[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]


 
  IMPLEMENTATION OF TITLE III, OIL AND GAS PROVISIONS OF THE ENERGY 
                          POLICY ACT OF 2005

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

                           OVERSIGHT HEARING

                               before the

                       SUBCOMMITTEE ON ENERGY AND
                           MINERAL RESOURCES

                                 of the

                     COMMITTEE ON NATURAL RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                        Tuesday, April 17, 2007

                               __________

                           Serial No. 110-15

                               __________

       Printed for the use of the Committee on Natural Resources



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                     COMMITTEE ON NATURAL RESOURCES

               NICK J. RAHALL II, West Virginia, Chairman
              DON YOUNG, Alaska, Ranking Republican Member

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       Chris Cannon, Utah
Donna M. Christensen, Virgin         Thomas G. Tancredo, Colorado
    Islands                          Jeff Flake, Arizona
Grace F. Napolitano, California      Stevan Pearce, New Mexico
Rush D. Holt, New Jersey             Henry E. Brown, Jr., South 
Raul M. Grijalva, Arizona                Carolina
Madeleine Z. Bordallo, Guam          Luis G. Fortuno, Puerto Rico
Jim Costa, California                Cathy McMorris Rodgers, Washington
Dan Boren, Oklahoma                  Bobby Jindal, Louisiana
John P. Sarbanes, Maryland           Louie Gohmert, Texas
George Miller, California            Tom Cole, Oklahoma
Edward J. Markey, Massachusetts      Rob Bishop, Utah
Peter A. DeFazio, Oregon             Bill Shuster, Pennsylvania
Maurice D. Hinchey, New York         Dean Heller, Nevada
Patrick J. Kennedy, Rhode Island     Bill Sali, Idaho
Ron Kind, Wisconsin                  Doug Lamborn, Colorado
Lois Capps, California               Vacancy
Jay Inslee, Washington
Mark Udall, Colorado
Joe Baca, California
Hilda L. Solis, California
Stephanie Herseth Sandlin, South 
    Dakota
Heath Shuler, North Carolina

                     James H. Zoia, Chief of Staff
                   Jeffrey P. Petrich, Chief Counsel
                 Lloyd Jones, Republican Staff Director
                 Lisa Pittman, Republican Chief Counsel
                                 ------                                

              SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES

                    JIM COSTA, California, Chairman
          STEVAN PEARCE, New Mexico, Ranking Republican Member

Eni F.H. Faleomavaega, American      Bobby Jindal, Louisiana
    Samoa                            Louie Gohmert, Texas
Solomon P. Ortiz, Texas              Bill Shuster, Pennsylvania
Rush D. Holt, New Jersey             Dean Heller, Nevada
Dan Boren, Oklahoma                  Bill Sali, Idaho
Maurice D. Hinchey, New York         Don Young, Alaska ex officio
Patrick J. Kennedy, Rhode Island
Hilda L. Solis, California
Nick J. Rahall II, West Virginia, 
    ex officio
                                 ------                                





























                                CONTENTS

                              ----------                              
                                                                   Page

Hearing held on Tuesday, April 17, 2007..........................     1

Statement of Members:
    Costa, Hon. Jim, a Representative in Congress from the State 
      of California..............................................     1
    Pearce, Hon. Stevan, a Representative in Congress from the 
      State of New Mexico........................................     3
        .........................................................
    Udall, Hon. Mark, a Representative in Congress from the State 
      of Colorado, Prepared statement of.........................    27

Statement of Witnesses:
    Bartis, James T., Senior Policy Researcher, RAND Corporation.    39
        Prepared statement of....................................    41
    Bramble, Hon. Curtis S., Senate Majority Leader, Utah State 
      Senate.....................................................    35
        Prepared statement of....................................    36
    Cicio, Paul, President, Industrial Energy Consumers of 
      America....................................................    56
        Prepared statement of....................................    58
        Letter submitted for the record..........................    60
    Haspel, Dr. Abraham E., Assistant Deputy Secretary, U.S. 
      Department of the Interior.................................     5
        Prepared statement of....................................     8
    Kelley, Kathleen, Former State Representative, Colorado......    45
        Prepared statement of....................................    46
    Morgan, Ann J., Vice President for Public Lands, The 
      Wilderness Society.........................................    13
        Prepared statement of....................................    14
    Simpson, Oscar, Public Lands Community Organizer, National 
      Wildlife Federation........................................    51
        Prepared statement of....................................    53

Additional materials supplied:
    Casper Star Tribune article ``Public comments: Slow 
      development'' submitted for the record.....................    74
    Lambert, Hon. Keith, Mayor of Rifle, Colorado, et al., Letter 
      submitted for the record...................................    76
    O'Connor, Terry, Vice President, Communications, Regulatory 
      and Government Affairs, Shell Exploration & Production 
      Company, Unconventional Resources, Statement submitted for 
      the record.................................................    66


   OVERSIGHT HEARING ON IMPLEMENTATION OF TITLE III, THE OIL AND GAS 
              PROVISIONS OF THE ENERGY POLICY ACT OF 2005.

                              ----------                              


                        Tuesday, April 17, 2007

                     U.S. House of Representatives

              Subcommittee on Energy and Mineral Resources

                     Committee on Natural Resources

                            Washington, D.C.

                              ----------                              

    The Subcommittee met, pursuant to call, at 2:05 p.m. in 
Room 1334, Longworth House Office Building, Hon. Jim Costa 
[Chairman of the Subcommittee] presiding.
    Present: Representatives Costa, Bishop, Udall, Pearce, 
Sali.

 STATEMENT OF THE HON. JIM COSTA, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF CALIFORNIA

    Mr. Costa. The oversight hearing by the Subcommittee on 
Energy and Mineral Resources will now come to order. As we are 
aware, there are many committees and subcommittees that are 
meeting not only today but this week, and therefore we have the 
challenge of trying to maintain the flow of the testimony and 
the questions with our witnesses, and with the added burden of 
members coming and going and trying to keep attention and 
focus. So we will do our very best with the time allotted that 
we have here this afternoon.
    The hearing is on the testimony dealing with the 
implementation of Title III of the Oil and Gas Provisions of 
the Energy and Policy Act of 2005. I mean in essence what we 
are really talking about here this afternoon is best management 
practices. Under Rule 4(g), the Chairman and Ranking Member may 
make opening statements. If any other members have statements, 
they will be included in the record under unanimous consent. We 
try to do that to expedite the time for the witnesses to 
testify and to ask questions.
    Additionally, under Committee Rule 4(h), additional 
material for the record should be submitted by members and 
witnesses within 10 days after the hearing. I am reminded to 
urge all of you when you do that not to wait until the 9th or 
the 10th day but earlier is better than later. We would 
appreciate the witnesses' cooperation in such submissions.
    Let me just say that the purpose, as I indicated, of this 
afternoon's hearing is to discuss an effort since the enactment 
of the 2005 law, which is best management practices, and to 
define a balance to determine ways, and obviously how, we 
increase our energy efforts domestically as it relates to oil 
and natural gas, but also we have renewable sources that we 
think are a part of the equation or the solution, and as we do 
so to be mindful of the fact that it is nice to talk about 
energy independence but that goal and the ability to reach that 
goal, I think in terms of reality, are very difficult at best.
    Also we want to include the current affects under the 2005 
law on energy policy or practices as it relates to impacts on 
climate change and the environment. Who do we have here today? 
Well we have a diversity of perspectives with our witnesses. We 
have in both Panel I and Panel II, I think, the breadth and 
width of the Department of Interior reflected and from people 
formerly involved in the Bureau of Land Management. We have the 
academic focus of RAND, and sports members. We have local 
elected officials, and an industry energy consumer advocate.
    So as we listen to the testimony this afternoon to assess 
and review implementation of the Oil and Gas Provisions of the 
Energy Policy Act of 2005 and its impact on primarily western 
public lands and the communities within those lands to see if, 
in fact, we are increasing the amount of energy--both in terms 
of domestic oil and natural gas production and its impact 
environmentally and socially in those various communities.
    We know that oil shale, for example, in terms of its 
research and development, has an important role, we hope, to 
play. But given the challenges in terms of the cost 
effectiveness of producing oil shale and oil sands, is it 
really realistic to sell those various leases by 2008 when, in 
fact, most of the experts tend to indicate that it will be at 
least another 10 years before cost-effective technologies are 
able to represent themselves in a way that makes this source of 
energy real?
    There are obviously a lot of estimates in terms of the 
potential recovery of oil in the U.S. as it relates to oil 
shale compared to reserves in Saudi Arabia, and most of those 
reserves are located in Federal lands in Utah, Colorado and 
Wyoming. We know what happened to the last major venture that 
ended in the early 1980s, and when the price of oil fell, of 
course, the interest in that effort almost was completely 
eliminated.
    Recent advances in extraction we think make it more 
realistic. Certainly $70 a barrel oil makes it more realistic, 
and so when we listen to the testimony this afternoon one of my 
questions will be to ask whether or not the Energy Policy Act 
deadline is reasonable. We also need to look at the potential 
impacts of energy policy on habitat. We have witnesses in the 
second panel that will talk about it.
    We know that the Western Governors' Association has been 
calling for a repeal of Section 390 of the Energy and Policy 
Act, which exempts certain activities from the National 
Environmental Policy Act because they believe it is having an 
adverse impact in those respective western states. I will be 
interested to listen to witnesses testify as to whether or not 
they support or concur with the Western Governors' Association.
    Finally, where are we going? The goal of this hearing is to 
determine what, if any, legislation is necessary to address 
these issues and concerns that are brought out and vetted in 
this public forum, the facts and data that back up people's 
beliefs, philosophical views and assertions that you as 
witnesses will make in your statements. Certainly we have a 
number of witnesses here that will testify.
    I am looking forward to that testimony, and at this time I 
would like to allow my colleague, the gentleman from New 
Mexico, the Ranking Member of the Subcommittee on Energy and 
Mineral Resources, to make an opening statement. Mr. Pearce.

 STATEMENT OF HON. STEVAN PEARCE, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF NEW MEXICO

    Mr. Pearce. Thank you, Mr. Chairman. I appreciate that.
    Mr. Costa. Welcome back from the Easter break.
    Mr. Pearce. And you too. California and New Mexico are not 
bad places to be during the recess I think.
    Mr. Costa. I concur.
    Mr. Pearce. Chairman Costa and I both voted for the Energy 
Policy Act of 2005 because the Act was positive and a landmark 
step in the effort to lower energy prices for our constituents 
and reduce our dependence on foreign oil. I do not know about 
other parts of the country, but $5 a gallon gasoline is not OK 
in Hobbs, New Mexico. The focus of this hearing is Title III, 
the Oil and Gas Provisions of the Act and rightly so as this 
committee played a significant role in the adoption of those 
provisions.
    I would remind our panel that we both, Democrats and 
Republicans, signed off on that bill as it went through 
conference, and any single member, either a Democrat or 
Republican, could have voided any provision in that bill. Among 
other policies that the oil and gas provisions were intended to 
accomplish, they were intended to encourage increased domestic 
production of oil and gas by streamlining the Federal 
permitting process. They are providing potential incentives for 
technically challenging oil and gas from the deep depths of the 
outer continental shelf, and to encourage the domestic 
development of more than two trillion barrels of oil from the 
oil shale in the western U.S.
    The title of today's hearing is Implementation of Title 
III, the Oil and Gas Provisions of the Energy Policy Act of 
2005. The key word for me in this title is implementation which 
means to accomplish or to carry out. I worry that as I look at 
the trajectory that we have another agenda in mind not to 
implement but, in fact, to strike down and repeal, and we hear 
that echo beginning to come from the witnesses today.
    We saw that agenda in H.R. 6 earlier this Congress when 
four provisions of the very title we are having a hearing on 
today were repealed with no hearing, no markup and no process. 
To me, H.R. 6 should be renamed the $5 a gallon gasoline bill, 
and unfortunately that process, that trajectory does not seem 
to be stopping with H.R. 6, as I see it foreshadowed in 
testimony today.
    I welcome all of our witnesses and look forward to the 
testimony, but I insist that your testimonies be fact based. 
The Chairman has stated adequately that we in Congress to which 
legislation that we should be passing, and we are going to base 
that on your testimony. So we take your testimony very 
seriously.
    I am concerned about different things that I find 
especially disturbing in Ms. Morgan's written statements. I 
know her previous experience as BLM's Colorado State Director 
would tell her otherwise. The first example when she states 
that oil and gas has become the predominant use of public lands 
on page 1 of her testimony, if I could get my staff to hold up 
the chart, it is just plain wrong. The BLM manages 700 million 
of subsurface minerals estate. That subsurface mineral estate 
includes BLM lands, the national park lands, the national 
wildlife refuge lands, the wilderness lands and the Department 
of Agriculture lands.
    Of that 700 million acres of Federal lands, 6 percent or 42 
million acres are currently under lease for oil and gas 
development. Six percent is not predominant. One point eight 
percent or 12.4 million acres have active oil and gas 
production. That is a smaller piece of the pie chart there. Is 
6 percent or 1.8 percent predominant? I think that is a very 
important question.
    Also she cites EPCA II study on page 2 of her testimony 
saying that close to 80 percent of BLM acreage is available for 
development. Again let us be accurate and fact based. EPCA II 
found that 13 percent, not 80 percent, of onshore Federal land 
is accessible under standard lease terms. Now 80 percent that 
is a big jump from 13 percent.
    EPCA II also found that 60 percent of onshore Federal gas 
may be developed but only under heavy restrictions such as no 
surface occupancy. Have you ever tried to drill for natural gas 
without touching the surface? That is not accessible. It is not 
available but it is misleading.
    Another example is on page 6 of her testimony where she 
states that in Fiscal Year 2004 BLM approved applications to 
drill for 6,052 wells but just drilled 2,702. I have the BLM 
data here at the desk and would request unanimous consent to 
put that into the record. It states that 3,770 well leases were 
spotted, not 2,702. That is more than 40 percent off.
    Another example of exaggeration is the statement that the 
Administration has a rush to lease policy on page 7. We learned 
in the past several hearings that the number of new leases 
issued under the current Administration is substantially lower 
than the number of leases issued under the Clinton 
Administration, 61 percent lower if you are counting the number 
of actual leases, 75 percent if you are counting by acreage. We 
should restrict ourselves just to the facts.
    When I read the recommendation to repeal Section 366 
regarding APD timelines because there are no environmental 
protections, I wonder if the witness actually read the rule 
because when I read it, it says that if the environmental 
protections are met then that NEPA must be followed and 
complied with, and when they are met, then we can open 366. So 
I do wonder about the factual basis of that part.
    Her recommendation to repeal Section 390 regarding NEPA 
categorical exclusions because these exclusions would mean that 
BLM would no longer need to analyze or disclose the 
environmental impacts. I am especially disappointed because I 
know that particular provision very well. It was in this 
committee, the Resources Committee, one afternoon during the 
markup of the entire Energy Policy Act when George Miller and 
Mr. Abercrombie from Hawaii both began a debate and a 
discussion about what things we should include here, and it was 
a very forefront discussion, forward discussion here in this 
committee, the full Committee of Resources, where we adopted 
those provisions.
    And to state that they are just not working very well 
simply says that neither party, this bipartisan agreement on 
those provisions, was not adequate. So again I worry about the 
entire hearing and its purpose. As I look at the trajectory 
over the past several weeks of the hearings that we had, I see 
a trajectory that leads us to conclude that the intent of the 
majority is to repeal the entire Oil and Gas Provision, the 
entire section of the Energy Policy Act of 2005.
    So Mr. Chairman, I appreciate the hearing. I appreciate the 
opportunity to express my opinions. I look forward to the 
witnesses and their testimony and discussing how to implement 
the Title III of the Energy Policy Act of 2005. I yield back 
the balance of my time.
    Mr. Costa. Well, thank you very much, gentleman from New 
Mexico. Since we both exceeded our time allotment, I figure it 
is tit for tat but I will take that as instructive. Very clever 
to in your statement to get a whole host of questions into the 
witness before your opportunity to ask questions. I will 
remember that in the future.
    Mr. Pearce. Thank you, Mr. Chairman.
    Mr. Costa. No. I am crediting you with it. Anyway, let us 
get to the witnesses. That is why we are here. Our first 
witness is Dr. Haspel, Assistant Deputy Secretary for the 
Department of Interior. You have an extensive background during 
your public career, and we appreciate that, and we are looking 
forward to your testimony. Please begin. You know we have the 
five-minute rule, and I am not holding that part against you 
right now but keep it to five minutes, and we have the 
submission of your testimony, and I will advise that to all 
witnesses please.

