they had.
    You know, one of the points, and maybe you can help me with 
this, the on-shore states share in revenues from royalties off 
of the state lands. Yes, the outer Continental Shelf is ours, 
America's. But it also is China's and Japan's, and Cuba, and 
Mexico, and every other country when you get out there far 
enough.
    And so we are looking at right now China and Cuba in a 
joint venture, we are talking about the Floridians want us at 
125 miles out in the Gulf from their coast because of tourism. 
And if you go to the last pier on Key West, you are going to be 
able to see oil rigs from there. And they are going to belong 
to a country that is consuming or building, and potentially to 
consume more energy than this country ever did. And it is 
becoming a developing country, and taking the jobs and the 
factories and the plants and everything that we have had and 
built through the centuries away from us.
    Yet we complain about the $3 gas at the pump. We don't want 
to ruin our beaches, which won't happen, I firmly believe that 
and I will stand by that. And this Administration, as pro-oil 
and gas as it is, would you please ask them, put the politics 
aside and let us do what is good for America? Let us do what is 
good for us to keep our jobs, keep our citizens, keep energy 
costs down. Food and gas, food and energy, without those two 
things we become a nation that is weak. And I just don't 
understand how somebody, this Administration or anybody that 
has people sending them notes about I would sure like to pay a 
whole lot less for my gas, can sit up here and say I am worried 
about the pollution, when for 35 years the records have been 
great. And getting better by the year.
    But, Ms. Burton, as the person that represents the agency 
that administers the lease sales and such, I would ask you to 
ask the Secretary to take the lead to ask the White House to 
look past this. If, in fact, the United States had been revenue 
sharing with the coastal states of Louisiana, Mississippi, 
Alabama, Texas, et cetera through the years; and if, in fact, 
and it is a fact, we would have had these two storms; instead 
of Bobby Jindal and me and our delegation having to come here 
and beg and grovel for every dollar for the rebuild along the 
coast, we would have had monies that would have been a 
continual source of revenues that our state and our parishes 
could bond out. And we wouldn't be here, like paupers or can 
shakers, and feeling the same way, asking our own government to 
give us a share of what we rightfully deserve.
    We have had the exposure on land for all the drilling 
activity in the years when the drilling concepts were not good, 
and they had oil spills; in the years when they just willy 
nilly dredged canals straight through our coastal wetlands, and 
which has caused part of the destruction of those things. Why 
isn't it a fair thing to do to give these coastal states, who 
want to produce, a share of that royalty money so they can be 
somewhat more self-sufficient, and not dependent on coming up 
to the Federal level and begging?
    Ms. Burton. I will be sure to take that message.
    Mr. Melancon. Thank you. I yield back my time, if there is 
any.
    The Chairman. The gentleman's time has expired. Mr. Boren.
    Mr. Boren. Thank you, Mr. Chairman. I do have a few 
comments and a question.
    To my colleagues from Louisiana, I was just in New Orleans 
about a week and a half ago, and I actually ran into Charlie. 
And I will say this. General Downer and others were doing an 
excellent job on the ground, and they should all be commended 
for the work that they are doing.
    We had a bipartisan group tour not only the areas in the 
Ninth Ward, but out on the coast, and we were able to see some 
of those platforms.
    Mr. Chairman, there were some earlier comments about 
capital gains tax cuts. I can tell you there is one Democrat 
who did support those capital gains tax cuts, and will support 
those in the future, and also will support drilling: my good 
friend, Mr. Pallone, who I think has left us. To him, we think 
rigs are beautiful things. In Oklahoma we actually have rigs 
all the way up to our state capitol, and we would love to see 
some off the coast of New Jersey--sorry. He is not here, so he 
can't rebut me.
    The Chairman. It is good for the fishing.
    Mr. Boren. That is right, absolutely. We can just go scuba 
diving under there and see a lot of fish.
    But one question that I had really, Ms. Burton, in regards 
to the state versus the Federal government and revenue sharing. 
This Administration is a Republican Administration, talks about 
devolution, talks about giving power back to the states. 
Frankly, that has always been the mindset of local control.
    Right now we had a GAO study. I think this morning I woke 
up and saw on CNN or Fox, one or the other--I think it was 
actually Fox--that was talking about a billion dollars that was 
wasted on things like someone paid off their divorce. One guy 
had a sex change after 18 payments or something like that, or I 
don't know what the person was, but they were having a sex 
change, 18 payments. All this, a billion dollars that was 
wasted.
    So basically the argument from the Bush Administration is 
this. We want to keep that $50 billion from Louisiana, we want 
to keep that in the U.S. Treasury. When at the same time we are 
wasting millions, if not billions, of dollars in other areas. 
We are over-spending.
    And at a time of record deficits, why should we say, as 
Americans, let us give more money back to the Federal 
government, when we should give it to places like Louisiana, 
where they are doing an excellent job? And sometimes Louisiana 
gets a bad rap, but let me tell you, the people that we met 
were doing an excellent job on the ground.
    I can tell you Oklahoma doesn't have a lot of coastline. We 
have Lake Texoma, that is our coast.
    But I would just like to hear your opinion, Ms. Burton, on 
whether or not we should have Federal control, or we should let 
the states, local control, which again is a tenet of the 
Republican party, giving power back to the states, and local 
control versus Federal control. I would like to hear your 
comments.
    Thank you.
    Ms. Burton. You do me great honor to ask for my opinion. 
However, let me tell you my opinion doesn't count.
    [Laughter.]
    Ms. Burton. What does count is the opinion of this 
Administration, which I do represent. And so I will tell you 
that, again, we have great sympathy for what you are trying to 
do here, but we also have grave concern about the deficit.
    And so all I can tell you is that. And that is the reason 
why our expression of concern is very strong here today.
    Mr. Boren. Let me just make one final statement, then I 
will yield back my time. There is a way to return to fiscal 
responsibility. The Blue Dogs have a plan. There are pay-go 
rules and others, there is actually a 12-step plan, and I would 
be happy to share that with my colleagues.
    And with that, I yield back to the Chair.
    The Chairman. Mr. Pearce?
    Mr. Pearce. No questions.
    The Chairman. Mr. Abercrombie?
    Mr. Abercrombie. Mr. Chairman, this is a wonderful day. I 
wish Mr. Gibbons was here because I know he would enjoy what I 
am going to do.
    [Laughter.]
    Mr. Abercrombie. Ma'am, I am delighted that you are here, 
and I take, believe me, your admonition to us that it is not 
your decision to make with respect to the question of revenues. 
So I will make what amounts to an editorial comment which you 
can then share, to the degree anyone in the Administration 
cares to listen.
    But I just find it ironic that I am sitting here, as the 
hawk on the deficit, in reducing the deficit.
    Now, I am not precisely sure what kind of schizophrenic 
operation is going on over at the Office of Management and 
Budget or wherever, wherever these decisions are being made. 
But if you want to reduce the deficit, you want to have 
investment in the states that are going to create the jobs in a 
domestic energy resource that literally is untapped.
    Now, I mean, I have all kinds of labels in my life. I have 
been a Communist sympathizer, a pinko, a hippie beatnik, I am 
not sure how they work together on that. I am a labor Democrat. 
I have been a labor whore all my life in politics.
    [Laughter.]
    Mr. Abercrombie. I voted for changes in the estate tax and 
became a corporate whore, which either made me really dumb or 
one of the smartest guys in the room, to be both at once.
    But even with all of the magical incarnations that I have 
been able to go through, even this progressive labor Democrat 
sitting on this side can see that this is one time in your life 
when the supply side taxation, or the supply side investment 
clearly is going to work to everybody's benefit. I don't 
understand how anybody can miss that.
    If you want to reduce the deficit, let us invest in 
America. Let us turn loose the people who can create these 
jobs.
    Mr. Chairman, with your permission, I am going to submit a 
paper on labor concerns with a stronger build-and-buy American 
outline here.
    I took a look at the map yesterday of the existing leases 
out there just in the Gulf, OK, and then took a look at them at 
the map where we don't have the leases. Mr. Peterson and I have 
been doing that, and we talked to Mr. Jindal about it, and to 
Charlie about this, as well. It is blank over there. It is 
blank.
    Now, if you will just grant that it is possible to have 
environmentally safe and sound, just for conversation's sake, 
platforms and so on, there are thousands of American jobs that 
will come into existence just to build these platforms, for the 
very reasons that you cited. We have very strict environmental 
laws now. We have very strict labor laws with regard to safety 
and those kinds of things.
    We have a steel industry that is reeling that will come 
into effect here. We have workers out there right now that are 
losing their jobs in the chemical side, the plastic side, and 
so on. Think, not only will they come back into existence, but 
of the hundreds, if not thousands, of jobs we will have to 
build these platforms and maintain these platforms. These are 
Americans that we are going to put back to work.
    And I can tell you as an old state legislator and a city 
council member, I have served in every legislative venue there 
is over the past, I am going on my fourth decade. There is a 
multiplier effect when you create jobs in your community and 
churn those dollars through. It could be as much as four to 
one, depending on what economist you are talking to. It could 
be six to one. That is going to provide revenue to the Federal 
government, that is going to help you with the deficit.
    I am not mocking your concern or the Administration's 
concern about deficit reduction. I am saying that by going into 
some variation--and believe me, Mr. Chairman, I can assure you 
that Mr. Jindal and Mr. Melancon, myself, Mr. Peterson and 
others who want to accomplish this will be more than willing to 
sit down and try and work out something that will meet your 
satisfaction for you and others who want to move forward on 
this.
    We cannot let this go. I am asking the Administration, 
speaking on the Democratic side here, I am asking the 
Administration, work with us on this. Don't take some academic, 
abstract position on revenues and deficits and stuff. Let us 
talk about investing in this country.
    And I will finish with this. And I would like to submit 
this, Mr. Chairman, also for the record. ``The Wall Street 
Journal,'' well-known leftist rag that I am pursuing here, June 
14, 2006. Crude calculation. In oil's new era, power shifts to 
country with reserves.
    China and India alone are going to consume carbon-based 
energy sources over this next century scarcely within the 
imagination of those of us sitting on this Committee right now. 
Saudi Arabia and others in the Middle East are now taking their 
energy sources and investing in themselves. They are not just, 
you know, the old stereotype of the Saudi prince with the dark 
glasses on, and diabetes heading for him because of his 
lifestyle, you know. Those days are over. They are investing in 
their own countries. They are taking their oil resources, Mr. 
Chairman, and investing in their own countries.
    And let me tell you, while Ms. Rice is out there 
contemplating all kinds of high-level negotiations, India and 
China are making deals with Iran right now about oil, because 
they need it.
    And I will tell you something else. And this is what this 
article goes into. You think Japan is just going to roll over 
and let all this international intrigue take place, with the 
requirements they have for their industrial base? No way is 
that going to happen.
    We have to develop our domestic resources here, consistent 
with the values that we have. And I understand environmental 
concerns and all the rest. But my point here is that on this 
issue, there may be some arguments about how far offshore we 
should go, or what the mileage has to be before we are allowed 
to do drilling, and so on.
    But I can assure you that every instinct that I have, 
political instinct, tells me we are going to pass legislation 
that is going to come out of this Committee. We are going to go 
to the floor, and we can go to the American people. We can go 
to the American people and say we are going to develop 
alternative energy resources in this country safely, with 
environmental safety, and that we are going to move forward 
because we have to do this in our own national security defense 
if we don't develop our domestic energy.
    And so I am appealing to you today. This isn't a question, 
it isn't a statement. I am appealing to you to go back to the 
Administration and tell them wake up. Because this Congress is 
going to be admonished by Members here, Democrat and Republican 
alike, to develop alternative domestic resources, and to share 
it with the states as the principal mechanism for putting our 
people back to work and generating revenue at the local level, 
and at the national level, which is going to benefit the United 
States of America.
    How is that for a sermon?
    [Applause.]
    Mr. Abercrombie. I want to put this article in the record, 
Mr. Chairman. Believe me, this ``Wall Street Journal'' article 
today is an announcement that we are on notice that if we do 
not act, in this Congress, to move on the question of domestic 
energy resources and giving with alternatives, reasonable 
alternatives, we can blame only ourselves if we fall off the 
charts.
    The Chairman. I couldn't have said it any better. Mr. 
Udall.
    Mr. Mark Udall. Thank you, Mr. Chairman. Before I move to a 
couple questions for the witness, at the risk of getting in 
trouble with my good friend from Hawaii, I would have to tell 
you that when I look at it, and the first two words that do 
come into my mind are ``hippie'' and ``beatnik.''
    [Laughter.]
    Mr. Mark Udall. And Mr. Chairman, if he does take a chair 
over there, be careful what you wish for.
    No, my good friend from Hawaii, his passion is on point, 
and I respect the concern that he expressed.
    I wanted to focus, if I could, Ms. Burton, on Section 29 in 
the proposed legislation, on page 118. And the bill's title, of 
course, focuses on the outer Continental Shelf. But this 
section deals with oil shale and tar sands, and so that has an 
impact on Colorado.
    And I wonder if you could share with us what the effect of 
that section would be. How would it change current law?
    Ms. Burton. Mr. Chairman, I think I am going to pass. Mr. 
Udall, I did explain at the beginning that I haven't had a 
chance, we haven't had a chance in my bureau to analyze the 
bill in great detail. And so I cannot tell you precisely how we 
feel about that. But I don't think that section raised a lot of 
flags or a lot of concern.
    We are, as you know, working in Colorado right now to do 
some pilot work on oil shale, and we are very mindful of the 
fact that there had been some failed attempts some 20-some 
years ago. And so based on that we are being very, very careful 
on how we do it, and hopefully we will take care of the 
environment in particular.
    Mr. Mark Udall. So I take it that you will give us a formal 
reply to my question about the Department's reaction to that 
section.
    Ms. Burton. Sure.
    Mr. Mark Udall. If I might just add a couple of comments 
myself in this particular regard. The current law says that 
when it comes to oil shale, the Secretary sets a royalty that 
encourages development and is fair to the taxpayer. The 
President signed that into law in the Energy Act of last year, 
and I assume that the Administration supports that provision, 
is that correct?
    Ms. Burton. Yes.
    Mr. Mark Udall. This, as I read it, would change that 
provision. And again, given your unfamiliarity with the 
section, I don't want to put you on the spot, but I think that 
is how I read it.
    It is interesting, because this provision was included in 
the previous drafts of what became the Energy Act of 2005. And 
it was dropped in the Conference Committee process, I believe. 
So I am curious both about the substance and the process, and 
why we have seen this again in front of us.
    Ms. Burton. We definitely will look into that, sir. I 
apologize that we haven't had a chance to really analyze the 
bill in full.
    Mr. Mark Udall. Well, I would imagine that the title 
probably led you to take a look, first and foremost and 
primarily, at the outer Continental Shelf policy matters, and 
that oil shale was probably not in the front of your mind when 
you saw the title.
    Ms. Burton. Well, that is correct. And as I explained 
earlier, we are, since the passage of the Energy Policy Act, we 
have been extremely busy trying to meet the deadlines. And 
sometimes it is very difficult to do. So this didn't come to 
the forefront until very recently.
    Mr. Mark Udall. If I could, I would like to change topics 
to the discussion we have been having here on revenue. On page 
four of your testimony you note that some of the OCS areas are 
under Presidential withdrawal.
    Now, I think the President can change that by Executive 
Order, is that correct?
    Ms. Burton. It is our understanding that the President can 
modify the withdrawal if he wants to. And he has made the 
comment that he will work with the states. And this is where he 
stands at this point.
    Mr. Mark Udall. So if that were to happen, and I know that 
is a hypothetical, and leasing occurred in those areas, that 
would result in new revenues without this legislation.
    Ms. Burton. If an area only has a Presidential withdrawal. 
For example, this is the case in the North Aleutian Base of 
Alaska. And the Governor has asked the President to consider 
lifting, modifying his withdrawal for that area.
    If that were to take place, and the President modified his 
withdrawal, then yes, we could drill there. I mean, we could 
lease there.
    Mr. Mark Udall. And there would be revenues. I know market 
forces would come to bear.
    Ms. Burton. If industry is willing to work up there and 
produces hydrocarbon, certainly there would be revenue.
    Mr. Mark Udall. So my last point-slash-question would be, 
we would generate some revenue in that case without this bill.
    Ms. Burton. That is correct.
    Mr. Mark Udall. I thank you again for your testimony. Mr. 
Chairman, thank you. And I have no time left, but I will yield 
it back anyway. Thank you.
    The Chairman. Mr. Jindal.
    Mr. Jindal. Thank you, Mr. Chairman. I want to thank our 
witness. I especially want to thank you for the evolution of 
the Administration's position.
    I hear in your testimony, and I hear in your remarks, an 
openness to revenue sharing. That is something I think that is 
an evolution from where the Administration has been previously.
    I have a series of questions, and I suspect I will run out 
of time before I will get to hear all the answers to my 
questions. So I would like to share with you three or four 
questions in a row. And if you don't have a chance to fully 
answer all of them, I certainly hope you will share these with 
your colleagues back at OMB. And I suspect that a lot of these 
questions will ultimately have to be answered by your 
colleagues at OMB, not necessarily in your department.
    I understand you to say that the resources off our coast 
belong to us all, as you talk about your support for states 
opting in and out. So the first question--and again, I am going 
to ask you three or four before I allow you to have an 
opportunity to respond--the first is, I suspect that when you 
say these resources belong to us all, I would assume you would 
also believe that the resources that are on the Federal lands 
in New Mexico or in other states also belong to us all.
    So my first question would be, why would it be appropriate 
to have revenue sharing on those Federal, those resources, and 
yet the Administration wouldn't be fully supportive of revenue 
sharing of these similar resources, national resources, that 
belong to us all?
    Second, I would want to make sure that you and OMB, I would 
ask if you are aware that the rationale for revenue sharing was 
to mitigate the impact of exploration and production on these 
host states. And this is a question I would like your 
department to come back and answer. Are you aware of any other 
state that has contributed so much toward energy exploration as 
Louisiana, that has suffered so greatly when it comes to 
impact, when you consider the 30 miles a year that we are 
losing every year off of our coast?
    My third question, and I will reference I think my 
colleague, Congressman Walden, stated this well when he talked 
about New Mexico's revenues that you, yourself, said you came 
from Wyoming. They received 50 percent of the revenues.
    My third question is if the Administration is opposed to 
sharing revenues on existing production because the 
Administration feels this is too expensive a position, I don't 
understand, in light of the Administration's views on tax cuts. 
I guess my question would be, is the Administration considering 
changing revenue sharing in those states, like Wyoming, like 
New Mexico? And if not, why not? If it is not appropriate to be 
sharing offshore, off these national resources that belong to 
us all, why not in those states?
    And the last question, and I do want to give you a chance 
to respond, is we talk about expense. And I want to know if the 
witness is aware that even under my bill, if it were adopted, 
in the first year Louisiana would not receive the same revenues 
that my colleague cited that New Mexico receives today, despite 
the fact that Louisiana is generating $6 billion a year off our 
coast for the Treasury, despite the fact that we are generating 
30 percent of the energy.
    I want to ask if you are aware. If you are not, to make 
sure that OMB is aware, that for every mile that we are 
losing--we are losing 30 miles off our coast--for every 2.4 
miles we lose, we lose the ability to absorb one foot of title 
search.
    Now, it may seem expensive to the Administration to share 
with Louisiana $600 million a year, as would be under my bill 
when this starts. But I would argue that pales in comparison to 
the nearly $100 billion we were spending after Hurricane 
Katrina and Rita.
    My colleagues, Democrat and Republican, have argued for 
years that if we don't restore that coast--we are losing 30 
miles a year every year--if we do not restore that coast, 2.4 
miles of coast reduces by one foot the amount of water that 
ends up in people's homes, that ends up in populated areas. If 
we do not do that, we will spend a lot more after the next 
hurricane.
    I would argue that that $100 billion that we are spending, 
I would argue that over 1,000 lives that we lost would 
certainly pale in comparison to the cost of what it would cost 
to restore Louisiana's wetlands to build those levees properly.
    Now, nobody from Louisiana, neither Charlie nor I, are 
arguing if we had revenue sharing, Katrina and Rita would not 
have happened. We know that it would have happened. But we also 
know that if our country had been investing in restoring our 
wetlands and building those levees properly, we wouldn't have 
had the catastrophe that we did after Katrina and Rita.
    There were two separate catastrophes. One was man-made, and 
the second was man-caused.
    And I apologize. I did not mean to take all of my time in 
questions, and I certainly hope you don't feel my frustration 
is directed at you. I applaud your testimony. I applaud in 
particular the evolution of the Administration's position. And 
I am sorry that all my colleagues weren't here to hear this, 
especially my colleagues from New Mexico and other states that 
are already receiving revenues today.
    But my point to you, and the point I would like you to 
bring back to OMB, is that I actually think it would be more 
cost effective, it would be more equitable, to share those 
revenues with states like Louisiana.
    I would also point out, my colleagues point to the jobs 
that are being lost, there are 100,000 jobs we have lost in the 
chemical industry, 120,000 jobs in the forestry industry. So 
there is a cost to not acting, as well. There is not simply a 
cost to sharing these revenues, there is a cost to not sharing 
these revenues.
    For those and several other reasons, I applaud you for 
moving forward toward a position that is more open toward 
revenue sharing. I would encourage you to share my questions 
with OMB. And certainly I would like to hear back in 
particular, are they aware of any other state that has suffered 
more, in terms of impact? Because a rationale for revenue 
sharing has always been to mitigate the impact of energy 
exploration on those resources that are owned by the nation, as 
you have said in your testimony, that belong to us all.
    And I apologize, I have used all of your time to ask you my 
questions. But I do hope you will share not just the intensity, 
but the details of those questions, with your colleagues at OMB 
in particular.
    Mr. Chairman, I apologize, but I yield back the time that I 
don't have remaining.
    [Laughter.]
    Ms. Burton. I will carry the message back. And as you know, 
change is hard to come by. And I think we need to keep that in 
mind.
    But you are correct that the Administration, as of now, is 
saying we are willing to work with the Committee and to discuss 
the issue. I don't know where it will go, but that is where we 
are now.
    Mr. Jindal. Mr. Chairman, I beg your indulgence. I would 
also like the witness to take back to her department our 
Governor's stated opposition to the August lease sales. She 
said publicly she will pursue legal action. So I don't want any 
of my colleagues on this Committee to mistakenly assume that 
there is no cost to the status quo.
    And again, I am not necessarily saying that everybody that 
is in favor of my bill, I am not necessarily saying everybody 
in our delegation is in agreement with that legal action. But I 
do want my colleagues to hear it.
    And for the record, our Governor has publicly stated if 
there is not a change in the revenue sharing, that she will 
legally, and she has already retained counsel to legally 
challenge the upcoming August lease sale.
    So I don't want anybody to mistakenly think there is zero 
cost to maintaining the status quo in terms of our nation's 
ability to produce its own energy resources.
    Thank you.
    The Chairman. Thank you. I want to thank Ms. Burton, thank 
our witness, for your testimony and for answering the 
questions. I think that you do get a feeling of where this 
Committee is, and I would encourage you to take back to the 
bean counters to reevaluate what some of their message may be 
in your testimony.
    So thank you very much for being here.
    Ms. Burton. Mr. Chairman, thank you very much for giving me 
this opportunity.
    The Chairman. I would like to call up our second panel of 
witnesses. We have Senator Frank W. Wagner, Ms. Colleen M. 
Castille, Ms. Charlotte Randolph, and Mr. Daniel H. Lopez. 
Would you join us at the witness table?
    If I could have all of you just stand and raise your right 
hand. On the Resources Committee we customarily swear in all of 
our witnesses.
    [Witnesses sworn.]
    The Chairman. Thank you. Let the record show that they all 
answered in the affirmative.
    Senator Wagner, we are going to begin with you. And I will 
remind our witnesses that your entire written testimony will 
appear in the record. If you could limit your oral testimony to 
five minutes, it would be greatly appreciated.
    Senator.

              STATEMENT OF HON. FRANK W. WAGNER, 
                   SENATOR, STATE OF VIRGINIA

    Mr. Wagner. Thank you, Mr. Chairman, and I appreciate this 
opportunity to testify before your Committee today.
    As I am sure you are aware, over the last two years the 
Virginia General Assembly has voted overwhelmingly to allow for 
the exploration and development of our offshore natural gas 
resources, and requests that the Federal government rescind the 
existing moratorium off the Virginia coastlines.
    In 2005, then-Governor Warner vetoed Senate bill 1054. 
However, his veto was predicated not on his objection to 
offshore development, but the feeling that the issue required 
additional study, undertaken last year.
    Virginia's study of this issue was completed in January of 
2006. The conclusion drawn was that with the appropriate 
environmental safeguards and distance from the shore, Virginia 
would gain significant benefits from such exploration and 
development.
    I introduced Senate Bill 262, the Virginia Energy Plan, 
during the 2006 session of the Virginia General Assembly. This 
legislation enacts a comprehensive energy plan focused on 
increasing supply, improving delivery redundancies, and 
reducing the demand through conservation.
    Mr. Chairman, Virginia took this bold step not as a 
visionary leap to the future, but out of an absolute cold 
reality unfolding throughout the Commonwealth right now today. 
Post-Hurricane Katrina we were able to grasp the full extent of 
the vulnerability of our energy infrastructure. It is true that 
no one measure will cure Virginia's or the nation's energy 
ills.
    However, development of our offshore resources is a 
critical part of Virginia's energy plan. House Bill 4761 is 
exactly what Virginia has been asking for over the past two 
years. We thank Congressman Jindal, Congressman Melancon, and 
you, Mr. Chairman, for moving forward and allowing states to 
control their own destinies, while opening a broad new horizon 
for America's energy access.
    Mr. Chairman, House Bill 4761 demonstrates tremendous 
foresight. Not only does the legislation allow states to opt 
out of existing moratoria, but also allows states to share in 
the royalty revenues derived from the development of those 
resources. The last two actions on the OCS legislation by the 
Virginia General Assembly were approved on the premise that 
legislation in Washington would include revenue sharing.
    The Virginia energy plan--there has been a lot of talk, Mr. 
Chairman, I know about what are the states going to do with 
this money. Within the Virginia energy plan we do allocate 
those resources, should they become available from the Federal 
government. I can tell you that 40 percent of that revenue, we 
are currently under a mandate from the Federal government in 
Virginia to take actions to clean up the Chesapeake Bay. This 
year we were able to appropriate that money because of a budget 
surplus that we face in Virginia. The out years, we are not so 
certain. So we dedicate 40 percent of any royalty stream to 
those efforts to help clean up the Chesapeake Bay.
    And I know a number of you, both in the audience as well as 
you, Mr. Chairman, have the opportunity to drive on Virginia's 
highways, and you know the transportation difficulties we face 
in Virginia. We face a tremendous funding problem within the 
Commonwealth of Virginia. And 40 percent of the revenues from 
the royalties would go to transportation.
    And we also want to take the additional 20 percent and 
invest, if you will, back into energy, Mr. Chairman. We have 
set aside 10 percent for grants and tax relief to encourage 
conservation, and encourage the development of renewable 
resources. And 5 percent into R and D, both at our current coal 
and energy research and development facility, Virginia Tech; it 
is a consortium, as well as a new ocean energy consortium. Five 
percent of the funding will be dedicated for research and 
development.
    We think it is absolutely instrumental in Virginia that we 
reinvest a portion of that royalty money back into energy, 
recognizing that we need to do everything we can to develop 
state-of-the-art methods to both conserve energy, as well as 
find new sources and find existing energy, making it even 
cleaner to use.
    Mr. Chairman, when those of us involved in the study of an 
energy plan took a long look at the energy woes confronting 
Virginia, we determined there is not an energy shortage problem 
in this nation; there is an energy policy problem that has 
created the shortage. And because it is a policy problem, 
industry, the private sector cannot fix it.
    Government, at whatever level, created the policies; thus, 
government must fix the policies. Given the right policy 
atmosphere, American ingenuity and business acumen will develop 
the solutions.
    Given the current global situation underlying inflationary 
pressures brought on, in no small part, by increasing energy 
prices, it is no wonder that our well-documented 
vulnerabilities in national security exist because of our 
continued dependence on foreign oil.
    In observing our ever-expanding negative balance of trade, 
we in Virginia have determined, as I am sure you in Washington 
have, that to the maximum extent possible Americans producing 
American energy, for use by American consumers and American 
industry, is a laudable goal. House Bill 4761 is a giant step 
down this avenue.
    Mr. Chairman, I know I do not need to remind you of what 
you know so well, that the availability of low-cost natural gas 
is absolutely essential to the economic well-being of the 
United States. Natural gas is a key ingredient in many of the 
processes in the chemical industry. It is irreplaceable in the 
manufacture of some of the most common types of fertilizers. 
Because of its most important attribute--that is, the cleanest-
burning fossil fuel we have--it has been the fuel of choice in 
recent years for nearly every new electric generation plant 
brought on line.
    However, because natural gas prices depend on the source of 
the gas, and whether and how far it is transported, we pay more 
in this nation than most of the rest of the world pays for 
their natural gas.
    If we are to maintain our petrochemical industry, our 
leading role in agriculture, and our tremendously successful 
efforts to clean our air by generating electricity with the 
cleanest-burning fossil fuel, we simply must expand our access 
to supplies of natural gas.
    Mr. Chairman, I am running out of time, so I will yield the 
last six seconds I have, and you have the rest of the comments 
in there.
    [The prepared statement of Senator Wagner follows:]

              Statement of The Honorable Frank W. Wagner, 
               Senator, 7th District, Senate of Virginia

    Thank you, Chairman Pombo, Congressman Rahall, for the opportunity 
to testify before you today.
    As I am sure you are aware, over the past two years the Virginia 
General Assembly has voted overwhelmingly to allow exploration and 
development of our offshore natural gas resources and requests that the 
federal government rescind the existing moratorium off the Virginia 
coastline. In 2005, then Governor Warner vetoed my bill, SB 1054. 
However, his veto was predicated not on his objection to offshore 
development, but his feeling that the issue required additional study, 
undertaken last year.
    Virginia's study of the issue was completed in January 2006. The 
conclusion drawn was that, with the appropriate environmental 
safeguards and distance from shore, Virginia would gain significant 
benefits from such exploration and development.
    I introduced Senate Bill 262, the Virginia Energy Plan, during the 
2006 session of the General Assembly. This legislation enacts a 
comprehensive energy plan, focused on increasing supply, improving 
delivery redundancies and reducing demand through conservation.
    Mr. Chairman, Virginia took this bold step, not as a visionary leap 
to the future, but out of an absolute, cold reality unfolding 
throughout the Commonwealth right now--today. Post-Hurricane Katrina, 
we were able to grasp the extent of vulnerability in our energy 
infrastructure. It is true that no one measure will cure Virginia's--or 
the nation's--energy ills. However, development of our offshore 
resources is a critical part of Virginia's energy plan. H.R. 4761 is 
exactly what Virginia has been asking for over the past two years. We 
thank Congressman Jindal, Congressman Melancon and you, Mr. Chairman, 
for moving forward and allowing states to control their own destinies, 
while opening a broad new horizon for America's energy access.
    Mr. Chairman, H.R. 4761 demonstrates tremendous foresight. Not only 
does the legislation allow states to opt out of existing moratoria, but 
also allows states to share in royalty revenues derived from the 
development of those resources. The last two actions on OCS legislation 
by the Virginia General Assembly were approved on the premise that the 
legislation in Washington would include revenue sharing. The Virginia 
Energy Plan states that any revenue derived from offshore activity 
would be divided as follows: 40% dedicated to the clean-up of the 
Chesapeake Bay; 40% for transportation needs (those of you who drive in 
Virginia know about our traffic problems); 10% dedicated as tax 
incentives for conservation and renewables; 5% for development of clean 
coal technologies and 5% for research and development of marine 
renewables, including methane hydrates.
    Mr. Chairman, when those of us involved in the study of the energy 
plan took a long look at the energy woes confronting Virginia, we 
determined that there is not an energy shortage problem; there is an 
energy policy problem. And, because it is a policy problem, industry--
the private sector--cannot fix it. Government, at whatever level, 
created the policies. Thus, Government must fix the policies. Given the 
right policy atmosphere, American ingenuity and business acumen will 
develop the solutions.
    Given the current global situation and underlying inflationary 
pressures brought on in no small part by increasing energy prices, it 
is no wonder that our well-documented vulnerabilities in national 
security exist because of our continued dependence on foreign oil.
    In observing our ever-expanding negative balance of trade, we in 
Virginia have determined, as I am sure you have in Washington, that to 
the maximum extent possible, Americans, producing American energy for 
use by American consumers and American industry, is a laudable goal.
    H.R. 4761 is a giant step down this avenue. Mr. Chairman, I know I 
do not need to remind you of what you know so well, that the 
availability of low cost natural gas is absolutely essential to the 
economic well being of the United States. Natural gas is a key 
ingredient in the majority of processes in the chemical industry. It is 
irreplaceable in the manufacture of some of the most common types of 
fertilizers. Because of its most important attribute, that it is the 
cleanest burning fossil fuel, it has been the fuel of choice in recent 
years for nearly every new electric generation plant brought on line. 
However, because natural gas prices depend on the source of the gas and 
whether and how far it is transported, we pay more for natural gas here 
in the U.S. than any other industrialized country in the world.
    If we are to maintain our petrochemical industry, our leading role 
in agriculture and our tremendously successful efforts to clean our air 
by generating electricity with the cleanest-burning fossil fuel, we 
simply must expand our access to supplies of natural gas.
    Mr. Chairman, because the debate has been raging as a result of 
actions taken by the General Assembly over the last two years, many 
Virginians are more aware of what is involved in offshore production 
activities than residents of states that are not embroiled in the 
issue. Recently, I conducted a poll, as did my congresswoman, Rep. 
Thelma Drake, to gauge the willingness of the citizens in my district, 
the coastal community of Virginia Beach, to allow OCS activity off 
Virginia's coast. After two years of relatively intense, negative media 
attention, my constituents--an overwhelming 75%--(and I believe the 
percentage was higher in Congresswoman Drake's district) supported 
offshore exploration and development of our offshore resources.
    Mr. Chairman, H.R. 4761 fulfills the will of the Virginia General 
Assembly over the past two years, which is to open the OCS off the 
coast of Virginia for exploration and development of natural resources. 
I want to applaud the leadership provided by you, Mr. Chairman, 
Congressman Jindal, Congressman Melancon and the other co-patrons of 
this legislation.
    On behalf of the Virginia General Assembly and the 75% of my 
constituents in Virginia Beach, whom I have the honor and the privilege 
to serve in the Senate of Virginia, I urge you to vote for passage of 
this most important piece of legislation.
    Thank you for allowing me to testify before you today. I would be 
happy to answer any questions at the appropriate time.
                                 ______
                                 
    The Chairman. Thank you. Next we have Secretary Castille, 
who is the Department of Environmental Protection in the State 
of Florida.

         STATEMENT OF COLLEEN M. CASTILLE, SECRETARY, 
         FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION

    Ms. Castille. Good afternoon, Mr. Chairman, and thank you 
for the opportunity to testify before this Committee on a 
matter of great importance to the State of Florida.
    Florida's tourist-based economy and quality of life depend 
upon a clean and healthy environment. Our more than 85 million 
visitors each year contribute more than $57 billion and 900,000 
jobs to the economy. In addition, Florida's marine, fishing, 
and boating industries inject more than $41 billion into the 
state's economy.
    Over the last seven years, Governor Bush has demonstrated 
his continued commitment to protect Florida's coastline from 
the potential threat of offshore development. In 2001 he 
secured a historical commitment from the Federal government to 
buy back existing drilling rights just 25 miles off Pensacola, 
and prevented new leasing through 2007 within 100 miles of the 
panhandle, and within 200 miles of Tampa Bay.
    Last year, Florida's Governor and Cabinet signed an 
unprecedented settlement agreement to forever eliminate the 
potential for oil drilling in the state's waters. Florida is 
committed to supporting a national energy policy that balances 
future offshore production with alternative fuel development, 
conservation, and environmental protection.
    Next week, Governor Bush will sign the 2006 Florida Energy 
Act, a $100 million strategy to diversify Florida's fuel supply 
and provide long-term energy security. This comprehensive plan 
provides financial incentives to create a more balanced energy 
portfolio by increasing Florida's investment in renewable 
energy sources, such as solar, hydrogen, and biofuels.
    Florida does have a desire for balanced legislation that 
protects Florida's economic and environmental interests. For 
the last 25 years Congress has determined which of the areas of 
the outer Continental Shelf were appropriate for new 
exploration and development.
    As Congress addresses America's future energy needs and the 
demand for new production in the eastern Gulf of Mexico, 
Florida requests that you consider its environmental and 
economic interests by including the following nine elements in 
any legislation.
    To maintain and strengthen the protections that are 
currently in place, Florida supports the codification of the 
current Presidential withdrawal through 2012.
    Florida supports a no-drilling buffer zone of at least 100 
miles from Pensacola to Jacksonville, including the near shore 
waters and the Straits of Florida, and along the Eastern 
Seaboard, that are not currently protected by Presidential 
withdrawal or Congressional moratoria.
    With 67 leases in the eastern Gulf within 100 miles of 
Florida, the threat of near-shore drilling remains. Federal 
legislation should create a lease buy-back or exchange program 
that would help to create a truly drilling-free buffer zone 
around Florida's entire coastline.
    Governor Bush supports legislation that protects our 
military interests in the Gulf. Both the Navy and the Air Force 
conduct critical training and testing missions from Florida's 
panhandle to Key West. Requiring the Department of Interior to 
consult with the Department of Defense on new leasing 
activities in the eastern Gulf, and giving oversight authority 
to the President, would safeguard our national security.
    Governor Bush also advocates giving states control over a 
reasonable portion of the OCS, putting this critical decision 
in the hands of people most impacted by offshore oil and 
natural gas production. Such a plan by Congress would give 
Floridians the ability to maintain in perpetuity a no-drilling 
buffer zone that would forever protect our resources and our 
quality of life.
    New legislation should allow states to maintain a buffer 
zone in the waters between each state. It is important to allow 
either state to unilaterally prevent offshore development in a 
reasonable portion of neighboring states' waters.
    Governor Bush has consistently opposed, and continues to 
oppose, any offshore development and lease sale 181 that is 
within 100 miles of Florida's coast. Florida supports 
legislation that protects this 800,000-acre area between 
Florida and Alabama, known as the Stovepipe. Florida also 
supports legislation that would prevent costly and duplicative 
inventories in areas of the OCS withdrawn from leasing.
    And finally, Florida opposed natural gas drilling proposals 
that would open up the OCS to drilling as close as 20 miles to 
Florida's beaches. These efforts represent an unwise, haphazard 
approach to energy development on the OCS, and represent a 
threat to Florida's coastal environment.
    In conclusion, Mr. Chairman, Governor Bush and I are 
personally grateful for the opportunity to present to you the 
nine elements that we believe would be beneficial to states. 
And we will continue to work with you to promote legislation 
that empowers states to determine their own future on the U.S. 
Outer Continental Shelf.
    [The prepared statement of Ms. Castille follows:]

      Statement of The Honorable Colleen M. Castille, Secretary, 
             Florida Department of Environmental Protection

    Mr. Chairman, thank you for the opportunity to testify before this 
Committee on a matter of great importance to the State of Florida. With 
the exception of Alaska, no other state in the nation boasts as much 
coastline as the Sunshine State, and the people of Florida pride 
themselves on the natural scenic beauty of our extraordinary waters.
    As the fourth largest state in the Union, Florida has a prosperous 
economy based on tourism, agriculture, technology and trade. Home to 
the only living coral reef in the lower forty-eight states and 825 
miles of unspoiled sugar-white beaches, it naturally follows that a 
large percentage of our state's economy is built on tourism with more 
than 85 million visitors each year, contributing more than $57 billion 
and more than 900,000 jobs to the economy. More than 33 million of 
these annual tourists are drawn by our world-class beaches and near-
shore coastal waters. In addition, Florida's marine industry injects 
more than $18 billion to the state's economy, recreational and 
commercial fishing inject more than $8 billion into Florida's 
communities, and boating contributes another $15 billion. Florida's 
natural resources provide the foundation on which many residents build 
their businesses and their lives. This is why Governor Jeb Bush has 
vigorously advocated protection against oil and natural gas development 
off of Florida's shores.
    Over the last seven years, Governor Bush has demonstrated his 
commitment to protect Florida's coastline from the potential threat of 
offshore development. In 2001, he secured a historical commitment from 
the federal government to buy back existing drilling rights just 25 
miles off of Pensacola while preventing new leasing within 100 miles of 
the Panhandle and 200 miles of Tampa through 2007. In addition, in June 
of 2005 Governor Bush and the Florida Cabinet signed an unprecedented 
settlement agreement between the State of Florida and the Coastal 
Petroleum Company to forever eliminate the potential for oil drilling 
in state waters.
    Florida is committed to supporting a national energy policy that 
balances future offshore development with conservation and 
environmental protection. Developing renewable, environmentally 
friendly, domestically produced fuels like ethanol, improving 
conservation practices, and increasing efficiency will help the U.S. 
meet its own energy needs. This year, Governor Bush spearheaded the 
2006 Florida Energy Act, a $100 million strategy to diversify the 
state's fuel supply and provide long-term energy security. This four-
year comprehensive plan provides rebates, grants, and tax incentives to 
create a more balanced energy portfolio by increasing Florida's 
investment in renewable energy sources such as solar, hydrogen, and 
biofuels. Specifically, the 2006 Florida Energy Act provides $7.5 
million to stimulate investment in ethanol refining capacity to help 
Florida meet its demand for motor vehicle fuel. This investment will 
speed the development of two or three ethanol production plants in 
southwest Florida, which could annually produce up to 80 million 
gallons of renewable fuel for Florida's drivers. In addition, Florida's 
``Farm to Fuel'' program will take advantage of the vast amount of farm 
acreage in the state and our year round growing season to cultivate the 
agricultural products needed to produce ethanol.
    For the last 25 years, Congress has determined which areas of the 
U.S. Outer Continental Shelf (OCS) were appropriate for new exploration 
and development. In 1981, Congress initiated an appropriations 
moratorium prohibiting any funds from the U.S. Treasury to be spent on 
new oil and natural gas leasing activities off certain areas of 
California. In 1984, Congress extended that moratorium to the Eastern 
Gulf of Mexico and other parts of the OCS and continued to add more OCS 
acreage over the years. Following Congress' lead, in 1990, President 
George H.W. Bush issued a Presidential directive administratively 
preventing new leasing in some areas of the OCS until the year 2000, 
and in 1998 President Clinton extended this Presidential Withdrawal 
until 2012 and expanded it to its current size. Today, the Presidential 
Withdrawal and the Congressional Moratorium prohibit new leasing 
activities throughout the OCS except in the Central and Western Gulf of 
Mexico, Alaska, the Lease Sale 181 area, and an area known as the 
Straits of Florida. Thus, the Congressional Moratorium and the 
Executive Withdrawal cover almost the entire Atlantic and Pacific 
coastlines of the lower forty-eight states.
    As Congress evaluates the actions necessary to address America's 
future energy needs and the demand for new production in the Eastern 
Gulf of Mexico, Florida requests that you consider its environmental 
and economic interests:
Codification of the Presidential Withdrawal
    The State of Florida supports efforts to maintain the annual 
Congressional Moratorium and the Presidential Withdrawal through at 
least 2012. Placing the Presidential Withdrawal in law would provide 
additional permanency to the current protections provided by the annual 
Congressional Moratorium.
No-Drilling Buffer Zone
    To protect our environment and tourism-based economy, Florida 
supports a no-drilling buffer zone of at least 100 miles around the 
state, from Pensacola to Jacksonville. Prohibiting development of near-
shore waters in the Straits of Florida and along the eastern seaboard, 
which are not currently protected by Presidential Withdrawal or 
Congressional Moratorium, increases protection for our sensitive marine 
resources. In addition, the marine communities found on the Florida 
outer continental shelf would be protected from other potential 
environmental impacts caused by offshore activities, including physical 
disturbances caused by anchoring, pipeline placement and rig 
construction, the resuspension of bottom sediments and pollution from 
drilling and production discharges.
Lease Buy-Back or Exchange
    Equally important, any legislative proposal must address the 
existing, potentially active leases in the Eastern Gulf of Mexico 
Planning Area. Governor Bush has long held that no oil or natural gas 
drilling should occur within 100 miles of Florida's coast. With 67 
leases in the Eastern Gulf wholly or partially within 100 miles of the 
State of Florida, the threat of near-shore drilling remains. Florida 
has already taken action to eliminate the threat of near-shore drilling 
in the waters under its jurisdiction. Last year, under the leadership 
of Governor Bush, the Florida legislature appropriated $12.5 million to 
buy back the last remaining oil leases in state waters. Similarly, any 
federal legislation should create a lease buy-back or exchange program 
that would help to create a truly drilling-free buffer zone around the 
entire Florida coastline. Such a program should allow the holders of 
near-shore leases, such as those within 100 miles of Florida, to sell 
back their leases to the Department of Interior or exchange them for 
leases further offshore safely beyond the immediate threat of 
environmental harm. As an additional incentive to exchange the leases, 
any new legislation should prevent companies which opt to retain leases 
within 100 miles of Florida from filing an exploration plan until after 
2012. Participation in a federal OCS lease buy-back or exchange program 
in the Eastern Gulf of Mexico would make economic sense for most oil 
and natural gas companies, offering them the opportunity to trade 
restricted leases of limited value for new leases that would be outside 
an area withdrawn from leasing and outside of the Joint Gulf Test 
Range.
The Joint Gulf Test Range
    Any OCS legislation must protect the military's interest in the 
Eastern Gulf of Mexico. The Eastern Gulf is home to the Joint Gulf Test 
Range that extends from the panhandle of Florida all the way to Key 
West. The Florida panhandle houses Eglin Air Force Base, the largest 
Air Force base in the United States, as well as Tyndall Air Force Base 
and Pensacola Naval Air Station. Both the Navy and the Air Force 
conduct training missions in this vast test range essential to our 
national security. In a recent speech on the floor of the House of 
Representatives, Congressman Jeff Miller, who represents a heavily 
military district in the Florida Panhandle, listed the following 
current and future missions planned in the Eastern Gulf of Mexico: 
``the F-35 Joint Strike Fighter initial training and live fire; the F-
22 pilot upgrade training, including the AMRAAM live fire; Tomahawk 
cruise missiles launched from submerged vessels; testing of Small 
Diameter Bomb program against man-made targets in the Gulf of Mexico; 
F-16 weapons system testing and evaluation; air dominance munitions; 
unmanned combat air vehicles; and directed energy weapons and 
classified programs.'' With this myriad of critical training missions 
in the Eastern Gulf it is no wonder that last November the Secretary of 
Defense Donald Rumsfeld wrote that, ``Areas east of 86'41+, which is 
the military mission line...are critical to DOD.'' He went on to say, 
``In these areas east of the military mission line, drilling structures 
and associated development would be incompatible with military 
activities, such as missile flights, low-flying drone aircraft, and 
weapons testing and training.'' Knowing that areas east of the military 
mission line are critical to the training of our military interests 
located in Florida, last year Governor Bush supported legislation that 
would have required the Department of Interior to consult with the 
Department of Defense on any new leasing activities in the Eastern Gulf 
and gave oversight authority to the President.
State Options
    The State of Florida supports a states' rights approach to offshore 
development. The ability of coastal states to maintain a no-drilling 
buffer in the OCS is of vital importance to Florida where the tourist-
based economy depends on a clean and healthy marine environment. 
Governor Bush and I strongly support giving states control over a 
reasonable portion of the OCS, putting this critical decision in the 
hands of the people most impacted by offshore oil and natural gas 
production. Such a plan by Congress would give the people of Florida 
the ability to maintain in perpetuity a no-drilling buffer zone that 
would forever protect our resources and quality of life.
Protection of State Borders
    New legislation should also allow states to maintain a buffer zone 
in the waters between each state. It would be important to allow either 
state to unilaterally prevent offshore development in a reasonable 
portion of its neighboring state's waters. Additionally, Governor Bush 
has objected and will continue to object to any offshore development in 
the area of the Gulf of Mexico known as Lease Sale 181 that is within 
100 miles of the coast of Florida. This is the 800,000-acre area 
commonly known as the ``stovepipe'' that forms the seaward border 
between Florida and Alabama. Florida supports legislation that 
maintains this protection.
OCS Inventories
    Florida supports legislation that would prevent additional 
inventories from being conducted in areas of the OCS withdrawn from 
leasing which violate the spirit of the withdrawal and encourage 
additional drilling activities in these areas. Additional OCS 
inventories would be costly, duplicative, and unnecessary in light of 
the Comprehensive Inventory of U.S. Oil and Natural Gas Resources, 
mandated by the Energy Policy Act of 2005 and submitted to Congress in 
February 2006 by the Department of Interior's Minerals Management 
Service.
Near-Shore Natural Gas Drilling
    Finally, the State of Florida vehemently opposes natural gas 
drilling proposals currently circulating in Congress that would open up 
the OCS to drilling as close as 20 miles to Florida's beaches. Recent 
attempts to amend the House version of the Department of Interior 
Appropriations bill for Fiscal Year 2007 even contemplated a complete 
repeal of the 25-year Congressional Moratorium. This could have brought 
natural gas drilling as close as three miles away from Florida and 
other coastal states. These efforts represent an unwise, haphazard 
approach to energy production on the OCS.
    Despite claims to the contrary by the promoters of these plans, 
there are serious environmental risks associated with near-shore 
natural gas drilling, and while it is possible to produce natural gas 
only, it is usually found with other liquid hydrocarbons. Whether it is 
a 20-mile buffer or a three-mile buffer, neither distance gives states 
or the federal government enough time to react in the event of an 
unexpected spill or blowout at a natural gas platform. The potential 
environmental impacts resulting from routine discharges of drilling mud 
and rock cuttings associated with any drilling operation would also be 
amplified by near-shore natural gas drilling. Up to 3,200 cubic meters 
of silt-like rock cuttings and mud could be released by one exploratory 
well. These discharges could contain significant amounts of toxic 
metals, which could be released into the ocean environment posing a 
threat to marine life and clouding Florida's crystal clear waters.
    The State of Florida thanks Chairman Pombo and this Committee for 
considering the environmental and economic interests of the people of 
Florida when crafting this crucial piece of legislation. Governor Bush 
and I are personally grateful for the opportunity to present this 
testimony before you today, and we will continue to work with you to 
promote legislation that empowers states to determine their own future 
on the U.S. Outer Continental Shelf.
                                 ______
                                 
    The Chairman. Thank you. I recognize Mr. Jindal and Mr. 
Melancon to introduce our next witness.
    Mr. Melancon. Thank you, Mr. Chairman. If I can do two 
quick things, and then Bobby, I would like to request unanimous 
consent to put in the record testimony from Mr. Scott Angelle, 
who is the Secretary of the Department of Natural Resources of 
the State of Louisiana. He was unable to be here today.
    The Chairman. Without objection.
    [The statement submitted for the record follows:]

        Statement of The Honorable Scott A. Angelle, Secretary, 
               Louisiana Department of Natural Resources

                                SUMMARY
    Mr. Chairman, Mr. Ranking Member, and distinguished members of the 
House Committee on Resources, thank you for your gracious invitation to 
appear before your Committee.
    The time is past due for us to get serious about energy supply and 
use in this country. Energy supply issues cannot be discussed seriously 
without addressing offshore production, and offshore production in 
America would be almost insignificant if it were not for the State of 
Louisiana. In 2005, the Louisiana OCS (that is, the federal offshore 
Outer Continental Shelf off of Louisiana's coast) produced 89% of the 
oil and 70% of the natural gas production in the U.S. Gulf of Mexico 
OCS and 85.4% of the oil and 69.5% of the natural gas production in the 
entire U.S. OCS. Since the beginning of time, Louisiana OCS territory 
has produced 85.4% of the 15.9 billion barrels of crude oil and 
condensate and 81.1% of the 162 trillion cubic feet of natural gas ever 
extracted from all federal OCS territories.
    The current volume of Louisiana OCS production, which has been 
reduced due to hurricane damaged infrastructure, amounts to 24.0% of 
total U.S. domestic crude production and 19.2% of total U.S. domestic 
natural gas production from all locations. Prior to the recent run-up 
in prices, federal production off Louisiana's shores alone contributed 
an average of $5 BILLION a year to the federal treasury. And, that was 
when the price of oil was even less then one-half of the $70 per barrel 
it is selling for today.
    The availability to the American people of this prodigious energy 
and revenue source would not be possible without the cooperation and 
participation of Louisiana and its citizens. While all but four other 
coastal states refuse to allow any new exploration or production off 
their coasts, Louisiana has pioneered offshore development and 
continues to do more than its share to develop and make available 
onshore and offshore energy to all Americans.
    Louisiana incurs tremendous infrastructure and environmental costs 
to make all of this OCS production possible. A discussion of 
infrastructure costs is provided later in this presentation. For the 
moment, it is sufficient to state that Louisiana has TENS OF BILLIONS 
OF DOLLARS of requirements to repair, rebuild, and maintain the 
infrastructure needs of roads, ports, flood protection, environmental 
damage from old practices of the past, onshore disposal of offshore 
production wastes, and other infrastructure, including restoring 
protective coastal wetlands that are being lost at a rate of more than 
24 square miles per year.
    The deterioration and damage to all of this infrastructure, and the 
lack of financial assistance through revenue sharing with the state 
needed to maintain and improve the infrastructure, threaten the 
viability of this offshore energy and revenue production capability to 
continue. The recent devastating impacts of Hurricanes Katrina and Rita 
have demonstrated the vulnerability of this critical infrastructure.
    Inland states like Wyoming, New Mexico, Colorado, and others host 
drilling on federal lands onshore, they receive 50% of those revenues 
in direct payments, and consequently have the financial resources to 
support that infrastructure. In Fiscal Year 2004, Wyoming and New 
Mexico together, received about $928 million from those revenues, which 
IS an appropriate revenue sharing procedure. In contrast, for example 
in 2001, of the $7.5 BILLION in revenues produced in the federal OCS 
area that year, only a fraction of one percent came back to those 
coastal states. The inequity is truly profound.
    Louisiana's OCS production complex dwarfs all other energy 
production centers in the country, onshore or offshore; yet, the pocket 
change the state receives in revenue from it is almost insulting, 
considering that Louisiana makes all of this revenue and energy 
production possible. The minuscule amount of revenue the state receives 
from its colossal OCS production is what is called Section 8(g) funds, 
which amounts to about $30 million per year to Louisiana out of a $5 
billion revenue stream. It gets even more humiliating when one realizes 
what 8(g) money really is. This money is derived from the mineral 
revenues from a band that extends from each coastal state's offshore 
boundary seaward for three miles into federal waters. Federal revenue 
from this zone is shared, 27% with the coastal producing state and 73% 
to the federal government. Beyond that, the state receives zero 
revenue. Unfortunately, even this paltry revenue is revenue sharing in 
disguise. Section 8(g) funding was created to COMPENSATE coastal 
producing states for drainage from oil and gas reservoirs on the state 
side of the boundary from wells drilled on the federal side of the 
border.
    This so-called revenue sharing is all the revenue a coastal 
producing state like Louisiana receives, in contrast to the 50% sharing 
onshore. It is not any wonder that no states other than Louisiana, 
Texas, Mississippi, Alabama, and Alaska are willing to allow oil and 
gas production off their coasts. Why do even these few states allow any 
federal offshore production?
    Louisiana has recently pondered this and weighed these issues long 
and hard, carefully examining the cost / benefit ratio for the state. 
The infrastructure damage from the recent hurricanes dangerously 
weakened the already deteriorated coastal eco-structure of the state. 
For continued and expanded OCS development off the coast of Louisiana, 
business as usual cannot continue. Enormous investments of capital are 
required to ensure the continued viability of the OCS industry off 
Louisiana's coasts without sacrificing the integrity of Louisiana's 
onshore and coastal habitat.
    Louisiana does not have the funds for the needed improvements, but 
the funding can and should be made available by sharing 50% of the 
revenues from Louisiana OCS production with the state.
    To prove to the entire United States Congress that Louisiana is 
serious about applying the OCS funds to coastal restoration, during the 
2005 regular session prior to the storms, the Louisiana Legislature 
passed the Revenue Lock Box Amendment. This Constitutional amendment 
now awaits voter approval in the Fall of 2006. It was tweaked in the 
November, 2005 special session, and it requires the deposit of all OCS 
revenues into the Coastal Restoration and Protection Fund. I felt very 
strongly about this when I proposed this idea, even before the storm. 
It was obvious that all state leaders were asking for these funds for 
the purpose of coastal restoration but I noticed nothing in the law 
that actually required that it be used for that purpose. Governor 
Blanco and I thought it was so important that we set up this lock box 
before obtaining any OCS revenues so there would be no temptation to 
use it for something else. While health care and education are very 
important, as are many other needs of the state, I think it is 
appropriate that we use these anticipated funds to rebuild and protect 
our coast, a national treasure.
    Governor Blanco has complete support of our community leaders, 
Parish Presidents Against Coastal Erosion. We believe it is only fair 
that Louisiana receives the same deal given to western states beginning 
in the 1920s, which now gives them 50% of the royalties of mineral 
produced on federal lands. Doesn't it make sense for Congress to 
reinvest in infrastructure that makes domestic energy possible, like 
investment in our ports and port facilities, roads, barrier islands and 
as a means of fighting erosion of our land?