 STATEMENT OF ABRAHAM HASPEL, ASSISTANT DEPUTY SECRETARY, U.S. 
                   DEPARTMENT OF THE INTERIOR

    Mr. Haspel. Mr. Chairman, members of the Subcommittee, 
thank you for the opportunity to appear here today to discuss 
the Department of the Interior's implementation of the Energy 
Policy Act of 2005 in general, and the milestones and 
accomplishments of the Bureau of Land Management with respect 
to Title III, in specific.
    Mr. Costa. Could you bring the mike a little closer to you? 
It is going to be helpful to us. We really do want to hear you 
and those behind you.
    Mr. Haspel. OK.
    Mr. Costa. I will not count that against your time. Please 
go ahead.
    Mr. Haspel. All right. Interior is committed to the timely 
implementation of the tasks given it in EPAct. Shortly after 
its passage, the Department established the Interior Energy 
Coordination Council to coordinate the implementation of the 
EPAct throughout Interior. It is in my role as the lead 
coordinator of the ECC that I appear before you today to report 
on both Interior's and the BLM's progress in implementing 
EPAct.
    The ECC identified 101 tasks mandated by the various 
provisions in the titles of EPAct. Interior has completed 65 
and continues to make great progress in completing the 
remaining tasks. Because of BLM's responsibilities in managing 
onshore energy development on the public lands, it has been 
given a role to play in the implementation of 60 provisions of 
the EPAct. In the 56 provisions within Title III in which 
Interior identified tasks, the BLM is involved in 36.
    BLM's success at completing its tasks is high. As you can 
see on the chart before you, they have finished almost 70 
percent of their 31 tasks thus far, and three more tasks are 
expected to be completed in the next three months which will 
bring their success rate to almost 80 percent. Among the many 
tasks required by Title III, there are three BLM efforts I 
would like to highlight.
    First, the pilot project to improve Federal permit 
coordination, Section 365; second, best management practices 
for oil and gas development, Section 362[b]; and third, the oil 
shale program, Section 369. One, a significant EPAct 
implementation effort for the BLM has been establishing the 
Section 365 pilot project to improve Federal permit 
coordination. On October 24, 2005, ahead of the 90-day 
timeframe in EPAct, the Environmental Protection Agency, the 
Department of Agriculture, the Corps of Engineers and Interior 
signed an interagency memorandum of understanding to implement 
the oil and gas pilot offices.
    A total of 116 out of 150 approved BLM pilot office 
positions have been filled to date. My written testimony goes 
into detail regarding staffing from other Federal and state 
agencies. I am pleased to report that the BLM has received 
outstanding cooperation and personnel from the Corps of 
Engineers, the Fish and Wildlife Service, the Forest Service, 
the Bureau of Indian Affairs and the Bureau of Reclamation.
    Montana and Wyoming have both agreed to supply personnel, 
and the BLM is in discussions with Utah and Colorado regarding 
their participation. The new staff now engaged in intensive 
training will be facing an increased workload. The number of 
APDs has risen by 46 percent over the last three years. BLM has 
increased their processing and approvals of APDs by 20 percent 
over the same time. With regard to inspection enforcement, 
since 2001 the number of inspections completed has increased by 
almost one-third. With the recent staffing efforts, the BLM 
anticipates both APDs and inspection enforcement outputs will 
increase further during this fiscal year.
    Two, in order to improve the administration of the onshore 
oil and gas program, the BLM and the Forest Service have 
developed and are implementing best management practices. The 
BLM has updated the Gold Book of Surface Operating Standards 
and Guidelines For Oil and Gas Exploration and Development. The 
BLM has also issued three instruction memorandums that one, 
established offsite compensatory mitigation guidelines for oil 
and gas authorizations that provide additional opportunities to 
address impacts of proposed projects; two, that established oil 
and gas process improvement teams in BLM field offices; and 
three, that provided guidance on the review of binding 
requirements for oil and gas operations.
    The BLM continuously seeks new ways to minimize, mitigate 
or compensate for any adverse impacts from development 
activities. Innovation of the type envisioned in EPAct is 
already underway at BLM. One example in my written testimony 
discusses how drilling multiple wells from a single location, 
centralizing production facilities or relocating them offsite 
in the Pinedale area of Wyoming is achieving an overall 
reduction in the footprint of development involved in winter 
drilling projects in the Pinedale and declined from what 
otherwise would have resulted.
    The BLM is also using performance based standards to 
challenge industry to reduce emissions, minimize surface 
disturbance, and develop quick and effective reclamation 
techniques to improve restoration of disturbed areas. I would 
also like to note that some of the recently developed BLM land 
use plans have been among the most restrictive ever developed 
for oil and gas leasing on Federal lands.
    The BLM land use planning process seeks to ensure that 
domestic oil and gas development on public lands is done in a 
way that protects the environment. In addition, the President's 
2008 budget includes a healthy lands initiative, a priority for 
Secretary Kempthorne which will help address some of the 
conflicts between development and production of our natural 
resources.
    My next section was going to discuss the oil shale program. 
Since I have 20 seconds left, I will answer whatever questions 
you have on that.
    Mr. Costa. You can elaborate a little bit more. I cut into 
your time.
    Mr. Haspel. OK. The BLM supports and is developing an oil 
shale program consistent with the declared policy of Congress 
expressed in Section 369 of EPAct which states that, and I will 
quote, ``Development should be conducted in an environmentally 
sound manner, using practices that minimize impacts, and 
development should occur with an emphasis on sustainability to 
benefit the United States while taking into account affected 
states and communities.''
    The BLM published a call for nominations for 160-acre 
research development and demonstration oil shale leases on 
public lands in Colorado, Utah and Wyoming in the Federal 
Register on June 9, 2005. It received 20 nominations for RD & D 
leases. After review of the nominations, eight proposals were 
further evaluated. Six were ultimately selected, five in 
Colorado, the other in Utah.
    My written testimony details the chronology of events that 
have taken place thus far in the development of this program. I 
would like to emphasize that the BLM Colorado and Utah state 
offices worked with each of these nominated proposals to 
complete the NEPA review process which included opportunities 
for public input. Public open houses were held in Rangely, 
Meeker, Rifle, and Grand Junction, Colorado, as part of the 
public comment process. Further, all of the preliminary 
environmental assessments included the opportunity for a 30-day 
public review.
    The Colorado leases were executed on December 15, 2006. The 
final environmental assessment and decision record for the Utah 
proposal is currently being reviewed by the BLM Washington 
office. Further, Colorado, Utah, and Wyoming requested an 
opportunity to provide input on preparation of the oil and 
shale regulations. A listening session was held with these 
states on December 14, 2006, in Denver to provide this 
opportunity. Another listening session is scheduled for later 
this month on April 26, 2007, in Salt Lake City.
    Finally, with regard to the program EIS, the Federal 
Register notice of intent for the EIS was published on December 
13, 2005, and the draft EIS is currently scheduled for release 
late in the summer of 2007, at which time the public will be 
given an opportunity comment.
    Mr. Chairman, thank you for the opportunity to testify 
today. I hope my remarks have illustrated the careful diligence 
with which Interior and the BLM are engaged in EPAct 
implementation, and the efforts that we have made to encourage 
public participation and solicit public input. This concludes 
my prepared remarks. I would be happy to respond to questions 
you may have.
    [The prepared statement of Mr. Haspel follows:]

    Statement of Dr. Abraham E. Haspel, Assistant Deputy Secretary, 
                    U.S. Department of the Interior

    Mr. Chairman and Members of the Subcommittee, thank you for the 
opportunity to appear here today to discuss the Department of the 
Interior's implementation of the Energy Policy Act of 2005 (EPAct), in 
general, and the milestones and accomplishments the Bureau of Land 
Management (BLM) has achieved with respect to Title III, in specific.
    Before I speak to the specifics of implementation of EPAct, I would 
like to mention a high priority of Secretary Kempthorne, the Healthy 
Lands Initiative included in the President's FY 2008 budget. As 
activities on public land increase, we are seeing growing conflicts 
among recreation users, energy developers, hunters, ranchers, and 
others all competing to protect, access, and use these public lands. 
BLM will join with the U.S. Geological Survey and the Fish and Wildlife 
Service to identify, restore, and mitigate the potential impacts of 
increased energy production in wildlife-energy interface areas and 
potentially prevent the listing of certain species such as sage grouse.
    The potential listing of sage grouse as an endangered species could 
severely constrain public land use, particularly for current and future 
energy production. The habitat of the sage grouse covers over 100 
million acres. Interior's Healthy Lands Initiative includes $22.0 
million in new funds, which combined with existing program resources, 
will allow Interior to implement a strategic vision to protect and 
restore sage grouse habitat, maintain migratory corridors for other 
species, and assure continued access to energy. These investments will 
support new land use planning techniques and new policy tools that will 
complement current activities and enable us to work with non-Federal 
partners to restore and conserve habitat and maintain access for energy 
and other uses.
    Focused on six strategic areas, these funds will transform land 
management from the current parcel by parcel approach to landscape-
scale decision making, drawing upon partnerships and new policy tools 
to help BLM provide increased access for energy and other uses, while 
simultaneously preserving important habitat corridors and sites for the 
benefit of species. In 2008, including this increase, over 400,000 
acres will be restored in partnership with Federal leaseholders, 
private landowners, state, local, and tribal governments--to benefit 
wildlife. The Healthy Lands Initiative includes $15.0 million for BLM 
to conduct landscape-scale conservation, $2.0 million for U.S. Fish and 
Wildlife Service, and $5.0 million for USGS.
EPAct and Title III Implementation
    There is within the Department an Interior Energy Coordination 
Council (ECC), the stated purpose of which is to:
      coordinate the implementation of the EPAct throughout 
Interior;
      ensure the allocation of current efforts and resources 
are appropriately focused;
      ensure the timelines of EPAct are met;
      ensure that policy decisions are made promptly and in a 
coordinated manner; and
      ensure viability and consistency among the various 
interests within Interior and within the Administration.
    The membership of the ECC, which continues today, includes all of 
the Assistant Secretaries and the Solicitor, with the Bureau and the 
Office Directors participating on an issue-by-issue basis. The ECC is 
chaired by the Senior Advisor to the Secretary. I am its lead 
coordinator. With this responsibility comes the leadership of the ECC 
Liaison Group, the senior career staff support group that deals with 
the day to day implementation of the EPAct and which identifies the 
cross-cutting issues needing resolution by the ECC. It is in this role 
that I appear before you today to report on both Interior's and the 
BLM's progress in implementing the EPAct.
    The ECC identified 101 tasks mandated by the various provisions in 
the titles of EPAct. Of these, 57 have statutory due dates, with 44 due 
prior to today. Another 44 tasks have no statutory due date. Interior 
has completed 65 of the mandated tasks, including three-quarters of 
those without statutory due dates. For example, in titles other than 
Title III, Interior has issued the joint hydropower licensing rules, 
established the technical advisory panel for the North Slope Science 
Initiative, established and implemented an Indian Energy Resource 
Development Program, submitted a plan to Congress for the National 
Geological and Geophysical Data Preservation Program, conducted an 
offshore oil and gas inventory as well as completed a number of 
reports. Interior continues to make great progress in completing the 
remaining tasks.
    Because of the role the BLM plays in managing onshore energy 
development on the public lands, it was given a role to play in the 
implementation of 60 provisions of the EPAct; for 52 of those 
provisions the BLM was tasked as the lead agency. Of the 56 provisions 
within Title III in which Interior identified tasks, the BLM is 
involved in 34 of those and has the lead responsibility for 31 
provisions and 33 tasks. Twenty of the provisions in Title III include 
statutory due dates, five of which are in the future; 14 have no 
statutory due date. BLM's success at completing its tasks is high. They 
have finished almost 70 percent of the tasks for which they are 
responsible, thus far, and three more tasks are expected to be 
completed in the next three months, bring their success rate to almost 
80 percent. (See attached chart)
Highlights of BLM's Successes in Meeting Title III Requirements
    Among the many tasks required by Title III, there are three BLM 
efforts I would like to highlight: first, the pilot project to improve 
Federal permit coordination; second, best management practices (BMPs) 
for oil and gas development; and, third, the oil shale program.
Pilot Project to Improve Federal Permit Coordination, Section 365
    A significant EPAct implementation effort for the BLM has been 
establishing the Section 365 Pilot Project to Improve Federal Permit 
Coordination. On October 24, 2005, ahead of the 90-day timeframe in 
EPAct, the Environmental Protection Agency (EPA), the U.S. Department 
of Agriculture, and the Corps of Engineers and Interior signed an 
Interagency Memorandum of Understanding (MOU) to implement the oil and 
gas Pilot Offices. The Interagency MOU establishes the roles, 
responsibilities and delegations of authority among the federal 
agencies for streamlining Application for Permit to Drill (APD) 
processing and Inspection and Enforcement (I&E) activities in the seven 
BLM Pilot Offices (in Rawlins, WY; Buffalo, WY; Miles City, MT; 
Farmington, NM; Carlsbad, NM; Grand Junction/Glenwood Springs, CO; and, 
Vernal, UT) identified in EPAct.
    The Minerals Management Service established a Treasury Account for 
the Permit Processing Improvement Fund for the Pilot Offices on 
November 1, 2005. The BLM completed fund transfers for six Forest 
Service positions, ten U.S. Fish and Wildlife Service positions, 3.5 
Corps of Engineers positions, and one Bureau of Indian Affairs position 
for these agencies to support the Pilot Offices under the Interagency 
MOU--and the BLM is currently reviewing additional funding requests for 
additional positions for the Forest Service and the U.S. Fish and 
Wildlife Service for FY 2007.
    In October 2005, the BLM began the recruitment process for an 
initial 105 positions to support the APD approval process and I&E 
activities.. Bureau-wide vacancy announcements for Petroleum 
Engineering Technicians and Natural Resource Specialists in the seven 
BLM Field Offices were issued on October 5 and October 7, 2005 
respectively. Because the BLM Vernal Field Office noticed a substantial 
increase in APD workload during the first half of FY 06, it identified 
a need for additional positions to meet that workload demand. On June 
9, 2006, BLM approved 11 additional BLM positions for the Vernal Pilot 
Office. Further, in February 2007, the BLM management approved another 
34 BLM positions for the Pilot Offices. This increased the total number 
of approved BLM positions for the Pilot Offices to 150 positions. A 
total of 116 BLM Pilot Office positions have been filled to date. In 
addition, the BLM has hired seven contract positions to support the 
Pilot Offices.
    With regard to staff from other federal and state agencies:
      All collateral duty Corps of Engineer positions (total of 
3.5 FTE) are on board.
      The U.S. Fish and Wildlife Service positions in all of 
the offices have been filled.
      The Forest Service positions in Farmington, Buffalo, 
Vernal and Glenwood Springs have been filled. Under the terms of the 
MOU, the BLM and the Forest Service are cooperating closely to 
administer oil and gas development on lands managed by the Forest 
Service. Particular attention is being given to improving communication 
and information-sharing, field reviews, and I&E activities. 
Furthermore, the BLM and Forest Service are ensuring increased 
cooperation concerning threatened and endangered species during project 
planning and implementation.
      The Bureau of Indian Affairs has agreed to fill a 
position in the BIA Gallup Regional Office and BLM signed the transfer 
of funds letter for the position on May 26, 2006. The BIA has 
designated an individual as a point of contact until the position is 
filled on a permanent basis.
      The BLM New Mexico State Office and the Bureau of 
Reclamation signed an Interagency Agreement for a Reclamation position 
in Carlsbad, New Mexico.
      An agreement on two positions with the New Mexico Oil and 
Gas Conservation Commission (Carlsbad and Farmington) was reached in 
mid August. The Oil and Gas Commission plans to use existing staff for 
the two positions, with a six month rotation for the staff in order to 
provide an opportunity for more staff to work directly with the BLM.
      The BLM Montana State Office and the Montana State 
Department of Environmental Quality (DEQ) signed an agreement on June 
1, 2006, to fill one hydrologist position and one air quality 
specialist position in Miles City and one permitting position in 
Helena. The Montana DEQ permitting position in Helena has been filled. 
BLM Montana also has entered into an agreement with the Montana 
Department of Fish, Wildlife and Parks for a wildlife position in Miles 
City. Interviews for this position began in January 2007.
      The BLM Wyoming State Office has met with the State Game 
and Fish Department to discuss participation in the Pilot Project and 
is working with the State DEQ for a position in Buffalo and a position 
with the State Historic Preservation Office (SHPO) under a new 
statewide cultural resources protocol agreement.
      The BLM Utah State Office has had discussions with the 
State Division of Wildlife Resources and the SHPO regarding assistance 
in the Vernal Field Office.
      The BLM Colorado State Office has visited with the State 
Department of Natural Resources to discuss support to the Pilot 
Project.
    Staffing at the pilot offices is nearly complete as the result of 
the BLM's planning and recruitment efforts, and the new staff are now 
engaged in intensive training. The number of APDs submitted has risen 
steadily over the last three years--from 6,979 in 2004 to 8,351 in 2005 
to 10,220 in 2006. BLM has been working hard to keep pace with the 
increase, processing 7,351 APDs in 2004, 7,736 in 2005, and 8,854 in 
2006 and approving 6,452 APDs in 2004, 7,018 in 2005, and 7,743 in 
2006. With regard to I&E, since 2001, the number of inspections 
completed increased from 12,785 to 16,967. With the recent staffing 
efforts, the BLM anticipates that both APD and I&E outputs will 
increase further during this fiscal year
    The BLM, through the Interior's National Business Center, 
contracted with Booz Allen Hamilton on December 22, 2005, to assist in 
the review and reporting of implementation and performance of the Pilot 
Office streamlining efforts over a 3-year period. An initial contract 
meeting with Booz Allen Hamilton was held on January 10, 2006 in 
Denver. The contractor worked with BLM in the development and tracking 
of performance measures for the Pilot Offices, the preparation of site 
visit reports, and a 1-year progress report.
Management of Federal Oil and Gas Leasing Programs, Section 362(b)--
        Best Management Practices (BMP)
    In order to improve the administration of the onshore oil and gas 
program, the BLM and the Forest Service have developed and implemented 
BMP. The BLM has updated the Gold Book of ``Surface Operating Standards 
and Guidelines for O&G Exploration and Development'' and posted the 
update on September 28, 2005, on the BLM Best Management Practices 
webpage at www.blm.gov/bmp. The BLM also issued Instruction Memorandum 
No. 2005-069 on February 1, 2005, that established offsite compensatory 
mitigation guidelines for oil and gas authorizations, to provide 
additional opportunities to address impacts of proposed projects. The 
BLM further issued Instructional Memorandum No. 2006-071 on January 19, 
2006, that established oil and gas process improvement teams in BLM 
Field Offices. Furthermore, the BLM issued Instructional Memorandum No. 
2006-206 on August 3, 2006, that provided guidance on the review of 
bonding requirements for oil and gas operations.
    The BLM continually seeks new ways to minimize, mitigate, or 
compensate for any adverse impacts from development activities. 
Innovation of the type envisioned in EPAct is already underway at the 
BLM. For example, BLM is:
      initiating a pilot block survey in the Carlsbad Pilot 
Office to identify cultural resource properties in the area;
      evaluating an experimental drilling technique proposed by 
the operator in the Jonah Field in Wyoming using temporary wooden 
pallets for roads and well pads to determine if this technology reduces 
impacts to surface vegetation and soil; and
      incorporating advanced technologies and environmental 
Best Management Practices, such as drilling multiple wells from a 
single location, centralizing production facilities or relocating them 
offsite. For example, in the Pinedale area of Wyoming, concerns about 
impacts to wildlife have resulted in reduced surface disturbance 
compared to past development by implementing such measures as the 
consolidation of infrastructure, such as roads, pipelines, and 
production facilities. As a consequence, the BLM has achieved an 
overall reduction in the footprint of development involved in winter 
drilling projects in the Pinedale Anticline relative to what would 
otherwise have resulted.
    Some of the recently developed land use plans have been among the 
most restrictive ever developed for oil and gas leasing on Federal 
lands. The BLM's land use planning process seeks to ensure that 
domestic oil and gas development on public lands is done in a way that 
protects the environment.
    The BLM is also using performance-based standards to challenge 
industry to reduce emissions, minimize surface disturbance, and develop 
quick and effective reclamation techniques to improve restoration of 
disturbed areas. If on-site mitigation measures do not achieve the 
desired conditions, companies have the option of undertaking off-site 
mitigation measures. For example, in March 2006, the BLM announced that 
EnCana is contributing up to $24.5 million over ten years toward an 
office dedicated to funding offsite mitigation and monitoring in the 
Jonah Field. The BLM believes that offsite mitigation can potentially 
become an increasingly useful tool for improving habitats adjacent to 
certain natural gas development areas.
Oil Shale, Tar Sands, and Other Strategic Unconventional Fuels, Section 
        369
    In section 369 of EPAct, Congress declared that it is the policy of 
the United States that oil shale, tar sands, and other unconventional 
fuels are strategically important domestic resources. Under that 
section, the Secretary of the Interior is required to make available 
for leasing lands necessary to conduct research and development 
activities with respect to technologies for the recovery of liquid 
fuels from oil shale and tar sand resources on public lands in 
Colorado, Utah, and Wyoming. In addition, the Secretary is also 
required to develop a program for the commercial leasing of oil shale 
and tar sands resources on public lands.
    The BLM published a call for nominations for 160-acre Research, 
Development and Demonstration (RD&D) oil shale leases on public lands 
in Colorado, Utah, and Wyoming in the Federal Register on June 9, 2005. 
It received 20 nominations for RD&D leases. After review of the 
nominations, eight were further evaluated and six proposals were 
selected. Five of the selected nominations were for lands in Colorado, 
and the other selected nomination was for lands in Utah.
    The BLM Colorado and Utah State Offices worked with each of these 
proposals to complete the NEPA review process, which included 
opportunities for public input. Public open houses were held in Rangely 
(March 28, 2006), Meeker (March 30, 2006), Rifle (April 4, 2006), and 
Grand Junction, Colorado (April 6, 2006) as part of the public comment 
process.
    The preliminary Environmental Assessment for the one proposal in 
Colorado was released on July 28, 2006, for a 30-day public review. The 
preliminary Environmental Assessments for the remaining Colorado 
proposals were released on August 15, 2006. The preliminary 
Environmental Assessment for the Utah proposal was released on 
September 18, 2006, for a 30-day public review period. The final 
Environmental Assessments for the Colorado proposals were completed on 
November 9, 2006. The Colorado leases were executed on December 15, 
2006. The final Environmental Assessment and decision record for the 
Utah proposal is currently being reviewed by the BLM Washington Office.
    The BLM engaged in a number of other activities with respect to oil 
shale.
      A 90-day report to Congress was provided on December 6, 
2005, that discussed the status of implementation actions to: 1) 
promulgate regulations; 2) to prepare a Programmatic Oil Shale/Tar 
Sands Leasing EIS; and 3) to develop a leasing program.
      On August 25, 2006, the BLM published an Advance Notice 
of Proposed Rulemaking in the Federal Register to solicit public 
comment on royalty rates, due diligence, and other provisions of the 
oil shale regulations. On September 26, 2006, the Advance Notice was 
reopened and extended to October 26, 2006 for additional public 
comment.
      The states of Colorado, Utah and Wyoming requested an 
opportunity to provide input on preparation of the oil shale 
regulations. A listening session was held with these States on December 
14, 2006, in Denver to provide this opportunity. Another listening 
session is scheduled for April 26, 2007, in Salt Lake City.
      The Federal Register Notice of Intent for the EIS was 
published in the Federal Register on December 13, 2005, and the Draft 
EIS is currently scheduled for release late in the summer of 2007.
      Finally, Argonne National Laboratory was selected as the 
contractor to prepare the Programmatic EIS required by Section 369(d) 
of EPAct.
Conclusion
    Mr. Chairman, thank you for the opportunity to testify today. I 
hope my remarks have illustrated the careful diligence with which 
Interior and the BLM are engaged in EPAct implementation, and the 
efforts that we have made to encourage public participation and solicit 
public input at every turn. This concludes my prepared remarks. I would 
be happy to respond to questions you may have.
[GRAPHIC(S) NOT AVAIALBLE IN TIFF FORMAT]
                                 