                          SUPPLYING THE NATION
                  LOUISIANA--AMERICA'S ENERGY CORRIDOR

Louisiana--Energy Producing State for the Nation
    Louisiana's first well (a dry hole) was drilled in 1868. The 
state's first oil well was drilled in 1901. The first oil well over 
water in the world was in Louisiana in 1910 in Caddo Lake. The first 
well drilled off the coast of Louisiana was in 1938 near Creole, 
Louisiana. Louisiana was the site of the first well drilled out of 
sight of land in 1947.
    34% of the nation's natural gas supply
    30% of the nation's crude oil supply is either produced in 
Louisiana, produced in the Louisiana OCS, or moves through the state 
and its coastal wetlands.
    2 of the 4 nation's Strategic Petroleum Reserve storage facilities 
are located in Louisiana.
    The state is home to the Henry Hub NYMEX natural gas price and 
trading terminal.
    Over 40,000 miles of large transmission pipelines traverse the 
state to transport oil and gas from production centers to consumption 
markets throughout the country.
    Together with the infrastructure in the rest of the state, this 
production is connected to nearly 50% of the total refining capacity in 
the United States. Based on its energy producing value to the nation, 
acre for acre, Louisiana is the most valuable real-estate in the 
nation.
    Including Louisiana OCS production, Louisiana's rank among the 50 
states is:
      1st in total crude oil production
      1st in OCS crude oil production
      1st in OCS natural gas production
      1st in OCS revenues generated for the federal government
      1st in mineral revenues from any source to the federal 
government
      1st in LNG terminal capacity
      1st in foreign oil import volume
      2nd in total natural gas production
      2nd in total energy production from all sources
      2nd in petroleum refining capacity
      2nd in primary petrochemical production
Louisiana--Refining State for the Nation
    Louisiana has
      17 operating petroleum refineries, most large world-scale 
facilities
      16.2% of total U.S. refinery capacity
      2.77 million barrels per day refinery capacity
      2nd highest refinery capacity in the nation
    and produces
      42.1 million gallons of gasoline per day
      29.9 million gallons of distillate (jet fuel and diesel 
fuel) per day
Louisiana--OCS Revenue & Energy State for the Nation
    Without Louisiana, there would be little OCS production and, 
therefore, little OCS revenue for the Federal Government
    Louisiana OCS (federal) territory is the most extensively developed 
and mature OCS territory in the U.S. and most developed and mature 
offshore area in the world.
    Prior to the recent run-up in prices, federal production off 
Louisiana's shores alone contributed an average of $5 BILLION a year to 
the federal treasury, and, that was when the price of oil was even less 
then one-half of the $70 per barrel it is selling for today.
    Louisiana's share of this revenue, $ZERO
    The current average $30 million Section 8(g) payment to the state 
is not real revenue sharing, but is compensation to the state for 
drainage of reservoirs underlying state water bottoms from wells 
drilled on the federal side of the state's offshore boundary line. For 
this band that extends from the state offshore boundary seaward three 
miles, 27% of the OCS revenue from that 8(g) zone is ``shared'' with 
the state.
Annual Market Value of Oil & Gas Produced in the Louisiana OCS
      Natural Gas: Approximately $30 Billion (based on $9 per 
MCF and pre-Katrina & Rita production volume)
      Oil: Approximately $33 Billion (based on $60 per barrel 
and pre-Katrina& Rita production volume)
    For a total of approximately $63 Billion per year
    Historically, Louisiana OCS territory has produced
      85.4% of the 15.9 billion barrels of crude oil and 
condensate, and
      81.1% of the 162 TCF (trillion cubic feet) of natural gas 
extracted from all OCS territories from the beginning of time through 
the end of 2005.
    Currently (Preliminary 2005 data), Louisiana OCS territory produces
      89% of the oil, and
      70% of the natural gas
    produced in the Gulf of Mexico OCS,
      85.4% of the oil, and
      69.5% of the natural gas
    produced in the entire U.S. OCS, and
      24.0% of total U.S. domestic oil, and
      19.2% of total U.S. domestic natural gas production.
    Note that current Louisiana OCS production as a share of total 
domestic production is down by several percentage points due to damaged 
production that is temporarily or permanently shut-in due to Hurricanes 
Katrina and Rita.
    All of this infrastructure is vulnerable to accelerated destruction 
form coastal erosion and land loss.
Louisiana and Energy Are Synonymous.
    The importance to the nation of energy production and use in 
Louisiana is further highlighted in the following rankings in which 
Louisiana is (2003 EIA data latest available):
      3rd in industrial energy consumption
      3rd in natural gas consumption
      5th in petroleum consumption
      8th in total energy consumption
    But, only 22nd in residential energy consumption
    Usually, when national energy issues are discussed, Louisiana is 
cast in the image of a rich producing state floating in a sea of oil 
and gas that is being inequitably shared with the consuming states. 
Often misunderstood or overlooked, is the fact that more than two 
thirds of the production from the state is in the Louisiana federal OCS 
territory and, hence, produces no revenue for the state, while at the 
same time incurring significant infrastructure support costs to the 
state, which is discussed in more detail later.
    Also often overlooked or not explained, is the fact that, though 
Louisiana is the 2nd highest energy producing state in the nation, 
Louisiana is also 8th highest in total energy consumption. Therefore, 
Louisiana is more of a consuming state than 42 other states! This story 
is never told, nor are Louisiana's difficulties as a key consuming 
state given much concern at the federal energy policy level. Thus, when 
Louisiana, the energy producing state speaks, it is also Louisiana, the 
energy consuming state speaking. Louisiana is inexorably tied into the 
issues of all states in the nation, whether considered producing states 
or consuming states.
Louisiana's Role as a Through-Processor of Hydrocarbons for the Nation
    All of the preceding represents only the direct supply line of oil 
and natural gas. Additionally, Louisiana's 8th highest ranking among 
the states in energy consumption is attributable to the fact that 
Louisiana is consuming most of this energy as a through-processor of 
energy supplies for the rest of the nation, consuming colossal amounts 
of energy for their benefit.
    An example of how Louisiana is consuming energy resources for the 
primary benefit of other states is petroleum refining. The energy 
equivalent of 10% of Louisiana's entire petroleum product consumption 
is required just to fuel the processes that refine crude oil into 
gasoline, diesel fuel, jet fuel, heating oil and other products 
consumed out of state. The oil refining industry employs only about 
10,400 workers in the state; whereas tens of millions of jobs 
throughout the country are dependent on the affordability and 
availability of the products from the continued operation of these 
refineries and associated petrochemical facilities in Louisiana.
    Many other examples could be cited of the numerous energy intensive 
natural gas and oil derived chemical products Louisiana (and also Texas 
and Oklahoma) through-processes for the rest of the U.S. Per unit of 
output, these industrial processes in Louisiana are characterized as 
capital (equipment), energy, raw material, and pollution discharge 
intensive, and low in labor requirements and dollar value added, 
essentially the opposite of the downstream industries in other states 
that upgrade these chemicals into ultimate end products. Much of the 
energy Louisiana technically consumes is really the transformation of 
oil and gas into primary chemical building blocks that are shipped to 
other states where the final products are made, whether it be plastic 
toys, pharmaceuticals, automobile dash boards, bumpers and upholstery, 
electronic components and cabinets, synthetic fibers, or thousands of 
other products dependent on this flow of energy and high energy content 
materials out of Louisiana.

OCS INFRASTRUCTURE AND ITS IMPACTS AND NEEDS
    It is important to understand that there is no free lunch. 
Louisiana, like other coastal producing states, sustains impacts on 
coastal communities and bears the costs of onshore infrastructure 
required to support this production activity.
Saving Louisiana's Wetlands that Protect Offshore and Onshore 
        Production Infrastructure
    Louisiana's unique and fragile coastal wetlands introduce yet an 
additional issue: land loss. Prior to Hurricanes Katrina and Rita, 
Louisiana was losing more than 24 square miles of coastal land each 
year. In fact, if what is happening today in coastal Louisiana were 
happening in the nation's capital, the Potomac River would be washing 
away the steps of the Capitol today, the White House next year, and the 
Pentagon soon after that. In fact, during the course of this morning 
alone, Louisiana will lose a football field wide area from the Capitol 
Building to the Washington Monument. It is feared that the ferocity of 
Hurricanes Katrina and Rita may have accelerated the land loss by 
several years.
    There are many causes of this coastal erosion in Louisiana, 
including oil and gas development and what may be the most significant 
factor: building levees and channeling the Mississippi River. Whatever 
the cause of its demise, the health and restoration of Louisiana's 
coastal wetlands are vital to protecting the offshore and onshore 
infrastructure that is essential for the continuation, as well as the 
expansion, of offshore energy production in the Gulf of Mexico.
    Once the state realized the magnitude of the coastal erosion 
problem, Louisiana got serious about doing something about it. In 1980, 
the coastal restoration permitting program was moved to the Department 
of Natural Resources (DNR). In 1981, $40 million of state oil and gas 
revenue was set aside in a legislative trust fund for coastal 
restoration projects. The State has a dedicated revenue stream of up to 
$25 million per year, depending on the level of revenue collections 
from oil and gas production within the state, to replenish the fund. In 
the past few years, that replenishment stream has been at the $25 
million level. In 1989, the Office of Coastal Restoration and 
Management was created in DNR, and the magnitude of the program was 
greatly expanded.

The Fight against the Elements
    Prior to Hurricane Katrina, Louisiana needed a minimum of $14 
billion (in today's dollars) over the next 20 to 30 years for coastal 
restoration projects. Louisiana has quite a unique geology relative to 
the rest of the country. The Louisiana coast is geologically the 
youngest part of the U.S. and, prior to manmade interference from 
leveeing and channeling the Mississippi River and other activities, was 
still accreting land mass faster than it was losing it to subsidence, 
erosion, salt water intrusion, sea level rise from global warming, and 
other causes. The science of coastal geology and the expertise of 
coastal engineering to counter these forces is in its infancy, as it 
has never in the history of civilization, been attempted on the scale 
it must be implemented in South Louisiana. Also, we are dealing with a 
situation that is continuously subject to changing dynamics, such as 
more frequent and more powerful hurricanes, the apparently increasing 
effects of global warming, etc.

Extent of Louisiana Infrastructure Supporting OCS Production
    The total value of the Louisiana OCS infrastructure and the onshore 
infrastructure supporting it is difficult to ascertain. The estimated 
depreciated investment in offshore production facilities is over $85 
billion, depreciated offshore pipeline infrastructure is over $10 
billion, and public coastal port facilities is $2 billion, for a total 
of approximately $100 billion, depreciated, and not counting highways, 
sewer, water, fire and police protection, schools, and other public 
works structures that also have ongoing operation and maintenance 
costs. The replacement of all of this would be several times the $100 
billion depreciated figure. It also does not count the onshore coastal 
infrastructure of pipelines, storage facilities, pumping stations, 
processing facilities, onshore disposal facilities for offshore 
production wastes, etc.
    This infrastructure is vulnerable if not protected by the State's 
barrier islands and marshes. As these erode and disappear, 
infrastructure is exposed to the open sea and all of its fury. As the 
coast recedes, near shore facilities become further offshore and 
subject to greater forces of nature, including subsidence, currents, 
and mudslides. Erosion in the coastal zone is already beginning to 
expose pipelines that were once buried.
    Research at Louisiana State University shows that every 2.7 miles 
of healthy marsh can reduce storm surge by a critical 12 inches. This 
is why the state has been pleading for years for funding of the state's 
$14 billion, 20 to 30-year coastal restoration program. The inability 
to implement needed projects to protect the coast from storms up to now 
may mean that the costs will be even greater as a result of the 
devastating hurricanes in 2005.
    As more of the protection from Louisiana's barrier islands and 
coastal wetlands wash away, increasingly more onshore and offshore 
production will be damaged or destroyed by even less powerful storms 
than Katrina and Rita, and particularly by storms whose paths directly 
pass through the producing areas off of Louisiana's coast, as did 
Katrina and Rita. Direct hits to the prime production area by 
hurricanes and tropical storms cause incalculable damage to this 
production infrastructure, as well as to the onshore support 
infrastructure, as Katrina and Rita are proving.

HOW TO INCREASE OFFSHORE U.S. ENERGY PRODUCTION
Share Offshore Revenue with the States that Allow Offshore Production
    The most effective way to help is to assist those states that make 
offshore energy production possible off their coasts. This can be 
accomplished by sharing with those coastal producing states some of the 
offshore revenues generated off their coasts. This would encourage 
those states to pursue more development, and it would help offset 
infrastructure costs those states incur that is associated with that 
development. Louisiana, like other coastal producing states, sustains 
impacts on coastal communities and bears the costs of onshore 
infrastructure to support this production activity.
    When states like Wyoming, New Mexico, Colorado, and others host 
drilling, coal mining, and similar activities on federal lands onshore, 
they receive 50% of those revenues in direct payments, and consequently 
have the financial resources to support that infrastructure. In Fiscal 
Year 2004, Wyoming and New Mexico together received about $928 million 
from those revenues, which IS an appropriate revenue sharing procedure.
    In contrast, for example in 2001, of the $7.5 BILLION in revenues 
produced in the federal OCS area, only a fraction of one percent came 
back to those coastal states. The inequity is truly profound.
    We are pleased this committee is investigating offshore exploration 
and equitable treatment of states. The need to sustain the existing 
supply that Louisiana provides must simultaneously be addressed. The 
most effective answer to both issues is to share offshore revenues with 
the coastal producing states that make that production possible. It is 
critical that coastal producing states receive a fair share of revenues 
to build and maintain onshore infrastructure and, in Louisiana's case, 
to help stem our dramatic land loss, which is occurring at a rate 
believed to be the fastest on the planet.
    Production off Louisiana shores alone contributes an average of $5 
BILLION dollars a year to the federal treasury. And, that was when oil 
was less than half of the $70 plus per barrel price it is selling for 
today.
    Does it not make sense to encourage the coastal producing states 
which provide that revenue for the benefit of the rest of the nation? 
Does it not make sense, that when so many, like the U.S. Ocean 
Commission, are targeting offshore OCS revenues to pay for worthwhile 
preservation of natural resources, that this nation first protect those 
who make these resources possible?
    Prior to Hurricanes Katrina and Rita, in Louisiana's coastal zone, 
many of the pipelines and other infrastructure that our wetlands have 
historically protected become exposed to open Gulf of Mexico 
conditions. Dire measures are required to stem this destruction. To 
maintain, much less increase, production from off our coasts, we must 
reinvest in the infrastructure that makes all of the activity possible, 
whether it be port facilities, roads to transport equipment and 
supplies, erosion control, or barrier island and wetlands storm 
protection.

Assistance from the Energy Policy Act of 2005
    The Coastal Impact Assistance Money provided in the Energy Policy 
Act of 2005 that Congress passed last year is tremendously good news 
for the state's coastal restoration efforts. Yet, the $540 million 
provided over four years for coastal restoration is only a drop in the 
bucket compared to the total of $14 billion needed, prior to Katrina 
and Rita, over 20 to 30 years for Louisiana's unique coastal 
restoration needs.

                               Conclusion

    It is vital to the nation's security and prosperity that new energy 
sources be developed. The federal government has the ability to steer 
investments. Louisiana's OCS significance is demonstrated by its 
producing 24% of oil and 19.2% of natural gas produced domestically, 
which is down several percentage points due to permanently and 
temporarily shut-in production from 2005's hurricanes. The Louisiana 
OCS, along with that of Texas and all of the U.S. OCS areas off limits 
to exploration and production, is the single most promising area for 
the U.S. to obtain significant new supplies of energy. These supplies, 
whether conventional oil and gas, imported oil, imported LNG, wind and 
ocean energy, or natural gas hydrates, need the support and cooperation 
of coastal states to enable that activity to take place and to supply 
and maintain critical production and support infrastructure.
    LNG facilities are being built where the existing U.S. pipeline 
infrastructure exists (essentially Louisiana and Texas) in order to get 
the gas from the coast into the delivery system to supply the nation. 
The same will be true when the technology is developed to commercialize 
methane hydrate production off the coasts. This Louisiana and Texas 
infrastructure will also be used when deep and ultra-deep shelf 
production comes on stream. This is another reason why offshore revenue 
should be shared with the coastal producing states that are allowing 
onshore and offshore drilling and allowing the siting of LNG facilities 
to make energy available to the rest of the country.
    With effective policies and incentives, the federal government can 
steer investment into the offshore areas, and by receiving an equitable 
share of revenue generated offshore, the coastal producing states can 
be in a position to ensure that this production will be made available 
to the rest of the nation. Louisiana desperately needs immediate 
revenue sharing financial assistance from a source not subject to 
annual appropriations, to continue to maintain existing, and to develop 
future energy supplies for the nation.
    It is a travesty that the Congress enacted national energy 
legislation without substantial OCS revenue sharing in the form of 
direct payments to the coastal producing states from the revenue 
derived from offshore production, and without giving the coastal states 
a 50% share in offshore production revenue from off their coasts, 
similar to the automatic payments for drilling and coal mining on 
federal lands onshore, and before any other dispersal of those monies.
    Now that Hurricane Katrina has laid waste to Louisiana's largest 
city, the entire southeastern portion of the state, much of the 
southwestern part of the state, the state's coastal oil and gas 
infrastructure, and its once protective wetlands, a massive rebuilding 
program is imperative to repair and rebuild Louisiana's critical 
infrastructure and protective wetlands to enable the state to continue 
to supply a critically needed portion of this nation's energy needs.
    When it comes to Louisiana continuing its role in leading the 
nation's offshore energy development, the bottom line is that the state 
cannot afford, and is not willing to continue to sacrifice our vital 
and fragile protective wetlands.
    Thank you for this opportunity to appear before you.
                                 ______
                                 
    Mr. Melancon. The second thing I would like to do is I 
would like to acknowledge to everyone in here that you saw a 
historic moment when Mr. Neil Abercrombie made his comments.
    And third, Bobby and I would like to welcome Charlotte and 
George Randolph. Charlotte is the President of Lafourche 
Parish, Louisiana, a coastal parish that has got its own 
problems, and very fortunate because the parish has put money 
where their mouth is through the years, that they didn't go 
under during this last storm. We are finding a problem because 
they are being penalized for future protection needs because of 
that.
    Bobby.
    Mr. Jindal. Thank you. I would just like to point out that 
Charlotte, in addition to presiding over Lafourche Parish, that 
parish is also home to Port Fourchon. Chairman Gibbons did lead 
a delegation, a bipartisan delegation of this Committee, 
literally, and coincidentally, about two weeks before Hurricane 
Katrina came on shore. Brought Members and staff from this 
Committee to see offshore drilling, and saw the domestic 
production, the important role. Port Fourchon secures 16 
percent to 18 percent of the entire country's energy supply.
    She is also the President of PACE, Parishes Against Coastal 
Erosion.
    Mr. Chairman, right before I turn it over to her, with your 
permission I would like to introduce into the record a 
statement of endorsement for this approach from Ducks Unlimited 
and several other conservation groups. Without objection, I 
would like to add that to the record.
    The Chairman. Without objection.
    [The statement submitted for the record follows:]

Congressional Sportsmen's Foundation * Bear Trust International * Boone 
& Crockett Club * Dallas Safari Club * Ducks Unlimited * Association of 
   Fish & Wildlife Agencies * National Shooting Sports Foundation * 
  North American Bear Foundation * North American Grouse Partnership 
   * Pope and Young Club * Quail Unlimited * Quality Deer Management 
Association * Safari Club International * Texas Wildlife Association * 
 The Wildlife Society * Theodore Roosevelt Conservation Partnership * 
       U.S. Sportsmen's Alliance * Wildlife Management Institute

    To Members of the House Resources Committee:
    We are writing to ask your support for the Domestic Energy 
Production through Offshore Exploration and Equitable Treatment of 
State Holding Act of 2006, in particular Title 14--the Federal Energy 
Natural Resources Enhancement Fund [Fund]. The Act [H.R. 4761] 
addresses a number of important energy related concerns. Of special 
interest to our groups is the Fund it creates that would direct a small 
percentage of the revenues from oil and gas production on Federal lands 
and the Outer Continental Shelf (OCS) to state fish and wildlife 
management agencies and to Federal land management agencies to help 
meet the increased natural resources management demands that accompany 
efforts to also meet the Nation's energy needs.
    Simply put, we clearly understand the importance of developing 
domestic sources of oil and gas to meet rising demand, control prices 
and lessen our dependence on foreign sources. At the same time we do a 
profound disservice to all those who benefit from abundant and healthy 
fish and wildlife resources, especially our children and grandchildren, 
if we do not also provide for sound stewardship of these resources.
    The development of domestic sources of energy is fundamentally 
important to the Country's security and economy. The challenge before 
us is to accommodate the equally important natural resources that are 
affected by such development. Fish and wildlife resources are the 
mainstay of many western local economies. These resources will sustain 
those economies long after extraction of energy reserves is completed, 
but only if we exercise proper care and stewardship during this period 
of development. It is critical that adequate investments are made now 
to assure a healthy future for fish and wildlife populations and their 
habitats. The Fund offers a fair and sensible way to assure this 
future. It does so by designating a small percentage of receipts from 
energy development activities to fund very specific and related 
purposes.
    In addition to targeting critically needed funds to our management 
agencies, it prudently requires a careful accounting from those 
agencies of how the funds have been used and how successful those 
investments have or have not been. This reporting requirement will 
enable the implementation of carefully established priorities--we will 
have confidence that the right projects are being implemented in the 
right places to the maximum benefit of our natural resources.
    This approach provided for in H.R. 4761 is a win for communities 
with oil and gas production, outdoorsmen throughout the country, the 
nation's energy supply, state wildlife management agencies, and 
wildlife and the environment. It should also be evident that this 
legislative initiative will help unify stakeholders on Federal lands 
and the OCS in support of responsible development, habitat management 
and the benefits of energy production.
    We look forward to working with you and your staff in this effort. 
You may contact either Jim Mosher at 301-223-1533 
[[email protected]] or Gary Taylor at 202-624-7890 
[[email protected]].
                                 ______
                                 
    Mr. Jindal. Thank you, Mr. Chairman.
    The Chairman. Charlotte Randolph.

          STATEMENT OF CHARLOTTE RANDOLPH, PRESIDENT, 
                  LAFOURCHE PARISH, LOUISIANA

    Ms. Randolph. Thank you, Mr. Chairman. It is indeed a 
privilege to appear before your Committee today.
    I do believe you also visited Port Fourchon, and I met you 
there. That was the last time I had seen you. I thank you for 
that visit, because you saw first-hand the tragedy of land loss 
and coastal erosion.
    As you would imagine, Katrina and Rita have changed that 
landscape dramatically, and tremendously impacted the oil and 
gas industry.
    I do thank the other Congressmen on this Committee who have 
visited our region. I know that Congressmen Jindal and Melancon 
have either escorted you through our state, or at least made 
you aware of our plight.
    Lafourche and Louisiana have been supporting and 
encouraging the exploration of oil and gas for over 60 years. 
The economy of Lafourche and other coastal parishes has been 
and continues to be dependent on oil and gas revenues. The 
majority of the top taxpayers in the parish are involved in the 
petrochemical industry, both directly and in service-related 
businesses.
    Our royalties from on-shore operations comprise 5 percent 
to 10 percent of our revenues, and provide funding for capital 
improvement projects: roads, bridges, and drainage projects. 
These revenues allow us to maintain the infrastructure of our 
communities.
    The funds are also used to partner with the state and 
Federal governments to stabilize and protect LA Highway 1, the 
only land link to Port Fourchon, which Congressman Jindal 
alluded to.
    Lafourche Parish starts nearly 90 miles to the north in the 
sugarcane fields along her namesake, Bayou Lafourche. So 
economic engines providing for our citizens include 
agriculture, seafood, shipbuilding, and the oil and gas 
industry. Thus, our motto is feeding and fueling America. We 
are that significant.
    The energy industry does not only support our residents in 
Lafourche companies, workers throughout the region, the state, 
and many other states travel here for shift work, bringing home 
better paychecks than they could have earned where they live, 
and perhaps finding a good-paying job here when none were 
available back home.
    They also leave behind precious sales taxes which pay for 
our schools and police department. The parking lots at Port 
Fourchon and the offices of the boat companies contain many 
vehicles without a state license plate.
    The Federal government has finally recognized the damage in 
south Louisiana. It was in the pursuit of national interest. 
And because of national interest, we insist that the damage be 
mitigated.
    Louisiana has lost 30 percent of the nation's coastal 
wetlands. Of the nation's total wetlands loss, Louisiana has 
experienced an astonishing 90 percent of that loss. These land 
loss factors not only threaten an important environmental area, 
it places two million people at greater risk from hurricane 
storm surge, as we witnessed last year with Katrina and Rita.
    Much of the area is transitioning into an open-water marine 
environment. This is impacting the oil fuel infrastructure that 
was originally constructed and protected areas of coastal 
Louisiana.
    Surface water used for industry and drinking has been 
contaminated on several occasions by increased salinity at the 
rural water intake, 45 miles inland. This has made the water 
source unsuitable for thousands of people and several 
industrial plants during these events.
    To solve these challenges we must enhance our natural 
protection. For our communities it is necessary to build tidal 
and hurricane levees. Although we have retreated from the most 
threatened communities, we can justify protection for the 
remaining areas. These communities support people and 
businesses which work to provide 25 percent of the nation's oil 
and gas, five of the top 15 ports in the country, and 30 
percent of the fisheries of the lower 48 states. To abandon 
these communities is to abandon over $100 billion in public 
infrastructure.
    These projects keep wetlands wet and dry lands dry. The 
marriage of structural flood protection for the communities and 
reestablishment of the environment functions of our barrier 
islands and marshes is what we term comprehensive hurricane 
protection.
    To some degree, the erosion problems of south Louisiana are 
attributed to international trade and domestic on-shore and 
offshore oil development. When one realizes that $5 billion of 
royalties and lease payments go to the Federal Treasury, only 
through the support of coastal Louisiana and the infrastructure 
it provides, it is obvious that this source of money should 
fund the repairs of the impacts of its production causes.
    Louisiana has virtually no direct share of those revenues 
at this time, according to agreements with the Federal 
government. Other states receive 50 percent to 90 percent share 
of the revenues from that development. No American argues the 
fairness of that sharing with the states that accept this 
burden.
    The Federal government is receiving this revenue through 
the support of coastal Louisiana and the fragile platform upon 
which it sits. An important point is--I see that I am running 
out of time--is that this fall, the voters of Louisiana will 
vote on a constitutional amendment that should these OCS 
revenues be distributed more equitably to the state, this 
amendment would ensure that these funds would be spent on 
coastal land-loss prevention, as well as hurricane protection, 
and would dedicate those funds strictly to that, and to the 
infrastructure that it impacts.
    I thank you, Mr. Chairman, and will answer any questions if 
you have any.
    [The prepared statement of Ms. Randolph follows:]

  Statement of Charlotte A. Randolph, Lafourche Parish President, and 
           President, PACE (Parishes Against Coastal Erosion)