    Mr. Costa. And you are almost speechless at the end of it. 
How about that?
    Mr. Haspel. I tried to make five minutes.
    Mr. Costa. Why don't you have a little water and take a 
little rest up there? We do appreciate your testimony. Our next 
witness is Ann Morgan, Vice President of Public Lands Campaign 
for The Wilderness Society, and a person who has both had an 
opportunity to engage in public service in Colorado with the 
Bureau of Land Management as well as in the private sector. So 
would you please begin your testimony, Ms. Morgan?

   STATEMENT OF ANN MORGAN, FORMER STATE DIRECTOR, COLORADO, 
BUREAU OF LAND MANAGEMENT, VICE PRESIDENT FOR PUBLIC LANDS, THE 
                       WILDERNESS SOCIETY

    Ms. Morgan. Thank you. Chairman Costa, members of the 
Subcommittee, thank you for inviting me to testify about the 
onshore Oil and Gas Provisions of the Energy Policy Act of 2005 
and how the implementation of this Act has affected western 
lands and resources. While I am currently the Vice President of 
the Public Lands Campaign at The Wilderness Society, between 
1994 and 2002 I served as a Bureau of Land Management State 
Director, including five years in Colorado.
    It was part of my responsibility to manage the BLM lands 
and resources to achieve a balance between conservation and 
development. I believe that it is possible to have a vibrant 
oil and gas program and at the same time protect the public's 
other important resources such as wildlife, clean air, clean 
water, places to hunt, fish, recreate and enjoy wilderness. In 
fact, in the five years that I was State Director in Colorado, 
the number of acres sold annually oil and gas lease sales 
doubled.
    Everyone you will hear from today agrees that oil and gas 
development is a legitimate and important use of the public 
lands. The problem is that over the last six and a half years 
oil and gas development has become the predominant use of the 
public lands where those oil and gas resources exist. 
Unfortunately key aspects of Title III of the Energy Policy Act 
of 2005 have exacerbated that problem.
    The Federal Land Policy and Management Act directs the BLM 
to manage for multiple resources including oil and gas but also 
wildlife, fisheries, recreation, cultural and wilderness 
resources. However, in recent years the BLM policies have 
facilitated the extraction of oil and gas resources to the 
virtual exclusion of many of these other resources.
    This policy has been predicated on the fallacious notion 
that too many restrictions have impeded energy development on 
the west public lands. The fact of the matter is that most BLM 
public lands in the five Rocky Mountain states containing 
substantial natural gas resources are available for development 
and have been for a long time.
    At the same time that the BLM is rolling out a multi-
million dollar healthy lands initiative designed to restore 
lands and habitat impacted by oil and gas development, they are 
also routinely waiving permit conditions designed to protect 
wildlife and healthy lands. They are inadequately funding their 
inspection enforcement program, unable to meet their 
commitments to monitor wildlife and air quality impacts, 
opening more sensitive lands to leasing, and they are 
estimating that over a million acres will be graded, drilled, 
built upon or disturbed by currently planned new oil and gas 
development.
    BLM indicates that whole over 36 million acres of the 
Federal mineral estate are under lease, only 12 million are 
under production. Why are they continuing to rush to new 
leases? This committee has an opportunity to redress the 
imbalances in the BLM's oil and gas program. It is possible to 
have an oil and gas program that provides for oil and gas to be 
made available to the American people while protecting the last 
remaining wild places in the American west, the wildlife that 
inhabit these lands, the quality of the west air and water, and 
the property rights of ranchers and farmers.
    I commend to your attention the western energy agenda 
attached to my statement. This is a proposal of a series of 
recommendations endorsed by a host of local and national 
organizations. Among these recommendations are to eliminate the 
pilot project offices and require oil and gas operators to 
fully cover the administrative costs of their program, repeal 
Sections 390 of the Energy Policy Act to eliminate new 
categorical exclusions of NEPA, review and repeal Section 366 
because it only serves to pressure the BLM to take quick action 
within artificial timeframes, to fully fund the BLM's 
inspection and enforcement program and ensure that inspector's 
time is spent on inspection and enforcement activities not on 
permitting new wells, to require reclamation bonds that fully 
cover the cost of restoring damage to the public lands and 
resources from oil and gas development. The BLM's current 
reclamation bonding requirements have not changed in decades.
    To require the BLM to develop and require adherence to best 
management practices designed to minimize damage from oil and 
gas activities, and finally given the amount of leases already 
in place and the damage to public lands that has already 
occurred, Congress should consider limiting the Department of 
Interior's ability to continue issuing leases in areas that 
have been proposed for protection, identified as having 
wilderness characteristics or are included in the Forest 
Service roadless areas, allowing the Department to take a 
breath and reassess its approach.
    Thank you very much for the opportunity to testify and to 
share our concerns about the extreme pace of development and 
the inability of the BLM to balance oil and gas development 
with its obligations to also manage the west's wildlife, clean 
air, clean water, recreation, wilderness, and other resources. 
I would also be glad to respond to Representative Pearce's 
comments and questions. If I do not have the information for 
that list of questions now, I would be glad to get that 
information back to you within 10 days.
    [The prepared statement of Ms. Morgan follows:]

    Statement of Ann J. Morgan, Vice President of the Public Lands 
                    Campaign, The Wilderness Society