    Chairman Pombo, it is indeed a privilege to appear before your 
Committee today. The last time I saw you was when you visited Port 
Fourchon and witnessed first hand the important work being conducted 
for this country there. You also saw the tragedy of land loss and 
coastal erosion. As you would imagine, Katrina and Rita have changed 
the landscape you saw and tremendously impacted the oil and gas 
industry.
    Ladies and gentlemen of the committee, I am certain that 
Congressmen Jindal and Melancon have either escorted you through our 
state or at least made you aware of our plight.
    Lafourche has been supporting and encouraging the exploration for 
oil and gas for over 60 years. The economy of Lafourche Parish and 
other coastal parishes has been and continues to be dependent on oil 
and gas revenues. A majority of the top taxpayers in the parish are 
involved in the petrochemical industry, both directly and in service-
related businesses. Oil royalties from onshore operations comprise five 
to ten percent of our revenues and provide funding for capital 
improvement projects--roads, bridges, and drainage projects.
    These revenues allow us to maintain the infrastructure of our 
communities and supplement basic operations such as the detention 
center, our court system and the district attorney's office. The funds 
are also used to partner with the state and federal governments to 
stabilize and protect Louisiana Highway 1--the only link to Grand Isle 
and Port Fourchon.
    Lafourche Parish starts nearly 90 miles to our north, in the sugar 
cane fields along our namesake Bayou Lafourche. The economic engines 
providing for our citizens include agriculture, seafood, shipbuilding 
and the oil and gas industry. Thus our motto ``Feeding and Fueling 
America''.
    The energy industry does not only support our residents and 
Lafourche companies. Workers from throughout the region, the state and 
many other states travel here for shift work, bringing home better pay 
checks than they could have earned where they live. And perhaps finding 
a good-paying job here when none were available back home. They also 
leave behind precious sales taxes which pay for our schools and police 
department. The parking lots at Port Fourchon and at the offices of the 
boat companies contain many vehicles with out-of-state license plates.
    The trucking companies which traverse our highways bring products 
from many different parts of the United States, providing jobs int the 
very important support industry.
    Pipelines buried deep under sugar cane fields and cattle pastures 
far north of here in Lafourche provide the property taxes for 
recreation centers.
    Lafourche Parish was built by the force of the Mississippi River. 
That force took the soils from 41% of the United States and reassembled 
that sediment into a natural platform for 2,000,000 people to live in 
south Louisiana. Plainly stated, the Mississippi River system has built 
a platform of ridges, swamps, marshes, estuaries, rivers and bayous 
which serve the nation through navigation, gas and oil supply, and 
fisheries production.
    The need for navigation and flood control has caused the natural 
cycle of building land to change so that wetlands, beaches and ridges 
are now being lost at 25 to 35 square miles a year. The continued 
degradation of one of the most important environmental and monetarily 
valuable deltas in the world should be addressed seriously on the 
federal level.
    There is no other place in the United States that has provided the 
function of this delta.
    The Federal government has finally recognized that damage in South 
Louisiana was in the pursuit of national interest. And because of 
national interest, we insist that the damage be mitigated.
    Louisiana has 30% of the nation's coastal wetlands. Of the nation's 
total wetlands' loss, Louisiana is experiencing an astonishing 90% of 
that loss. We are also losing elevation in the range of one foot in 20 
to 30 years in an area where most of the dry land is no more than seven 
feet above sea level.
    These land loss factors not only threaten an important 
environmental area, it places 2,000,000 people at greater risk from 
hurricane storm surge. Major pipelines and other infrastructure for oil 
and gas are now exposed to more extreme hazards. This oilfield 
infrastructure was constructed in protected waters of coastal 
Louisiana. Much of the area is transitioning into an open water marine 
environment. This directly affects the working condition of this 
infrastructure to contain the oil and to deliver it to its markets 
nationwide.
    Surface water used for industry and drinking has been contaminated 
on several occasions by increased salinity at the raw water intake 45 
miles inland. This has made the water source unusable for thousands of 
people and several industrial plants during these events. We tasted 
salt in our drinking water; people with high blood pressure were 
advised to boil their water. This system we use serves 300,000 people. 
Sen. Mary Landrieu stepped in with emergency funds to build a structure 
that would help alleviate this problem. We're investigating building 
another.
    To solve these challenges from the Gulf, we must enhance our 
natural protection such as barrier islands and marshes, and protect our 
increasingly threatened communities. For our communities it is 
necessary to build tidal and hurricane levees, and increase the 
elevation of the levees in communities which already have protection.
    Although we have retreated from the most threatened communities, we 
can justify protection for the remaining areas. These communities 
support people and businesses which work to provide 25% of the nation's 
oil and gas, supply five (5) of the top 15 ports in the country, and 
produce 30% of the fisheries of the lower 48 states. To abandon these 
communities is to abandon over $100 billion in public infrastructure. 
Studies indicated that for $10 billion to $15 billion, this 
environmentally and economically productive area, and its communities, 
could have been maintained pre-Katrina and Rita. Today, the price tag 
is probably doubled because we must mitigate damage that could have 
been lessened with proper protection.
    Reintroduction of Mississippi River water and sediments will allow 
us to maintain, and possibly regain thousands of acres of wetlands.
    Renourishment of our uninhabited barrier islands with quality 
offshore sand through pipeline sediment delivery would re-establish 
much of the tidal protection which has been lost. It will reduce the 
tidal prism which has increasingly invaded marshes, 30 miles from the 
coast. A comprehensive plan of lateral barriers would protect us in the 
near term, while we implement the long--term sediment recovery 
processes.
    These projects would, in effect, keep the wetlands wet and the dry 
lands dry. The marriage of structural flood protection for the 
communities and re establishment of the environment functions of our 
barrier islands and marshes is what we term Comprehensive Hurricane 
Protection.
    To some degree the erosion problems of South Louisiana are 
attributed to international trade, and domestic onshore and offshore 
oil development. When one realizes that $5 billion of royalties and 
lease payments go to the federal treasury only through the support of 
coastal Louisiana and the infrastructure it provides, it is obvious 
that this source of money should fund the repairs of the impacts its 
production causes. Louisiana has virtually no direct share of those 
revenues, according to agreements with the Federal government. Other 
states, which are impacted by oil and gas development on Federal 
government lands and waters, receive 50 to 90 percent share of the 
revenues from that development. No American argues the fairness of that 
sharing to the states that accept this burden. The Federal government 
is receiving this revenue through the support of coastal Louisiana and 
the fragile platform on which it sits. We ask that the Federal 
government reinvest the revenue necessary to protect the communities 
which work to produce the energy. It should reinvest the revenue 
necessary to maintain the most biologically productive ecosystem in the 
lower 48 states. If the Federal government takes care of protecting its 
interest, Louisiana will not need funding since protection of the 
Federal interest protects our unique corner of America. We do not ask 
for money from other states.
    Only reinvest in the place which is producing this revenue.
    As this is written, we monitor another tropical system. This is 
hurricane season.
    For a very long time, members of our Congressional delegation have 
been petitioning our government for assistance. True success will be 
achieved when the nation's leaders fully recognize the value of coastal 
Louisiana and fully fund the projects necessary to protect us.
    We are indeed grateful for the allocations provided in the recently 
enacted Energy Bill and the Transportation Bill of 2005. These funds 
provide for opportunities to reinforce our existing levee systems as 
well as to construct a major highway to the very significant Port 
Fourchon. It's a good start and we thank you for these funds.
    Louisiana's Governor Kathleen Blanco said it best when she noted 
that we are not asking for more money out of greed but for need. A 
guaranteed annual source of revenue will allow us to plan for the 
future, which at this point is very, very difficult.
    I had the privilege of participating in a trip to the Netherlands 
earlier this year, where we learned much from that country's recovery 
from devastating storms. Perhaps the most important lesson learned was 
an old one--where there is a will, there is a way.
    What is our future? Do we plan for retreat or do we continue to 
fight?
    Of course we will fight for Lafourche and south Louisiana. We have 
formed an organization with the acronym PACE--Parishes Against Coastal 
Erosion, comprised of parish presidents from 19 coastal parishes.
    Together we represent one half of the population of Louisiana. The 
National Association of Counties has participated in one of our 
meetings and recommended that the federal government recognize the 
concerns erosion is causing. The Breaux Act has funded numerous 
projects on our coast. We have allies in our fight, including other 
states which share our plight.
    But the most important relationship must be with the federal 
government. Our parish and our state cannot fund the needed projects. 
We have taxed ourselves to begin a levee system and have borrowed money 
to construct a new highway to Port Fourchon, which will be repaid with 
tolls.
    We must use Outer Continental Shelf Royalty funds derived from our 
coast to win this battle and keep us viable.
                                 ______
                                 
    The Chairman. Thank you. Next I would like to recognize Mr. 
Daniel Lopez, who is the President of New Mexico Tech.

                 STATEMENT OF DANIEL H. LOPEZ, 
                   PRESIDENT, NEW MEXICO TECH

    Mr. Lopez. Thank you, Mr. Chairman and Members of the 
Committee.
    We in New Mexico recognize the national leadership of the 
Chairman of this Committee and its staff in restoring domestic 
natural resource development to its historical role in the 
economic growth and well-being of the country.
    New legislative initiatives and oversight hearings are at 
the heart of your leadership by reestablishing a process to 
move the Nation toward a progressive national resource policy, 
rather than the policy that has been marked by stop-and-go over 
the last 25 years.
    The Energy Act of 2005 and its extension in H.R. 4761 are 
examples of what is required of public policy if the supply of 
energy is to meet the projected consumption without economic 
recession. It is time to establish an alliance between the 
interior oil- and gas-producing states such as New Mexico, and 
the coastal states with offshore resources.
    Interstate competition can no longer be afforded. Indeed, 
New Mexico Tech petroleum engineers are equally employed on 
both sea platforms in the Gulf of Mexico, and in the high 
deserts of San Juan Basin in the State of New Mexico.
    The nation's mining and petroleum schools, however, have 
lost human capital and program depth because of the lower 
Federal funding for physical science, in contrast to the 
biological sciences, which have, until recently, moved student 
careers and research choices away from petroleum and mining.
    In particular, the surviving historic and established 
petroleum mining schools, which are located mainly, but not 
exclusively, in the West, have lost a generation of faculty and 
alumnae, just as the natural resource industry is top-heavy 
with near-retirement engineers and managers.
    I am asking for your support for Section 23, Energy and 
Mineral Schools Reinvestment Act, and Section 12 of EMSRA, 
which are inseparable from H.R. 4761. The creation of a Federal 
energy and mining resource professional development fund 
reporting to the Department of Interior, with funding from H.R. 
4761 offshore leasing, revenues will begin to restore the 
petroleum and mining engineering and technological world 
leadership of the United States, which has been maintained for 
more than two centuries.
    It means New Mexico Tech and similar institutions or 
programs, from West Virginia to Arizona, Pennsylvania to South 
Dakota, and others can build capacity in petroleum and mining 
teaching and research that would attract the best and the 
brightest faculty and students for the coming energy resource 
global competition.
    Capacity-building and petroleum and mining technology must 
include minorities who are under-represented in current 
management and work force representation among American natural 
resource companies. Section 12 of EMSRA offers career technical 
education support for institutions with programs that can 
attract minority students who want two-year trades training 
that leads to jobs in petroleum and mining companies.
    New Mexico Tech has working relationships with New Mexico 
two-year colleges that assist teaching, and encourage it, 
especially minority students, to pursue further education and 
higher education in these technical areas. We ask for support 
of Section 12 of EMSRA.
    New Mexico Tech is also leading the nation, the University 
Research and Training Center for Homeland Security, ranging 
from first responders, counter-terrorism training, and 
explosives research. Passage and funding of H.R. 4761 will 
enable us to offer veterans of the global war on terrorism with 
service in Iraq and Afghanistan education and training in 
energy infrastructure protection and security, with emphasis on 
pipelines, tank farms, offshore oil and gas platforms, 
refineries, and related information control centers. Energy 
infrastructure security programs for veterans will be developed 
in cooperation with career technical education centers with 
two-year programs.
    The existing and historic state-chartered petroleum and 
mining schools, of which New Mexico Tech is one, can meet the 
challenge of the Energy Act of 2005 and H.R. 4761, which create 
incentives for energy supply development and expansion. But new 
energy exploration and production also requires engineering 
work force expansion.
    EMSRA and career technical education provisions in Section 
12 are needed to make the Energy Act of 2005 more effective. 
Oil and gas crews and engineers are reported to be in short 
supply in the Rocky Mountain areas. Unless we opt to become 
dependent not only on foreign oil, but also upon foreign oil 
engineers and workers in the field, passage of H.R. 4761 will 
be needed to become a reality as the next milestone in our 
national energy policy.
    Thank you, Mr. Chairman. I stand for questions.
    [The prepared statement of Mr. Lopez follows:]

 Statement of Dr. Daniel H. Lopez, President, New Mexico Institute of 
                         Mining and Technology

    Mr. Chairman, Members of the Committee:
    I am Dr. Daniel H. Lopez, President of the New Mexico Institute of 
Mining and Technology. New Mexico Tech, as it is commonly known today, 
is a historic institute of higher education which was established in 
Socorro, New Mexico, by territorial legislation in 1889. Its founding 
charter set the course for New Mexico Tech to become one of the 
nation's premier institutes of mining and petroleum engineering 
research and education. New Mexico Tech offers academic degrees from 
bachelor's of science to the Ph.D. in both its mineral and petroleum 
engineering programs, and its graduates have gone on to make lasting 
marks throughout the world at the forefront of mining and petroleum 
extraction and processing technology and management. In addition, the 
university is home to the world-renowned Petroleum Recovery Research 
Center, which is dedicated to developing enhanced recovery methods for 
existing oil and gas fields.
    We in New Mexico recognize the national leadership of the Chairman, 
this Committee and its staff in restoring domestic natural resource 
development to its historical role in the economic growth and well-
being of the country. New legislative initiatives and oversight 
hearings are at the heart of your leadership by reestablishing a 
process to move the nation toward a progressive natural resource policy 
rather than a policy that has been marked by stop and go for the last 
25 years. The Energy Act of 2005 and its extension in H.R. 4761 are 
examples of what is required of public policy if the supply of energy 
is to meet projected consumption without economic recession.
    It is time to establish an alliance between the interior oil and 
gas producing states, such as New Mexico, and the coastal states with 
off-shore resources. Inter-State competition can no longer be afforded. 
Indeed, New Mexico Tech petroleum engineers are equally employed on 
both sea platforms in the Gulf of Mexico and in the high desert of the 
San Juan Basin in the State of New Mexico.
    The nation's mining and petroleum schools, however, have lost human 
capital and program depth because of lower federal funding for the 
physical sciences, in contrast to the biological sciences which have, 
until recently, moved student career and research choices away from 
petroleum and mining. In particular, the surviving historic and 
established petroleum and mining schools, which are located mainly, but 
not exclusively in the West, have lost a generation of faculty and 
alumni just as the natural resource industry is top-heavy with near-
retirement engineers and managers.
    I am asking for your support for Section 23, Energy and Mineral 
Schools Reinvestment Act (EMSRA) and Section 12 of EMSRA which are 
inseparable from H.R. 4761. The creation of a Federal Energy and 
Mineral Resources Professional Development Fund, reporting to the 
Department of Interior, with funding from H.R. 4761 off-shore leasing 
revenue will begin to restore the petroleum and mining engineering and 
technological world leadership of the United States which has been 
maintained for more than two centuries. It means New Mexico Tech and 
similar institutions or programs, from West Virginia to Arizona, 
Pennsylvania to South Dakota, and others can build capacity in 
petroleum and mining teaching and research that would attract the best 
and brightest faculty and students for the coming energy resource 
global competition.
    Capacity building in petroleum and mining technology must include 
minorities who are under-represented in current management and 
workforce representation among American natural resource companies. 
Section 12 of EMSRA offers ``Career Technical Education'' support for 
institutions with programs that can attract minority students who want 
two-year trades training that lead to jobs in petroleum and mining 
companies. New Mexico Tech has working relations with New Mexico two-
year colleges that assist teaching and encourages advanced study for 
qualified students. We ask for support for Section 12 of EMSRA.
    New Mexico Tech is also the leading national university research 
and training center for Homeland Security, ranging from first-
responder, counter-terrorism training and explosives research. Passage 
and funding from H.R. 4761 will enable us to offer veterans of the 
Global War on Terrorism, with service in Iraq and Afghanistan, 
education and training in energy infrastructure protection and security 
with emphasis on pipelines, tank farms, off-shore oil and gas 
platforms, refineries and related information control centers. Energy 
infrastructure security programs for Veterans will be developed in 
cooperation with the Career Technical Education (Section 12) centers 
with two-year programs.
    The existing and historic state-chartered petroleum and mining 
schools, of which New Mexico Tech is one, can meet the challenge of the 
Energy Act of 2005 and H.R. 4761, which create incentives for energy 
supply development and expansion. But new energy exploration and 
production also require engineering and workforce expansion. EMSRA and 
Career Technical Education Provisions in Section 12 are needed to make 
the Energy Act of 2005 more effective. Oil and gas crews and engineers 
are reported to be in short supply in Rocky Mountain areas. Unless we 
opt to become dependent not only on foreign oil, but also upon foreign 
oil engineers and workers in the field, passage of H.R. 4761 will need 
to become a reality as our next milestone in national energy policy.
    Thank you.
                                 ______
                                 
    The Chairman. Thank you. I thank all of the panel of 
witnesses. I am going to begin by recognizing Mr. Peterson for 
his questions.
    Mr. Peterson. Thank you very much. I want to thank all of 
you for your good testimony, and especially Senator Wagner. We 
have met before in your tireless efforts in Virginia. It has 
been helpful for the nation.
    I guess I would like to start with my questioning for the 
lady from Florida, Colleen Castille. The State of Florida is 
the third-largest consumer in the country of natural gas, and 
it pays the second-highest price at $21 per thousand.
    In 2004, Florida produced less than 1 percent of its 
natural gas consumption. Additionally, 39 percent of the 
current electric generation capacity in Florida uses natural 
gas, and because of the changeover it is expected to be 80 
percent by 2020.
    How can the State of Florida be so opposed to drilling for 
natural gas in the outer Continental Shelf when it has an 
opportunity to support efforts that would provide more natural 
gas just off its shores, in a state that has built its economic 
future on gas?
    Ms. Castille. Thank you. Mr. Chairman, Mr. Peterson, we 
have, in Florida, worked tirelessly in the past year with 
Congress on a compromise position that would open 8.5 million 
acres of the outer Continental Shelf to oil and gas 
development. So we believe that there is a balance to be had 
between environment and the economy, and so we are helping in 
part of the state's and United State's need for future oil and 
gas development.
    Mr. Peterson. Could you tell us where that is?
    Ms. Castille. It would be in the southern area of lease 
sale 181, and west of the military line.
    Mr. Peterson. Well, I guess I have been troubled with 
Florida's influence on 181 over the years, because the vast 
majority of 181 is not in Florida waters. I believe, and you 
can say, I think your Governor, Jeb Bush, was the reason that 
tract 181 was removed from the five-year plan, which the 
Clinton Administration had scheduled to lease tract 181.
    I give your Governor credit for his hard work at removing 
181 from the five-year plan. And today we sit in an energy 
crisis in this country with 181 not being leased, and it will 
be years before it can be leased, and you are still protesting 
the volume or the size of 181 when the vast majority of it is 
not in Florida waters. How do you substantiate?
    Ms. Castille. I think, as many of us from all of the states 
have addressed the issue, it is a public resource, and a public 
resource that we all have a duty to use and respect.
    We also believe that we should be developing alternative 
energy sources, and not be beholden to hydrocarbons as our 
energy source. And we have put $100 million into that effort in 
this past legislative session to develop alternative energy, 
specifically biofuels.
    Mr. Peterson. Oh, I agree with that. I am for all of those. 
But they are not within reach in volumes. They are on the 
margins, they are fractions. And you know that as well as I 
know that.
    Natural gas is the clean hydrocarbon. It is almost a 
perfect one. No knocks, no socks, very limited CO2.
    In your statement, you said the State of Florida vehemently 
opposes natural gas production 20 miles offshore. What are you 
afraid of? Vehemently is a pretty strong word. What are you 
afraid of?
    Ms. Castille. I would like to correct the record. I did not 
say vehemently, I said consistently opposes.
    Mr. Peterson. It is in your printed statement.
    Ms. Castille. Oh, I am sorry. What we would like to do is 
we don't want to have any risk to our economy, which is 
tourism. As I mentioned, it is a $59 billion industry in our 
state. There are other accoutrements that come with oil and gas 
drilling, and when you look at the entire industry, an industry 
that is closer to our shores will want to bring the resources 
closer to our shores.
    So we would like to protect our beaches and our coastal 
areas, and the tourism industry that is associated with it.
    Mr. Peterson. But the whole world does both. The whole 
world does both. They have good beaches, but they have energy.
    If you were in Congress, would you vote for the Jindal 
Bill?
    Ms. Castille. I am not a Congressman, I work for Governor 
Bush.
    [Laughter.]
    Mr. Peterson. Does the Bush Administration in Florida 
support the Jindal Bill?
    Ms. Castille. There are quite a bit of the elements in Mr. 
Jindal's bill that we support, as I mentioned throughout my 
testimony.
    Mr. Peterson. Are you aware that all the recent polls in 
Florida, over 60 percent of the population, support drilling 
offshore of both gas and oil?
    Ms. Castille. I am aware that the polls in our one 
industry's questioning of the public as to how they feel, there 
are people who are on both sides of this issue. And we believe 
we have worked well, Mr. Chairman and Mr. Peterson, with 
Congress and with the Congressional delegations from all of the 
states to support a balanced environmental protection bill that 
allows a significant expansion of oil and gas development in 
OCS.
    Mr. Peterson. Well, I might disagree with that. When I 
asked to meet with your boss, I was turned down several times. 
But I also want to state for the record, it is my view that the 
success of Governor Jeb Bush has kept us from an adequate 
energy supply in America. Because if we do for Florida what he 
wants, we lock it up around the coast.
    On the West Coast, when you go 100 miles out, it is too 
deep to drill. So if Florida has to have 100 to 125 miles 
protection, you lock up the whole West Coast for production. 
And I find it unacceptable that we end up negotiating with one 
state.
    I love their beaches, I have enjoyed them as much as 
anybody. But I want to tell you, Canada has clean beaches. The 
Gulf has clean beaches. Other countries, Great Britain, 
Denmark, Sweden have clean beaches. And they produce both gas 
and oil.
    And for Florida to be donning scare tactics about energy 
production off its shores, we should be beyond that.
    The Chairman. Mr. Melancon.
    Mr. Melancon. Thank you, Mr. Chairman. Ms. Castille, just 
so you know, there is a lot of Castilles in the Lafayette area, 
Louisiana.
    Ms. Castille. Just so that you know, my whole family is 
from Louisiana in Trowbridge. And at the Acadiana Village is my 
family home.
    Mr. Melancon. Oh, great. We will be kind.
    [Laughter.]
    Mr. Melancon. I guess one of the ironies is that Bobby 
asked questions a while ago or made the statement about the 
natural resources that are within the states belong to America, 
just like the natural resources off the OCS, outer Continental 
Shelf.
    How can Florida, in their mind, dictate to America where we 
can drill, when those natural resources belong to all of 
America? Has anybody addressed that in the administration in 
Florida?
    Ms. Castille. I think there are a number of natural 
resources across the United States that have elected officials 
as responsible for ensuring that those resources are used 
wisely, and are accessed in such a way that reduces the 
environmental impact to our communities.
    We have addressed that. We believe that the balance that we 
have been proposing in many of the bills that have been 
proposed is significant; that we protect our resources, and yet 
we allow the expansion of 8.5 million acres of oil and gas 
development.
    Mr. Melancon. Well, I am kind of like Mr. Peterson. I 
disagree. That is our resources offshore. But like I said, I am 
going to be kind. You come from Louisiana. It doesn't matter 
where you come from.
    If you would, Ms. Randolph, if you could give maybe a brief 
on what the LA-1 Coalition is doing on its own to service 
America's oil, offshore oil industry. What the program is, how 
they borrowed money, and what they are doing.
    Ms. Randolph. It was recognized about 10 years ago in 
Lafourche Parish that we needed a secure highway to this very 
important port. When we appealed to the Federal government for 
monies to build a new highway, which is threatened every time 
the winds blow with water overtopping it, and the thousands of 
18-wheelers that service it cannot access the port in its 
current condition. When we appealed to the Federal government 
for assistance, we received nothing.
    The LA-1 Coalition was formed in order to band together 
companies that could put up the monies for a lobbying effort. 
What has happened as a result of that is that there have been 
some monies allocated to LA-1, about $60 million.
    What we agreed to do, the people in Lafourche Parish agreed 
to do, was borrow the money for the remainder of it, which is 
about $90 million. Again, we are taxing ourselves to create 
this energy infrastructure that supports the rest of the United 
States.
    We are also going to put a toll on it, so that the toll can 
help pay back that loan that we had to take out in order to 
accomplish the building of this highway, this very important 
highway, which supports about 30 percent of this nation's oil 
and gas.
    And as an example, too, Congressman, the South Lafourche 
levee district organized about 30 years ago to build a levee 
system around the southern part of the parish. Again, the 
people of the parish taxed themselves. We did not benefit from 
oil and gas revenues at that time. We simply used that money to 
match state and Federal monies. And because of that, Lafourche 
Parish was the only parish that did not have a levee overtop in 
either Katrina or Rita.
    We have gone to our people over and over again--the LA-1 
Coalition is a good example of that--when private business and 
the public sector get together, and we find a way to fund these 
things. But now we are feeling the impacts of oil and gas, as 
you and Congressman Jindal talked about, with the fact that if 
we had invested some of this OCS revenue sooner, we would not 
have felt the devastation from Katrina and Rita on either side 
of the state.
    But the LA-1 Coalition is the result of local people just 
deciding it was time to do something. And so we have the 
initiative in our area, we have the will, but we no longer have 
the money. And that is why the OCS impacts that we are 
experiencing should be mitigated by the OCS monies.
    Mr. Melancon. Thank you, Ms. Randolph. I think my time has 
expired. Thank you, Mr. Chairman.
    The Chairman. We are going to temporarily recess the 
Committee. We have been called to a series of votes on the 
floor, so we will temporarily stand in recess. And as soon as 
we get done with our votes, we will return shortly.
    And I apologize to our witnesses, but we have no control 
over the floor. But we will return as quickly as we can.
    [Recess.]
    The Chairman. I call the hearing back to order. Mr. Lopez, 
I had a couple of questions I wanted to ask of you if I could.
    Your testimony strongly supports the energy and mineral 
schools reinvestment provisions that are in this bill. Would 
you please give us a little bit of a background on where the 
petroleum and mining schools now find themselves?
    Mr. Lopez. Mr. Chairman, I would be happy to. And this is 
across the country, not just at New Mexico Tech.
    Just by way of example, in the 1980s collectively the 
mining schools were graduating about 700 students. Today we are 
graduating about 100 as a collective group of schools.
    Very similar things are happening in the petroleum 
engineering programs. Again, we have just a large shortage of 
prepared engineers. And then, by extension, even in the 
geosciences just generally we have lost enrollment over the 
years.
    I think this bill and the provision that you have included, 
Mr. Chairman, would go a long way in trying to reverse that 
trend.
    We know in addition to that that we have a very elderly 
population at the management and senior engineering levels. 
Those people are going to retire. We have very few replacements 
coming up.
    And finally, Mr. Chairman, I would tell you that especially 
at the graduate level, most of the students attending these 
programs are foreign nationals. We have dwindling numbers of 
native-born students populating these programs across the 
country, both in the mineral side, as well as the oil and gas 
side.
    The Chairman. You say that you went from graduating 700 a 
year to 100 a year. Is that because there is no demand for the 
engineers?
    Mr. Lopez. Two primary thrusts, I believe, Mr. Chairman. 
First, there was a lot more money put into the biological 
sciences and other areas that made it much more attractive for 
students, especially again at the graduate level. Graduate 
students are attracted by the availability of support to 
continue their education.
    But in addition, there has not been much support for the 
undergraduate portion of the program.
    In addition to that, I think the negative coverage related 
to environmental questions has lured away a lot of potential 
students. And I think it is incumbent upon us to continue to 
try to get the message across that the development and support 
of continuing to develop our energy resources is something that 
is critical to the nation. It is critical to our security, and 
it is critical in every respect.
    So I think those are the two primary reasons, Mr. Chairman, 
why we have experienced dwindling enrollments in these two 
programs.
    The Chairman. Thank you. One further question. One thing 
that we have talked about is having a stable long-term source 
of funding for these schools. Why do you believe that is 
important?
    Mr. Lopez. Mr. Chairman, one of the things that attracts 
students, and not only students but faculties, to be able to 
see into the future, because research programs especially need 
the long-term horizon in order to be effective.
    You are not going to attract the best and the brightest, 
and especially again at the graduate level, if you don't have a 
stable source of support to advance discovery in those two 
areas.
    The undergraduate students by extension are attracted to 
those programs when they can see that they have high-quality 
faculty. And high-quality faculty comes as a partner to stable 
and sustained support for discovery.
    The Chairman. Well, thank you very much. I want to 
recognize Mr. Jindal.
    Mr. Jindal. Thank you, Mr. Chairman. I have three quick 
questions.
    Secretary Castille, in your testimony you say that Florida 
opposes natural gas drilling proposals currently circulating in 
Congress that would open up drilling as close as 20 miles to 
Florida's beaches.
    I just want to make sure I understand. Would you be 
supportive of a proposal that would give states the option to 
drill that close, but would not force them to do so? In other 
words, would you be supportive of giving the states final say 
on the activity that happens off their coasts?
    Ms. Castille. Mr. Chairman, Mr. Jindal, we would be 
supportive of a bill that allowed oil and gas drilling outside 
of 100 miles of the states.
    Mr. Jindal. But closer in, would you be supportive of an 
approach that would allow a state to decide what happened 
closer than 100 miles?
    Ms. Castille. I believe we would have to work with our 
delegation to see what they would want to do.
    Mr. Jindal. Thank you. My second question is for Senator 
Wagner. Thank you for being here.
    You note that the revenue sharing portion of this bill is 
an essential part of this legislation. I want to applaud you 
also for your efforts at the state level.
    If no revenue sharing were allowed, which is basically what 
happens today in my home state of Louisiana, I would like you 
to speculate for us, what would a state like Virginia be likely 
to do? If there was no revenue sharing, would they be able to 
support any production? And do you believe that states should 
be forced to allow production if there is no chance for revenue 
sharing?
    Mr. Wagner. Thank you, Mr. Chairman and Congressman Jindal. 
It played a key role, the revenue sharing aspect played a key 
role in moving the legislation forward. I mean, as one who is 
concerned not just for Virginia's future, but also the 
nation's, I think we need to do every aspect we can to open up 
our domestic energy sources. And I think it is the right 
strategy for this country, both in the short term and in the 
long term.
    Having said that, I would say that I consider the revenue 
sharing an instrumental part of it. When we did a poll in my 
district, and I believe Congresswoman Drake's poll was even 
more positive on that, 75 percent of the people I represent 
support it. Similar from another state's senator that polled 
his half of Virginia Beach, 73 percent. Now, we are talking 
Virginia Beach, also. We are talking, quote-unquote, the 
impacted tourist area. Overwhelming when you throw in the 10 
percent that really doesn't have an opinion. You will find 
numbers less than 15 percent that oppose it. And I believe 
Congresswoman Drake's poll showed even a greater percentage in 
support of it.
    But with that came the idea of revenue sharing, with that, 
to provide a stream of revenue. And as I outlined in my 
testimony, we have in Virginia, anticipating that, we will 
spread that money around where we thought it will be most 
beneficial.
    And so I consider that an important element of it, and that 
is why I am so supportive of the legislation you have here 
today.
    The Chairman. Thank you. And thank you for your work at the 
state level.
    My last question is for President Randolph. Charlotte, if 
Lafourche Parish and the State of Louisiana were to receive the 
revenues as described in H.R. 4761, my legislation, how would 
that help you to improve the delivery of energy resources for 
the rest of the country? Also, how would you anticipate using 
those funds to protect against future hurricanes?
    In other words, if this revenue sharing were in place 
today, how would you all use this money?
    Ms. Randolph. Congressman, earlier in my testimony I 
mentioned the constitutional amendment that the voters of 
Louisiana are going to be considering this fall, in elections 
this fall. That amendment will dedicate those funds, the OCS 
revenues, to, number one and first and foremost, coastal 
protection and hurricane protection. And secondarily, to 
infrastructure impacts that we felt through the years.
    How it will improve the delivery certainly is with an LA-1 
that is able to continue to allow the thousand 18-wheelers a 
day that go to and from Port Fourchon to continue to operate. 
It allows a lot of the workers from throughout the country to 
be able to get down to Port Fourchon and earn a living, not 
just people within Lafourche Parish or the state. We are 
represented, almost every state is represented at Port Fourchon 
right now.
    So the State of Louisiana would use that money definitely, 
first and foremost, for flood protection. And then we would 
certainly get into making certain that we can deliver the oil 
and gas.
    One of the problems we have had with the erosion in the 
state is the fact that so many of the oil and gas pipelines are 
being exposed now, because of the erosion that is occurring. 
And that is a big concern.
    When they were first produced in the area, when they were 
first introduced into the area, they were well protected. And 
they no longer have that protection. So if we can rebuild some 
of the land that existed before, we are also protecting the 
fuel that comes out of the Gulf.
    LOOP is something that is in our area, the Louisiana 
Offshore Oil Port. Looking at LOOP right now as one of the 
sites for the strategic oil reserve. That is within a levee 
system now that needs to be improved. The levee system needs to 
be improved. If we can improve that levee system, then an 
additional amount of oil will be stored in Lafourche Parish for 
the rest of the country's use later on.
    So the revenues that would come from OCS would certainly be 
used in ways that we can help this country.
    Mr. Jindal. Thank you, Charlotte. Thank you, Mr. Chairman.
    The Chairman. Thank you. Are there further questions for 
this panel? Mr. Peterson.
    Mr. Peterson. Yes. Senator Wagner, again I want to thank 
you for coming and for your hard work. How many years have you 
been working on this?
    Mr. Wagner. This is the second year that we have been 
working on it. I chair a joint commission study on the needs of 
manufacturers in Virginia. We lost 80,000 manufacturing jobs in 
Virginia, and the pace continues to accelerate. So we were 
looking at all aspects of what we can do to help mitigate that 
loss in Virginia.
    And we recognize we are in competition with the rest of the 
world, but we are also in competition with 49 other states all 
trying to seek the same high-value manufacturing jobs.
    We basically just took the overhead column of a business 
and went through it, and said what can we do better, faster in 
Virginia. Part of that study focused on energy costs, which 
were a problem pre-Katrina that was really impacting a lot of 
boardroom decisions, and quite frankly hurting our 
manufacturing base. The largest user of natural gas east of the 
Mississippi is located in Hopewell, Virginia. It is the 
Honeywell plant, and they manufacture nylon and core components 
for fertilizer. It is 50 million cubic feet a day. We question 
whether or not we can continue to operate that plant, given the 
current rates.
    It has become a serious concern. Obviously post-Katrina it 
garnished a lot more attention throughout Virginia, and a lot 
more Virginians became educated on the delicacy of our 
infrastructure, and the fact of availability. And of course, I 
thought Katrina had fast-forwarded our energy costs. In fact, 
we are on a slow creep to that five years from now. Little did 
I know, six months later we are paying the same for gasoline as 
we were paying immediately after Katrina.
    And so the concern levels are out there. And I can tell you 
from the constituents that I have talked to, they are looking 
for those types of solutions. We have been on it for two years. 
We have been supportive of that, and have come up and worked 
with the Federal government, both in the Senate and the House, 
at every occasion. Because we basically would ask you to let us 
do what we would like to do off the coast of Virginia.
    Mr. Peterson. Christine, I had another question for you. In 
the recent poll here from Mercury Public Affairs, Consumer 
Alliance for Energy Security, 74 percent of Floridians believe 
that energy policies restricting the development of natural gas 
need to be changed. That is 74 percent of Floridians. Fifty-
nine percent of Floridians are for producing natural gas 20 
miles offshore.
    What does that number have to reach before policymakers in 
Florida will listen to their voters?
    Ms. Castille. Mr. Chairman and Mr. Peterson, good policy is 
not developed on polls, but polls are a part of that 
information on good policy. And we believe we have taken into 
account the need for the nation's future energy resources, and 
supported a compromise bill last November that Governor Bush 
outwardly supported with letters, and sent to all of the 
Committee members, as well as the Florida delegation to support 
additional oil and gas resources opening up, 8.5 million acres 
of those.
    Mr. Peterson. Well, we won't go back down that road. You 
know, let me read you a statement by a Floridian.
    ``We have been in a situation where many states are looking 
at Florida and saying it is just not fair for us, Florida, to 
use all that fuel, and not be willing to open up their 
waters.'' Do you agree with that statement?
    Ms. Castille. We do agree, and we have recommended opening 
up some of the waters for oil and gas development.
    Mr. Peterson. In the territory of Louisiana and Alabama?
    Ms. Castille. Well, it has only just become the territory 
of Louisiana and Alabama, by changing the lines.
    Mr. Peterson. That is international standards. It was 
technically never Florida's territory.
    Ms. Castille. It was technically United States territory--
--
    Mr. Peterson. That is correct.
    Ms. Castille.--of which we are one-fiftieth.
    Mr. Peterson. Yes, you are one-fiftieth. But you produce 1 
percent of what you use. And it just seems to me that I just 
find it incredible that the stance of Florida is setting the 
standard of what we are going to do in Congress. That if the 
Florida Senators and the Florida Governor doesn't agree, it 
ain't going to happen. And I find that troubling.
    Because it is a problem for America. If we don't change our 
ability to get natural gas in this country, we will not give 
our kids the country we inherited. All of the industries we 
have talked about, I have talked to the CEOs, they have one 
foot in another country already. They don't want to go. They 
cannot afford.
    See, when gas was two dollars a thousand and oil was $10 a 
barrel, it didn't matter. But when we suddenly have the highest 
gas prices in the world, we have to look at our policies. It is 
not a competitive marketplace. Everybody buys gas cheaper than 
us. So you can do business anywhere cheaper than here.
    Now, Virginia is a pretty smart state. Pennsylvania looks 
at them as the toughest competition we face. When we get in a 
competitive bid for manufacturing, we lose them to them, every 
time.
    And in spite of that, they are losing jobs. Why? Because of 
energy.
    This whole country cannot absorb these natural gas costs. 
And to be afraid of producing this cleanest fuel that has never 
spoiled a beach is just a falsehood that needs to be done away 
with.
    Thanks for coming.
    The Chairman. I want to thank the panel for your testimony. 
If there are further questions for the panel, they will be 
submitted to you in writing. And if you could answer those in 
writing as well so that they can be included in part of the 
hearing record.
    I want to thank you very much for making the effort to be 
here, and again apologize for the delay during the hearing when 
we had votes. Thank you very much for being here.
    I am going to excuse this panel and call up our third 
panel. If I could have you all remain standing and raise your 
right hand.
    [Witnesses sworn.]
    The Chairman. Thank you very much. Let the record show they 
all answered in the affirmative.
    Welcome to the Committee. I apologize for our delay. Mr. 
Cleveland, Terry Cleveland, the Wyoming Game and Fish 
Department, I understand that you have a conflict. If you want 
to give your testimony, and then you can be excused after you 
are completed.
    I will remind the witnesses that your entire written 
statement will be included in the record. If you could hold 
your oral testimony to five minutes it would be greatly 
appreciated.
    Mr. Cleveland.

            STATEMENT OF TERRY CLEVELAND, DIRECTOR, 
                WYOMING GAME AND FISH DEPARTMENT

    Mr. Cleveland. Thank you, Mr. Chairman. I appreciate the 
accommodation. Though Wyoming has lots of natural resources 
that we are willing to share with the nation, it is a little 
difficult to fly in and out.
    Thank you, Mr. Chairman, Members of the Committee, for the 
opportunity to address the Committee regarding Section 14 of 
H.R. 4761.
    Both the Wyoming Game and Fish Department and the 
Association of Fish and Wildlife Agencies support Section 14 of 
this bill. It would provide much-needed funding to state fish 
and wildlife agencies to proactively evaluate, monitor, and 
manage fish and wildlife resources impacted by energy 
development.
    Wyoming is a national focus for energy development. At a 
time when world politics interfere with imports and other 
supplies are dwindling, Wyoming has the largest domestic 
reserves of coal and uranium, world-class natural gas and wind 
resources, as well as significant oil production. We also have 
tremendous potential for oil shale development.
    These energy sources are being tapped, and plans are 
underway for power plants, synfuel plants, pipelines, and power 
grids to process and ship that energy from Wyoming.
    The current scale and intensity of energy development is 
unprecedented in our state's history, and experts predict this 
development will continue for several decades. With Wyoming's 
small human population, we are able to provide a higher 
percentage of our supply to out-of-state users than any other 
state.
    While Wyoming has world-class energy resources, it also has 
world-class wildlife resources, and a wildlife-oriented culture 
that the state and nation value very highly. About half of 
Wyoming's residents hunt and/or fish; 75 percent enjoy non-
consumptive wildlife watching activities, and many thousands of 
non-residents spend time in Wyoming to take part in such 
activities. This participation rate is far higher than most 
other states.
    Energy development is the state's chief economic engine, 
but wildlife-associated activities are a significant part of 
the state's second-leading economic source: tourism and 
recreation.
    Economic support from tourism and recreation will need to 
be maintained to provide economic diversity and continue as a 
vital part of the state's economy when development of non-
renewable energy sources inevitably slows.
    The Wyoming Game and Fish Department is not opposed to 
energy development. We recognize the national energy need, and 
Wyoming's contribution toward fulfilling that need. We also 
recognize our statutory obligations to conserve and manage the 
800-plus species of wildlife found in Wyoming that are so 
important to our state's economy, and to the culture and 
heritage of our citizens.
    We believe it is possible to maintain Wyoming's flourishing 
wildlife populations, but it will require greater collaborative 
effort, since energy development is proceeding at a scale, 
intensity, and duration far beyond anything we have experienced 
in the past. This effort will require additional funding.
    I wholeheartedly agree with Congress' finding in Section 
14[a] concerning the necessary expenditures by state fish and 
wildlife agencies to deal with energy development, and the 
inadequacy of current conditional funds to support that work.
    As noted in Section 14, there are a variety of activities 
related to energy development that require additional funding, 
including surveys, environmental analyses, research, and 
management. We have been involved with Federal agencies and 
industry in assessing and planning development activities for 
many years.
    Often we have not been able to provide needed data and 
recommendations in the analyses of these activities due to 
insufficient funds. This not only adversely affects fish and 
wildlife, it also results in poor-quality, less credible NEPA 
analyses. It would benefit both wildlife and energy development 
if we were better able to gather and provide needed 
environmental information.
    It is especially important that wildlife species at risk 
are addressed, as these are the most likely to become 
petitioned as T and E under the Endangered Species Act if it is 
perceived significant detrimental effects from energy 
development are occurring.
    Additional monitoring and research are needed to address 
mitigation and reclamation, as the current scale and intensity 
of energy development is unprecedented in our state. Within my 
agency we have been funding energy development and work largely 
at the expense of other programs. Although we pursued 
additional funding through our state legislature and Federal 
government for years, those efforts have been largely 
unsuccessful to provide needed funds.
    In conclusion, species like sagegrass, muledeer and others 
associated with sagebrush step habitats are already below 
desired levels in many areas. Regardless of how well we do 
planning, permitting, monitoring, using best management 
practices, and onsite mitigation, given the level of 
development and human activity compounded with chronic drought 
and competing land uses, we are unlikely to maintain or enhance 
wildlife populations at the landscape scale unless we 
proactively implement basin-wide wildlife habitat initiatives.
    The additional money from this bill, while not a complete 
solution, would be a significant contribution to better deal 
with energy development impacts in our state.
    Thank you, Mr. Chairman, for the opportunity to provide 
comments, and I have submitted my written testimony.
    [The prepared statement of Mr. Cleveland follows:]

                Statement of Terry Cleveland, Director, 
                    Wyoming Game and Fish Department

    I am Terry Cleveland, Director, Wyoming Game and Fish Department, 
and I appreciate the opportunity to provide testimony on H.R. 4761. I 
also serve as vice chair of the Energy and Wildlife Policy Committee of 
the Association of Fish and Wildlife Agencies, which represent the 
collective interests of the 50 state fish and wildlife agencies. The 
state fish and wildlife agencies have statutory authority for the fish 
and wildlife resources within their borders and responsibility to 
ensure the sustainability of these resources for their citizens. The 
state fish and wildlife agencies recognize that sustainable energy 
development as well as sustainable fish and wildlife resources are in 
the national interest and are committed to working to ensure that 
energy development objectives are met consistent with meeting fish and 
wildlife conservation objectives. Energy development is going to 
happen; we want to make it happen right for our citizens.
    Both the Wyoming Game and Fish Department and the Association of 
Fish and Wildlife Agencies support Section 14 of the bill, as it would 
provide much-needed funding to State fish and wildlife agencies in 
producing states to proactively evaluate, monitor, and manage fish and 
wildlife resources impacted by energy development.
    Wyoming is a national focus for energy development. At a time when 
world politics are interfering with imports and other supplies are 
dwindling, Wyoming has the largest domestic reserves of coal and 
uranium, world-class natural gas and wind resources, as well as 
significant oil production. With Wyoming's small human population, we 
are able to provide a higher percentage of our energy resources to out-
of-state users than any other state. The development of energy 
resources in Wyoming has increased exponentially the past several 
years, and that trend is expected to continue well into the future.
    While Wyoming truly has world-class energy resources, it also has 
world-class wildlife resources and a state culture that values wildlife 
very highly. About half of Wyoming's residents hunt and/or fish, 75% 
enjoy non-consumptive wildlife watching activities, and many thousands 
of nonresidents spend time in Wyoming each year specifically to take 
part in those activities. While energy development is the state's chief 
economic engine, wildlife-associated activities are a very significant 
part of the state's second leading industry, tourism and recreation. In 
the past, energy development followed a boom/bust cycle, while economic 
support from tourism and recreation has been steady throughout the 
years. Tourism and recreation need to be maintained to provide economic 
diversity and continue as a vital part of the state's economy when 
development of nonrenewable energy sources inevitably slows.
    Over the next 30 years, total energy production in Wyoming is 
expected to substantially increase. In particular, natural gas 
production is predicted to double by 2030. Coal power plants are in the 
planning and construction phases in several areas of Wyoming. Wind 
farms have been developed, and more are planned. Large-scale increases 
in pipeline capacities and the electric power grid are underway. The 
increased demand and prices for uranium indicate a coming resurgence in 
this industry. Interest is high for developing synfuel plants in 
Wyoming. Wyoming also has very significant oil-shale deposits and 
research on how to extract this resource is progressing.
    Impacts on wildlife from energy development can be very 
significant. Energy development in Wyoming is huge in scale, 
potentially impacting 25% of our surface area. It is high intensity and 
millions of acres will have oil/gas well pads on 40-160 acre spacings. 
Expectations are that this will also be long in duration, with most 
natural gas fields projected to have development phases exceeding 10 
years and life-of-field production for several decades. Coal production 
may last for 250 years. Energy development impacts wildlife in a 
variety of ways, not only from well pads and mines, but also from 
associated roads, pipelines, power lines, and increased human activity 
and disturbance. Very significant portions of energy development areas 
in Wyoming contain habitats that are key to maintaining fish and 
wildlife populations.
    As an agency, the Wyoming Game and Fish Department is not opposed 
to energy development. We recognize the national energy need and 
Wyoming's contribution towards fulfilling that need. We also recognize 
our statutory obligations to conserve and manage the 800+ species of 
wildlife found in Wyoming that are so important to our state's economy 
and the culture and heritage of our citizens.
    We believe it is possible to maintain Wyoming's flourishing 
wildlife populations, but it will require greater collaborative effort 
with energy development proceeding at a scale, intensity, and duration 
far beyond anything we have experienced in the past.
    This effort will require additional funding. I wholeheartedly agree 
with Congress' findings in Section 14(a) concerning the necessary 
expenditures by state fish and wildlife agencies to deal with energy 
development and the inadequacy of current traditional funds to support 
that work.
    As noted in Section 14, there are a variety of activities related 
to energy development that require additional funding, including 
surveys, environmental analyses, research, and management. The Wyoming 
Game and Fish Department has been involved with federal agencies and 
industry in assessing and planning development activities for many 
years. I believe that through these collaborative efforts, better 
decisions on development have been made that ultimately allowed the 
resource to be developed while mitigating and minimizing impacts to 
wildlife. But this is very time-consuming, information-intensive and 
expensive work, and the pace of development is outrunning our ability 
to be adequately involved in these projects. Often, we have not been 
able to provide needed data and recommendations in the analyses of 
these activities because of insufficient funds. This not only adversely 
affects fish and wildlife, it also results in poorer quality, less 
credible National Environmental Policy Act analyses for developments. 
It would benefit both wildlife and energy development if we were better 
able to gather and provide needed environmental information.
    Information needs include baseline habitat and wildlife population 
survey data to complement the analyses of large-scale developments, and 
the all-important monitoring of mitigation and reclamation efforts that 
not only determine the ultimate success of those efforts, but guide 
future planning of other developments.
    Baseline information collection and monitoring of key habitats such 
as crucial big game winter ranges, sage grouse nesting habitat, blue-
ribbon trout streams, migratory bird nesting habitat, and attention to 
the habitat needs of the sensitive species that have been identified in 
our Comprehensive Wildlife Conservation Strategy all need increased 
efforts.
    It is especially important that these sensitive species, i.e. 
wildlife species-at-risk, are addressed, as these are the most likely 
to be petitioned as Threatened or Endangered under the Endangered 
Species Act if it is perceived that significant detrimental effects 
from energy development are occurring. In Wyoming's Comprehensive 
Wildlife Conservation Strategy, we have identified 279 species that 
need substantial work to ensure that impacts, such as from energy 
development, do not place them in jeopardy under the Endangered Species 
Act. If detrimental effects are occurring, we need to be able to manage 
these impacts before species become jeopardized. We currently do not 
have the funds to adequately monitor a fraction of that many species.
    Additional monitoring and research are needed to address mitigation 
and reclamation for the large scale and high intensity disturbances 
from energy developments occurring in Wyoming. Since this scale and 
intensity are unprecedented, there is inadequate information about 
possible impacts on wildlife as well as methodologies and solutions to 
deal with these impacts. These must be developed to ensure wildlife 
populations remain viable in energy development areas.
    In summary, species like sage grouse, mule deer, and others 
associated with sagebrush steppe habitats are already below desired 
levels in many areas. Regardless of how well we do planning, 
permitting, monitoring, using best management practices and on-site 
mitigation, given the level of development and human activity 
compounded with chronic drought and other competing land uses, we are 
unlikely to maintain or enhance wildlife populations at the landscape 
scale unless we proactively implement basin-wide wildlife habitat 
initiatives.
    Within our agency, we have been funding our energy development work 
largely at the expense of other programs. A recent example of robbing 
Peter to pay Paul is our conversion of a fisheries population biologist 
position in northeastern Wyoming into a position dealing with coal bed 
natural gas issues. We will not be able to adequately back-fill the 
fisheries position, an important position that has been essential for 
managing game fish in northeastern Wyoming for more than 30 years. We 
are unable to stretch license fee and federal excise tax monies, which 
constitute almost 90% of our revenue, to adequately cover the 
additional costs associated with increased energy development while 
maintaining existing programs and services.
    Although we have pursued additional funding through our state 
legislature and the federal government for years, those efforts have 
not yet provided sufficient revenue to adequately address wildlife 
issues relating to energy development. A bright spot has been our work 
in several cases with industry and federal agencies to secure funding 
for specific projects. But overall, we have inadequate funding to 
address statewide energy development issues.
    The additional money from this bill, while not a complete solution, 
would be a significant contribution towards better dealing with energy 
development impacts on wildlife.
    Thank you for the opportunity to share our perspectives and I would 
be pleased to address any questions.
                                 ______
                                 
    The Chairman. Thank you. Thank you for your testimony. I 
next recognize Ms. Carolyn McCormick, the Managing Director of 
the Outer Banks Visitors Bureau.

STATEMENT OF CAROLYN McCORMICK, MANAGING DIRECTOR, OUTER BANKS 
    VISITORS BUREAU, DARE COUNTY TOURISM BOARD OF DIRECTORS

    Ms. McCormick. Good afternoon, Chairman and Members of the 
Committee. I want to thank you very much for inviting me to be 
here today.
    I am the Managing Director of the Outer Banks Visitors 
Bureau, the Dare County Tourism Board, which is a North 
Carolina public authority. I am also a resident of Nags Head, 
North Carolina, and a mother of two girls.
    I am here today about preserving and continued protection 
for America's national treasures, our fragile coastal 
economies, our natural environment, our fisheries, and our 
heritage.
    The people of Dare County have a history of strongly 
opposing offshore drilling. Resolutions opposing drilling have 
been filed by the towns of Nags Head, Kill Devil Hills, Kitty 
Hawk, Southern Shores, Duck, Manteo, and the County of Dare.
    The Outer Banks are truly America's beaches. It is a free 
and open access chain of barrier islands off the coast of North 
Carolina. We are home to Fort Riley National Historic site, the 
birthplace of English-speaking America in 1587. The Wright 
Brothers National Memorial, the site of man's first powered 
flight in 1903. The Cape Hatteras National Seashore, the 
nation's first national seashore established in 1953. Pea 
Island National Wildlife Refuge, and the Alligator River 
National Wildlife Refuge. Over 70 percent of our fragile 
barrier islands are owned by the people of the United States, 
and managed by the United States Department of Interior.
    Tourism in America is a $1.3 trillion industry, with 
coastal communities representing over $700 billion annually. 
Last year travel and tourism generated over $100 billion in tax 
revenues for state, local, and Federal governments. This year 
50 percent of leisure travelers will make their vacation in a 
naturalistic trip. Jobs and the environment are not mutually 
exclusive.
    For the last 25 years the House of Representatives have 
extended the annual bipartisan legislative protection for 
America's most sensitive coastal waters, and in May of 2006 the 
House again extended this protection for the 26th year.
    In spite of this outcome on the House floor, the House 
Resources Committee is today considering H.R. 4761, a complex 
offshore drilling bill that reverses this year's current 
coastal protection, exempts various offshore activities from 
present environmental law, preempts longstanding state 
authority over sub-sea pipeline corridors and state waters, 
complicates efforts to repurchase non-producing Federal 
offshore leases, enables oil companies to avoid the cost of 
removing their drilling rigs at the end of production.
    This current bill, H.R. 4761, would immediately lift all of 
the Congressional offshore drilling prohibitions nationwide, 
and then would position each coastal state against their 
neighbors, as states become the object of fiscal coercions to 
convince them to sacrifice their coastal waters to drilling 
impacts.
    Other provisions of H.R. 4761 would immediately reverse 
Presidential offshore drilling withdrawals in the Gulf of 
Mexico that were first put in place by former President George 
Herbert Walker Bush, and will accelerate new offshore drilling 
off of Florida without the preparation of updated environmental 
studies.
    Oil and gas development is a tough industry that negatively 
impacts coastlines, harms ecosystems, and directly threatens 
all coastal tourism, fishing, and real estate economies. The 
waters off of Cape Hatteras and on the Outer Banks have long 
been recognized as one of the last places that should be 
jeopardized by offshore oil and gas drilling impacts, and these 
areas were, in fact, bought back with a substantial Federal 
expenditures when they were inappropriately leased to the oil 
industry in previous years.
    Lifting the OCS moratorium will have damaging consequences 
for all of America's beaches for marine life and their habitat 
and for the broader environment, and will have damaging effects 
on local economies.
    The industrial character of offshore oil and gas 
development is often at odds with the existing economic base of 
the affected coastal communities, many of which rely on 
tourism, coastal recreation, and fishing. In Dare County, North 
Carolina the Outer Banks Visitors Bureau has been fighting 
efforts to lift the ban on coastal drilling precisely because 
it realizes what a crushing effect coastal drilling will have 
on the Outer Banks tourism economy, our only economy. One spill 
can cause a ripple effect throughout the Outer Banks, and 
topple whole industries.
    The powerful hurricanes that battered the Gulf Coast have 
destroyed drilling platforms, underwater pipelines, and coastal 
storage tanks, dumping millions of gallons of oil on shore, as 
well as a little in shore. Drilling in hurricane storm-plagued 
waters has proven to be disastrous.
    The public supports the ban on drilling off our coasts. 
Concerns over environmental consequences of offshore oil and 
gas development have led Congress to impose restrictions on OCS 
activities in sensitive areas off the nation's coast every year 
since 1981. These moratoria now protect the East and West 
Coasts of the U.S. and most of the Eastern Gulf of Mexico.
    H.R. 4761 rescinds the entire Congressional moratorium 
nationwide, permanently transfers authority over continued 
coastal protection away from the U.S. Congress, and fragments 
the decision to coastal states on what is a national public 
policy issue. And it does this in a manner that makes the 
decision over where and when to drill offshore more readily 
influenced by the oil industry, and sets the stage for a 
divided States of America.
    Thank you, sir.
    [The prepared statement of Ms. McCormick follows:]

 Statement of Carolyn Esther McCormick, Managing Director, Outer Banks 
  Visitors Bureau;, Dare County Tourism Board, Manteo, North Carolina