    Chairman Costa, members of the Subcommittee, thank you for inviting 
me to address this Subcommittee and to testify about the onshore oil 
and gas provisions of the Energy Policy Act of 2005 and how the 
implementation of this act has affected Western lands and resources.
    While I am currently the Vice President of the Public Lands 
Campaign at The Wilderness Society, between 1994 and 2002 I served as a 
Bureau of Land Management (BLM) State Director, including five years in 
Colorado. It was a part of my responsibility to manage the BLM lands 
and resources to achieve a balance between conservation and 
development. In the five years I was State Director in Colorado, the 
number of acres sold annually at oil and gas lease sales doubled. I 
believe that it is possible to have a vibrant oil and gas program and 
at the same time protect the public's other important resources such as 
wildlife, clean air, clean water, and places to hunt, fish, recreate 
and enjoy wilderness.
    Everyone you will be hearing from today agrees that oil and gas 
development is a legitimate and important use of the public lands. The 
problem is that over the past 6 1/2 years oil and gas development has 
become the predominant use of the public lands where oil and gas 
resources exist. In fact the current policy being pursued by the BLM is 
so out of balance that there is a rising chorus of concern among 
growing numbers of state and local elected officials, game and fish 
departments, hunters, anglers, ranchers, farmers, and other residents 
of the rural West. Unfortunately, key aspects of Title III of the 
Energy Policy Act of 2005 (EPAct) have exacerbated the imbalances that 
were present prior to EPAct's enactment. My statement today traces the 
history of the current policies, and their impacts on other public land 
values, and makes some suggestions for areas of EPAct that should be 
revisited by this Committee.
    The Federal Land Policy and Management Act (FLPMA) provides that 
the 261 million acres of public lands managed by the Bureau of Land 
Management be managed ``in a manner that will protect the quality of 
scientific, scenic, historical, ecological, environmental, air and 
atmospheric, water resource, and archeological values; that, where 
appropriate, will preserve and protect certain public lands in their 
natural condition; that will provide food and habitat for fish and 
wildlife and domestic animals; and that will provide for outdoor 
recreation and human occupancy and use'' (43 U.S.C. 1701 (a)(8)). The 
law also provides that the public lands be managed in a manner that 
``recognizes the Nation's need for domestic sources of minerals...'' 
(43 U.S.C. 1701 (a)(12)). However, in recent years it has become the 
policy of the BLM to facilitate the extraction of federal oil and gas 
resources, where these resources exist, to the virtual exclusion of all 
other resource values. My testimony will focus on this disturbing 
transformation of BLM's policy in connection with development of 
conventional oil and gas resources on our public lands.
    I understand that you will be hearing from other Westerners 
regarding their concerns with the renewed commitment to experimenting 
with oil shale development and their experiences in having energy 
developers, aided and abetted by the BLM, trample their rights as 
private property owners. Many of our collective concerns (and proposals 
for remedying them) are set out in a document entitled the Western 
Energy Agenda, which I've included with my testimony (attached). This 
document not only identifies the important values at stake, but also 
sets out a path to ensure that our national energy policies achieve the 
appropriate balance between oil and gas development and economically 
viable Western communities.
    Current BLM oil and gas policies can be traced directly to Vice-
President Cheney's secretive National Energy Policy task force report 
in May of 2001. The Vice-President's report recommended, among other 
things, opening up the Arctic National Wildlife Refuge to oil and gas 
development, opening up the few protected areas within the National 
Petroleum Reserve--Alaska, and a review of so-called ``impediments'' to 
onshore development on federal public lands. These so-called 
impediments are the lease conditions put in place to safeguard the 
public's natural resources while the mineral resource is being 
developed.
    The task force report erroneously characterized 40% of federal 
onshore oil and gas resources in the lower 48 states as being ``off-
limits'' to development (National Energy Policy, May 2001, p. 5-10). 
This early misinformation about 40% of the lands being off limits 
created the appearance of dire restrictions and problems with BLM's 
land use plans and fiduciary management of the oil and gas program. In 
fact, subsequent studies by the BLM indicated that fully 88% of natural 
gas resources were available for development (EPCA I report, p. xv) and 
the data presented in BLM's more recent assessment (EPCA II) shows that 
close to 80% of BLM acreage is available for development. Amazingly, 
the results of these recent studies have not changed the BLM's push to 
increase access even further.
    The new energy policy was accompanied by two Executive Orders. 
Executive Order 13212 directed the federal agencies to ``expedite 
energy-related projects,'' including by expediting permit review and 
taking other actions to ``accelerate completion'' of these projects. 
Executive Order 13211 required agencies to prepare a ``statement of 
energy effects'' for any action that could adversely affect energy 
supply and distribution, detailing not only potential effects but also 
alternatives to avoid those effects. Taken in conjunction with the 
energy policy, these orders effectively mandated oil and gas 
development as the most important consideration in land management and 
characterized all other resources as impediments.
    Subsequent policies developed and practiced by the BLM to reduce 
environmental protection for the public lands, and encourage more oil 
and especially natural gas development with fewer environmental 
safeguards, have been predicated on this erroneous assumption.
    The BLM issues its policies and directives to its field offices in 
the form of Instruction Memoranda (IM) and IMs issued since the 
directed move away from balanced management reflect the agency's 
commitment to managing the public lands primarily to support oil and 
gas development. For example, Instruction Memoranda Nos. 2003-233 and 
2003-234 were issued in July 8, 2003, for the stated purposes of 
reaffirming BLM's ``commitment to not unduly restrict access to the 
public lands for energy exploration and development'' and of 
implementing the Administration's goal for federal agencies to 
``expedite their review of permits or take other actions necessary to 
accelerate the completion of [energy-related projects]'' including 
through reassessment and modification of so-called ``constraints'' to 
federal oil and gas leasing. IM 2003-233 also established seven 
priority areas (Powder River Basin, Green River Basin, Montana Thrust 
Belt, Piceance Basin, Uintah Basin, Ferron Coal Trend and San Juan 
Basin) for applying this approach. IM 2003-234 required a review of all 
existing lease stipulations to determine if they were still ``necessary 
and effective'' and to direct that, if ``lease stipulations are no 
longer necessary or effective, the BLM must consider granting waivers, 
exceptions, or modifications.''
    IM 2004-110 was issued to direct land managers to proceed with 
leasing even while applicable land use plans were being revised, even 
if those plans were considering protecting the natural values of the 
same lands, and to require that any deferrals of leasing be supported 
by detailed explanations and documentation, submitted to the state and 
national directors of the BLM. This change in policy also required a 
change to the BLM's Land Use Planning Handbook, which had historically 
directed the agency not to take actions like leasing during the 
revision of a resource management plan, but in 2005 was revised to 
direct land managers to proceed with leasing.
    IM 2005-247, issued in the wake of the Energy Policy Act of 2005 
(which I'll discuss in more detail later in my testimony) to address 
``NEPA compliance'' in light of the new leasing priorities, recommends 
that BLM develop an alternative of higher well density and development 
beyond that actually proposed by the operator and provides direction as 
to how to make the maximum number of projects fit into categorical 
exclusions to avoid NEPA altogether.
    BLM's budget priorities also reflect this imbalance between the oil 
and gas resource and all of the other biological, cultural, 
recreational and other resources it is mandated to manage and protect. 
The BLM's oil and gas budget since FY 2000 has more than doubled--from 
$57 million in FY 2000 to $121 million in FY 2008, while funding for 
other important programs have remained stagnant or declined, for 
example the BLM's magnificent National Landscape Conservations System. 
Ironically, Congress has prohibited the BLM from helping to cover its 
administrative costs via the prohibition on cost recovery fees in Sec. 
365 (i) of the Energy Policy Act of 2005, a provision which to its 
credit the House is on record of repealing in H.R. 6, passed earlier 
this year.
    In addition to these substantial policy changes, BLM's land use 
planning initiative was hijacked to make more lands available for oil 
and gas development. In 2000, the BLM presented Congress with a request 
to substantially increase the amount of funding for its land use 
planning program, in order to update BLM land use plans that were 
severely out of date. Though the BLM's Report to the Congress--Land Use 
Planning for Sustainable Resource Decisions (February 2000) presented a 
compelling array of issues that needed to be addressed in new land use 
plans--including managing for threatened and endangered species, 
recreation, protected lands (such as the national monuments, national 
conservation areas, and wild and scenic river corridors that were 
specifically mentioned by Secretary Babbitt in connection with this 
budget request), OHVs, wildland/urban interface and energy 
development--the Bush Administration hijacked this initiative to focus 
on having new plans designed primarily to make more BLM lands available 
for development (despite the fact that most BLM lands in the five-state 
Rocky Mountain region were already available for development).
    In February, 2002, the funding for the planning initiative 
originally designed to address the special values and competing uses of 
the public lands was officially prioritized for 21 ``Time Sensitive 
Plans,'' which would be completed on expedited schedules. 11 of these 
21 plans were included for the express purpose of addressing the oil 
and gas development potential of the lands. The remaining 10 were plans 
that BLM was required to complete as part of lawsuit settlements or the 
establishment of new units in the National Landscape Conservation 
System.
    An analysis of the BLM's planning documents completed by The 
Wilderness Society in January, 2006, found that 95% of lands addressed 
in the 11 energy-related time sensitive plans would be open to oil and 
gas development, leading to a 200% increase (or more than tripling) in 
the amount of wells projected on these public lands (attached).
    The prioritization of private development of the oil and gas 
resource over the management and preservation of other natural 
resources pervades BLM's land management, even beyond the time 
sensitive plans. In the Little Snake resource area of Colorado, 93% of 
the planning area is open to oil and gas development in the Draft 
Resource Management Plan. Every management alternative presented in the 
recently released Draft Resource Management Plan for the Pocatello, 
Idaho field office opened 98% of the planning area to leasing; even 
though there is very little potential for oil and gas development in 
the area, the BLM has focused on preserving opportunities for oil and 
gas drilling at the expense of wise management of the other natural 
values of these lands.
    A subsequent, preliminary analysis of BLM and Forest Service major 
land use planning and energy project decisions completed by The 
Wilderness Society in October, 2006, found that more than 118,000 new 
wells were approved, or in the process of approval, in just Colorado, 
Montana, New Mexico, Utah and Wyoming, which would triple the amount of 
producing wells nationwide over the next 15 to 20 years (attached).
    The impacts from this type of development would truly be 
staggering--the average amount of land actually graded, drilled, built 
upon or disturbed as estimated by the BLM would likely exceed 1,000,000 
acres. This does not even take into account additional serious and 
frequently severe impacts like fragmentation of wildlife habitat into 
smaller pieces that eventually cannot sustain viable wildlife 
populations. All of this new development must be considered against the 
backdrop of the existing 63,000 producing wells, the over 10,000 shut-
in wells, the over 100,000 orphaned wells and the approximately 
24,000,000 acres of leased acreage not yet in development that the 
industry already has under lease.
    It is clear that sensitive resources, such as wildlife and wildlife 
habitat and wilderness-quality lands, are at risk from current 
policies. Oil and gas companies frequently request that the conditions 
in their leases, which are designed to protect public values such as 
wildlife, clean air and clean water, be put aside in favor of removing 
restrictions on oil and gas development activities. For example, the 
Rawlins, Wyoming Field Office granted 72% of the requests to waive 
lease conditions, known as stipulations, which were received between 
October 1, 2005 and September 30, 2006. The Pinedale, Wyoming Field 
Office granted 88% of the requests for wildlife exceptions received 
from October 2006 through February 2007. The Pinedale Field Office has 
a history in recent years of granting such requests, granting 90% of 
requests for exceptions from stipulations applied to protect sage 
grouse during the winter of 2002-2003 and granting 88% of requests for 
exceptions from big game winter range stipulations.
    According to the Wyoming Game and Fish Department, ``As densities 
of wells, roads, and facilities increase, the effectiveness of adjacent 
habitats can decrease until most animals no longer use the habitat.'' 
The damage caused by such oil and gas drilling is dramatic: studies 
have shown that road densities of two miles per square mile causes a 
50% reduction in elk populations, while six miles of roads per square 
mile drives almost 100% of the elk from the area. A recent study in the 
Pinedale area showed a 46% decline in mule deer during the first four 
years of gas development. Pronghorn are even more sensitive to 
disturbance, with BLM documents indicating that pronghorn are adversely 
affected at road densities of one mile per square mile. A study of the 
potential impacts of coalbed methane development in the Powder River 
Basin on sage grouse, which was commissioned by the BLM, found that 
areas in which methane wells are being drilled did not have the same 
strong population growth recorded elsewhere in the basin in 2004 and 
2005--with bird population in 2005 at only 12% of what it was in 2000, 
in comparison to closer to 70% in areas outside development.
    In Utah and Colorado, the BLM has issued new oil and gas leases on 
more than 200,000 acres of lands that have been the subject of 
Congressional attempts to designate them as wilderness. Lands proposed 
for wilderness protection in Wyoming and New Mexico have also been 
leased.
    The BLM's exclusive focus on oil and gas development has led to 
hurried leasing and negligent land management; the agency is not 
fulfilling its obligations under FLPMA or under the Federal Oil and Gas 
Royalty Management Act. FLPMA requires the BLM to manage the multitude 
of resources on the public lands for their many uses and values. By 
focusing only on development of oil and gas, and acknowledging the 
other natural resources of our public lands only as ``impediments'' to 
development, the BLM has, inevitably, allowed serious damage to occur. 
The Federal Oil and Gas Royalty Management Act of 1982 requires the BLM 
to inspect oil and gas operations to ensure compliance with lease 
conditions, including those stipulations designed to protect the 
environment.
    The rush to open public lands to drilling is evidenced by the 
leased lands and drilling permits held unused by the oil and gas 
industry. BLM data indicates that while over 36 million acres of the 
federal mineral estate are under lease, only 12 million are under 
production. Does it really make sense for the BLM to rush parcels to 
auction when this kind of asset-hoarding is going on by the oil and gas 
industry? The BLM also predicts that it will receive requests for more 
than 10,000 applications for permit to drill (APDs) this year. In its 
rush to permit drilling, the BLM has consistently issued more permits 
than the industry can drill. For instance, in Fiscal Year 2004, 
industry requested and received approval to drill 6,052 wells, but 
drilled just 2,702, resulting in a surplus of more than 3,000 permits. 
Nevertheless, the BLM continues to prioritize processing APDs above all 
other management obligations.
    The BLM's lack of due care for our public lands can be seen in its 
approach to applying and enforcing lease stipulations and conditions of 
approval for APDs. Stipulations are lease conditions that describe 
actions that the oil and gas operator must take to protect wildlife 
habitat, air, water and other important values while developing the oil 
and gas resource. Special stipulations may limit activities during 
certain time periods (such as prohibiting activities in raptor nesting 
areas or big game winter range during crucial times of year) or 
prohibit use of the land surface altogether (such as within 1/4 mile of 
sage grouse leks). However, these lease terms can only be effective if 
they are applied. As I've noted previously, the BLM's guidance requires 
an ongoing assessment of whether lease stipulations should even be 
retained--characterizing them as ``impediments'' to development. Also, 
when asked, the BLM will generally agree to give operators relief from 
complying with those that remain a part of the lease.
    Conditions of approval are imposed when an oil and gas operator 
applies for a permit to drill a well and can impose limitations on the 
way in which an operator will drill a well, such as setting out 
specific requirements to restore healthy plant populations and prevent 
erosion. So-called ``best management practices'' (such as reclamation 
of unused well pad areas) are applied as conditions of approval for an 
APD, but their application is at the discretion of the agency--as is 
their content. The BLM does not make best management practices 
mandatory in its land use plans, even though the agency touts its best 
management practices initiative.
    The Government Accountability Office (GAO) issued a report in June 
2005 entitled ``Oil and Gas Development--Increased Drilling Permit 
Activity Has Lessened BLM's Ability to Meet Its Environmental 
Protection Responsibilities'' (GAO-05-418). As the title indicates, the 
GAO found that the increased volume of APDs, and the mandates to focus 
on processing them, has resulted in more BLM staff resources devoted to 
issuing permits--with less attention being paid to monitoring and 
enforcing compliance with environmental standards that apply to the 
activities conducted under the permits.
    A May, 2006, internal BLM assessment provided confirmation on a 
large scale of the GAO's findings. The report found that the Pinedale 
Field Office had failed miserably in fulfilling the many commitments 
made in land use plans, resource assessments (and in permitting oil and 
gas drilling), to monitor and limit harm to wildlife and air quality 
from natural gas drilling in western Wyoming. The report stated that 
there is often ``no evaluation, analysis or compiling'' of data 
tracking the environmental consequences of drilling. For example, the 
report details six years of failures by the BLM in Pinedale to honor 
its commitments to track pollution that affects air quality and lake 
acidification in nearby wilderness areas.
    The BLM's rush to lease and to prioritize leasing over all other 
considerations has resulted in the agency including absolutely 
inappropriate parcels in lease sales, raising the ire of local 
municipalities and causing the BLM to remove parcels from lease sales 
after publicizing their availability. The following examples, from just 
6 months of last year in Colorado, illustrate the depth of this 
problem:
    1.  The February 9, 2006 Colorado lease sale included about 11,000 
acres in Palisade's watershed, and 600 acres in Grand Junction's 
watershed, according to the BLM. Those watersheds provide drinking 
water to the municipalities. Both municipalities protested the lease 
sale, based on risks to the water supply and inadequate protections in 
lease stipulations. [Land Letter, 2/2/06; Grand Junction Daily 
Sentinel, 1/19/06]. This same lease sale was also supposed to include 
parcels along the San Miguel River, which is listed on American Rivers' 
``Outstanding Rivers'' list and, under BLM guidance, should not have 
been leased until the agency completed a study of its wild and scenic 
eligibility. A number of protests were filed. Ultimately, the BLM 
acknowledged their errors and removed nine parcels, totaling 
approximately 7,300 acres along the San Miguel River from the lease 
sale.
    2.  The May 11, 2006 Colorado lease sale was slated to include the 
minerals under a property owned by the City of Craig, where the city 
was planning to build a picnic area, boat ramps and other facilities on 
a city-owned parcel of land on the eastern edge of Elkhead Reservoir. 
Again, protests were filed and the city expressed its shock. The BLM 
again acknowledged its error and removed the parcel from the lease 
sale.
    3.  The August 8, 2006 Colorado lease sale was slated to include 
the minerals underlying three parcels in two Colorado State Wildlife 
Areas (the Piceance Creek and Browns Park State Wildlife Areas). Again, 
protests were filed and BLM decided to remove these parcels from the 
sale.
    The ecological condition of the public lands has become so dire 
that the Administration has started a new program, known as the 
``Healthy Lands Initiative,'' to fund ``restoration of habitat, weed 
management, and improvement of riparian areas'' on a ``landscape 
scale.'' For areas heavily impacted by oil and gas development the 
activities needed to maintain the health of our public lands should 
have been a mandatory condition of developing them, but, as I've 
outlined already, the BLM has either not required or not enforced the 
necessary protective measures. And, even now, the Administration will 
not make the health of our public lands a priority on the same level as 
permitting oil and gas development. Funding for this initiative is 
expected to come not only from taxpayers, but also from cooperative 
agreements with private parties, incentives for industry and other 
``non-traditional'' approaches to get assistance from those who care 
about these lands.
    Provisions of Title III of EPAct further institutionalized the 
imbalance in the BLM's management of public lands. The Energy Policy 
Act of 2005 will only exacerbate BLM's continued focus on permitting 
oil and gas development at the expense of environmental protection. For 
example, though in several years prior to enactment of EPAct the BLM 
issued thousands more drilling permits than were used by operators, in 
Sec. 366 Congress imposed a 30-day timeframe for APD issuance based on 
arguments by industry representatives that the BLM was negligent in 
timely responses to submission of drilling permit applications. This 
provision further ensures that the BLM will do an inadequate job 
fulfilling its multiple use mandates. Conducting a complete 
environmental analysis of the direct, indirect, residual and cumulative 
impacts on resources as diverse as air, water, wildlife, cultural 
resources, and recreation is complicated and deserves to be done well 
and in conjunction with interested parties including landowners, 
communities and state fish and game agencies. The artificial timeframes 
in EPAct pressures the agency to essentially rush to judgment on 
permits, issuing them without sufficient review and contributing to the 
resulting damage of the public lands that I've described and the BLM 
(in its Healthy Lands Initiative) has now acknowledged.
    Likewise, apparently due to complaints from industry 
representatives regarding the alleged onerous burden of complying with 
the National Environmental Policy Act (NEPA), Congress provided a 
series of mandatory ``categorical exclusions'' from NEPA compliance for 
certain activities in Sec. 390 of EPAct. These exclusions would mean 
that the BLM would no longer need to analyze and disclose the 
environmental impacts of certain activities, such as an oil and gas 
operator disturbing 5 acres at a time of a lease up to a total of 150 
acres per lease, drilling new wells in a ``developed field'' and 
drilling on a site where drilling has previously occurred even if that 
drilling was just a water well. To those who own land nearby and to 
hunters, fishers, and others who care about our Western landscapes, the 
lack of environmental analysis, review of alternatives and public 
involvement is disturbing. The nation's natural resources are being 
subjugated to the development of the oil and gas resources without even 
the pretense of balance.
    The ``Pilot Projects'' authorized in Sec. 365 of EPAct simply 
signal that oil and gas development is the highest priority activity in 
the BLM Field Offices where the program is authorized. These offices 
continue to issue more APDs than industry can drill, are unable to keep 
up with their inspection and enforcement obligations, no longer manage 
for multiple uses, and fail to mitigate the impacts of drilling 
(despite their promises to the public).
    In conclusion, this Committee has an opportunity to redress the 
imbalances in the BLM's oil and gas program. To reiterate: our view is 
the oil and gas development is a legitimate use of the public lands--
but not everywhere on the public lands, and not in a manner that 
impairs other resource values. It is possible to have an oil and gas 
program that provides for oil and gas to be made available to the 
American people, while protecting the last remaining wild places in the 
American West, the wildlife that inhabit these lands, the quality of 
the West's air and water, and the property rights of ranchers and 
farmers. Our specific recommendations include:
    1.  Instead of dedicating income from lease rentals to perpetuate 
the imbalance in management in the Pilot Project Offices, Congress 
should eliminate this program altogether, and instead require the oil 
and gas operators to fully cover the administrative costs of the 
program that provides such great benefits to them.
    2.  Repeal Section 390 of the EPAct to eliminate new categorical 
exclusions from NEPA review, requiring the BLM to consider the impacts 
of additional oil and gas developments on public lands and to permit 
public review and comment.
    3.  Repeal Section 366 of EPAct, because it only serves to pressure 
the BLM to take quick action within artificial timeframes on permits 
and hamstrings the agency's ability to thoroughly review permits and 
protect other resources.
    4.  Fully fund the BLM's Inspection and Enforcement Program and 
ensure that inspectors' time is spent on inspection and enforcement 
activities, not on permitting more wells.
    5.  Require reclamation bonds that fully cover the cost of 
restoring damage to public lands and resources from oil and gas 
development. The BLM's current reclamation bonding requirements have 
not been changed in decades. Damage done to the public's lands from oil 
and gas activities should be avoided, and bonding levels should be set 
to cover the full costs of restoration.
    6.  Require the BLM to develop and require adherence to Best 
Management Practices designed to minimize the damage to public land 
values from oil and gas activities.
    7.  Given the amount of leases already in place and the damage to 
public lands that has already occurred, Congress should consider 
limiting the Department of Interior's ability to continue issuing 
leases in areas that have been proposed for protection, identified as 
having wilderness characteristics by the BLM or are included in Forest 
Service roadless areas--allowing the Department to ``take a breath'' 
and reassess its approach to oil and gas development on our public 
lands.
    We commend to the Committee's attention the ``Western Energy 
Agenda'' attached to my statement. This series of modest proposals 
endorsed by a host of local and national organizations, if enacted, 
will begin to restore the balance so badly needed in the management of 
our public lands. I invite the Committee to hear from other Westerners 
who are experiencing first hand the impacts of the current development 
boom on their farms, ranches, favorite hunting grounds, and 
communities. We look forward to working with the Committee to restore 
balance to the management of our nation's public lands in the weeks to 
come.
                                 ______
                                 

  Amigos Bravos  Biodiversity Conservation Alliance  
 Californians for Western Wilderness  Coalition for the Valle 
   Vidal  Colorado Environmental Coalition  Colorado 
Wildlife Federation  Earthjustice  Environment Colorado 
  Forest Guardians  Idaho Wildlife Federation  
   Montana Wildlife Federation  National Wildlife Federation 
   Natural Resources Defense Council  Nevada Wildlife 
Federation  New Mexico Wildlife Federation  New Mexico 
Wilderness Alliance  Northern Plains Resource Council  
Oil and Gas Accountability Project  Powder River Basin Resource 
  Council  Sagebrush Sea Campaign  San Juan Citizens 
    Alliance  Sierra Club  Southern Utah Wilderness 
 Alliance  Southwest Environmental Center  Sustainable 
 Obtainable Solutions  The Wilderness Society  Western 
Colorado Congress  Upper Green River Valley Coalition  
  Western Organization of Resource Councils  Western Resource 
Advocates  Wilderness Workshop  Wyoming Outdoor Council

                       2007 Western Energy AGENDA
    The American West is blessed with enough clean, renewable energy 
potential to meet a substantial portion of our nation's energy demand. 
But as the Rocky Mountain states look to the future, a dramatic 
increase in drilling for oil and natural gas is placing unprecedented 
pressures on water, ranches, wildlife, landscapes and communities 
across the Rocky Mountain West. The inclusion of Western energy issues 
in the recently announced House Natural Resources Committee oversight 
agenda is an important first step toward responsible energy development 
in the region. We also encourage Congress to aggressively pursue a 
clean energy agenda, an outline of which is available at 
www.saveourenvironment.org/2007_Energy_Platform.pdf.
    In order to ensure that our national energy policies achieve the 
appropriate balance between oil and gas development and economically 
viable western communities, Congress should take the following steps:
Protect the West's Water
    The West's water is the region's most important natural resource 
and should be protected from the contamination and degradation that is 
frequently caused by irresponsible oil and gas drilling.
      Repeal Section 323 of the Energy Policy Act of 2005 
(EPAct), which exempts oil and gas construction activities from the 
Clean Water Act's stormwater permit requirement.
      Repeal Section 322 of EPAct, which exempts hydraulic 
fracturing from the Safe Drinking Water Act. Hydraulic fracturing 
involves the high-pressure injection of water, sand, and toxic fluids 
into a rock or coal formation to enhance oil and gas production.
      Allocate funds for the National Academy of Sciences study 
on the effect of coalbed methane production on water resources as 
required by Section 1811(d) of EPAct. Funds should be allocated from 
the BLM oil and gas program in the FY 2008 Department of Interior 
Appropriations bill.
Safeguard The West's Special Places
    The vast majority of public lands under lease across the West--
approximately 24 million acres of 36 million acres under lease--have 
not been put into production, yet the BLM continues to fast-track 
leases on millions of acres of public lands each year and is moving 
forward with creating transmission corridors that could harm our 
environment.
      Support protection of New Mexico's Otero Mesa, Colorado's 
Roan Plateau, Wyoming's Red Desert, and Utah's Redrock Wilderness from 
oil and gas development.
      Revise Section 368 of EPAct, regarding energy 
transmission corridors, to avoid sensitive lands, eliminate the 
application of categorical exclusions, and limit the width of 
designated corridors.
Conserve America's Wildlife Heritage
    The American West has many of the world's last remaining big game 
herds, with hundreds of thousands of elk, mule deer and pronghorn 
following ancient migration corridors to calving and fawning areas and 
critical winter habitat they need to survive, as well as critical 
habitat for declining species such as sage grouse.
      Require BLM to use Best Management Practices. Every 
company authorized to operate on federal lands should use practices 
that will avoid and minimize habitat fragmentation and degradation, 
such as directional drilling, well clustering, maximizing spacing 
between wells and well clusters, phased development, unitization and 
complete concurrent restoration.
Defend Western Ranches and Private Lands
    Ranchers and other landowners who don't own the mineral rights 
beneath their property have little say over whether and how the federal 
minerals under their lands are developed, and little recourse from the 
impacts this development can have on their health, drinking water, 
livelihoods and quality of life.
      Support legislation like Congressman Udall's H.R. 2064 
Western Waters and Farm Lands Protection Act that requires surface use 
agreements, adequate notification of surface owners, adequate bonding, 
regulation of water impacts, the clean up of orphaned, abandoned and 
idled wells, and stronger reclamation standards.
Restore Public Participation and Balance
    The BLM's highest priority over the past six years has been to 
issue as many oil and gas leases in as short a time as possible.
      Amend Section 366 of EPAct to eliminate the 30-day permit 
deadline. Pressuring the BLM to take quick action on permits hamstrings 
its ability to thoroughly review permits and protect other resources.
      Repeal Section 390 of the EPAct to eliminate new 
categorical exclusions from NEPA review. Requiring BLM to consider the 
impacts of additional oil and gas development on public lands and to 
permit public review and comment will lead to more careful decision-
making.
      Support the Bush Administration's proposal to eliminate 
dedicated funding for the Permit Coordination Pilot Project established 
in Section 365 of EPAct and repeal of the cost recovery fee 
prohibition. BLM field offices have issued permits at a breakneck pace, 
often ignoring their commitment to other environmental resources and 
the public.
      Fully fund BLM's Inspection and Enforcement Program and 
ensure that inspectors' time is spent on inspection and enforcement 
activities, not permitting of other activities.
Look Before We Leap on Oil Shale
    The Energy Policy Act put the BLM on a path to seek commercial 
leasing for oil shale as early as 2008--despite the fact that there 
still is no economically viable extraction technology and the long list 
of environmental and social impacts cannot be fully understood by then.
      Prohibit commercial lease sales, promulgation of 
regulations, and environmental analysis for commercial leasing until 
current Research Development and Demonstration projects have proven 
they are economically viable without taxpayer subsidies, will comply 
with all existing environmental protections, and have acceptable 
environmental and social impacts.
Conclusions
    The Rocky Mountain West deserves a balanced energy policy that 
helps provide for our nation's needs by maximizing energy efficiency, 
promoting renewable energy resources, and ensuring protections for the 
region's communities, wildlife, water supplies and landscapes. Oil and 
gas is a part of our nation's energy portfolio but it must be developed 
in a manner that is socially and environmentally sustainable. We urge 
Congress to help achieve this balance through consideration and 
adoption of this Western Energy Agenda.
                                 ______
                                 
                  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
                                 
Preliminary Analysis of Current Federal Actions

                   Authorizing Drilling of New Wells

                             (October 2006)

Analysis Completed by The Wilderness Society's BLM Action Center

Contact:  Nada Culver, 303-650-5818 x117
         Heath Nero, 303-650-5818 x116

    In October 2006, The Wilderness Society's BLM Action Center 
conducted a preliminary analysis of land use plans and large-scale 
projects approved or in the process of approval in the states of 
Colorado, Montana, New Mexico, Utah and Wyoming in order to estimate 
the number of new oil and gas wells likely to be approved for drilling 
over the next 15 to 20 years. This document lists the names of the 
plans and projects analyzed, the number of new wells expected, and the 
sources the BLM Action Center used in its analysis. Over 118,000 new 
wells are expected in the five-state region from the 28 federal actions 
analyzed.
[GRAPHIC(S) NOT AVAIALBLE IN TIFF FORMAT]
                                 
    Mr. Costa. Very good. Well I can assure you that Mr. Pearce 
is very good at asking his questions, and he will get an 
opportunity to do just that in terms of the points you raised. 
I would like to defer at this point to Congressman Udall who 
has another hearing that he would like to attend, and I know 
that part of his focus was on the second panel but I would be 
happy to give you five minutes, an opportunity to focus on your 
area of interest.
    Mr. Udall. Thank you, Mr. Chairman.
    Mr. Costa. The gentleman from Colorado.
    Mr. Udall. Thank you, Mr. Chairman. I will always be in 
your debt. Thank you for holding the hearing. If I might, I 
would ask unanimous consent my entire statement be included in 
the record.
    Mr. Costa. With no objection, unanimous consent is 
approved.
    [The prepared statement of Mr. Udall follows:]

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

    Thank you, Mr. Chairman, and thank you for holding this hearing on 
subjects of great importance, especially regarding oil shale.
    Oil shale has great potential as an energy source, so it's an 
important part of our energy policy.
    And it's important to the taxpayers, who own most of it. They have 
an interest in what return they will get for this resource. But it's 
particularly important for Colorado.
    Our state has some of the most important deposits of oil shale, and 
Coloradans--particularly those on the Western Slope--will be directly 
affected by its development.
    Back in 2005, a report from the RAND Corporation spelled out the 
great benefits that can come from developing oil shale. But it also 
made clear it's important for the development to happen in the right 
way.
    The report said oil shale development will have significant 
effects, not just on the land but also on air quality and on both the 
quality and quantity of our very limited water supplies.
    And it says what Coloradans know already--large-scale oil shale 
development will bring significant population growth and is likely to 
put stress on the ability of local communities to provide needed 
services.
    In short, the report reminded us how much Colorado and our 
neighbors had at stake when Congress debated the oil shale provisions 
of the 2005 Energy Policy Act.
    The current law requires the Interior Department to prepare a 
programmatic environmental impact statement (EIS) on oil shale.
    That's the right thing to do. Work has started on that EIS, and 
Coloradans look forward to reading it. But the law also tells BLM to 
proceed promptly toward commercial leasing, regardless of what the EIS 
says--and, even before we know the outcome of the ongoing research and 
development work that Shell Oil and others are doing on R&D leases.
    I have been concerned that this risks a rush to commercial 
development before the Interior Department knows enough to do it right 
and before Colorado's communities have a chance to prepare for what 
will follow.
    So, I note that today the RAND Corporation's witness will testify 
that ``the economic, technical, and environmental feasibility of oil 
shale development is not adequate to support the formulation of a 
commercial leasing program on the timescale mandated'' by the 2005 law 
and that ``the fundamental approach the Department of the Interior is 
currently taking may be counterproductive if the goal is to keep open 
the option for a sustainable domestic oil shale industry.''
    The RAND witness will also testify that additional legislation may 
be needed. I think that is right, and I want to work with you, Mr. 
Chairman, to address this very point as we develop legislation.
    Thank you again for holding this hearing, and I look forward to 
hearing from the witnesses.
                                 ______
                                 
    Mr. Udall. Mr. Chairman, the importance of this hearing is 
not lost particularly on Coloradans given that we are the 
epicenter for the potential oil shale development. I think 
former Director Morgan outlined the concerns that many of us 
have in Colorado. My good friend from New Mexico talked about 
the EPAct legislation we passed, and I wanted to remind 
everybody here and for the record that in that law we required 
the Interior Department to prepare a programmatic environmental 
impact statement on oil shale, and that is the right thing to 
do.
    Work started on that EIS but the law also told the BLM to 
proceed promptly toward commercial leasing, regardless of what 
the EIS says, and even before we know the outcome of the 
ongoing research and development work that Shell Oil and others 
are doing on the R & D leases that have already been issued. 
And so I share a concern I think that many Coloradans share 
that this risks a rush to commercial development before the 
Interior Department knows enough to do it right and before 
Colorado's communities have a chance to prepare for what will 
follow.
    And in that spirit I wanted to note that the RAND 
Corporation's witness--and I commend to everybody the RAND 
Corporation report--will testify that, ``The economic, 
technical and environmental feasibility of oil shale 
development is not adequate to support the formulation of a 
commercial leasing program on the time scale mandated by the 
2005 law, and that the fundamental approach the Department of 
Interior is currently taking may be counterproductive if the 
goal is to keep open the option for a sustainable domestic oil 
shale industry.''
    The RAND witness, as I understand it, may also testify that 
additional legislation may be needed, and Mr. Chairman, I think 
that is the right course of action, and I would like to work 
with you to address this point as we move forward. I did--
before I direct some questions at the panel--want to 
acknowledge someone who will testify in the second panel, and 
that is former Representative and more important present 
rancher and farmer, Kathleen Sullivan Kelley, who has come all 
the way here to talk about her experiences in the late 1970s 
and early 1980s, and I hope we will really listen to her 
stories because she represents the people in that part of our 
great state. So it is great to see her representing.
    Mr. Costa. The constituent?
    Mr. Udall. She is not a constituent but she is on the 
doorstep of every member of the Colorado delegation.
    Mr. Costa. OK. It is just as good.
    Mr. Udall. So she is well known for her passion and 
articulate approach to explaining what the opportunities are 
but also the challenges. With that, I wanted to direct a 
question to Director Morgan, and you spoke to this I think but 
I heard my colleague from New Mexico suggest that somehow your 
testimony is at odds with your experience as the State BLM 
Director in Colorado. Do you agree with that?
    Ms. Morgan. No, Representative Udall, I do not. My years as 
State Director for BLM in Colorado we did do a lot of oil and 
gas leasing but we were also very cautious about where we 
offered those leases. We looked carefully at roadless and 
wilderness potential lands. We looked at wildlife habitat. I 
believe----
    Mr. Costa. Bring that mike a little closer, please and make 
sure it is on. Go ahead.
    Ms. Morgan. Should I repeat that? During my years as BLM 
State Director in Colorado, I believe we were able to issue oil 
and gas leases but also take a look at where we were issuing 
them to make sure that we were staying out of areas of 
sensitive habitat and staying out of roadless and wilderness 
quality lands.
    Mr. Udall. Thank you. I want to turn to Mr. Haspel. As I 
mentioned, the witness from the RAND Corporation suggests that 
not all is well with the oil shale program. Would you like to 
comment on that observation?
    Mr. Haspel. Yes, I would. Congress directed, as the 
Chairman pointed out, the Department to establish a leasing 
program, commercial leasing program within 180 days after the 
publication of the programmatic EIS. It did not direct the 
Secretary, however, to lease. It says that the Secretary may 
lease if there is, in fact, interest on the part of states and 
others to do so.
    We still would have to make a finding that it would be 
appropriate to use the leasing program that was constructed 
within the timeframe that Congress told us, and if the 
information was such that it was appropriate to do so that he 
might choose to do so, and if not, he would not. But that is 
all going to be informed by what we learn from the RD & D 
leases and what we learn from the public as we go through 
completing the programmatic EIS, and as we go through the 
development of the regulations which as I pointed out in my 
testimony the states of Colorado, Utah and Wyoming have all 
asked to participate in.
    Mr. Udall. Mr. Chairman, I see my time has expired. If I 
might, I would like to ask a question for the record of Ms. 
Morgan.
    Mr. Costa. Yes. I interrupted you and the witnesses in 
their answers. So quickly.
    Mr. Udall. Mr. Haspel, I would note that it does still say 
``may'' in the legislation, which still leaves the option to 
the Interior Secretary, and it does have the potential to 
accelerate the pace of development in ways that I think are 
unwise. Director Morgan, you have had a chance I think to 
review the RAND Corporation, and I would appreciate if you 
would comment for the record at your convenience in that 
regard, and I know that in your testimony you suggest that 
there are problems, and is it your understanding it would be up 
to Congress to fix those problems?
    Ms. Morgan. Yes. I think one of the main concerns we have 
is that we believe it makes sense to take the information that 
we gather, that the agency gathers from the project pilots and 
the R & D projects to form and develop a full commercial 
leasing program, and the way it is currently set up those are 
almost concurrent. We are not able to do that.
    Mr. Udall. Thanks again, Mr. Chairman. Thanks to the 
witnesses.
    Mr. Costa. I thank the gentleman from Colorado, and I think 
as it relates to the question that was asked last, you can 
elaborate in your written testimony. I suspect the gentleman 
from Colorado will ask you that in a formal submitted question. 
The Chair will now recognize the gentleman from New Mexico.
    Mr. Pearce. Thank you, Chairman. Ms. Morgan, I am reading 
the statement in Dow Jones, January 20, 2003, by Mr. Peter 
Morton of The Wilderness Society. He stated that if you bid on 
a lease on public land you can expect environmental litigation 
regardless of the merits. Was he speaking for The Wilderness 
Society?
    Ms. Morgan. I am not aware of a position of The Wilderness 
Society along those lines, no.
    Mr. Pearce. OK. That is interesting. Thank you. Mr. Haspel, 
it has been characterized already in the testimony that the 
Administration is kind of systematically shortchanging the NEPA 
policy. You are a career servant so you are not really a 
political appointee. Do you find any evidence that this 
Administration or any other Administration has systematically 
shortchanged NEPA under the processes?
    Mr. Haspel. No. The Bureau of Land Management is following 
the same process they followed before. I would point out that 
the number of----
    Mr. Pearce. Is your microphone on?
    Mr. Haspel. Yes, it is.
    Mr. Pearce. OK. Just pull it up close.
    Mr. Costa. A little closer please. We really want to hear 
you.
    Mr. Haspel. The Bureau of Land Management is following the 
same processes that they have before. They have been issuing 
instructional memorandums. I would note that they issue about 
250 a year dealing with all the various land use issues they 
deal with, and somewhere between 10 to 25 over the last four 
years have been dealing with oil and gas.
    The NEPA compliance aspects, they do the resource 
management plans. They follow through with EAs on site 
specific. The issue, of course, has been whether or not the 
categorical exclusions are somehow not an appropriate use. I 
would tell you that we believe they are. We are making use of 
the existing NEPA work that has been done, and we are making 
sure that it is being used in an effective and an efficient 
way.
    Mr. Pearce. Thank you. Again Ms. Morgan's testimony 
appeared to criticize the Administration for failing to inspect 
oil and gas operations to ensure compliance with lease 
conditions. Again, can you give me your reflection on what the 
Interior Department does as far as holding people to their 
lease agreements?
    Mr. Haspel. Prior to issuing APDs, there is a site 
inspection. After drilling occurs or as drilling occurs and 
during the process of operations, there are inspections. The 
number of inspections have increased by more than a third over 
the last three years where we are now doing just under 17,000 a 
year. There is sort of a triage process. We go and look at 
those where we have experience or lack of experience with the 
operator, where we are in sensitive areas and so on so that we 
are hitting the high priority inspections given the resources 
we have made available to us for the purpose of inspection and 
enforcement.
    Mr. Pearce. All right. Has the Department of the Interior 
issued any R & D oil shale leases in Utah, and if they have 
not, why not?
    Mr. Haspel. No, we have not yet. The documentation 
necessary to do that is now into review in the Washington 
office, and I do not at this point know when they plan to act 
on it.
    Mr. Pearce. OK. Ms. Morgan, you have a background with BLM. 
Are you opposed to using BLM land or Federal lands for 
generating wind energy?
    Ms. Morgan. Not if it is properly sited.
    Mr. Pearce. Yes. It is curious because they have a much 
larger footprint than oil and gas. We have some of the largest 
wind farms in New Mexico. They extend throughout the northern 
and eastern side of the district and many more are expanding, 
and they require a larger footprint than oil and gas and 
produce only very, very small increments. That is curious.
    Let us say that we do end up limiting access to Federal 
lands, which I think is probably the direction we are heading 
but if we do that, should the Federal government be required to 
compensate those states? In other words, New Mexico about a 
billion dollars a year comes just in the form of taxes, and let 
us say that oil and gas on Federal lands is just limited 
severely. Should the Federal government pick up and give the 
people of New Mexico some sort of compensation for that 
restriction?
    Ms. Morgan. Well it seems to me that that is rather 
hypothetical, Representative, because right now the vast 
majority of the lands and resources in Federal lands for 
natural gas and oil are currently available.
    Mr. Pearce. Yes. Hypotheticals have a way of happening 
because if you look at the Rocky Mountains, you will find oil 
and gas footprints currently exist but the agencies are 
unwilling to lease more land where it already exists. In other 
words, they are saying we have already drilled here. It is not 
pristine. We cannot say it is pristine, and yet we limit it.
    And so that hypothetical is actually far more close to the 
truth than a hypothetical, and again if you would like to 
answer, fine, if you do not want to answer, that is fine too. 
But I do wonder if you think states should be compensated when 
we shut off their ability to produce revenue from their states 
because the Federal government involuntarily took their land. 
They own 30 percent of New Mexico. They own 30 to 40 percent in 
Nevada, Utah, all across the west. We do not have the 
capability to make a living.
    Ms. Morgan. The natural gas resource that has been coming 
off of the Federal lands has increased steadily over time. So 
that is the way I see it continuing. As I said, I do not want 
to----
    Mr. Pearce. I appreciate it. I look back to New Mexico used 
to have 22 lumber mills, timber mills and, when we got the 
spotted owl, we were down to two. So I do believe that American 
jobs are at stake. I think we are going to outsource the oil 
and gas production, and I would have liked to have had your 
opinion on the record but I can understand why you did not. 
Thank you very much, Mr. Chairman.
    Mr. Costa. Yes. We need to try to get a little closer back 
on time here. I have been trying to be very generous both to 
the gentleman from Colorado and New Mexico. I guess I will be 
advised not to be so generous in the future with my colleagues 
from western states. I will try to see if I can stay to the 
five minutes.
    You know however you slice and dice it, and I know there is 
a great debate and we are having part of it take place here on 
the use of public lands for domestic oil and natural gas 
production, if you look at the snapshot in the last 10 years, 
as I have tried to do, both during the Clinton Administration 
and during the current Administration, it is clear that the 
application of permits to drill have increased, and it is clear 
that the amount of production that has taken place both as it 
relates to oil and gas has increased.
    Now, we can argue as we I think want to as to whether or 
not this is good or bad policy. It is obviously an attempt to 
try to reduce our dependence but at the same time it has 
impacts, and some of those impacts are positive, and some of 
them are adverse. Dr. Haspel, the Western Governors' 
Association has recommended a repeal of Section 390 and to 
create a new category of exclusions for environment review and 
public comment for some new permits to drill on BLM lands.
    Has the Department had an opportunity to reflect on the 
position on Section 390, and what would be your response to the 
Western Governors' recommendation?
    Mr. Haspel. The Department has, and I would characterize 
our consideration the following way. We believe there has been 
a misunderstanding in terms of what 390 implies. We do not 
believe----
    Mr. Costa. A little closer to the mike please. There has 
been a misunderstanding. I got that part.
    Mr. Haspel. In terms of what 390 allows or does not allow, 
we believe that the categorical exclusions in 390 are 
interpreted to mean there will be no public involvement. That 
there will be no coordination with state game and fish 
agencies. There will be no consideration with regard to other 
environmental concerns such as endangered species or national 
historic preservation. All these are incorrect. Those will all 
continue.
    What this does is basically say that there has been 
environmental work done. Use that first, and then when we come 
back to site specific work we will do more. The BLM will 
continue to have to provide information on pending oil and gas 
wells to state game and fish agencies. APDs will be posted for 
public review for 30 days. All the other environmental statutes 
and regulations continue to apply.
    Mr. Costa. OK. So my time does not expire here, I would 
like you to submit in detail the answer to that question that 
you I think began and were just about to conclude with but let 
me move on. Your testimony also talks about the number of 
inspections of oil and gas activities completed, and you talked 
about I think some positive effort the increase from 12,785 
wells in 2001 to over 16,967. I guess how many opportunities 
does BLM have to inspect nationwide or put another way, what 
percentage of the BLM's inspection obligations is the agency 
meeting with roughly 17,000 I am told inspections a year?
    Mr. Haspel. Let me find out.
    Mr. Costa. This does not count against me, please, 
gentlemen. If you do not have the answer, you can submit it.
    Mr. Haspel. I am told that it is about 80 percent.
    Mr. Costa. Eighty percent. If you can provide more detail 
later on, I would appreciate that. Ms. Morgan, I would like to 
move to you with the time remaining. Your testimony mentions 
the BLM's rush to lease lands for oil and gas development has 
resulted in the agency including some inappropriate parcels and 
lease sales. From your point of view or The Wilderness Society, 
what are some of the areas that you consider most inappropriate 
that have been leased or most in jeopardy?
    Ms. Morgan. My written testimony gave three examples from 
about a six-month period just in Colorado last year. Those 
included leases in municipal watersheds, potential lease 
underneath a city park, and a potential lease under state 
wildlife lands. The last two were brought to the attention of 
the BLM because they were protested, and they withdrew those.
    Mr. Costa. My time is expiring here so we can ask in 
greater detail. You talked about the 30-day timeframe in your 
testimony and that is being inappropriate. Do you think any 
deadlines are appropriate?
    Ms. Morgan. I think the problem with the 30-day timeframe 
is the incredible volume of work that the BLM is facing.
    Mr. Costa. OK. I get that but do you think any timelines 
are appropriate?
    Ms. Morgan. I did not come today with a particular 
timeframe in mind. I think you probably could come up with a 
timeframe as appropriate.
    Mr. Costa. My last question before the time expires. What 
planning occurred when you were BLM Director that does not 
occur now? It is done. You can submit that in written 
testimony.
    Ms. Morgan. All right.
    Mr. Costa. No. I want to make sure. I cannot admonish my 
colleagues and then extend beyond the time.
    Mr. Udall. Mr. Chairman?
    Mr. Costa. Yes?
    Mr. Udall. I would be happy to yield some of Mr. Pearce's 
upcoming time either to get the question asked or----
    Mr. Pearce. Mr. Chairman, we both will give you 40 seconds 
apiece, Mr. Chairman.
    Mr. Udall. Time we do not have.
    Mr. Costa. You can answer that question if you can do that 
in 40 seconds.
    Ms. Morgan. The same kinds of planning occurred when I was 
State Director is occurring now. That is through resource 
management plans and other kinds of plans. The difference is 
that we took a look at the parcels that were proposed for 
leasing and made a decision whether they were appropriate or 
not.
    Mr. Costa. OK. Thank you very much. I now yield back to the 
gentleman from New Mexico.
    Mr. Pearce. I thank the Chairman. Ms. Morgan, if I were to 
follow-up on that question, I would ask as I look at these 
three parcels and they were all submitted and then they were 
withdrawn during the comment period, is that not correct?
    Ms. Morgan. Two of the three were, Representative. The 
lease under the municipal watershed did go ahead.
    Mr. Pearce. But is that not the process that we raise 
things up and elevate them, let people come and comment, and if 
comments are proved to be detrimental that there is not a 
probable or good lease site that we should withdraw? I mean 
that to me is the process working, and yet you use it to 
describe that this Administration has some rush to lease. You 
worked in the Clinton Administration. Did you all ever put 
leases up that were eventually withdrawn? Any kind of lease 
ever?
    Ms. Morgan. Yes, I am sure we did.
    Mr. Pearce. Yes. So the process worked OK there but I do 
not know. I just find your observations to be curious. Now you 
were mentioning in your testimony that 12 million acres of BLM 
land is dedicated--is that not the word--that that is the 
figure you used, 12 million is dedicated to oil and gas 
production?
    Ms. Morgan. No, sir.
    Mr. Pearce. I wrote down the 12. What was the 12 million 
that you commented about in your verbal testimony because it is 
about 12 million oil and gas production?
    Ms. Morgan. I believe I said that 36 million acres are 
under lease, and 12 million are in production.
    Mr. Pearce. Twelve million is in production. You described 
that as a predominant amount yet when I do the math, 12 divided 
by 269 I come up with kind of a small number and not a dominant 
number. Would you like to say that that is inaccurate or how 
did you come up with the idea that this is an overwhelming 
percent?
    Again that chart there kind of lays it out. The 12 million 
is a little, little bitty sliver that looks like just an edge 
of that line but that to me puts it in perspective when I look 
at the full circle of all the BLM lands and see how little 12 
million actually is. I find the number 12 million to my ear 
sounds very big but 12 million as a percent sounds very small. 
I mean you are welcome to give the other side of that 
observation.
    Ms. Morgan. The 12 million are the amount of leased acres 
that are currently being produced so that means that there is 
additional lease acres that supposedly will go into production. 
The larger number is the amount of lands, BLM lands that are 
available to be leased through the resource management planning 
process.
    Mr. Pearce. Yes, that 36 million or whatever number, that 
is the larger. That is the small pie. The bulk, the rest of the 
92 or 3 or 4 percent of BLM lands are not leased or even 
available for lease, and so again I find that to be 
underwhelming myself but whatever observation that you would 
care to have. You are proposing that the wilderness projects 
that you referred to in the opening part of your statement that 
you represent suggest that 50 percent of North America be 
designated as wilderness and treated as de facto wilderness, in 
which case energy and mineral resources would have to be 
curtailed drastically.
    What are we supposed to do to really heat and cool the 
country and to drive our automobiles if we move to that 
exclusion that begins to narrow down that small percent that we 
have so far?
    Ms. Morgan. I am not sure where that figure comes from, 
Representative. That was not in my testimony.
    Mr. Pearce. Yes. The signatories to the western energy 
agenda. That is where it comes from. The wildlands conservation 
planning project. I think it is off the web page but it is the 
wildlands project, and it appears to be part of your 
organization's----
    Ms. Morgan. No, sir, that is not.
    Mr. Pearce. You are certain that this is not part of The 
Wilderness?
    Ms. Morgan. Yes, sir.
    Mr. Pearce. OK. All right. Thanks. Appreciate that. Mr. 
Chairman, I will yield back the 46 seconds and help you there.
    Mr. Udall. [Presiding.] I thank the gentleman for yielding 
back, and I want to thank the witnesses for their valuable 
testimony and the members for their questions. We are going to 
proceed to the second panel. Members of the Subcommittee may 
have additional questions for the witnesses, and we would ask 
you to respond in writing, and the hearing record will be held 
open for 10 days for the responses. Thanks again, Dr. Haspel 
and Director Morgan.
    [Pause.]
    Mr. Udall. I would like to recognize the second panel of 
witnesses. We have joining us Senator Curtis Bramble, the 
Majority Leader of the Utah State Senate; Mr. Jim Bartis, the 
Senior Policy Researcher at the RAND Corporation; Ms. Kathleen 
Kelley, a former State Representative from Colorado who I 
mentioned earlier; and Mr. Oscar Simpson, Public Lands 
Community Organizer of the National Wildlife Federation; and 
Mr. Paul Cicio, President, Industrial Energy Consumers of 
America. At this point I am going to turn the hearing back over 
to the Chairman, and thank you again for being here today.
    Mr. Costa. [Presiding.] You have done a marvelous job. All 
right. We have the first witness before us, which is State 
Senator Curtis Bramble. Good to have you here.