    Mr. Chairman and members of the committee, good morning. My name is 
Carolyn Esther McCormick, and I am the Managing Director of the Outer 
Banks Visitors Bureau; Dare County Tourism Board, a North Carolina 
public authority. I am a resident of Nags Head, North Carolina; which 
is located along the Outer Banks and a mother of two girls. I am here 
today about preserving and continuing protection for America's national 
treasures, our fragile economies, natural environment, fisheries and 
heritage for our children, our grand children and great grand children; 
and to voice concern over HR-4761.
    The Outer Banks are truly America's Beaches. A free and open access 
chain of barrier islands off the northeastern coast of North Carolina. 
The birthplace of English-speaking America in 1587--Ft. Raleigh 
National Historic Site; home of man's first powered flight in 1903--
Wright Brothers National Memorial; Cape Hatteras National Seashore, the 
Nation's first national seashore established in 1953; Pea Island 
National Wildlife Refuge, and Alligator River National Wildlife Refuge. 
70% of our fragile barrier islands are owned by the people of the 
United States and managed by the United States Department of the 
Interior.
    Annually we welcome over 5 million visitors to our Nation's 
seashore and National parks; our research indicates the main motivation 
for visitation is our natural, cultural and historic resources. (OBVB 
2005-2006 Visitor Profile Study.)
    Tourism in America is a $1.3 trillion industry with coastal 
communities representing over $700 billion annually. Last year travel 
and tourism generated over $100 billion in tax revenues for state, 
local and federal governments with 50% of leisure travelers this year 
making their vacation a ``naturalistic trip''.
    For the last 25 years the House of Representatives has extended the 
annual bipartisan legislative protection for America's most sensitive 
coastal waters. And in May of 2006 the House again extended this 
protection for the 26th year. In spite of this outcome on the House 
Floor, the House Resources Committee is today considering H.R. 4761, a 
complex offshore drilling bill that reverses this year's current 
coastal protection, exempts various offshore activities from present 
environmental law, preempts longstanding state authority over subsea 
pipeline corridors in state waters, complicates efforts to repurchase 
non-producing federal offshore leases, and enables oil companies to 
avoid the cost of removing their drilling rigs at the end of 
production.
    This current bill, H.R. 4761, would immediately lift all of the 
congressional offshore drilling prohibitions nationwide, and then would 
position each coastal state against their adjoining coastal states, as 
states become the object of fiscal coercion to convince them to 
sacrifice their coastal waters to drilling impacts. Other provisions of 
H.R. 4761 would immediately reverse presidential offshore drilling 
withdrawals in the Gulf of Mexico that were first put in place by 
former president George Herbert Walker Bush.
    The bill would also greatly accelerate new offshore drilling off of 
Florida by requiring multiple lease offerings in the Lease Sale 181 
area without the preparation of updated environmental studies. The 
waters off of Cape Hatteras and on the Outer Banks have long been 
recognized as one of the last places that should be jeopardized by 
offshore oil and gas drilling impacts, and these areas were, in fact, 
bought back with a substantial federal expenditure when they were 
inappropriately leased to the oil industry in previous years.
    Oil and gas development is a dirty and destructive business that 
damages coastlines, harms ecosystems, and directly threatens our 
tourism, fishing and real estate economies. The people of Dare County 
have a history of strongly opposing offshore drilling. Resolutions 
opposing drilling have been filed by the Towns of Nags Head, Kill Devil 
Hills, Kitty Hawk, Southern Shores, Duck, Manteo, and the County of 
Dare. The well documented socioeconomic and environmental risks alone 
far outweigh the rewards and set the stage of a divided states of 
America.
    Chairman Richard Pombo's, Committee on Resources, letter dated June 
8, 2006, on the Hearing on H.R. 4761 the Domestic Energy Production 
through Offshore Exploration and Equitable Treatment of State Holdings 
Act of 2006 states:
      The Bill allows for coastal state self ``determination 
and revenue sharing
      Enhances the country's ability to increase domestic 
production of oil and natural gas, alternative energy and minerals from 
the federal Outer Continental Shelf
      Diminish the amount of foreign ``oil imports required to 
meet the nation's energy needs
What H.R. 4761 does in reality?
     1.  Immediately terminates the twenty-five year congressional 
moratorium that protects the entire U.S. West Coast, all of the East 
Coast, and Florida's Gulf Coast and Panhandle (section 15). This 
provision exposes all of the Florida Gulf Coast and Panhandle to near 
shore offshore oil and gas leasing, much closer to the coast than Lease 
Sale 181.
     2.  Longstanding pre-existing presidential Outer Continental Shelf 
withdrawals, first put in place by former President George H.W. Bush, 
extended in duration by President Bill Clinton until 2012, and located 
within the Gulf of Mexico are immediately revoked upon passage of this 
Act, Section 9, item (2). The 2007-2012 Outer Continental Shelf Leasing 
Program is amended by this Act to include two sequential lease sales, 
in January 2007 and June of 2007, to occur in the Gulf of Mexico within 
the Lease Sale 181 area, without any updating of existing Environmental 
Impact Statement analyses, (Section 9, item 2).
     3.  Makes an arbitrary finding, without any supporting scientific 
documentation of any kind, that gas drilling more than 25 miles 
offshore and oil drilling more than 50 miles offshore would not 
adversely affect resources near the coastline (Section 2, item 4).
     4.  Formally establishes what it calls new ``State Seaward 
Boundaries'', which are arbitrary extensions of onshore boundaries 
between coastal states that continue out into the ocean, applying lines 
that are deemed entirely inequitable by many shoreline states (section 
4).
     5.  Grants to the Secretary of Interior unilateral jurisdiction 
over preparing final regulations enabling what the bill calls ``natural 
gas only'' leasing (section 5, items 2,3,4), but gives the Secretary 
the sole right to decide to instead grant oil companies the right to 
produce oil on these ``gas only'' leases unless the Governor and the 
legislature of the nearby adjoining state, or the Governor and state 
legislature of any neighboring coastal state within 50 miles of the 
lease, object within 180 days of being notified of the oil discovery 
(section 6, items 1,2).
     6.  Grants to the Secretary of Interior the right to arbitrarily 
approve production of a mixture of natural gas liquids (liquid gas 
condensate) and gaseous natural gas when the Secretary is considering a 
lease to be defined as a ``gas only'' lease (section 6, item 8).
     7.  Grants to the owners of offshore leases in any region the 
right to transport produced crude oil through the waters of the 
adjacent state, and through the waters of any neighboring states, 
unless the adjacent coastal state or the neighboring state objects to 
production of oil from such a ``gas-only lease''. Since the bill does 
not specify transportation method, such pre-approved transport of crude 
oil could be either by tanker, barge, or subsea pipeline (section 6, 
Item 4).
     8.  Allows the Secretary of Interior to issue more than one lease 
for a given offshore drilling tract, so that each lease may apply to a 
separate and distinct range of vertical depths, different horizontal 
surface areas, or a combination of the two (section 6, Item 1).
     9.  Requires that an oil company holding any offshore ``gas only'' 
lease that may repurchased by the federal government at the request of 
the lessee because it is found to contain oil instead of, or in 
addition to, natural gas, and therefore does not qualify as a natural 
gas lease, must be repaid by the federal government for the original 
cost of the bonus bid paid for the lease, for lease rents, for seismic 
acquisition costs, and for drilling costs, and for other unidentified 
``reasonable expenses''. The Secretary of Interior shall recover from 
the adjacent state and from local governments any funds previously 
shared with them that were derived from the repurchased lease, if such 
payments were payable after the date of repurchase. The lessee of a 
repurchased gas lease can obtain a priority right to acquire a future 
oil and gas lease within 30 years after the repurchase (Section 6, item 
7).
    10.  Oil company partnerships would be allowed to bid jointly on 
tracts in offshore regions determined by the Secretary of Interior to 
be ``frontier tracts'' or which are what the bill calls ``high cost 
tracts'' (section 6, item [r]).
    11.  A portion of federal receipts from lease tracts beyond 4 
marine leagues and within 100 miles of any coastline that are available 
for leasing under the 2002-2007 Oil and Gas Leasing Program before 
adoption of this Act, and lease tracts beyond 4 marine leagues and 
within 100 miles from any coastline that were made available for 
leasing by this Act, as well as lease tracts located throughout the 
Alaska OCS region beyond 4 marine leagues and within 100 miles of any 
coastline will be subject to a sharing of prescribed escalating 
percentages of OCS federal receipts according to an allocation formula 
specified in (Section 7, (B)). A 75% share of federal receipts from 
tracts located within 4 marine leagues of any coastline shall be 
deposited into a separate account for subsequent allocation, (Section 
7, (4)). For Bonus bids, 87.5 percent of the accrued federal revenues 
shall be conveyed to the adjacent state, and 6.25 percent shall be 
allocated to the federal Treasury, (Section 7, (5) [i] and [ii]). For 
Royalties, 87.5 percent shall be allocated to the adjacent state or to 
any other producing state with a leased tract in its adjacent zone 
within 100 miles of its coastline that generated royalties during the 
fiscal year, except in the event that other producing states have a 
coastline point within 300 miles of any portion of the leased tract, 
the amount shall be distributed with one-third to the adjacent state 
and two-thirds to each producing state according to a formula inversely 
proportional to the distance between the nearest point on the coastline 
of the producing state and the geographic center of the leased tract, 
(Section 7, (B) [i] through [iv]).
    12.  For tracts partially or completely beyond 100 miles of the 
coastline, a separate escalating formula of deposits of federal 
receipts shall be followed (section 7 (c) (1) and (2)) and one-third of 
the royalties shall be passed to the adjacent state--and two-thirds to 
each producing state--according to a formula inversely proportional to 
the distance between the nearest point on the coastline of the 
producing state and the geographic center of the leased tract, (section 
7, (B) [i] to [iv]). Of these allocations, counties and county-
equivalent political subdivisions shall receive 25 percent of the 
allocation based on the ratio of such coastal counties to the coastline 
miles of all coastal counties in the State. Coastal counties without a 
coastline shall be considered to have 50 percent of the average 
shoreline miles of the coastal counties that do have shorelines. 
Another 25 percent of the county allocation shall be based on the ratio 
of the county's population to the coastal population of all counties in 
the state, 25 percent shall be allocated to counties with a coastal 
point within 300 miles of the leased tract--based on the county's 
relative distance from the leased tract, (section 7, (2) (D)). And 25 
percent of the allocation shall be based on the relative level of 
offshore oil and gas activities in the county compared to the level of 
oil and gas activities off of all counties in the state.
    13.  Funds allocated to states and counties can be used for a broad 
and poorly defined array of purposes, and no standards are applied to 
ensure that the money is spent to restore damage caused by offshore oil 
and gas activities. Activities that further harm the coastal zone, 
including improvements to infrastructure associated with offshore 
energy production activities and any other purpose determined by state 
law can be funded with these allocations, and no accounting the federal 
government is required for any of these expenditures, except as 
otherwise required by law (Section 7, (3) [f]).
    14.  The enactment of any future congressional legislative 
moratorium on expanded offshore oil and gas leasing will automatically 
prohibit any sharing of federal receipts from offshore drilling with 
the affected states or localities for the duration of any such 
restriction, (section 7, (3), [h]).
    15.  The President is authorized by this bill to partially or 
completely revise or revoke any prior withdrawal made by the President 
under the authority of Section 9 (Section 9, [1]). Any such withdrawal 
requested by a state may be for a term not to exceed ten years, and the 
President is directed to accommodate competing interests and potential 
uses of the Outer Continental Shelf in considering whether or not to 
grant the withdrawal petition of any state (Section 9, [1]).
    16.  Governors of coastal states, with the concurrence of their 
state legislatures, may petition the Secretary of Interior to open any 
area adjacent to their state that is more than 25 miles from the 
coastline of any neighboring state for offshore gas leasing and related 
activities, or any area that is more than 50 miles from the coastline 
of any neighboring state for offshore oil and gas leasing and related 
activities, (Section 9, item (3) (A)). In analyzing the decision to 
lease an area under the terms of this provision, the Secretary of 
Interior needs only to prepare a cursory Environmental Assessment (EA) 
document, and is not required to prepare a full Environmental Impact 
Statement (EIS) as stipulated by the National Environmental Policy Act. 
Broad discretionary authority is granted to the Secretary of Interior 
with respect to the terms and conditions under which such offshore 
development will be allowed to occur, and, to expedite such new 
leasing, the Secretary of Interior is permitted to amend the current 
Five-Year Leasing Program to accommodate such new leasing unless less 
than 12 months remain in the current Five-Year Leasing Program, 
(Section 9, item (3) (B) (C) (D)).
    17.  The Governor of a state, acting with the concurrence of its 
state legislature, may also petition that any area within 125 miles of 
the state's coastline be withdrawn from leasing, for either oil or gas 
or both, but each state must submit separate petitions for distances 
within 50 miles of the coastline, with separate votes by the 
legislature each time, and must submit separate petitions for areas 
beyond 100 miles of the coastline, but not exceeding 125 miles of the 
coastline. The Secretary of Interior shall, within 90 days, prepare an 
Environmental Assessment to evaluate the effects of approving the 
state's petition. The Secretary shall not approve a state's petition 
for more than a total of ten years, but may approve such petitions 
repeatedly ad infinitum, in response to repeated requests from the 
state at appropriate intervals, (Section 9, [h] (1) and (2)). Any 
state's constitutional provision, or any state statute or state law, 
that has the effect of restricting either the Governor or the state 
legislature, or both, under this section, shall automatically forfeit 
for that state any sharing of federal Outer Continental Shelf receipts 
and simultaneously be prevented from exercising any state request for 
any withdrawal from leasing, for the duration of such state 
constitutional or state legislative action, (Section 9, (B) [i]).
    18.  The bill will require that seventy-five percent of the 
available un-leased acreage within each offshore planning area be 
offered in each Five-Year leasing Program, (Section 10, item (1)).
    19.  The bill authorizes the Secretary of Interior to consider and 
analyze leasing throughout the entire U.S. Outer Continental Shelf 
without regard to any other law affecting such leasing. The bill 
elevates any military space-use conflicts to the President for 
resolution, if the Secretary of Interior is unable to resolve such 
conflicts with the Secretary of Defense, (Section 10, item (1)).
    20.  If the governor of an affected coastal state requests in 
writing a modification of any proposed leasing action at least 15 days 
prior to the submission of the Five-Year Leasing Program to Congress, 
the Secretary of Interior shall reply to that Governor in writing, 
granting or denying such request, (Section 10, item (2)). The Secretary 
of Interior, at the beginning of the development of each Five-Year 
Leasing Program, provide each adjacent state with a current estimate of 
potential oil and gas resources off of that state, and with a best-
efforts projection of the share of federal leasing receipts that state 
can expect to receive if it cooperated with federal offshore leasing 
plans off of its coastline, (Section 19, item (2)).
    21.  If a coastal state requests protection for its offshore 
waters, no subsea pipeline carrying oil or gas can be sited through the 
protected zone unless more than fifty percent of the production 
projected to be carried by the pipeline within its first ten years of 
operation is from that same state's adjacent zone waters, (Section 11, 
item (f)(1)). No state may prohibit the construction of a subsea 
pipeline for natural gas through its adjacent waters. No state may 
object to a natural gas pipeline landing location on its coast unless 
it proposes two alternate pipeline landing locations on its own 
coastline, each located within 50 miles on either side of the proposed 
landing location, (Section 11, item (2)).
    22.  Many damaging offshore oil and gas activities would be 
exempted from the need to prepare an Environmental Impact Statement 
(EIS) under NEPA, including the conduct of seismic airgun surveys, and 
individual lease sales would no longer require the preparation of an 
Environmental Impact Statement (EIS), as the generic Environmental 
Impact Statement prepared for each Five-Year Leasing Program would be 
deemed by this Act to be sufficient to comply with NEPA for all lease 
sales in the Program. No Environmental Impact Statement (EIS) would 
need to be prepared for a Plan of Exploration, and no EIS would be 
required for a Plan of Development after the first one is prepared for 
each area, (Section 12, item (2)(A)(B)(C)). A development and 
production plan may be submitted by a lessee that is deemed to cover 
more than one lease at a time. An exploration plan would be required to 
be reviewed by the Secretary of Interior within ten (10) days of 
submission, (Section 19, (2)(B)).
    23.  The Secretary of Interior is given the authority to review 
each development and production plan to ensure that it is consistent 
with all statutory and regulatory requirements applicable to the lease, 
(Section 10, (e) (4)). The language of the bill is not clear as to 
whether this provision exempts plans of development and production from 
the traditional federal ``consistency determinations'' customarily 
conducted by coastal states under the authority granted to them by the 
Coastal Zone Management Act, a critical opportunity for impacted states 
to participate in planning decisions affecting their coastline. The 
Federal Energy Regulatory Commission and the Department of Interior 
will decide between their two agencies which will prepare a single 
Environmental Impact Statement related to facilities for the 
transportation of natural gas, (Section 10, (h)).
    24.  The bill creates what is called a ``Federal Energy Natural 
Resources Enhancement Fund Act of 2006'', derived from a share of 
federal Outer Continental Shelf receipts that can be utilized for a 
wide range of mitigations for damage done by offshore drilling and for 
natural resource restoration and enhancement uses, but not for land 
acquisition of any kind, (Section 14, (5)).
    25.  The bill grants broad new primacy to the Department of 
Interior in use of the Outer Continental Shelf, and states that no 
federal agency may permit construction or operation of any facility, or 
designate or maintain any transportation corridor or operating area, on 
the Federal Outer Continental Shelf or in State waters, that will be 
incompatible with, in the view of the Secretary of Interior, oil and 
gas leasing and substantially full exploration and production of tracts 
that are geologically productive for oil or natural gas, (Section 16 
(a)).
    26.  The bill grants the Secretary of Interior the authority to 
repurchase, or buy back, any offshore lease if the lessee requests such 
a repurchase and if the Secretary finds that such lease is qualified 
for such repurchase because a federal permit was denied (except denial 
under the Coastal Zone Management Act), or because a condition of 
approval was attached to a permit that was not mandated by federal 
statute. The bill establishes that the financial restitution that a 
lessee shall receive will be the amount that a lessee would receive in 
a restitution case for a material breach of contract. If the Secretary 
of Interior fails to make a final decision on a request by a lessee for 
a repurchase of a lease within 180 days of the request, a ten percent 
increase in the compensation due to the lessee will be added if the 
lease is ultimately repurchased, (Section 17 (b)(1 through 6)).
    27.  The bill sets a precedent for allowing offsite environmental 
mitigation at a location away from the area impacted; (see Section 18) 
if the Secretary of Interior believes that such mitigations generally 
achieve the purposes for which mitigation measures are put in place.
    28.  The Secretary of Interior would be instructed to issue 
regulations enabling the application of decommissioned oil rigs for 
offshore fish farms, artificial reefs, and other purposes, and all 
platforms would no longer need to be removed and the drilling site 
would no longer need to be restored at the end of the project's 
economical life cycle, at the sole discretion of the Secretary of 
Interior, (Section 10). A state may request to opt-out of this program 
of leaving decommissioned rigs in place onsite, but the Secretary of 
Interior may or may not honor the state's request.
    29.  The existing requirement in the Omnibus Energy Act of 2005 to 
conduct a comprehensive seismic inventory of all Outer Continental 
Shelf waters would be rescinded, (section 22).
    30.  Certain undefined existing leases within 100 miles of 
California or Florida could be exchanged by the lessee, if the lessee 
so requests and if the Secretary of Interior agrees, for a new oil and 
gas lease, any part of which is located between 100 and 125 miles of 
the coastline, and which is completely beyond 100 miles of the 
coastline, off of the same state, (Section 27, (1)).
    31.  Existing Coastal Impact Assistance is repealed (Section 28).
    32.  Reduction of onshore leasing royalties collected for tar sands 
and oil shale may be enacted at the discretion of the Secretary of 
Interior to offer incentives the development of such resources (Section 
29).
    Lifting the OCS Moratorium will have damaging consequences for our 
beaches, for marine life and their habitat, and for the broader 
environment
    Damage to Marine Life and habitat
    While there have been many advances in oil and gas recovery 
technologies in recent decades, many serious consequences still result 
from exploration and drilling for either oil or gas.
    Seismic Surveying
    Marked changes in behavior in marine species in response to loud 
underwater noises in the ocean have been well documented. Seismic 
survey devices and military sonar's (which operate at a similar decibel 
level) have been implicated in numerous whale beaching and stranding 
incidents, one recently in Nags Head, North Carolina.
    Onshore damage
    The onshore infrastructure associated with offshore oil or gas 
causes significant harm to the coastal zone. For example, OCS pipelines 
crossing coastal wetlands in the Gulf of Mexico are estimated to have 
destroyed more coastal salt marsh than can be found in the stretch of 
coastal land running from New Jersey through Maine.
    Water pollution
    Drilling muds are used to lubricate drill bits, maintain downhole 
pressure, and serve other functions. Drill cuttings are pieces of rock 
ground by the bit and brought up from the well along with used mud. 
Massive amounts of waste muds and cuttings are generated by drilling 
operations. Most of this waste is dumped untreated into surrounding 
waters. Drilling muds contain toxic metals, including mercury and lead.
    Air pollution
    Drilling an average exploration well for oil or gas generates some 
50 tons of nitrogen oxides (NOx), 13 tons of carbon monoxide, 6 tons of 
sulfur dioxide, and 5 tons of volatile organic hydrocarbons. Each OCS 
platform generates more than 50 tons per year of NOx, 11 tons of carbon 
monoxide, 8 tons of sulfur dioxide and 38 tons of volatile organic 
hydrocarbons every year.
    Oil spills
    If offshore areas are leased for gas exploration, there is a 
possibility that oil will be found. There were some 3 million gallons 
of oil spilled from OCS oil and gas operations in 73 incidents between 
1980 and 1999. Oil is extremely toxic to a wide variety of marine 
species, and as noted by a recent National Academy of Sciences study, 
current cleanup methods are incapable of removing more than a small 
fraction of the oil spilled in marine waters.
    It is important to note that, with the exception of oil spills, the 
environmental damages described above result from drilling or exploring 
for either oil or natural gas, so any suggestion that restricting 
leases to natural gas drilling only will not adequately reduce risk of 
environmental impacts.
    Drilling in the OCS will have damaging effects on local economies
    The industrial character of offshore oil and gas development is 
often at odds with the existing economic base of the affected coastal 
communities, many of which rely on tourism, coastal recreation and 
fishing. In Dare Country, NC, the Outer Banks Visitors Bureau has been 
fighting efforts to lift the ban on coastal drilling precisely because 
it realizes what a crushing effect coastal drilling could have on the 
Outer Banks' $640 million tourist economy. If there's one spill or one 
disaster, the Outer Banks could be destroyed for a very long time. The 
powerful hurricanes that battered the gulf coast have destroyed 
drilling platforms, underwater pipelines and coastal storage tanks, 
dumping millions of gallons of oil. Drilling in hurricane and storm-
plagued waters has proven to be disastrous.
    In addition to potentially catastrophic effects on the tourism 
industry, drilling for gas and oil off our coasts could have 
significant negative impacts on commercial and recreational fishing, 
our fisheries, marsh lands, and marine habitat. Jobs and the 
environment are not mutually exclusive. A balanced economy is based on 
a clean healthy marine environment and efforts need to be focused on 
restoring our marine environment and bringing back our fisheries.
    Plenty of natural gas is already available for lease and permitting
    The majority of federal oil and gas resources are already available 
for development. According to the 2003 Energy Policy and Conservation 
Act (EPCA) report issued by the Department of the Interior, 85% of 
federal onshore oil resources and 88% of federal onshore natural gas 
resources (122.6 trillion cubic feet, or tcf) occurring on federal 
lands in Montana, Colorado, New Mexico, Utah and Wyoming are already 
available for leasing and development. Only 12% of federal onshore 
natural gas resources are off-limits to leasing. Eighty percent of the 
nation's undiscovered, economically recoverable Outer Continental Shelf 
(OCS) gas is already available for leasing. Thus, a permanent 
protection for the coastal moratorium areas will leave the vast 
majority of the nation's OCS gas available to the industry.
    In addition to availability for leasing, Bureau of Land Management 
(BLM) data indicates that the vast majority of federal lands currently 
under lease are not being developed. Of the more than 35,000,000 acres 
of public lands under lease, development is occurring or has occurred 
on approximately 12,000,000 acres. Drilling permit approvals on western 
public lands by the BLM increased by 62 percent in 2004, to a record 
number of 6,052, while the number of new wells that were drilled 
declined by nearly 10 percent, to 2,702.
    Based on this data, it is clear that the vast majority of federal 
oil and gas resources occurring on federal lands in the Rockies are 
available for development. In addition, most of the leased lands are 
not in development, and the BLM has issued thousands more drilling 
permits than the industry is actually able to drill. The oil and gas 
industry clearly has plenty of access to our public lands already; 
there is no reason to grant access to additional areas currently under 
moratorium for additional leasing.
    There are smarter, less expensive, and faster solutions for rising 
gasoline and natural gas prices
    The United States consumes about 25% of the world's energy. It is 
not likely that we can drill our way to energy independence. We must 
decrease our energy dependence by other means and invest more time and 
money into clean energy solutions. A recent study by the Union of 
Concerned Scientists found that by getting 20% of our energy from clean 
sources like wind and solar by 2020 we can reduce natural gas 
consumption by 6% by year 2020. According to an April 2005 study by the 
American Council for and Energy Efficient Economy, if we use technology 
available today to make our homes, buildings, and industry more energy 
efficient, we can save up to 12.6% of the natural gas they project we 
would be using by 2020. Studies have indicated that implementing these 
programs would create thousands of new jobs and save consumers hundreds 
of dollars a year in energy bills every year. Promoting renewable 
energy and efficiency would also encourage innovation and new 
technology, reduce pollution, and decrease our reliance on foreign 
sources of energy.
    The public supports the ban on drilling off our coasts
    Concerns over environmental consequences of offshore oil and gas 
development have led Congress to impose restrictions on OCS activities 
in sensitive areas off the nation's coasts every year since 1981. These 
moratoria now protect the East and West Coasts of the U.S. and most of 
the eastern Gulf of Mexico. The moratoria reflect a clearly established 
consensus on the appropriateness of OCS activities in most areas of the 
country, and have been endorsed by an array of elected officials from 
all levels of government and diverse political persuasions, including 
former Presidents George H.W. Bush and Clinton, who are joined by our 
current President, George W. Bush.
    Conclusion
    All of America's coastal communities are being pressured to put 
their vibrant economies, heritage, and environmental resources at risk 
when nothing is being done on a national scale to conserve resources 
and seek alternative energy sources for this generation and generations 
to come.
    H.R. 4761 rescinds the entire congressional moratorium nationwide, 
permanently transfers authority over continued coastal protection away 
from the United States Congress and fragments the decision to coastal 
states on what is a National Public Policy Issue, and does this in a 
manner that makes the decision over where and when to drill offshore 
more readily influenced by the oil industry.
                                 ______
                                 
    The Chairman. Thank you. Mr. Jeff Angers, Executive 
Director of the Coastal Conservation Association.

         STATEMENT OF JEFF ANGERS, EXECUTIVE DIRECTOR, 
          COASTAL CONSERVATION ASSOCIATION, LOUISIANA

    Mr. Anger. Mr. Chairman and Members, my name is Jeff 
Angers. I am Executive Director and CEO of the Coastal 
Conservation Association of Louisiana. And I want to thank you, 
Mr. Chairman, for your leadership and the opportunity to 
address the Committee today.
    CCA Louisiana has some 35,000 members and volunteers 
statewide. Our membership has been active in promoting good 
stewardship of our state's marine resources since we were 
founded in 1983.
    Before I address the positive use of oil and gas rigs as 
artificial reefs, I would like to comment on Louisiana's coast, 
distinctly from Louisiana's coastal cities, which you have 
heard so much about.
    Coastal Louisiana is washing away, literally. H.R. 4761 
seeks to reverse that trend. Over the last 50 years, about 1500 
square miles of coastal Louisiana have washed away, and we 
continue to lose 25 to 30 square miles each year. As a matter 
of fact, we lost over 100 square miles just last year.
    This deteriorating condition is insidious. It is like a 
cancer that is eating away at the very fabric of our country, 
our homes, our businesses, our coast.
    In addition to the very obvious loss of real estate, we are 
also witnessing the destruction of the largest saltwater 
estuary in the country. The loss of these nursery grounds will 
affect fisheries for generations to come.
    After the terrible storms of 2005, much of the focus has 
been on rebuilding coastal cities and towns. H.R. 4761 brings 
the focus to rebuilding the coast itself.
    The principal elements of this bill help to facilitate the 
recovery of one of Louisiana's most important resources: its 
coast and its coastal habitat. Most of the fish species 
harvested in the Gulf of Mexico are estuarine dependent, and 
coastal habitat loss along the Gulf has a direct correlation to 
the health of fishery stocks.
    Louisiana is the sportsman's paradise because of the 
productivity of this habitat, which coexists with the oil and 
gas industry. The improvement of habitat and reversing the 
degradation of our wetlands provides a multiplicity of 
benefits, one of which is better stewardship of these nursery 
grounds.
    The oil and gas industry and the fishing industry, 
recreational and commercial, have enjoyed a simpatico 
relationship over the years. As we all know, the Gulf has 
successfully been the site of oil and gas extraction for the 
last 50 years.
    One of the unintended benefits of that extraction has been 
the creation of fisheries' habitat, particularly for reef fish. 
The most well-known reef fish in the Gulf is red snapper, a 
prized recreational fish and the primary target species of a 
number of charter boat fishermen in the Upper Gulf.
    The Members of this Committee are familiar with the ongoing 
efforts to restore and rebuild the red snapper fishery. What 
Members may not realize is the importance of the habitat 
created by the offshore oil and gas industry to that rebuilding 
process.
    Red snapper have been commercially harvested in the Gulf 
for over 100 years. Today's total allowable catch is about 9 
million pounds.
    Following World War II three events have occurred which 
impacted red snapper. The first was a dramatic expansion of the 
shrimp fleet, resulting in bycatch of red snapper. Second, an 
influx of people to coastal communities, many of whom were or 
were to become anglers. Both of these events increased the 
mortality of red snapper.
    The third event, which was more of a journey, has helped to 
actually increase the abundance of red snapper. The structures 
facilitating the extraction of oil and gas from the Gulf have 
helped to create that habitat, and better and more habitat has 
created more fish.
    Many of the rigs now in place are nearing either the end of 
their useful life or the end of their license period. When they 
were put in place, most companies and regulators thought well 
heads should be capped, structures removed, cleaned up and 
disposed of on shore.
    Section 21 of this bill includes another concept, the Rigs 
to Reefs Act, and we are pleased to endorse it. For a number of 
years CCA has supported the use of oil and gas rigs as 
artificial reefs. CCA members continue to be beneficiaries of 
rigs converted to reefs much closer to shore.
    The Rigs to Reefs Act will provide for new authority to 
expedite the removal of decommissioned oil and gas platforms, 
provide for certainty as to the liability for operation of any 
platforms transferred, and last allows for the opting out of 
Department of Interior regs by any adjacent state for 25 miles 
from their coast. On the whole, these measures will help 
facilitate the deployment of Rigs to Reefs.
    Many of the provisions of the Rigs to Reefs Program will be 
improvements to the present system of decommissioning and 
citing of potential reefs over other operations. Mariculture 
operations are not authorized in this bill. However, if they 
are authorized under other legislation, this bill would allow 
these structures to be used.
    Whatever the final use of these structures, we do want to 
remind the Committee that the existing fishery management 
structure will be involved in governance therewith.
    Mr. Chairman, that concludes my remarks, and I will be 
happy to take any questions.
    [The prepared statement of Mr. Angers follows:]

       Statement of Jefferson M. Angers, Executive Director/CEO, 
             Coastal Conservation Association of Louisiana