             STATEMENT OF SENATOR CURTIS BRAMBLE, 
               MAJORITY LEADER, UTAH STATE SENATE

    Mr. Bramble. Thank you, Mr. Chairman. That is senator with 
a small S.
    Mr. Costa. You know I was a State Senator for eight years, 
and it is a lovely title, and I do not think you have to 
explain it. Everybody knows what a senator is. When I was an 
assembly member, I always had to explain it. People asked me 
what I assembled, and so I would stick with that title. It 
stead me well.
    Mr. Bramble. Well thank you, Mr. Chairman, and members of 
the Subcommittee for allowing me to share Utah's perspective on 
the Energy and Policy Act of 2005. I am testifying as the Utah 
Senate Majority Leader but also as a member of the American 
Legislative Exchange Council known as ALEC. They have more than 
2,400 legislative members from all 50 states, and over 90 
Members of Congress are members of ALEC. It is an honor to be 
here today.
    Utah developed a state energy policy in the 2006 general 
session. In that statute, it references adequate, reliable, 
affordable, sustainable clean energy resources. The statute 
mandates that we pursue energy conservation, energy efficiency, 
and environmental quality. It is a bit of a concern if the 
intent of this Congress would be to lock up, to repeal the 2005 
Act and lock up Federal lands.
    Our state policy is to promote development of nonrenewable 
energy sources, such as natural gas, coal, oil, oil shale and 
tar sands and renewable energy resources including geothermal, 
solar, wind, biomass, biodiesel and ethanol. You know it is 
interesting in the recent past Utah's Lieutenant Governor, Gary 
Herbert, in a committee meeting with Senator Domenici and 
Senator Salazar firmly stated on public record that Utah 
supports the development of sustainable oil shale and tar sand 
resources in Utah.
    Guiding principles for sustainable development are to 
promote economic prosperity, encourage responsible 
environmental protection, enhance the quality of life by 
addressing social and cultural needs of the people of Utah. 
Utah applauds this Act and encourages its implementation. 
Yesterday, today and tomorrow the Utah's Governor Huntsman, the 
Governor of Wyoming, Montana and I believe Nevada, as well as 
business, academia, conservation and environmental groups are 
meeting in Salt Lake City on an energy summit to address the 
challenges that we face.
    America has a tremendous resource in the Green River 
formation of Utah, Colorado and Wyoming. It is estimated over 
two trillion barrels of oil are tied up or locked up in the oil 
shale and tar sands. That is enough to meet the U.S. demands 
for over 400 years if we can find a way to develop it.
    I would like to address one issue that came up about 
Federal lands though. Utah and the west have a unique economic 
landscape. In Utah, over 70 percent of our land mass is owned 
by government. Over two-thirds of the State of Utah is owned by 
the Federal government. We have less than 30 percent of our 
state is held by private interests. What that does 
economically, Mr. Chair, our cost of government, the taxes 
Utahans pay is seventh highest in the nation, we have the 
lowest per pupil spending in the nation. We have one of the 
highest percentages of our state budget allocated to public 
education. In fact, all of our income taxes, both corporate and 
individual, go to education.
    Our economy depends on the effective and efficient and 
responsible development of these resources. Critics and 
skeptics would say that this type of development is a boom/
bust. I am a CPA. I have been practicing for over 30 years. 
Virtually ever sector of our economy has economic cycles. You 
could call it boom and bust. Whether it is automobile, high 
tech, housing, steel, semiconductor chip manufacturing, they 
all have economic cycles.
    The real challenge is to moderate the impact of those 
cycles and to find ways to make it sustainable. Utah is 
committed to responsible use of land. Mining now is much 
different than it was in the 1890s. The challenges that we need 
to overcome are environmental, technical and economic but I 
would like to make one point very clear, and I say this 
speaking not only from our statutorily adopted energy policy 
but having spoken with legislative leadership and the Governor.
    Extracting natural resources and developing natural 
resources and maintaining responsible stewardship of the land 
are not mutually exclusive. I would be happy to respond to any 
questions.
    [The prepared statement of Mr. Bramble follows:]

                    Statement of Curtis S. Bramble, 
          Utah State Senate Majority Leader, Utah State Senate

UTAH'S APPROACH TO ENERGY AND ECONOMIC DEVELOPMENT
    Thank you, Mr. Chairman and Members of the Subcommittee, for 
allowing me to share Utah's perspective on the Energy Policy Act of 
2005. I am testifying as the Utah Senate Majority Leader and as a 
member of the American Legislative Exchange Council (ALEC). ALEC has 
over 2,400 legislator members from all fifty states and over 90 members 
in the Congress. It is an honor to serve and to testify today.
    Utah State's energy policy mandates that we develop
        ``...Adequate, reliable, affordable, sustainable, clean energy 
        resources.''
    That we
        Promote the development of nonrenewable energy resources (such 
        as natural gas, coal, oil, oil shale, and tar sands), AND 
        renewable energy resources (including geothermal, solar, wind, 
        biomass, biodiesel, and ethanol).
    Utah has three objectives. To
        ``...pursue energy conservation, energy efficiency, and 
        environmental quality.''
    Our policy states we will
        Promote the development of resources and infrastructure 
        sufficient to meet our demand AND contribute to the regional 
        and national energy supply, to reduce dependence on 
        international energy sources.
    We believe
        ``...economic prosperity is linked to the availability, 
        reliability and affordability of consumer energy supplies...''
    [Source: Utah Code 63-53b-301, enacted in 2006.]
OIL SHALE, SPECIFICALLY
    I want to talk about oil shale, specifically.
    America has a tremendous resource in the Green River Formation. 
It's a layer of rock 40 to 60 feet thick under parts of Utah, Colorado 
and Wyoming. In White River, Utah, it lies about a thousand feet below 
the surface.
    This layer of rock is sedimentary stone but 18 percent of its 
weight is ancient organic material. Heat it up and you can extract 
shale oil (and high BTU gas). Refine it and you get premium 
transportation fuel.
    Some people estimate the Green River Formation holds 2 trillion 
barrels of recoverable oil. 2 trillion barrels of oil is enough to meet 
current U.S. demands for the next 400 years.
    The total recoverable crude oil ON EARTH is estimated at about 1 
trillion, over half of that in the Middle East. The U.S. has about five 
percent. In contrast, the U.S. has about 73 percent of the total 
recoverable oil shale reserves.
    Our nation's demand for oil is increasing. At the same time, 
increased global demand, skyrocketing energy prices, geopolitical 
instability, concerns about peak oil production and supplies make the 
situation problematic. We will not be able to conserve our way out of 
this dilemma. All these factors make oil shale an attractive resource 
to help to solve our country's dependency problems.
    There are a number of state initiatives in Utah to assist with 
energy development. One of these, the Utah Science Technology & 
Research Initiative (USTAR), provides money to research institutions to 
develop economically viable programs in all areas of science, including 
energy.
    The Utah State University Vernal Campus, located in the Uintah 
basin, in cooperation with USTAR is developing an Energy Research 
Center which will work with the BLM, and the oil and gas industry on 
emerging energy resources such as oil shale and tar sands. USTAR is one 
way local communities are working to promote energy development in 
rural Utah.
    Successful development of oil shale will help to solve our nation's 
energy dilemma and also bring millions and eventually billions of 
dollars to Utah and the Uintah Basin in royalties, mineral lease 
monies, and other economic benefits.
    Utah's White River Mine operation, run by the Oil Shale Exploration 
Company (OSEC) will be one of our nation's flagship ventures into this 
alternate fuel.
    OSEC is ready to move forward, but are still waiting for the BLM to 
approve the lease. While we don't begrudge federal agencies' caution, 
we would like to see good, safe, environmentally sound projects roll 
forward more expeditiously.
RESPONSIBLE USE OF THE LAND
    Today's mining techniques are much different than the mining of the 
1890s. We can find what we need in the earth without undue impact to 
the landscape. Most parties are committed minimizing impact to the 
land.
    The footprints of these new mining operations tend to be limited to 
necessary infrastructure, plus entry and exit points in the earth. We 
are not comfortable with the strip-mining model of oil shale 
extraction.
    In Colorado, Shell Oil is developing an in situ conversion process 
drawing the usable material directly from the rock where it lies. 
Colorado shale is closer to the surface, while Utah's shale is 1000 
feet underground--we'll have to tunnel down and bring it out, using the 
room-and-pillar mining methods. The mined shale will then be crushed 
and pryo-processed in a retort to produce shale oil.
    There will be many challenges to overcome before we produce oil 
shale commercially. These include: productive use of the spent shale, 
mitigating greenhouse gases, finding enough water to facilitate the 
process; and, the high cost to private companies.
    If the private sector makes all the investments, we are looking at 
the year 2025 before you get your first tank of gas from oil shale. 
Government has an opportunity to really help jump-start this emerging 
unconventional fuel.
    We would request that government at all levels look at appropriate 
incentives to speed this process. Last year, Utah provided a severance 
tax exemption to encourage developing oil shale technologies.
    Until we figure out how to commercially produce this resource, we 
are at the mercy of Venezuela, Saudi Arabia, and other oil producing 
countries.
    Utah is a beautiful state and we want to keep it that way. We 
believe we can pursue resource extraction in a way that is sustainable 
and environmentally responsible.
ECONOMIC AND COMMUNITY LANDSCAPE OF THE WEST
    The landscape of the American West is a constellation of small 
communities surrounded by vast stretches of federal land, and dotted 
here and there with larger towns and cities. We enjoy stunning vistas 
and unbelievable recreational opportunities, but those same vistas can 
constrict economic opportunity. In Utah, less than 30 percent of our 
land is privately held. The federal government owns and controls over 
70 percent. That creates unique challenges in meeting the needs of a 
growing population.
    The revenue from oil, gas and other mining helps make up for the 
inability to derive revenue such as property taxes from federal lands.
    In the budgeting process at the Utah State Legislature, we treat 
volatile income streams such as severance tax revenue as one-time 
income. We don't initiate ongoing programs with that money, but we can 
build roads, bridges, buildings, and infrastructure that is vital to 
our rural communities.
    Skeptics warn of a boomtown economy. They have a point, but, there 
are natural cycles in every sector of our economy. If forced to make 
the choice, we'd rather have a boom and bust, than just constant bust. 
However, I believe there are alternatives that can moderate those 
cycles.
    The small communities in eastern Utah and Western Colorado were 
devastated by Black Sunday 1982, when oil prices plummeted to $12 a 
barrel. The Colony oil shale project in Western Colorado locked its 
gates and overnight, thousands of workers found themselves without a 
job, the local economies were immediately thrown into a recession.
    The politics and economics are much different now than they were in 
the 1970s. However, we still need to proceed in a careful, deliberate 
manner that will help avert the tragic social and economic dynamics of 
the past.
    We are grateful to live in a land that is so beautiful and offers 
so much opportunity for the nation.
    We invite each level of government to do what it can to facilitate 
responsible energy development. The opportunities to do so are 
completely within our grasp.
    We do not believe that extracting natural resources and good 
stewardship of the land are mutually exclusive. Our economy depends on 
our ability to use these resources.
    Let's get ourselves out of the energy impasse.
    As a state, we believe we need to
      Pay attention to the opportunity for jobs in our rural 
areas;
      Work to provide energy for a growing region and hungry 
nation;
      Continue to explore non-traditional, alternative energy 
sources;
      Provide royalty, or tax incentives to encourage 
development of new technologies;
      Develop these resources deliberately and responsibly, so 
our western landscape will always be majestic and functional as a 
natural community; and so the boom and bust cycles of the past do not 
repeat themselves to the detriment of our local communities.
    The current policy of the United States is that
    (1)  United States oil shale, tar sands, and other unconventional 
fuels are strategically important domestic resources that should be 
developed to reduce the growing dependence of the United States on 
politically and economically unstable sources of foreign oil imports;
    (2)  the development of oil shale, tar sands, and other strategic 
unconventional fuels, for research and commercial development, should 
be conducted in an environmentally sound manner, using practices that 
minimize impacts; and
    (3)  development of those strategic unconventional fuels should 
occur, with an emphasis on sustainability, to benefit the United States 
while taking into account affected States and communities.
        [Source: TITLE 42. THE PUBLIC HEALTH AND WELFARE, CHAPTER 149. 
        ENERGY POLICY, 2005--OIL AND GAS ACCESS TO FEDERAL LANDS (42 
        USCS Sec. 15927: Oil shale, tar sands, and other strategic 
        unconventional fuels)]
    That policy makes a lot of sense to us.
    This is an important committee. I am grateful for the opportunity 
to speak to you this afternoon. If you have questions, I would be happy 
to respond.
                                 ______
                                 
    Mr. Costa. Thank you, Senator. Did I hear you correctly? 
Did you say in the 1890s?
    Mr. Bramble. I said mining is different now than the 1890s.
    Mr. Costa. OK.
    Mr. Bramble. If you look at what has happened in Colorado, 
Utah----
    Mr. Costa. I thought you were making reference to your own 
involvement, and I said you look for too young to be involved.
    Mr. Bramble. Well my grandchildren would appreciate that.
    Mr. Costa. Anyway our next witness is Mr. James Bartis from 
the RAND Corporation whose publication has been referenced on 
prospects and policy issues regarding oil shale development in 
the United States, and we are looking forward to your 
testimony. Thank you, Mr. Bartis.