    Good morning Mr. Chairman. My name is Jeff Angers, and I am the 
Executive Director and CEO of the Coastal Conservation Association of 
Louisiana (CCA). I would like to thank the Chairman for this 
opportunity to address the Committee on issues near and dear to the 
hearts of our members and the citizens of Louisiana.
    CCA Louisiana has some 35,000 members and volunteers statewide. Our 
membership has been active in promoting good stewardship of marine 
resources since we were founded in 1983. Before I address the use of 
oil and gas rigs as artificial reefs, I'd like to comment on our coast 
as a distinct place.
    Coastal Louisiana is washing away, literally. H.R.4761 seeks to 
reverse that trend. Over the last 50 years, about 1,500 square miles of 
coastal Louisiana have washed away, and we continue to lose 25 square 
miles each year. Over 100 square miles lost in 2005. This deteriorating 
condition is insidious. It is like a cancer eating away at the very 
fabric of our country: our homes, our businesses, our coast.
    In addition to the very obvious loss of real estate, we are also 
witnessing the destruction of the largest saltwater estuary in the 
country. The loss of these nursery grounds will affect fisheries for 
generations.
    After the terrible storms of 2005, much of the focus has been on 
rebuilding coastal cities and towns. H.R.4761 brings the focus to 
rebuilding the coast.
    The principal elements of this bill help to facilitate the recovery 
of one of Louisiana's most important resources, its coast and coastal 
habitat. Most of the fish species harvested in the Gulf of Mexico are 
estuarine dependant. And coastal habitat loss along the Gulf has a 
direct correlation to the health of fishery stocks. Louisiana is the 
Sportsman's Paradise because of the productivity of this habitat, which 
coexists with oil and gas industry. Improvement of habitat and 
reversing the degradation of our wetlands provides a multiplicity of 
benefits, one of which is better stewardship of these nursery grounds.
    Louisiana's coast welcomes the help.
    As we all know, the Gulf of Mexico has successfully been the site 
of oil and gas extraction for the last 50 years. One of the unintended 
benefits of that extraction has been the creation of fisheries habitat, 
particularly for reef fish. The most well-known reef fish in the Gulf 
is red snapper, a prized recreational fish and the primary target 
species for a number of charter boat fishermen in the upper Gulf. The 
members of this committee are familiar with the ongoing efforts to 
restore and rebuild the red snapper fishery. What members may not 
realize is the importance of the habitat created by the offshore oil 
and gas industry to that rebuilding process.
    Red snapper have been commercially harvested in the upper Gulf for 
over 100 years. As early as the 1880s, there were federal research 
efforts to find harvestable quantities of red snapper. Today the total 
allowable catch for red snapper is about 9 million pounds in a fishery 
that is rebuilding from being overfished by the directed fishery and 
particularly by extensive bycatch from the shrimp fishery.
    After World War II, three events occurred which impacted red 
snapper. The first: a dramatic expansion of the shrimp fleet resulting 
in an incredible bycatch of snapper. Secondly, an influx of people to 
coastal communities, many of whom were--or were to become--anglers. 
Both of these events increased the mortality of red snapper. The third 
event (more of a journey) has helped increase the abundance of red 
snapper. The structures facilitating extraction of the oil and gas from 
the Gulf have created habitat. And better and more habitat has created 
more fish.
    Many of the rigs now in place are nearing either the end of their 
useful life or the end of their license period. When they were put in 
place, most companies and regulators thought well heads ought to be 
capped; structures removed; cleaned up, and disposed of on shore. 
Section 21 of this bill includes another concept: ``The Rigs to Reefs 
Act of 2005.'' And we are please to endorse it.
    For a number of years, CCA has supported the use of oil and gas 
rigs as artificial reefs. CCA members continue to be beneficiaries of 
rigs converted to reefs much closer to shore.
    Many scientists have studied the impact of this method of habitat 
enhancement to determine if it creates more fish or simply aggregates 
fish from surrounding habitat making them easier to catch. The debate 
for the most part seems to be endless, but the red snapper example 
seems to produce the most definitive long-term result. Yes, new habitat 
creates more fish. Sound fishery management is necessary to address the 
health of the entire stock, but more fish is still better than less. 
Artificial reefs are new habitat or continuing habitat, and we support 
their use inshore and off.
    ``The Rigs to Reef Act'' will provide for new authority to expedite 
the removal of the decommissioned oil and gas platforms, provide for 
certainty as to the liability for operation of any platforms 
transferred and lastly allows for the opting out of Department of 
Interior regulations by any adjacent state for 25 miles from their 
coast. On the whole these measures will help facilitate the deployment 
of rigs to reefs.
    Many of the provisions of the rigs to reef program will be 
improvements to the present system of decommissioning and citing of 
potential reefs. We would like to work with the Committee to ensure 
that the fishery management system now in place in the Gulf is included 
in determinations under this bill. The Louisiana Department of Wildlife 
and Fisheries, the Gulf States Marine Fishery Commission, the Gulf of 
Mexico Fisheries Management Council and the National Marine Fisheries 
Service all have responsibilities that will be impacted by the 
decisions made under this section. All of them have a positive role to 
play in the decisions made for citing of the decommissioned rigs and 
their permissible uses.
    I would be remiss if I did not note that one of those potential 
uses is highly controversial. Mariculture has the potential in 
connection with the decommissioned rigs to be commercially successful. 
As of today, however there is no comprehensive legislation addressing 
the activity beyond the territorial sea. Almost all states have 
regulations, but they are hardly uniform. The Administration has 
proposed a bill, which was introduced in the Senate, but no 
corresponding bill exists in the House. CCA would discourage the 
implementation of guidelines for the placement of decommissioned rigs, 
which would in effect authorize mariculture activities without 
corresponding environmental controls. We would be happy to work with 
the Committee on such a provision to address our concerns.
    In addition, we would like to gain a greater understanding of the 
effect of the election by an adjacent State to implement their own 
regulations for decommissioning and citing rather than the Department 
of Interior regulations. Would state regulations enhance the authority 
of any related activity within 25 miles of the coast or is the 
authority narrowly confined. If so, how? We would be happy to work with 
the Committee to form a better understanding of this section as well.
    Mr. Chairman, that concludes my testimony, and I would be happy to 
take questions.
                                 ______
                                 
    The Chairman. Thank you. Mr. Tom Fry, President of the 
National Ocean Industries Association.

               STATEMENT OF TOM FRY, PRESIDENT, 
             NATIONAL OCEAN INDUSTRIES ASSOCIATION

    Mr. Fry. Mr. Chairman, thank you very much for allowing me 
to come back and visit with this Committee again.
    I was asked today to speak about some of the technological 
advances that have taken place within the offshore oil and gas 
industry. The association that I am proud to serve represent 
all facets of the offshore oil and gas and renewable energy 
industry within this country. So we are interested not only in 
oil and gas, but also renewable energy and how that may well 
affect our energy supplies for the future.
    I would like to start by just asking you to imagine that 
you are 100 miles offshore in the Gulf of Mexico. You are on a 
drilling ship that is the size of a football field. You are 
there in a computer room, not what we used to see, a big old 
drilling room, but it is a room that looks like a computer 
room, and people have joysticks. And what they are doing is 
they are starting to put together pipe. And that pipe goes down 
into the water. And this water sometimes is as deep as two 
miles, over 10,000 feet.
    Now, while that driller is putting that pipe into the 
ground, there are remotely operated vehicles that are going up 
and down that pipe, looking at the joints, looking at the 
activity, making sure that everything is working as it should. 
So that is what happens first.
    Now, you have this drill ship out there. You are wondering 
how is it going to stay where it is supposed to be. Well, you 
have computers on there that are using GPS, and they are voting 
every half-second, three computers voting every half-second to 
determine where that ship should be positioned to keep it right 
over the drilling location.
    You get down to the drill floor. The first thing you do is 
put the drill bit into the ground. The drill bits are new, new 
technology, with new kinds of sensors, so that when you go 
through the ground or the crust of the earth, you can find, you 
can determine what you are going through, what kinds of 
sediment you are into, and whether or not you are finding 
hydrocarbons.
    But in addition to that, you are drilling in a very new 
kind of environment, because you are drilling with 20,000-pound 
pressures and 350-degree temperatures. So again, new 
technologies that have brought us a long way.
    While you are in the crust of the earth drilling, you can 
also drill sideways and down, and then even back up. New 
technologies that allow us to drill in new ways that we never 
even thought a good 15 or 20 years ago.
    In order to do this, you have to have lots of technical 
folks. And the interesting thing is you can sit in a virtual 
reality room in New Orleans or Houston and look at this 
activity taking place as it is occurring, and change your mind 
about how you are going to go about it based on the technology 
that is available. To do this may well cost you $100 million 
per well.
    Also imagine that when you are completing the well, that 
you are going to have robots down on the sea floor. And they 
are going to be connecting sea completions.
    Now, one of the concerns has always been blowouts. We used 
to have a blowout preventer up on the top of the platform. Now 
there is one there, there is one on the sea floor, and there is 
also one that is placed underground, so that we have redundant 
systems.
    Imagine that you could go and hook up wells to one 
production platform that are over 150 miles apart, lessening 
the footprint. And also imagine the fact that it may well cost 
you $2 billion to develop such a process.
    After the well is completed, the wells create an 
environment which becomes a living ecosystem for many sea 
critters. It provides wonderful fishing in the offshore, and 
also a habitat for all sorts of other marine animals, to 
include coral reefs.
    A safety record, imagine a safety record that is 70 percent 
better than all of industry or U.S. industry. Imagine a spill 
record that the Coast Guard says is 99.999 percent, or that the 
amount that is spilled is .001 percent. Imagine an industry 
that now rivals the advances that have been made in the space 
program in the last 20 years. And imagine also, with this 
record, that 85 percent of the area off the coast of the United 
States is not available for leasing.
    Mr. Chairman, given the opportunity, the oil and gas 
industry would like to be able to have additional opportunities 
to drill in areas that are currently under moratoria, to 
provide energy for this country and to provide jobs for this 
country.
    I look forward to your questions, Mr. Chairman.
    [The prepared statement of Mr. Fry follows:]

                   Statement of Tom Fry, President, 
                 National Ocean Industries Association

    Mr. Chairman and Members of the Committee, thank you for inviting 
me to speak before you today about the role of technology in the 
offshore oil and gas industry. My name is Tom Fry, and I am the 
President of the National Ocean Industries Association, which 
represents nearly 300 companies working to explore for and produce 
energy resources from the nation's Outer Continental Shelf (OCS) in an 
environmentally sensitive manner.
    Through the development and application of technology, the 
companies of the offshore industry continue to improve their ability to 
bring new supplies of oil and natural gas online. Over the last fifty 
years, these companies have learned how to operate in deeper and deeper 
waters and locate resources that were once not accessible. At the same 
time, the technological advances pioneered by these companies have 
allowed for less impact on the environment and a wise stewardship of 
the resources beneath the ocean.
    The United States' Outer Continental Shelf (OCS) is conservatively 
estimated by the Minerals Management Service to hold undiscovered 
technically recoverable resources of over 419 trillion cubic feet of 
natural gas and 86 billion barrels of oil.
    That's estimated to be enough natural gas to heat 100 million homes 
for 60 years, and enough oil to drive 85 million cars for 35 years or 
to replace current Persian Gulf imports for almost 60 years.
    In fact, there may be even more than that. In the parts of the Gulf 
of Mexico where we have been allowed to buy leases and explore, we have 
produced three times as much oil and natural gas as we once thought was 
there. In 1984, MMS estimated that the Gulf of Mexico held 6 billion 
barrels of oil and 60 trillion cubic feet of natural gas; yet, after 
producing steadily for 22 years, the Gulf is now estimated to have 45 
billion barrels of oil and 232 trillion cubic feet of gas remaining. 
The more we explore, the more we know. Imagine the potential of those 
places where exploration has been off-limits for over 25 years.
    These are significant resources that can be developed safely and 
that we ignore to our consumers' disadvantage. Yet today, more than 85 
percent of the nation's OCS around the lower 48 states is off limits to 
oil and gas exploration because of presidential withdrawals and 
congressional moratoria, even though over 7 billion barrels of oil has 
been produced from the OCS since 1985 with less than .001 percent 
seeping into the ocean from drilling and extraction.
A Source of Constant Technological Innovation
    Today's offshore technology allows us to produce more energy by 
reaching places that would never before have been possible. New records 
are always being set.
    Wells drilled on the Outer Continental Shelf of the Gulf of Mexico 
are typically considered ``deep'' when drilled below the depth of 
15,000 feet. The technology required to drill, complete and produce 
this type of well must overcome an environment of high pressure (in 
excess of 20,000 pounds per square inch) and high temperature 
(exceeding 350+F). Deep wells such as this are expensive, costing as 
much as $100 million each.
    After coming from the ground, the oil or natural gas then travels 
through a pipeline where the temperature is just above freezing and the 
formation of ice crystals threatens to block the flow unless constantly 
supervised and adjusted. At depths far beyond where humans can travel, 
sometimes as much as 5,000 feet or more below the surface, Remotely-
Operated Vehicles (ROVs) are used to perform maintenance and repairs.
    Transocean's Discoverer Deep Seas set a world record in 2003 by 
drilling a well in water depths exceeding 10,000 feet. That's the 
equivalent of successfully navigating nearly two miles down from the 
surface of the ocean before even beginning to drill.
    All this is possible with fewer facilities and less impact--even 
visual--than ever before. For example, multiple subsea wells can be 
connected by tiebacks to a single platform over great distances. Such 
an installation, if overlaid on a map of the Washington, DC area, would 
reach as far north as Columbia, MD and as far South as Mechanicsville, 
VA, and connect to a platform one mile above the city.
    This cutting edge technology doesn't come cheap, however. The total 
cost of this type of project, including wells drilled and the subsea 
connection system, will often exceed $2 billion.
An Exemplary Record of Environmental Protection and Stewardship
    The outstanding environmental record of U.S. companies operating 
offshore around the world is well recognized as ``technologies are 
allowing the offshore industry to venture into deeper waters than ever 
before, while protecting marine life and subsea habitats'' 
1--even in the most challenging areas such as the Arctic and 
North Sea and in otherwise catastrophic weather.
---------------------------------------------------------------------------
    \1\ Clinton Administration DOE report: Environmental Benefits of 
Advanced Oil and Gas Exploration and Production Technology, 1999.
---------------------------------------------------------------------------
    Off the part of our coast in which exploration and production is 
allowed, the safety of our operations was recently demonstrated in the 
most severe hurricane situations. Though many of the exploration and 
production facilities in the Gulf of Mexico were severely damaged or 
destroyed, the high-tech safety and environmental protection equipment 
and processes worked.
    Here's a brief look at why we can be proud of our environmental 
record.
    Careful scientific environmental study and operational planning 
always precede such activity. For example, our offshore geophysical 
companies, which conduct seismic work that allows us to ``see'' 
geologic structures beneath the seabed, have worked with the National 
Marine Fisheries Service and the Minerals Management Service to 
implement many procedures and practices designed to avoid harm to 
marine mammals, including:
      Monitoring for the presence of animals of concern
      Shutdown or no start-up when they are too close
      Slow, gradual ramp-up of operations just in case
    During exploration, jack-up or semi-submersible rigs and drill 
ships have multiple systems and physical barriers to ensure that no 
spill occurs. Most important, along with multiple, redundant remote 
control systems, are ``blowout preventers'' which for deepwater wells 
are installed on the well at the seabed and are capable of immediate 
closure in event of any emergency.
    Once a field has been discovered and is in the development or 
production stage, completed wells flow through permanent ``Christmas 
tree'' systems--increasingly on the seabed for subsea developments as 
opposed to on a surface facility--of multiple valves to control oil and 
gas flow. These may be operated from tens or even a hundred miles away 
with multiple, redundant communication systems.
    Finally, a ``downhole safety valve'' is installed in the well 
itself below the seabed to provide an added protection barrier in the 
event of some catastrophic event damaging the Christmas tree.
    As a result of these safeguards, the offshore oil and gas industry 
has a laudable environmental record.
[GRAPHIC] [TIFF OMITTED] T8226.001


    Further proof of the safety of today's offshore oil and natural gas 
production comes from the 2002 National Academy of Sciences Report 
``Oil in the Sea III,'' which finds that although the amount of oil 
produced and transported on the sea continues to rise, improved 
production technology and safety training of personnel have 
significantly reduced both blowouts and daily operational spills. In 
fact, the report states, accidental spills from platforms represent 
less than 1 percent of petroleum inputs in U.S. waters.
    The industry remains under intense scrutiny by its two primary 
regulators--the MMS and the U.S. Coast Guard--as well as a host of 
other governmental agencies with oversight responsibilities such as the 
Environmental Protection Agency and the National Oceanic and 
Atmospheric Administration. However, it is the MMS that regulates all 
exploration, development, and production activities on about 8,000 
active leases to ensure that these activities are conducted safely and 
in an environmentally sound manner. The MMS reviews and approves 
industry exploration and development plans before allowing any 
operations to commence, monitors all lease operations to ensure that 
industry is in compliance with relevant requirements, and conducts 
scheduled and unscheduled inspections. In 1997, MMS conducted over 
12,000 inspections of OCS facilities.
    To summarize, the latest technology and sound management practices 
not only allow for the continued production of domestic energy 
resources, but they have also made the U.S. offshore industry the envy 
of the world. Its environmental record is superb:
      Since 1985, more than 7 billion barrels of oil were 
produced in federal offshore waters with less than 0.001 percent 
spilled--a 99.999 percent record for clean operations.
      There has not been an incident involving a significant 
oil spill from a U.S. exploration and production platform in 25 years 
(since 1980).
      Government statistics show that the injury and illness 
rate for offshore workers is about 70 percent lower than for all of 
private industry.
      Today's modern technology includes such environmental 
protections as automatic subsea well shut-in devices, including sub-
seabed safety valves.
      30 percent of the 15 million fish caught by recreational 
fishermen annually off the coasts of Texas and Louisiana are caught 
near platforms.
    As mentioned earlier, the industry's performance during last 
summer's hurricanes, which moved through a core area of offshore 
operations, is instructive. While it is true that 115 platforms were 
destroyed, the storm threatened over 3,000 facilities, the vast 
majority of which survived. Despite sustained winds reaching 170 miles 
per hour and towering waves and the resulting destruction of numerous 
platforms and rigs, there was no significant spill from production 
wells and no injury or loss of life among the 25,000-30,000 workers who 
are offshore at any given time.
    Because today's weather forecasting capabilities provide ample 
lead-time as storms approach, operators are able to follow routine 
shutdown and evacuation procedures. In the case of the Katrina and Rita 
hurricanes, 100% of oil production was shut-in ahead of the storms.
Conclusion
    The offshore oil and natural gas industry will continue to make 
advances in the development of new technologies, and these advances 
will allow us to keep bringing reliable supplies of energy to market 
while also ensuring the safe and efficient management of the nation's 
energy resources.
    Thank you for allowing me to be here with you today.
                                 ______
                                 
    The Chairman. Thank you. Dr. Enid Sisskin, Director of the 
Gulf Coast Environmental Defense.

             STATEMENT OF ENID SISSKIN, DIRECTOR, 
                GULF COAST ENVIRONMENTAL DEFENSE

    Ms. Sisskin. Mr. Chairman, Members of the Committee, thank 
you for this opportunity.
    I live in Gulf Breeze, Florida with my husband and two 
children within site of the Gulf of Mexico. I have been a 
member of Gulf Coast Environmental Defense, a grassroots all-
volunteer environmental education organization, since we moved 
there 13 years ago.
    The EPA has said that water quality in the Gulf of Mexico 
is deteriorating. Seagrass beds are dying, fish stocks are 
declining, the numbers of sea turtles, marine mammals, and 
coastal birds are decreasing, and coastal wetlands and 
estuaries are disappearing.
    A report by the Center for Health and Global Environment 
said that the Gulf of Mexico is more stressed than previously 
thought, and the health of the people and the economy of the 
coastal communities are at risk.
    It would be ill-advised at best to add more and more 
pollution to an already-stressed system, particularly one that 
forms the basis of the economy of many of the Gulf States. In 
fact, environmental impact statements for lease sales and 
drilling permits, the MMS and EPA admit concern about the long-
term effects of the wastes that would be discharged into the 
Gulf by drilling rigs.
    In spite of some of the testimony you have heard, drilling, 
whether for oil or natural gas, is a dirty, polluting business. 
Each rig discharges drilling muds, cuttings, and produced 
waters, as well as producing trash. These waste discharges 
affect biological communities. Effects include elimination and 
inhibited growth of seagrasses, declined species abundance, 
altered community structure, and decreased coral coverage. 
Fish, marine mammals, sea turtles, and birds will also be 
expected to be impacted by the OCS operations.
    EPA estimates the annual discharge of contaminants in 
drilling muds, cuttings, and produced waters from the OCS 
industry to be 1.7 billion pounds. And they say the extent of 
long-term impacts cannot be calculated.
    Another potential impact is from spills. Yes, we have heard 
that there have hardly been any spills, significant spills in 
the Gulf of Mexico. Just a year ago almost to this day, a spill 
from an Amerada Hess drilling platform washed up on the Breton 
National Wildlife Refuge oiling more than 800 pelicans in the 
rookery, and killing almost 500 of them.
    According to the MMS, due to Hurricanes Katrina and Rita, 
113 drilling platforms were lost, and 140 hurricane-related oil 
condensate and chemical spills were reported. Six of at least 
1,000 barrels, that is 42,000 gallons, the largest being a 
condensate spill of over 152,000 gallons.
    Elevated petroleum hydrocarbons in the water column could 
be gone as early as six months after a spill, but residual 
water quality effects could occur as long as two years. If a 
spill were to reach our sugar-white beaches by a few months to 
two years after cleanup, the beach would return to 
approximately pre-disturbance conditions, although some oil 
would persist in beach sands and would be released 
periodically. During hot, sunny days tarballs could liquefy and 
cause a seep to the sand surface.
    Any decrease in water quality, increase in trash, or an oil 
spill will cause catastrophic effects on our beaches and our 
economy, just recovering from the last two hurricane seasons. 
That is why the Pensacola Beach Chamber of Commerce, as well as 
26 Florida cities and counties, have all come out strongly 
against drilling.
    The bill we are here to discuss will lead to significant 
adverse impacts to coastal communities. For 25 years the OCS 
legislative moratorium and the longstanding Presidential OCS 
withdrawals have protected the coast. They represent a 
bipartisan, bicoastal consensus, and provide important coastal 
protection.
    The OCS legislative moratorium was once again included in 
the Fiscal Year 2007 White House budget this January, and 
continues to enjoy the support of the President, and was just 
sustained on the House floor last month. H.R. 4761 would 
immediately rescind the moratoria and reverse the Presidential 
OCS withdrawals off the Florida Gulf Coast.
    There is no justification nor any public mandate for this 
attack on these popular protections for America's most 
sensitive coastal waters. There is also no need to grant states 
any additional veto authority over the renewal of the 
legislative OCS moratorium each year beyond the existing 
ability that each state already has to opt out, through the 
efforts of their own Congressional delegation.
    H.R. 4761 pits one state against adjacent states, who may 
want to keep their coast and fisheries clean and unpolluted, 
and punish the states which choose to protect their coastal-
dependent economies.
    The EPA and MMS agree that coastal states that have long 
suffered damage to the coastal zone as a result of the adverse 
impacts of Federal offshore drilling have a right to receive a 
fair and equitable share of Federal receipts derived from that 
income. Money from activities that cause a damage should be 
clearly used to fix a damage, not to bribe states to accept 
more and closer drilling, or to punish states that make the 
wise choice to continue to protect their coasts from the 
substantial adverse impacts.
    Standards for the use of the money by states and localities 
are an absolute necessity, but lacking in the bill. What is 
being promoted is a new category. Gas-only offshore leasing is 
unmanageable, ill-conceived, and not practical.
    Further, most of the adverse impacts of offshore gas 
drilling are virtually identical to offshore oil drilling, with 
the sole exception of the probability of a large oil spill. 
Liquid gas condensate is highly toxic to virtually all marine 
life on contact. Routine pollution occurs from either gas rigs 
or oil rigs. The worst part of this is it is unnecessary when 
there are faster, cheaper, and cleaner alternatives.
    Our country contains less than 5 percent of the world's gas 
and oil reserves, but uses 25 percent of its energy. And we 
cannot drill our way to energy independence. It is only through 
conservation, increased efficiency, and use of alternative 
renewable energy resources that we will every be self-
sufficient.
    Unfortunately, the pollution and potential damage from 
spills and accidents don't respect safe boundaries. Bringing 
rigs up to a line or an arbitrary distance on a map won't stop 
the damage that will be caused by drilling to Florida's coastal 
communities.
    The forecasters are predicting another decade of active 
hurricane seasons, and we on the Gulf Coast, as well as 
communities on the East Coast, can expect storms with 
potentially severe damage to our environment and economies. We 
certainly don't need to add the pollution from oil and gas 
operations to compound what nature will send us.
    [The prepared statement of Ms. Sisskin follows:]

              Statement of Enid Sisskin, Ph.D., Director, 
                    Gulf Coast Environmental Defense

    Minerals Management Service and U.S. Environmental Protection 
Agency documents acknowledge that the Gulf Coast and the Gulf of Mexico 
are already experiencing severe environmental stress, and have been for 
a number of years. Large areas experience over-enrichment, low 
dissolved oxygen, toxin and pesticide contamination, shellfish ground 
closures, and wetland loss. Degradation of water quality is expected to 
continue due to contamination by discharges and spills, due to 
eutrophication of waterbodies, and due to hydrologic modification. 
Contamination coming from point and nonpoint sources and accidental 
spills entering the water system from rural and urban sources can be 
both localized and pervasive. Sixteen-hundred contaminants have been 
measured in the Gulf's waters by USEPA. These contaminants include 
hazardous and toxic wastes, petroleum and petroleum products, 
pesticides, synthetic organic compounds such as dioxin, and metal and 
inorganic chemicals such as cadmium and mercury. The USEPA goes even 
further, saying, ``Water quality is deteriorating, seagrass beds are 
dying, fish stocks are declining, the numbers of sea turtles, marine 
mammals, and coastal birds are decreasing and coastal wetlands and 
estuaries are disappearing.'' Another report, this one by the Center 
for Health and Global Environment, in 1998, also said that the Gulf of 
Mexico is more stressed than previously thought, and the health of the 
people and the economy of the coastal communities are at risk. These 
declines are for the most part, caused by humans. In Environmental 
Impact Statements for lease sales and drilling permits, the MMS and 
USEPA admit concern about the long-term and regional effects of some of 
the wastes that would be discharged into the Gulf of Mexico by drilling 
rigs.
    In spite of some of the testimony you've heard, drilling, whether 
for oil or natural gas is a dirty, polluting business. Each rig 
discharges drilling muds and cuttings and produced water, as well as 
producing trash. Again, according to the environmental documents, these 
waste discharges could affect biological communities by smothering 
living organisms or through toxicity, causing slow growth, decreased 
species abundance, or altered reproduction. Specifically, discharged 
muds have been found to cause heavy metal, mercury and cadmium, 
sediment contamination. Documented biological effects on benthic 
organisms from drilling discharges include elimination and inhibited 
growth of seagrasses, declined abundance in species, altered community 
structure, and decreased coral coverage. Localized effects on benthic 
marine organisms in proximity to OCS drilling sites have been measured, 
causing altered community structure, and changes in abundance lasting 
for ten years, or in some cases, permanently. Fish, marine mammals, sea 
turtles, and coastal and marine birds will be expected to be impacted 
by the drilling discharges, pollutants and trash from OCS operations. 
Any pollution in the effluent could poison and kill or debilitate these 
organisms and adversely affect the food chains and other key elements 
of the Gulf ecosystem. In the case of endangered sea turtles, any loss 
of individuals could impact species survival, again according to the 
USEPA. In addition, the actual burial of pipelines would probably cause 
irreversible structural impacts on the seafloor, particularly in areas 
where hard substrates would be encountered.
    The cumulative impacts of the discharged muds and cuttings on the 
live bottoms of the Eastern Gulf would add to long-term regional 
offshore water quality degradation. USEPA estimates the annual 
discharge of contaminants in drilling muds and cuttings over the entire 
northern Gulf to be 748,000 tons. The regional impacts of the 
discharged drilling muds and cuttings are unknown. According to the 
EPA, averaging estimates on annual inputs, drilling muds and cuttings 
and produced water discharges from the entire OCS oil industry would 
contribute about 1.65 billion pounds per year and 44 million pounds per 
year of contaminants. According to the EPA, full determination of long-
term impacts can not be calculated.
    Another potential impact is from spills. There's a new urban myth--
that there have not been any spills from drilling rigs in years. 
Unfortunately, that's just not true. Just a year ago, almost to the 
day, a 560 gallon spill from an Amerada Hess drilling platform washed 
up on the Breton National Wildlife Refuge oiling more than 800 pelicans 
in the rookery and killing almost 500 of them. According to the MMS, 
due to Hurricanes Katrina and Rita, 113 drilling platforms were lost 
and 146 hurricane-related oil/condensate/chemical spills were reported, 
six of at least 1,000 barrels (42,000 gal) were identified, the largest 
being 3,625 barrels (152,250 gal). Based on historical spill events, it 
is expected that elevated concentrations of petroleum hydrocarbons 
measurable in the water column would be gone as early as 6 months after 
the spill event, but residual water quality effects could occur as long 
as two years after the spill. If a spill were to reach our sugar white 
beaches, within a few months to 2 years after cleanup, although 
disturbed beach configuration would adjust to approximately 
predisturbance conditions, some oil that penetrated to depths beneath 
the reach of the cleanup methods would persist in beach sands and could 
be released periodically when storms and high tides resuspend or flush 
through beach sediments. During hot, sunny days, tarballs buried near 
the surface of the beach sand could liquefy and cause a seep to the 
sand surface.
    Any further decrease in water quality, increase in trash, or oil 
spills will have catastrophic effects on our beaches and our economy, 
just recovering from the last two hurricane seasons. That's why the 
Pensacola Beach Chamber of Commerce as well as 26 Florida cities and 
counties have all come out strongly against drilling. These cities and 
counties represent more than 8 million Floridians who are aware that 
our economy depends on a healthy environment.
    The bill we are here to discuss will lead to significant adverse 
impacts to the coastal communities. For 25 years, the OCS Legislative 
Moratorium and the longstanding Presidential OCS Withdrawals, have 
protected the coasts. They represent a bipartisan, bicoastal consensus 
and provide the most important cornerstone of U.S. coastal protection. 
The OCS Legislative Moratorium was once again included in the FY 07 
White House Budget Document this January, continues to enjoy the 
support of the President, and was just sustained on the House floor 
last month. H.R. 4761 would immediately rescind the Legislative OCS 
Moratorium nationwide, in all U.S. coastal waters for both oil and gas 
drilling, and would reverse the Presidential OCS Withdrawals off of the 
Florida Gulf Coast. There is no justification, nor any public mandate, 
for this attack by H.R. 4761 on these popular protections for America's 
most sensitive coastal waters.
    There is also no need to grant states any additional ``veto 
authority'' over the renewal of the Legislative OCS Moratorium each 
year beyond the clear existing ability that each state obviously 
already has to ``opt-out'' through the efforts of their own 
congressional delegation. The House delegation from any state could, 
right now, openly work to exempt their own state's coastline from 
continued protection in any given year. H.R. 4761 permanently writes 
all Members of Congress out of the decision making process as to how, 
where, and when expanded offshore drilling takes place off of their 
state. H.R. 4761 unnecessarily complicates the existing state role, in 
fact, and entangles the Governor and the state legislature of a coastal 
state in an onerous and time-consuming process that repeatedly imposes 
an unnecessarily high burden of proof, and very tight deadlines that 
are unlikely to be achievable, upon the Governor and state legislature 
of each state. State legislatures are not in session year-round in most 
states, making gaining concurrence at multiple junctures between a 
Governor and a state legislature unnecessarily complicated at best, and 
often virtually impossible. H.R. 4761 pits one state against adjacent 
states who may want to keep their coast and fisheries clean and 
unpolluted, and punishes states who choose to protect their coastal-
dependent economies with continued legislative measures. States rights 
are seriously eroded in other ways, as the siting of transportation 
corridors through state waters, for subsea pipelines or tankering of 
crude oil from offshore rigs, would be pre-empted by the federal 
government in provisions contained in H.R. 4761.
    As previously stated, the EPA and MMS agree that coastal states 
that have long suffered damage to their coastal zone as a direct result 
of the adverse impacts of federal offshore oil and gas drilling have a 
legitimate right to receive a fair and equitable share of federal 
receipts derived from federal offshore lease bonus bids and rents and 
royalties. Scientific studies tell us that extraction of oil and gas 
has caused significant subsidence (sinking) of coastal wetlands along 
an extensive portion of the Gulf Coast. The oil industry has cut deep 
channels for pipelines and for drill barge and vessel access to 
wellheads and other petroleum facilities, while sequential tropical 
storms have further eroded important coastal wetlands by scouring out 
these dredged channels and thus made coastlines even more vulnerable to 
storm damage. Money from the industrial activities that caused that 
damage should clearly be channeled to fix the damage, however, there is 
no legitimate justification for arbitrarily designing an allocation 
formula for directing federal OCS receipts to states in a manner that 
bribes states to accept new federal offshore drilling and more drilling 
closer to shore, or that punishes all states that make the legitimate 
choice to continue to protect their coasts from these same kinds of 
massive adverse impacts. It is obvious that all federal OCS receipts 
directed to states and localities should be utilized to mitigate damage 
from OCS activities, not to construct additional damaging 
infrastructure to attract even more drilling or to build inappropriate 
and harmful projects that further degrade the coastal zone, so strong 
standards for the use of the money by states and localities is an 
absolute necessity, but is lacking in H.R. 4761.
    What is being promoted as a new category of so-called ``gas-only'' 
offshore leasing is unmanageable and ill conceived, and H.R. 4761 
grants undue discretion to the Secretary of the Interior in deciding 
what combination of gas and liquid gas condensate would be deemed a 
``gas-only'' lease. To provide a Governor and a state legislature with 
only 180 days in which to react to an ``accidental'' discovery of crude 
oil on what was originally promoted as a natural gas lease, or else the 
``gas only'' lease would automatically become an oil and gas lease, is 
simply not practical, when most state legislatures are not in session 
throughout the year. Further, most of the adverse impacts of offshore 
gas drilling operations are virtually identical to offshore oil 
drilling operations, with the sole exception of the probability of 
creating a large oil spill. Liquid gas condensate is highly toxic to 
virtually all marine life on contact. Routine ocean dumping of spent 
drilling muds containing cadmium and mercury, random discharges of 
``produced waters'' sometimes containing radium, and daily discharge of 
toxic hydrocarbons like benzene, toluene, and Polycyclic Aromatic 
Hydrocarbons (PAH compounds) occurs from either gas rigs or oil rigs.
    The worst part of this it is unnecessary when there are faster, 
cheaper and cleaner alternatives. Our country contains less than 5% of 
the world's gas and oil reserves and uses 25% of the world's petroleum. 
We cannot drill our way to energy independence. It's only through 
conservation, increased efficiency, and use of a combination of 
alternative, renewable energy sources that we'll ever be self 
sufficient.
    Unfortunately, the routine water and air pollution and potential 
damage from spills and accidents don't respect state boundaries. The 
Gulf is already stressed, and bringing rigs up to a line or an 
arbitrary distance on a map, won't stop damage that will be caused by 
drilling to Florida's coastal communities. The forecasters are 
predicting another decade of active hurricane seasons, and we on the 
Gulf Coast, as well as communities along the East Coast, can expect 
storms with potentially severe damage to our environment and economies. 
We certainly don't need to add the pollution from oil and gas 
operations to compound what nature will send us.
                                 ______
                                 
    The Chairman. Thank you. Mr. Jindal.
    Mr. Jindal. Thank you, Mr. Chairman. I thank the witnesses 
for their testimony.
    Jeff, I have a couple of questions for you. In the 
testimony you heard from Mr. Cleveland before he had to leave, 
he noted in his testimony energy production activities in 
Wyoming coexist with wildlife, and that a state doesn't have to 
choose one over the other.
    In Louisiana we have seen evidence that rigs off of our 
coast have provided some of the most fertile grounds for 
aquatic life, and have spawned lush marine habitats. I have 
been told in one MMS study they found that 22 percent of the 
recreational fishing trips, 94 percent of the dive trips in the 
Gulf, from Alabama to Texas, are taken within 300 feet of an 
oil or gas structure or an artificial reef created from these 
structures.
    I guess I am asking you, based on your knowledge and 
experience, do you agree with the order of magnitude of those 
numbers? Is it possible for you to quantify the ecological 
benefits of the Rigs to Reefs Provision in this bill, and the 
positive impacts it might have on fostering marine life out in 
the Gulf, especially as it relates to Louisiana?
    Mr. Anger. Thank you, Congressman Jindal. There is no 
question that when a fisherman is fishing in the Gulf, he is 
typically, if he is fishing for reef fish, not going to be 
fishing in the vast open waters. He is going to be looking for 
structure.
    We have great practical experience in the Gulf that we 
catch fish at rigs. We catch more fish at rigs that have been 
converted to reefs. And the nation's foremost expert, as a 
matter of fact, Dr. Bob Shouppe, who is the Chair at the 
University of South Alabama, is the nation's foremost expert on 
the conversion of rigs to reefs.
    Many scientists have studied the impact of this method of 
habitat enhancement to determine if it creates more fish, or if 
it just encourages the aggregation of fish that happen to be in 
the surrounding area. The red snapper example is best, and 
seems to produce the most long-term definitive benefit.
    Yes, habitat creates more fish. Sound fishery management is 
still necessary to address the health of the entire stock. But 
as a fisherman, more fish is better than less fish. Artificial 
reefs are new habitat or continuing habitat, and we support 
their use in shore and off. And our members benefit from them, 
and the general public benefits from them universally.
    Mr. Jindal. Thank you, Jeff. Mr. Fry, I have a question for 
you. We heard in testimony that between 1980 and 1999 there 
were 3 million gallons of oil spilled as a result of oil and 
gas drilling. I am told that MMS estimates that 1,000 barrels 
naturally seep into the ocean every day; that would be about, 
just to do the math, 7.3 million barrels, or 306 million 
gallons, during the same time. I will repeat that: 3 million 
barrels, 306 million gallons naturally seeped during that same 
time period.
    Could you comment on the newest technology? Do you think 
that technology has advanced to the point that oil spills don't 
pose the risks that they did maybe several years ago, from 
decades ago?
    Mr. Fry. Certainly with the technological advances that 
have taken place, we have reduced the opportunity for and the 
risk of oil spills.
    I think you are referring probably to the study done by the 
National Academy of Sciences, wherein, using percentage figures 
rather than gross figures, two thirds of the oil that is in the 
sea comes from natural seeps. You can see it. That is how 
people found the oil that is offshore California, Santa 
Barbara, because there was oil on the shoreline, and said oh, 
there must be some oil down there, let us drill for it. So that 
is where most of the oil in the sea comes from.
    The second place, of the remaining portion, you take two 
thirds out, another two thirds of what remains is from runoff. 
It is runoff from people changing the oil in their car, it is 
runoff from agricultural activity that comes down the 
Mississippi or other rivers.
    One percent or less than 1 percent of the oil that is in 
U.S. waters comes from drilling operations.
    Mr. Jindal. I have one final question. Dr. Sisskin, I 
suspect you and I are going to disagree about a couple of 
things. But I see that historically you have supported 100-mile 
leasing moratoria, a moratorium around Florida.
    I am trying to understand why you oppose our legislation if 
it gives the people of Florida the opportunity to impose a 125-
mile moratorium. And I know we don't have a lot of time, and I 
apologize for that. But could you explain to me, why would you 
oppose giving the people of Florida the power to control 125 
miles from their coast when they don't have that power today?
    Ms. Sisskin. Well, part of it would be because it would be 
pitting one state against the other, bribing states to accept 
more drilling closer, and setting up a cumbersome process where 
the Governor and the legislator would have to meet to renew in 
incremental amounts, and do this on a regular basis.
    We believe that if the state does not want to have 
drilling, they can opt out in a dear Member letter. They can 
say that they don't want to be in the moratorium.
    And we actually have not, my group itself has not agreed 
that 100 miles is good. I think at this point with the Gulf of 
Mexico, we should be weaning away significantly from drilling 
anywhere in the Gulf of Mexico. We should be having basically a 
Manhattan Project to take the money that we are giving to the 
fossil fuel industry, and get alternatives, more conservation, 
give major tax breaks for conservation. We should be doing what 
we can do right now.
    We can reduce our dependence on foreign oil immediately, 
rather than in a 10-year time span that it would take to get 
all this drilling done, by just increasing conservation 
efficiency and start relying on more alternative and renewable 
sources. Countries in Europe are doing it all the time.
    Mr. Jindal. I guess I am confused. I mean, off your web 
page I have a document in front of me I will be happy to share 
with you that says that the Gulf Coast Environmental Defense 
Fund and another group support a 100-mile buffer zone for the 
entire State of Florida.
    Ms. Sisskin. That is not our web page. So I wish you would 
show it to me.
    Mr. Jindal. I will be happy to do that after the testimony. 
Thank you very much for being here today.
    In closing, Mr. Chairman, I certainly agree that we need to 
be pursuing conservation alternative to energy. I certainly 
hope your group is in support of a variety, a full range of 
alternatives, whether it is nuclear power, whether it is wind 
power, whether it is other renewable powers by diesel, ethanol.
    However, I would certainly like to suggest that in the near 
future we are going to continue to be dependent on energy taken 
out of the Gulf Coast. And I think it is to all of our benefit 
that we manage that responsibly, and we give states ultimately 
the decision of what happens off their coasts.
    But thank you for your testimony. Thank you, Mr. Chairman, 
I yield back.
    The Chairman. Mr. Melancon.
    Mr. Melancon. Thank you, Mr. Chairman. Jeff, let me ask a 
question, because this came to my attention yesterday. On the 
Rigs to Reefs, there are reef areas where they are depositing 
the rigs that the oil companies want to take down. And I am 
understanding that there is a move to try and just knock them 
down where they are, rather than put them into the reef areas. 
Have you heard anything about that? I mean, that is something I 
just heard yesterday, and it is from since the storm, I 
understand.
    Mr. Anger. No, sir, I am not familiar with it. But you 
know, the concern, we do continue to have the concern about 
them removing some of the platforms where we have had habitat 
built up that we would like to figure out a way to retain. And 
that is one of the great things that this Act might do for us.
    Whether they are tipped over in place or moved to another 
spot, we would just like to keep the structure out there.
    Mr. Melancon. My only concern is that the navigational 
hazards that are out there, especially when you get into the 
shallow waters.
    Mr. Anger. Yes, sir.
    Mr. Melancon. Ms. Edwards, you made a statement, I think, 
and correct me if I am wrong, that it is proven that offshore 
drilling is environmentally bad, or something similar to that.
    Ms. McCormick. Ms. McCormick. I think you said Ms. Edwards.
    Mr. Melancon. Ms. McCormick, I am sorry, yes.
    Ms. McCormick. That is fine. That drilling is bad?
    Mr. Melancon. Yes.
    Ms. McCormick. Yes, I did make that statement.
    Mr. Melancon. Environmentally bad? Is there any numbers 
anywhere that we could put our hands on that show the 
deterioration due strictly to the offshore drilling?
    Ms. McCormick. Yes, sir, I can certainly get some 
information to you and some facts to you. Absolutely.
    Mr. Melancon. I would like to see that. You know, one of 
the things--and of course, I have always kind of had in my 
mind--I wasn't sure about the global warming, but now that I 
have seen the enormity and the locations of different weather 
patterns throughout the United States that are just not the 
norm. I am 58 years old, and it is nowhere close to norm. I 
have become pretty convinced that the global warming is a 
reality, or I think it is something we need to look at.
    And I agree with Mr. Jindal, we need to conserve, we need 
to do those kind of things, find additional sources of 
renewable energy.
    But in the meantime, we have to do something to make sure 
that our jobs, industry, and everything else doesn't go away. 
Because it doesn't do us a bit of good if people don't have 
work, or they are all leaving this country. I mean, sometimes I 
wish I didn't have neighbors, too. But at the same time, I 
think they have as many rights.
    What I have seen in the Gulf Coast, and as I have told 
Representative Putnam not long ago, he caught a big shark and 
they were all big smiles and happy about it. And I invited him 
to come over to Louisiana and we would catch him some fish that 
he could eat, and catch a whole bunch of them. It wasn't going 
to be just one fish and it is over.
    You know, the estuaries of the coastal wetlands, which is 
what the bills and the revenue sharing is all about, is to 
rebuild what is the biggest or largest and most productive 
wetlands in the United States, and to try and start saving 
Louisiana.
    You know, thousands upon thousands of years ago, Cape 
Girardeau was where the coast was. And the government, after 
the floods of 1927, decided they needed to build levees to 
protect all the people in central, western, northwestern, and 
east central United States. And the problem that left us with 
was all that sediment that kept our wetlands building is gone, 
and it goes off into the Continental Shelf.
    At the same time that I support drilling, I feel very, very 
strongly, significantly and enormously strongly, about the fact 
that we are not looking at what we have done to the coast, to 
the Gulf Coast. And we need fuel, and we need the energy. And 
if it is done as environmentally friendly, then what do we do 
if we don't drill? Either of you ladies? What do we do for 
energy?
    Ms. McCormick. Well, part of the problem is lack of a 
comprehensive energy policy that we have not had for years and 
years and years. Our policy has been to stick another hole in 
the ground and pull up some more fossil fuel.
    We need to immediately, immediately--I mean, right now we 
have no alternatives, you are right. We can't tomorrow stop 
drilling. But we can tomorrow put a bill in front of the 
Congress that gets us a rational energy policy, one that 
subsidizes significantly conservation. Get the cafe standards 
of automobiles up there. Just raising them to 40 miles per 
gallon could do away with most of our imported, or needs for 
imported oil.
    We need to be working diligently right now to get 
alternatives out there. I mean, you have people, you are 
talking about engineers, have them working on alternative 
fuels.
    The problem is Europe is doing that right now. Germany and 
Denmark are getting up to about 35 percent of their energy 
needs from wind power. There are countries in Europe who are 
getting it from all sorts of alternatives. When I was 
researching a different talk I was giving, I was amazed at the 
alternatives I had never even heard of.
    But we are going to be a debtor nation again when we have 
to buy the technology from other nations when they figure out 
how to get alternative fuels to be both cost-efficient, as many 
of them are right now, and to substitute for the fuels we are 
using.
    Yes, in the short term we are going to have to keep doing 
what we are doing. But we have to turn it around and seriously 
start looking to wean ourselves away from fossil fuel.
    Mr. Melancon. Mr. Chairman, could I ask for a minute or two 
extra?
    I have been to Europe; I know what the price of gas is over 
there. The natural gas is cheaper, and they use quite a bit of 
it. But their gasoline isn't so. They were forced to conserve, 
and I think we are going to be forced to conserve if we don't 
start paying attention.
    As far as getting a policy out of the Congress, Congress, 
probably as most of you know, works a lot slower than anything 
else. And even if you did a bill tomorrow, it would take a 
number of years to get that conversion. Even if we did a bill 
for outer Continental Shelf drilling, it is going to take 
several years before we get out there and start producing.
    In the meantime, our dependency on foreign oil and foreign 
gas is ever-growing. And I don't know if you were in earlier. I 
represent that south Louisiana area. And the jobs that used to 
be at those fertilizer plants, that used to be at those plastic 
plants, they are gone. They are leaving. They are leaving this 
country, and they are going to China and other places that are 
exploring worldwide.
    For instance, China and Cuba are going to be having rigs 
within sight of the coast of Florida, as I understand, if not 
already. Mr. Fry started to, I think they have done all the 
seismic work, it is a matter of starting to move the rigs out.
    So we are going to be here where I think those rigs will be 
within 60 miles of the Florida coast, but our country is not 
going to drill within 60 miles of Florida. And we will continue 
to have an energy crisis. And China is not going to have the 
problem, and Cuba is not going to have the problem.
    And I understand the fairness thing. But at the same time, 
people expect, at the same time they criticize government, they 
expect their government to do a lot for them. And without 
raising more taxes, which I am opposed to, we need to find some 
ways to do it.
    And this disaster that happened in Louisiana, if I can put 
it maybe in some perspective, the largest property loss in the 
history of the State of Louisiana that was insured was half a 
billion dollars after Andrew. And now the largest property loss 
in Louisiana after Rita and Katrina is $40 billion. And we have 
to rebuild. Our government is already bankrupt. We are a debtor 
nation past what anybody even wants to talk about, and we have 
to get that back on course.
    But if we don't drill to provide the energy we need, two 
things happen to Louisiana. One is the jobs and the quality of 
living is going to be going. And then the second thing is that 
we just won't ever be able to rebuild, and all the fisheries 
that we concern ourselves with, and I think Jeff and his group 
and I personally don't want to see those kind of things going 
away. And I think global warming is maybe more the cause, from 
what I have read, of the reefs and this other deterioration. 
The sea itself is changing.
    But anyway, I thank you, Mr. Chairman, for letting me do 
that and have a little extra time. I will turn it back.
    The Chairman. Thank you. Dr. Sisskin, one of the 
frustrating things that I have got, and one of the difficulties 
that we have in this Committee, I agree with you that we have 
not had a comprehensive energy policy in this country for 
decades. And I think that anybody that claims that we have 
either doesn't know, or they are just not being very honest 
about it.
    In the seventies we had the initial energy crisis in this 
country. At that time a third of our energy came from foreign 
countries.
    Since then, our energy policy has not been to drill another 
hole. Our energy policy has been ``No.'' Our energy policy has 
been no to opening up anything new, to expanding anything, to 
doing anything to actually address an energy shortage.
    And in that time we have gone from a third of our energy 
coming from foreign countries to two thirds of our energy 
coming from foreign countries. And that is growing 
dramatically.
    If you compare what we have done over the last 30 years to 
develop new energy in this country, it is dwarfed by just about 
every other developed country in the world. Because they 
haven't said no. They have done things that expanded energy 
production domestically, which we haven't.
    I find it interesting, you talk about wind energy. I am, 
and have been, a big proponent of wind energy. One of the very 
first wind farms that was built anywhere in this country was 
built in my district, and it has been extremely successful over 
the last 20 years, to the point where it produces a huge amount 
of electricity out of that wind farm.
    Those windmills are up for renewal right now, their permits 
to be renewed. And environmental groups are filing lawsuits 
against the renewal of those wind energy permits, because of 
the impact that it has on birds.
    It doesn't seem like, no matter what we propose, that 
people are in favor of it. Someone is going to file a lawsuit 
to stop anything.
    You talk about last year's energy bill. Almost half of that 
energy bill was dedicated toward conservation and efficiencies, 
and that side of the equation, which I think all of us agree is 
important.
    But as Mr. Jindal said and Mr. Melancon and others on the 
Committee, even if we put as much money as we have, billions of 
dollars, into research and development on alternative energy 
and try to expand that, none of it is going to happen 
overnight. And we have to do something to produce, in the short 
term and the medium term, what we need to meet our demands on 
energy. And we are just not doing that.
    People complain about $3-a-gallon gas and electricity rates 
going up, and the impact that that has on all of us. But very 
few people are willing to stand up and be honest, and say we 
have to do something. And what we are doing right now is not 
really working.
    This whole issue with, I believe it was Ms. McCormick that 
mentioned that in the middle of all of this, the Resources 
Committee is having a hearing on a horrible bill about offshore 
oil and gas development. This issue was thrown in our lap. I 
have heard several people that have talked about, you know, 
once again the House has reaffirmed the moratorium. We barely 
hung onto that moratorium.
    Ms. McCormick. I know.
    The Chairman. And that is at today's prices, without a 
concerted effort on the part of anybody to do away with that 
moratorium. We were within a few votes of losing that 
moratorium for the entire country within three miles of your 
coast, and it would have been gone.
    That temporary moratorium that was put in place 20 years 
ago, 20-plus years ago, was put in place because Congress 
decided that they wanted to take a break, and say let us reform 
how we deal with our outer Continental Shelf. And for 20-plus 
years, we have been waiting, and it hasn't happened.
    What Mr. Jindal and Melancon and the authors of the other 
two dozen bills dealing with offshore have come up with is to 
try to deal with what the reality is, and how do we expand 
energy production in this country, at the same time allowing 
states like Florida, that do not want any kind of offshore 
development within 100 miles of their coast, the ability to 
have some say and control over that. Because right now you 
don't.
    And I come from the biggest delegation in the House, 53 of 
us. And if Congress decides they want to develop off the coast 
of California, there is not a heck of a lot the 53 can do. And 
we can all vote against it, but if their constituents are 
demanding that we do something about the high cost of oil and 
the high cost of gas, the rest of the delegations that don't 
represent California aren't so interested in it.
    And what we are trying to do, what the attempt is is to 
give states the ability to have some say over what happens off 
of their coasts.
    Now, you know, obviously there are Members of this 
Committee that feel differently than I do. There are Members 
that think that we ought to do away with the moratorium, and 
start going right now. But I have to try to find a balance 
between the ones who want to do away with the moratorium 
tomorrow and those that want absolutely no new energy produced 
in this country no matter where it comes from. And you have 
heard from both of them today.
    And what we are trying to do is find that balance and that 
compromise, and somehow we are going to do it by the time this 
over with. But I have a responsibility, as every Member of this 
Committee does, that we have to find additional resources to 
provide energy for this country. We cannot, in good conscience, 
continue to say that our national energy policy is ``No.'' And 
that is what it has been for the last 30 years, and we have to 
change that.
    I will give it to you, part of that has to be research and 
development in new technology on alternatives. That absolutely 
has to be part of the equation. But the other side of it is we 
are dependent on fossil fuels today for our energy, and we can 
no longer afford, morally afford, to rely for two thirds of our 
energy to come from foreign sources.
    I appreciate the testimony of this panel. Obviously there 
are differing opinions from all of you, but I think it is 
important that at some point, that we look at this in terms of 
how do we come up with the best possible policy for the long 
term for the United States, and not just look at what our 
short-term interests may be, as we have done in the past.
    Unfortunately, there are a number of other hearings and 
markups that are going on at the same time as this, and we have 
Appropriations bills on the floor. But there are several other 
Members of the Committee that did want the opportunity to ask 
questions of this panel. They will submit their questions to 
you in writing, and if you could answer those in writing I 
would greatly appreciate it, because I would like to have it be 
part of the Committee record. So thank you very much for your 
testimony.
    Yes, Mr. Melancon.
    Mr. Melancon. And I would like to reiterate the Chairman's 
comments. And I have only been here a short time, and I have 
seen you try to make the balance between conservation and 
environmental protection and production of oil for the entire 
United States to keep going. And my door, and I think I speak 
for everybody that is on this Committee, is open to people with 
ideas to make this thing work, and to protect the environment 
as best we can.
    If we didn't have to do it, we wouldn't be doing it. That 
is the reality. And so I thank you, Mr. Chairman.
    The Chairman. Thank you. I want to thank all of our 
witnesses today and Members of the Committee for participating 
in this.
    If there is no further business before the Committee, the 
Committee stands adjourned.
    [Whereupon, at 3:54 p.m., the Committee was adjourned.]

    [Additional material submitted for the record follows:]

    [The prepared statement of Mrs. Cubin follows:]

               Statement of The Honorable Barbara Cubin, 
                     Representative for All Wyoming

    Mr. Chairman:
    For three decades, this country has been on the path toward a 
serious energy supply shortage. Home heating costs are up and 
everything that rolls, floats, or flies costs more to operate. But the 
supply crunch we are facing doesn't only affect the energy costs for 
our homes, cars or tractors; it jeopardizes our national security.
    Adequate energy deposits exist within our borders and just off our 
coastlines to meet the majority of our nation's energy needs. 
Technology to best access these energy sources is improving everyday, 
and efforts to manufacture new renewable energy supplies are also on 
the rise. However, outdated environmental rules and a lack of an 
aggressive domestic production strategy have kept this county from 
securing our own energy future. Domestic production simply must 
increase to address this very real national security issue, and 
production on the Outer Continental Shelf (OCS) is an important piece 
of that solution.
    I am a cosponsor of the bill before us today because it takes the 
responsible action to produce the valuable energy resources on the OCS 
while providing affected coastal states a voice as to where leasing 
occurs. These states are also guaranteed a significant financial return 
from that development through appropriate revenue sharing when 
successful production occurs.
    Over the past several years, Wyoming has enjoyed billions of 
dollars in state budget surplus, due largely to royalties collected 
from an active energy industry in the state. I spent eight years as a 
state legislator in Wyoming and I can tell you firsthand--the burden of 
trying to figure out how to allocate those funds is a pretty nice 
problem to have. With the passage of H.R. 4761, our nation's coastal 
states have a real opportunity to experience this ``problem'' for 
themselves.
    This legislation does not only benefit coastal states. Despite the 
obvious national benefits of increased domestic energy production, H.R. 
4761 contains several other provisions that will assist western states 
like Wyoming pursue additional energy resources--and in a manner that 
is sensitive to environmental concerns such as natural habitat.
    One innovative provision in the bill would create a Federal Energy 
Natural Resources Enhancement Fund to monitor wildlife and fish 
habitats and air and water quality. This would provide financial 
resources to assist state and federal agencies working in concert with 
the energy industry to better manage the careful balance between 
development and habitat protection.
    Another provision of this bill would aggressively promote 
continuing education programs in the applied science and engineering 
fields necessary to fill current labor gaps in an increasingly advanced 
domestic energy industry. H.R. 4761 would also establish a royalty 
framework for the new oil shale leasing program established through the 
Energy Policy Act signed into law last summer. Vast western oil shale 
deposits--including those that reside in the Green River and Washakie 
basins in Wyoming--total some two trillion barrels of oil resource. 
This bill will ensure western states share in the revenue created when 
this massive resource is tapped.
    As we move forward with this legislation, it is important we 
continue to gather input from the local level. I am happy to see that 
our panels today will assist us in doing so. I would also like to 
personally welcome both Terry Cleveland, Director of the Wyoming Game 
and Fish Department, and a fellow former Wyoming State Legislator, 
Acting Assistant Secretary Johnnie Burton. I look forward to both of 
your testimonies.
    Thank you, Mr. Chairman, for holding this important hearing and I 
yield back the balance of my time.
                                 ______
                                 
    [A letter submitted for the record by George Swift, Interim 
President and CEO, The Chamber SWLA, follows:]
[GRAPHIC] [TIFF OMITTED] T8226.002

                                 