    STATEMENT OF JIM BARTIS, SENIOR POLICY RESEARCHER, RAND 
                          CORPORATION

    Mr. Bartis. Mr. Chairman and distinguished members, thank 
you for inviting me to testify and express my concern that the 
oil shale provisions of the Energy Policy Act of 2005 fall 
short of what is needed to ensure that the strategic potential 
of this unique resource can be realized. My remarks today are 
based on research conducted by RAND and sponsored by the 
National Energy Technology Laboratory.
    The public wealth embedded in oil shale lands owned by the 
Federal government is staggering. Many of the leased tracts in 
the Piceance Basin each hold over six billion barrels of oil. 
The public share of the anticipated revenues from just a single 
lease is in the tens of billions of dollars, and if we look at 
the entire Green River formation, the public share is in the 
trillions of dollars but none of this potential wealth can be 
realized without proper stewardship of the Federal oil shale 
lands.
    Our research indicates that the state of technology 
development and the state of our knowledge of environmental 
conditions within the Green River formation are not sufficient 
to support a Federal decision to go forward with a large scale 
commercial development of oil shale. In particular, the 
programmatic environmental impact statement for commercial 
leasing is drawing on technical information that is either out 
of date or highly speculative.
    Moreover, there is an important new issue that was not 
examined as part of oil shale development in the early 1980s, 
namely greenhouse gas emissions. For example, extensive 
development of oil shale may require sequestration of carbon 
dioxide. My greatest concern, however, centers on the adverse 
consequences of on the one hand not moving forward at all or on 
the other hand moving forward so quickly that the Federal 
government squanders the opportunity of capturing the public 
share of the wealth held in the oil shale lands or discounts 
the environmental impacts of development or precludes the 
possibility of large scale development.
    The best oil shale deposits occur in a very small area of 
Colorado and Utah. Without careful planning by the government, 
the air and water quality impacts, the provisions taken to meet 
water demands, and the infrastructure associated with just the 
first few commercial plants may stop all further development. 
The result will be an oil shale industry unable to make a 
significant contribution to the nation's energy security.
    Considering the dangers of moving forward prematurely with 
oil shale, I suggest the following for consideration by the 
committee. One, rescind the requirement to prepare a 
programmatic EIS for commercial leasing. Instead require a 
phased EIS effort for establishing an oil shale leasing and 
development strategy for the Federal government.
    Two, rescind the requirement to establish final regulations 
for a commercial leasing program. Within the next few years 
adequate information will simply not be available. Three, 
require that the Departments of Energy and the Interior and the 
Environmental Protection Agency cooperatively develop an oil 
shale leasing strategy. The near term objectives of this 
strategy should focus on obtaining information required for 
determining when, how, where and how much oil shale development 
should occur on Federal lands, and I left out the states. They 
have to participate there. So I apologize.
    Four, require that these same three agencies investigate 
and report on alternative approaches to providing early access 
to Federal lands for a small number of first of a kind 
commercial production facilities. Five, require that the 
Department of Interior conduct a second round of leasing of 
very small areas for conducting oil shale research. Additional 
leasing for research is very much in the national interests 
because a broader set of participants will encourage 
competition and innovation.
    And sixth and finally, require that the Departments of 
Interior and Energy conduct critical environmental and 
ecological research, conduct high payoff process improvement 
research, assess carbon management options, and evaluate the 
viability of a large scale demonstration of carbon dioxide 
sequestration in the vicinity of the Piceance Basin.
    In closing, I note that each of these six recommendations 
support the overall measured approach described in the RAND 
National Energy Technology Laboratory report. This measured 
approach involves proceeding at a slow enough pace to enable 
evaluation and course correction along the way, but fast enough 
to advance understanding and preparation for a possible large 
scale commercial production so that we are in a much better 
position to weigh both benefits and costs.
    The current framework established by EPAct to rush forward 
with commercial leasing is clearly not a measured approach. 
Thank you.
    [The prepared statement of Mr. Bartis follows:]

    Statement of James T. Bartis, 1 The RAND Corporation
---------------------------------------------------------------------------

    \1\ The opinions and conclusions expressed in this testimony are 
the author's alone and should not be interpreted as representing those 
of RAND or any of the sponsors of its research. This product is part of 
the RAND Corporation testimony series. RAND testimonies record 
testimony presented by RAND associates to federal, state, or local 
legislative committees; government-appointed commissions and panels; 
and private review and oversight bodies. The RAND Corporation is a 
nonprofit research organization providing objective analysis and 
effective solutions that address the challenges facing the public and 
private sectors around the world. RAND's publications do not 
necessarily reflect the opinions of its research clients and sponsors.
---------------------------------------------------------------------------
    Chairman and distinguished Members: Thank you for inviting me to 
speak on the development of our nation's oil shale resources. I am a 
Senior Policy Researcher at the RAND Corporation with over 25 years of 
experience in analyzing and assessing energy technology and policy 
issues. I am also the principal author of a RAND report that addresses 
the prospects and policy issues of oil shale development in the United 
States. 2 This work was sponsored and funded by the National 
Energy Technology Laboratory (NETL) of the U.S. Department of Energy. 
Since that work was published in the summer of 2005, I have continued 
to follow the industrial progress and government activities associated 
with oil shale development in Colorado and Utah.
---------------------------------------------------------------------------
    \2\ Oil Shale Development in the United States: Prospects and 
Policy Issues, Santa Monica, CA: RAND MG-414-NETL, 2005.
---------------------------------------------------------------------------
    The Energy Policy Act of 2005 (EPACT) established the framework the 
federal government is currently using to move forward in developing the 
domestic oil shale industry. In some areas, such as in the awarding of 
small lease tracts for research and development (R&D), significant 
progress has occurred. But in other areas, such as in preparing for 
early commercial leasing, I am concerned that the EPACT oil shale 
provisions fall short of what is needed to ensure that the strategic 
potential of this unique resource could be realized.
    Today, I will discuss the key problems and policy issues associated 
with developing the domestic oil shale industry and the approaches 
Congress can take to address these issues. My key conclusions are as 
follows: (1) the knowledge base about the economic, technical, and 
environmental feasibility of oil shale development is not adequate to 
support the formulation of a commercial leasing program on the 
timescale mandated by EPACT; (2) the fundamental approach the 
Department of the Interior is currently taking may be counterproductive 
if the goal is to keep open the option for a sustainable domestic oil 
shale industry; (3) meanwhile, important opportunities for early action 
are not being addressed; and (4) additional legislation may be 
appropriate to ensure that federal actions are most effectively 
directed at the sustainable development of oil shale at a level 
commensurate with its importance to our national security and economic 
well-being.
The Importance and Value of Oil Shale
    The potential public wealth embedded in our oil shale lands is 
staggering. Many, if not most, of the potential lease tracts in 
Colorado will contain over 2 million barrels of oil per surface acre. 
That means that a single 5,760-acre lease tract holds nearly 6 billion 
barrels. Assuming a modest recovery of the total oil within a lease 
tract, the potential public value of a single lease is clearly in the 
tens of billions of dollars. The potential public value of the total 
oil in place in oil shale deposits in the Green River Formation is in 
the trillions of dollars. However, realizing this potential depends on 
making further technical progress and on developing a regulatory and 
land management framework that ensures environmentally sustainable oil 
shale production.
    As part of RAND's examination of oil shale development, our 
research addressed the strategic benefits of having in place a mature 
oil shale industry producing millions of barrels of oil per day. Such a 
level of production would yield considerable economic and national 
security benefits, primarily by causing world oil prices to be lower 
than what would be the case in the absence of oil shale development. As 
a result, consumers would pay tens of billions of dollars less for oil. 
Lower world oil prices would also cause a decrease in revenues to oil 
exporting nations, some of which are governed by regimes that are not 
supportive of U.S. foreign policy objectives. These benefits associated 
with lower world oil prices accrue to our nation as a whole; however, 
they are not captured by the private firms that would invest in oil 
shale development.
    If shale-derived oil can be produced at prices well below world oil 
prices, then the private firms that do invest in oil shale development 
could garner economic profits above and beyond what is considered as a 
normal return on their investments. Through lease bonus payments, 
royalties, and taxes on these profits, we estimate that roughly half of 
these economic profits could go to federal, state, and local 
governments and, thereby, broadly benefit the public.
    While the prospects of major economic and national security 
benefits motivate the development of oil shale, federal actions need to 
be tempered by the need to address the adverse environmental impacts 
and risks that accompany such development. Moreover, with the growing 
realization of the role of carbon dioxide in promoting climate change, 
these adverse impacts are not just local and regional, but also global.
The Current Commercial Leasing Schedule
    At present, a number of firms are making appreciable investments in 
research directed at furthering the development of technologies 
required to produce liquid fuels from oil shale. However, to my 
knowledge, none of these firms has gathered technical information 
adequate to warrant a decision to invest hundreds of millions, if not 
billions, of dollars on first-of-a-kind commercial oil shale plants. 
These firms continue to focus on process development, improvement, and 
evaluation, but they have not yet conducted the front-end engineering 
and design work needed to establish the economic viability, oil 
recovery potential, and environmental performance of the approaches 
under consideration.
    The fact that industry is years away from establishing commercial 
viability and environmental performance calls into question the 
analytic basis of the current, legislatively imposed schedule for 
establishing regulations for commercial leasing. The programmatic 
Environmental Impact Statement (EIS) for commercial leasing is being 
prepared with very limited information on the environmental performance 
of important new processes, especially the in-situ extraction methods 
that offer to reduce significantly the environmental impacts of oil 
shale development. There is limited information on the response of 
local vegetation and wildlife to ecosystem loss or damage, on the 
eventual options for habitat restoration, or on how carbon dioxide 
emissions will be managed, including the feasibility of geological 
sequestration.
    A reasonable alternative is to eliminate the legislative 
requirement to fast-track the promulgation of regulations for a 
commercial leasing program. Instead, the federal government could focus 
its efforts on the critical steps required for developing oil shale, as 
further discussed in this testimony.
The Challenge of Oil Shale Leasing
    For several reasons, the federal approach to oil shale leasing 
cannot be based on the approach used to lease other energy resources--
such as coal, petroleum, and natural gas--that occur on federal lands. 
First, as discussed above, there is no prior commercial experience that 
is relevant to the development of the rich U.S. oil shale resources. 
The government lacks important information about the costs and risks of 
development. It thus runs the risk of either being too lenient about 
lease bonus and royalty payments, allowing firms to have access without 
adequate compensation to the public, or too zealous, causing a loss of 
private-sector interest in oil shale development, especially for 
initial commercial plants.
    Second, because of the vast size and geographic concentration of 
the highest-value oil shale resources and the need to perform extensive 
on-site processing, leasing decisions made by the federal government 
may have a profound impact on the residents of northwestern quarter of 
Colorado and the northeastern quarter of Utah. In particular, large-
scale development of oil shale will cause federal lands to be diverted 
from their current uses, will almost certainly have adverse ecological 
impacts, and will likely be accompanied by socioeconomic impacts that 
could be particularly severe, especially within the northwestern 
quarter of Colorado.
    Finally, and most important, the impacts on air and water quality, 
the provisions taken to meet demands for water, and the infrastructure 
associated with the initial round of commercial plants may impede, if 
not fully preclude, the development of oil shale to a level 
commensurate with its potential economic and national security value to 
the nation. As with the previous issue, this problem derives from the 
geographic concentration of all high-value oil shale resources to the 
very small area encompassed by the Piceance Basin of Colorado and 
within a small portion of the Uinta Basin within Utah. As an example of 
this problem, estimates made in the early 1980s predicted that shale-
derived oil production could not exceed a few hundred thousand barrels 
per day, based on considerations of how just a few plants located in 
the Piceance Basin would degrade regional air quality.
The Critical Path for Oil Shale Development
    In my judgment, establishing a broad-based commercial leasing 
program within the next five years is not necessary and, in fact, may 
be detrimental to oil shale development. Since the publication of the 
2005 RAND report sponsored by NETL on the prospects and policy issues 
of oil shale development, important technical progress has taken place. 
A number of highly reputable firms have announced their interest in 
pursuing oil shale. Some of these firms are participating in the 
Research, Development, and Demonstration (RD&D) lease program being 
administered by the Bureau of Land Management (BLM). Others are 
interested in participating, if a second round of RD&D leases becomes 
available. However, based on our knowledge of where these firms are in 
technology development and evaluation, none--with the possible 
exception of Shell Oil--will be prepared to make a financial commitment 
to a pioneer commercial-scale oil shale facility for at least five and, 
in some cases, as many as ten years.
    Given this judgment about corporate preparedness to move forward 
with oil shale, I suggest the federal government direct its efforts at 
the list of ``early actions'' listed in the RAND oil shale report, 
viewing those actions as priority measures for developing oil shale as 
a strategic resource for the United States.
    Conducting critical ecological and environmental research: This 
includes developing and implementing a research plan directed at 
establishing options for mitigating damage to plants and wildlife, 
conducting mathematical modeling and monitoring of the subsurface 
environment, and conducting research directed at identifying options 
for long-term spent shale disposal.
    Developing a federal oil shale leasing strategy: The overall goal 
of this strategy should be preserving the option of the sustainable, 
and publicly acceptable, large-scale development of oil shale within 
the Green River Formation. While developing information and analyzing 
options for eventual commercial leasing should be an important 
component of this strategy, the near-term objectives should focus on 
obtaining information required for determining when, how, where, and 
how much development should occur on federal lands within the Green 
River Formation. Beyond the above-mentioned ecological and 
environmental research, critical information needs include process 
performance, infrastructure demands (especially, water, power, 
processing facilities, and pipelines), options for protecting regional 
and local air and water quality, analysis of the feasibility of multi-
mineral development, and options for carbon sequestration.
    Fostering technology development: By providing small RD&D leases 
within the Piceance Basin to three firms, the BLM has made important 
progress in moving oil shale technology forward. However, this should 
not be a one-time program. In preparing for a second round of RD&D 
leases, the BLM should review the continued appropriateness of 
provisions that may not be consistent with a strategic plan for large-
scale oil shale development. Examples of questionable provisions 
include requiring multi-mineral development and granting preference 
rights to future commercial leases. Other firms that appear to be 
highly qualified to invest in oil shale development are interested in 
obtaining small lease tracts suitable for RD&D. Encouraging their 
participation is in the national interest, because a broader set of 
participants will promote greater innovation and competition. We also 
suggest that the federal government consider sponsoring high-risk, 
high-payoff research directed at improving the yield and environmental 
performance of oil shale technologies. To the extent that this research 
is conducted at universities and national laboratories, it offers the 
important benefit of educating and maintaining a cadre of scientists 
and engineers that are highly knowledgeable of oil shale development.
    Providing land access to early commercial plants: While a 
commercial leasing program is premature, a mechanism is required for 
providing access to federal oil shale lands to those firms prepared and 
able to finance, construct, and operate pioneer commercial oil shale 
production facilities. Given that production from a single lease may 
have a public value of tens of billions of dollars--once oil shale 
technology is commercial and competitive leasing is possible--we 
suggest that the government refrain from attempting to establish the 
regulatory parameters for the full exploitation of a lease site that 
would occur after expansion of the pioneer facility. An alternative 
approach is for the government to provide land access and possibly 
other assistance in the context of a cooperative agreement with the 
industrial proponent of the project. Such an agreement would be 
project-specific and would include provisions covering the schedule and 
duration of the project, environmental performance, environmental 
monitoring, and payments to the government, all of which would be 
consistent with the government's overall leasing strategy. Most 
important, the initial cooperative agreements should not prejudice how 
lease agreements might be done in the mature phase of an oil shale 
industry.
    Fostering early commercial experience: In building first-of-a-kind 
plants, a private firm will take on considerable technical risks, as 
well as the market risks associated with fluctuating world oil prices. 
Considering the economic and national security benefits associated with 
achieving large-scale oil shale production, it is appropriate for the 
government to share in these risks. This is a policy area that RAND is 
currently examining. At this time, I can say that we are considering a 
number of options, such as allowing capital investments in pioneer 
plants to be expensed and deferring lease bonus and royalty payments 
until the production facility is operating at a profit. The efficacy 
and economic and fiscal impacts of these options require further 
analysis.
    However, based on my own professional experience and judgment, I 
caution against the use of federal loan guarantees. Firms with the 
technical and management wherewithal to build and operate first-of-a-
kind oil shale plants--and then move forward with subsequent plants--
generally have access to needed financial resources. Loan guarantees 
can induce the participation of less-capable firms, while shielding the 
project developer from the risks associated with cost overruns and 
shortfalls in plant performance. The public then ends up with the bill 
if the project fails.
    Dealing with the impact of oil shale development on global climate 
change: Most process concepts for producing liquid fuels from oil shale 
cause carbon dioxide emissions in excess of those associated with 
refining conventional crude oils. Since most of these emissions will 
come from large stationary sources, such as power plants providing 
electricity to oil shale facilities and plants for processing shale-
derived oil, it may be feasible to capture this excess carbon dioxide. 
For initial commercial shale processing plants, an option is to use 
this captured carbon dioxide for enhanced oil recovery in nearby oil 
production areas.
    But the extensive development of oil shale would likely produce 
carbon dioxide at levels beyond the capacity of the enhanced oil 
recovery market. In this case, the captured carbon dioxide may need to 
be geologically sequestered. At present, however, the technical 
feasibility of geological sequestration has not been demonstrated. 
Thus, a critical issue in developing oil shale may be successfully 
demonstrating geological sequestration in the general vicinity of the 
Piceance Basin. Toward this end, planning for oil shale development 
should include assessing the potential use of co-produced carbon 
dioxide for enhanced oil recovery and the viability of geological 
sequestration, including a large-scale demonstration.
Options for Legislative Action
    Congress has the opportunity to address a number of existing 
legislative constraints and mandates that may not be in the best long-
term interest of the nation, if oil shale development is to remain a 
viable option. There are also a few areas where Congress may need to 
assert its will, such as including the U.S. Environmental Protection 
Agency in federal planning for oil shale development. I suggest the 
following for consideration by the Committee.
    1.  Rescind the requirement to prepare a programmatic EIS for a 
commercial leasing program within 18 months. Instead, require that the 
programmatic EIS be a phased effort for establishing an oil shale 
leasing and development strategy for the federal government. The 
initial phase of this effort should be directed at establishing 
critical information needs so that appropriate research programs can be 
formulated and carried out.
    2.  Rescind the requirement to establish final regulations for a 
commercial leasing program within six months of completing the 
programmatic EIS. As discussed above, within the next few years, it is 
unlikely that adequate technical, economic, and environmental 
information will be available to formulate fair and equitable leasing 
regulations.
    3.  Require that the Department of Energy, the Department of the 
Interior, and the Environmental Protection Agency cooperatively develop 
a federal oil shale leasing strategy.
    4.  Require that the Department of Energy, the Department of the 
Interior, and the Environmental Protection Agency investigate and 
report on alternative approaches to providing access to federal lands 
for early first-of-a-kind commercial facilities.
    5.  Require that the Department of the Interior make available for 
leasing additional lands for the purpose of conducting RD&D activities.
    6.  Require that the Department of the Interior and the Department 
of Energy prepare plans for conducting critical environmental and 
ecological research; high-risk, high-payoff process improvement 
research; an assessment of carbon management options; and a large-scale 
demonstration of carbon dioxide sequestration in the general vicinity 
of the Piceance Basin.
    In closing, I commend the Committee for addressing the important 
topic of moving forward with oil shale development. In much of the 
policy debate on oil shale development, I see two sides. On the one 
hand, there are the boosters who overestimate the benefits and urgency 
of moving forward and often dismiss the serious environmental and 
policy issues that need to be addressed. They advocate using the 
development of oil sands in Alberta, Canada, as a model for the 
development of U.S. oil shale. Anyone familiar with the heavy 
subsidization of early oil sands production and the environmental 
degradation that continues to be associated with Canadian oil sands 
extraction knows that the ``Alberta model'' is a nonstarter for 
development in the Green River Formation. On the other hand, there are 
the naysayers, who in their concern for environmental protection appear 
to dismiss the economic costs of importing high-priced oil and the 
national security consequences of continued wealth transfers to certain 
oil exporting nations.
    At RAND, our research has identified a course that addresses both 
the environmental concerns and the national benefits that accrue from 
large-scale production. We often refer to the RAND approach as a 
``measured approach'' in that it involves gathering information and 
proceeding at a slow enough pace to enable evaluation and course 
correction along the way but fast enough to advance understanding and 
preparation for possible large-scale commercial production so that in a 
decade we are in much better position to weigh both benefits and costs. 
The current framework established by EPACT to rush forward with 
commercial leasing is clearly not a measured approach.
    The United States has before it many opportunities--including oil 
shale and coal, renewables, improved energy efficiency, and fiscal and 
regulatory actions--that can promote greater energy security. Oil shale 
can be an important part of that portfolio. And it will be as long as 
we proceed with a strong commitment to take a well-informed path, 
recognizing that we have important environmental, economic, and 
national security issues at stake.
                                 ______
                                 
    Mr. Costa. Thank you very much for your testimony. Our next 
witness is another senator, a former State Senator from 
Colorado. She has a family farm. Kathleen Sullivan Kelley, an 
Irish lassie.

                 STATEMENT OF KATHLEEN KELLEY, 
             FORMER STATE REPRESENTATIVE, COLORADO

    Ms. Kelley. Very Irish. Thank you, Chairman Costa. Just a 
minor correction here. I was a State Representative and not a 
State Senator.
    Mr. Costa. I am sorry. You never assembled anything?
    Ms. Kelley. I assembled lots of stuff.
    Mr. Costa. I am sorry. I stand corrected--former State 
Representative Kathleen Sullivan Kelley.
    Ms. Kelley. Thank you. It is an honor to speak with you 
today about oil shale which has so profoundly affected and 
changed the course of my life. Our ranch, Josephine Basin, is 
approximately 25 miles northeast of Royal Dutch Shell's oil 
shale research and development site. In 1980, I was elected to 
the Colorado legislature representing House District 57. I 
affectionately called my House District Aspen, Vail and oil 
shale.
    I believe I was elected because of the concern that oil 
shale development was proceeding much too quickly with far too 
little vision and care. Subsidies were rampant through the 
synthetic fuels corporation with 80 plus billion dollars 
allocated and now 26 years later not one single commercial 
barrel of oil produced from shale.
    Those were very tough economic times, and many people 
coming to northwestern Colorado looking for jobs in oil shale 
were refugees from a collapsing auto and manufacturing 
industries. They clogged Rifle, Parachute, Meeker looking for 
jobs, driving property prices as much as 10 times higher than 
the real value, scrambling to rent or buy anything they could 
for shelters.
    As a last resort, many retreated to cars and lived in 
tents. One of the most poignant calls I ever received came from 
a fellow rancher who driving cattle down from a public lands 
permit ran into one such tent city and narrowly avoided 
trampling the tents only to find moments later that a seven-
month pregnant woman and her children were housed in one of the 
tents.
    Just as I was swept into the legislature on the rising tide 
of concern over oil shale development, I was swept out on the 
bust, losing my reelection bid by 13 votes. On May 2, 1982, I 
received a call from the public relations department at Exxon 
relaying news that their board of directors had taken a vote to 
close the Colony Project. Losing my reelection a few months 
later did not even begin to compare the trauma of the labor 
force. They were met at the front gate of Colony with security 
guards and shotguns.
    So forgive me if I view this latest oil shale rush as 
overblown hyperbole, with more to do about posturing than 
production. The only true commercial production of oil shale I 
know of from the Piceance Creek Basin rests on my desk at home 
as a polished paperweight and penholder.
    More telling is the Colony Project itself which after 25 
years sits mothballed and unreclaimed. I am concerned with that 
with this rush over so-called commercial oil shale development 
in a few short years we will have even more projects sitting 
mothballed and unreclaimed. That is why it is absolutely 
essential that the crucial research and development phase must 
be respected for what it is and not prematurely escalated with 
the gift of cheap public lands under the guise of commercial 
leasing.
    I could not agree more with Mr. Bartis on his comments. 
Wait for commercial leasing until we have a proven, viable 
extraction technology. In 2005, Congress included provisions in 
Section 369 of the Energy Policy Act that concerned oil shale. 
A commercial lease sale requires BLM to complete four tasks. It 
must issue research and development leases. It must complete a 
regional environmental review. It must adopt new leasing 
regulations. It must consult with state and local governments 
and the public.
    BLM has only completed one of the required tasks. It has 
issued research and development leases. All I ask is that BLM 
proceed intelligently, thoughtfully and cautiously as Section 
369 of the Energy Policy Act entreat us to do. And again, I 
would also reiterate what Mr. Bartis said. Rescind the 
requirement for the programmatic EIS timeframe and rescind the 
requirement to establish the final regulations for the 
commercial leasing program on that timeframe as well.
    And finally, I have with me a letter that is written by and 
signed by 21 elected officials in northwestern Colorado asking 
that we again emphasize the research and development phase and 
go slow. Thank you, Mr. Chairman.
    [The prepared statement of Ms. Kelley follows:]

                 Statement of Kathleen Sullivan Kelley

    Good morning Chairman Costa and Members of the Energy and Minerals 
Subcommittee.
    My name is Kathleen Sullivan Kelley. It is an honor and privilege 
to speak with you today about oil shale which has so profoundly 
affected and changed the course of my life.
    I am a fourth generation Coloradan, born in Northwestern Colorado, 
growing up on a ranching and farming operation near the small town of 
Meeker. Our ranch, Josephine Basin, is approximately twenty-five miles 
northeast of Royal Dutch Shell's oil shale research and development 
site. Boulders loaded with tar lay scattered in the alluvial valleys of 
our land having tumbled down from the crest of the Little Hills a range 
which is the eastern border of the Piceance Creek Basin. My husband 
Reed, and I still own and operate this ranch. It is a private land only 
operation, abutting BLM lands to the west.
    It is the love of this land which compelled me to seek elective 
office, for this raw country, of centuries-old pinyon and twisted 
juniper challenged by frequent droughts and harsh winters, is as 
brittle as it is beautiful. It is more wild than some lands with 
federal Wilderness designation, for this is not a pretty postcard land 
where hikers like to go. Until now, it was rarely touched by human 
traffic, save for the few rugged men and women who survive by 
scratching out a living from mostly cattle and sometimes sheep. This 
place is haunted by a deceptive sun drenched landscape, often parched, 
but rich in wildlife, deer, elk, bear, cougar, bald eagles, accipiters 
and falcons to name just a few. Our ranch has been the wintering ground 
for deer migrating from the Piceance and just this winter we wrestled 
in a losing battle with nearly a thousand head of elk descending from 
the Basin in search of winter feed.
    In 1980, when Exxon released what commonly became known as ``The 
White Paper,'' which outlined their oil shale plans and the mind-
boggling impacts they'd have on the communities and water resources of 
the region, I was elected to the Colorado Legislature, representing 
House District 57. I affectionately called my House District, ``Aspen 
Vail and Oil Shale.'' I believe I was elected because of the concern 
that oil shale development was proceeding much too quickly with far too 
little vision and care. Subsidies were rampant through the Synthetic 
Fuels Corporation, with $80 billion dollars allocated and now, twenty 
six years later, not one single commercial barrel of oil produced from 
shale. The second week after I was elected to the legislature I was 
flown by Occidental Petroleum by helicopter to the Logan Wash oil shale 
in-situ development site with two newly elected county commissioners. 
One of them was terrified of heights and the other was claustrophobic. 
It was during this flight, I discovered elective office was not all 
glory and fortunately, not everything makes the headlines.
    Those were very tough economic times and many people coming to 
Northwestern Colorado looking for jobs in oil shale were refugees from 
a collapsing auto and manufacturing industries. Most were suffocating 
under double digit interest rates on loans they couldn't repay. They 
clogged Rifle, Parachute and Meeker looking for jobs, driving property 
prices as much as ten times higher than real value, scrambling to rent 
or buy anything they could for shelter. As a last resort many retreated 
to cars and lived in tents.
    One of the most poignant calls I received as a legislator came from 
a fellow rancher the fall of 1981, who, driving cattle down from a 
public lands permit, suddenly discovered a camp with several families 
in the path of his cattle. He turned his cows and calves just in time, 
missing a tent housing a 7 month pregnant woman and her small children. 
This burly, tough rancher's voice quivered when he relayed this 
encounter.
    Because I was concerned about the burgeoning impacts of subsidy 
fueled, speculative oil shale development, I authored and introduced 
legislation which placed a severance tax on the ``projected'' 
production from federal oil shale lease sites. I felt at the time, it 
might be the only way to get enough substantive impact assistance if 
Exxon's growth and impact estimates in their ``White Paper'' were even 
10% accurate. It was also an attempted wake-up call, to let energy 
companies know that development must not proceed without adequate 
funding for the infrastructure to support it. Needless to say, it 
didn't pass.
    Just as I was swept into the legislature on the rising tide of 
concern over oil shale development, I was swept out on the bust, losing 
my re-election bid by 13 votes. On May 2, 1982, I received a call from 
the Public Relations Director for Exxon, relaying news that their Board 
of Directors had just taken a vote in Houston, and the Colony project 
near Parachute Colorado was one of several global development projects 
Exxon would be immediately closing. Losing my re-election a few months 
later didn't even begin to compare to the trauma the labor force 
experienced as a result of the closure. That day, over 2,000 workers--
most of them my constituents--were put out of work. While I got a 
courtesy call from Exxon's PR department, the workers were met at the 
Colony entry gate the following morning by security guards toting shot 
guns.
    I had a ranch where I could return to lick my wounds, but many of 
the people who worked in the oil shale industry at the time, had come 
to Colorado with their car as their only possession and left in that 
same car. Sure oil prices would never collapse again, one man I knew 
invested everything he owned on that energy boom, deliberately drove 
his jeep into a high mountain lake as his last destination.
    So forgive me if I view this latest oil shale rush as overblown 
hyperbole, with more to do about posturing than production. The only 
truly commercial production of oil shale I know of, from the Piceance 
Creek Basin, rests on my desk at home as a polished paper weight and 
pen holder.
    More telling is the Colony project itself, which, after twenty five 
years, sits ``mothballed'' and unreclaimed. I am concerned that with 
this rush over so-called commercial oil shale development, in a few 
short years we'll have even more projects sitting mothballed and 
unreclaimed.
    I give you this verbal snapshot of my personal experience because I 
want you to understand this experience that brings me before you, and 
this history that informs my opinions about current actions by the BLM 
with regard to oil shale. Petroleum is a commodity. As a raw commodity 
producer, I have experienced the volatility and hysteria of commodity 
markets first hand. Commodities markets are historically boom and bust. 
As a mineral owner, I know how much speculative ventures drive this 
industry. And as a resident of this oil shale laden country, I know 
speculation has always been oil shale's primary value.
    I understand this crunch we are in as a nation. I appreciate and 
hold dear the concept that we must be resource independent, sovereign 
if you will, to be secure in increasingly threatening global 
conditions. Three dollar plus diesel prices have destroyed a much 
needed profit margin in my industry and I am ready, as are other 
Americans, for a leveling of fuel prices. But extracting oil from shale 
is more problematic, more difficult, more technologically intensive and 
far more expensive than extracting salt from seawater. It will never 
be, in my opinion, even a partial answer to our energy needs. Our oil 
shale country is too vast and the shale is too deeply imbedded for 
practical, economically viable extraction of even a portion of it--with 
what we have in proven technology today.
    That is why it is absolutely essential that the crucial research 
and development phase must be respected for what it is and not 
prematurely escalated with the gift of cheap public lands under the 
guise of ``commercial'' leasing. Wait for commercial leasing until we 
have a proven, viable, extraction technology. Once that technology 
exists, and all the costs of the development are known, both intrinsic 
and extrinsic, and society has determined it is willing to bear those 
costs, only then might it be appropriate to open those lands to a 
competitive bid process for commercial development. But not before.

                                 * * *

    In 2005, Congress included provisions in Section 369 the Energy 
Policy Act that concerned oil shale. The Act told the Bureau of Land 
Management to make federal lands available for oil shale research and 
development, and it outlined steps the BLM was required to take before 
it considered offering commercial leases for federal oil shale 
resources.
    1.  BLM was directed to prepare a regional analysis of the 
environmental and social impacts that might result from commercial oil 
shale development, and;
    2.  It was then to adopt new regulations that would set the ground 
rules for any commercial lease sale.
    Importantly, after these two steps were completed, the Act directed 
the BLM to consult with state and local government officials, Indian 
tribes, and members of the public to determine the level of support for 
and interest in a commercial lease sale. Only if the BLM found 
sufficient support and interest was the BLM then authorized to hold the 
first commercial sale of federal oil shale.
    A commercial lease sale, then, requires the BLM to complete four 
complex tasks:
    1.  It must issue research and development leases.
    2.  It must complete a regional environmental review.
    3.  It must adopt new leasing regulations.
    4.  It must consult with state and local governments and the 
public.
    I am dismayed that the BLM has apparently decided to move 
aggressively forward with a full-scale commercial leasing program, even 
though it has completed only one of the required tasks--it has issued 
research and development leases. Even that step is incomplete, though, 
since we won't even get a chance to learn from their results for 
several years. The BLM is misinterpreting the oil shale provisions in 
the Energy Policy Act in its stampede toward commercial leasing, saying 
to the public and to Congress itself that it plans to hold a commercial 
lease sale in 2008. This is not only contrary to the Energy Policy Act, 
but certainly ignores a hundred years of unkind history for this 
resource--environmentally, socially and economically.
    Why rush, when for the first time in the history of this resource, 
we can smartly proceed with an important research phase which has the 
potential to give us, once and for all, the answers we need for viable 
commercial development, including, whether or not it is even possible.
    All I ask is that the BLM proceed intelligently, thoughtfully, and 
cautiously as Section 369 of the Energy Policy Act entreats it to do.
    BLM issued five ``Research, Development and Demonstration'' leases 
to three companies in November of 2006.
    1.  Chevron and EGL Resources each got one 160-acre lease.
    2.  Royal Dutch Shell got three 160-acre leases.
    Though the leases were issued last November, it will take time 
before any of the companies begin development. The BLM's leasing 
decisions said that the lessees must submit a detailed Plan of 
Development and obtain all required state and federal permits before 
they could start construction on these federal RD&D leases.
    So far, only Shell has applied for any of its state permits, and it 
has said that it expects state permitting to take up to one year to 
complete. In fact, the State of Colorado in February of this year 
rejected Shell's mined land reclamation permit due to missing and 
inconsistent information, further delaying the start of construction on 
Shell's RD&D site. Neither of the other two companies has yet submitted 
applications for the necessary state permits, meaning that construction 
on their sites is likely well over a year off.
    I am in contact with Royal Dutch Shell's public relations officials 
and some of their project engineers. I have been repeatedly told that 
Shell has experienced many set-backs on its technology, and while its 
had some encouraging success, it still can't say whether its technology 
works at a commercial scale or that it is environmentally sound. They 
want it to be, but wanting it to be, does not make it so. They have 
told me there are far too many questions needing answers. They still 
don't know with any degree of certainty, for example, whether a 
keystone of their in-situ process--the freeze wall technology--works to 
prevent the mixing of groundwater with their produced hydrocarbons and 
hazardous byproducts.
    As I ride out on the ranch to check our cattle and the rumbling, 
guttural blasts of fracing from natural gas exploration from miles away 
vibrate through the brush and grass, I'm not just wondering if the 
freeze wall technology works, particularly in energy development 
conditions of massive gas exploration and extraction near the R&D 
sites, I want a rock-solid guarantee it works. The water quality of the 
region depends upon it.
    The most open and vocal of the companies involved in speculative 
oil shale processing, Shell has stated publically that they are a long 
ways away from commercial development. During the ramp-up to the Energy 
Policy Act, Shell said repeatedly that it would make a decision by the 
end of this decade and I was told it may be much later than that as to 
whether its technology could be scaled up to commercial production. In 
testimony before the Senate Energy Committee in June 2006, Shell CEO 
Stephen Mut said:
    ``For years, we've been meeting neighbors, informing them of what 
our progress is on our research, and though we're years from making a 
commercial decision in the near-term, it's going to be time for us to 
begin talking about and opening a dialogue about what the impacts of 
the commercial development could be.''
    In response to questions from Colorado's Senator Salazar about the 
timing of Shell's commercial determination, Shell's CEO responded, 
``Shell hopes to make the decision whether to commercialize oil shale 
production around the end of this decade.'' Nonetheless, the BLM has 
repeatedly represented to the public and the media that it intends to 
hold a commercial lease sale in 2008.
    This is why I am disturbed by the BLM's aggressive and headlong 
rush toward large-scale commercial leasing of federal oil shale. It's a 
simple and undeniable fact--the technology isn't ready. Even the 
company that's furthest along--the company that's invested millions of 
its own dollars on oil shale research--says that it can't be sure if it 
works on a commercial scale.

                                 * * *

    Because of my experience in State Government in the last oil shale 
boom, I am deeply troubled that the BLM is ignoring Congressional 
direction to take into account the views of affected state and local 
governments. The Energy Policy Act said the BLM must consult with 
officials from the state and local government officials to assess 
support for and interest in a commercial lease sale. Yet in budget 
documents submitted to Congress by the Department of Interior, it 
appears that the BLM has determined that it will hold a lease sale 
without going through the required consultation.
    According to the Interior Department's budget justification,
    BLM plans to spend $4.4 million within the Oil and Gas program on 
Oil Shale activities in 2007. This amount is retained in the 2008 
request in order to finalize the programmatic EIS, manage the ongoing 
RD&D leases, prepare the commercial leasing rule and to perform site-
specific NEPA analyses required to offer commercial leases by the end 
of 2008.
    Nowhere in this budget document does the BLM mention its obligation 
to consult with the Governor of Colorado, representatives of local 
governments, Indian tribes, or members of the public before making a 
decision whether to move forward with a commercial lease sale.
    I have here a letter from several elected officials in western 
Colorado who are quite upset that the BLM has not taken the 
consultation mandated in the Energy Policy Act seriously. These 
officials--several of whom lived through the last oil shale bust like 
me--are upset that the BLM has decided to hold a commercial lease sale 
before it has sought local feedback on whether it's appropriate and 
before research has shown that the technology is viable. Commercial-
scale oil shale development is not something to rush into lightly, and 
local elected officials want us to GO SLOW.
    Frankly, Honorable Members, our government from local to state is 
vastly unprepared and unduly restricted from developing the 
infrastructure necessary to support commercial scale oil shale. Not 
only are local and state budgets extremely tight, they teeter 
precariously on the edge of deficits. Funding for infrastructure wisely 
needs to be predictable and stable. Expecting a community to bond 
itself to fund infrastructure based upon speculative development is a 
poor practice. But when that is the only viable option, it means we 
bear the costs which should rightly belong to those who generate them: 
The Energy Companies. Currently, our area is pressured by the 
cumulative impacts of extremely aggressive energy development and our 
communities have been reduced to begging for additional assistance for 
key infrastructure items.
    The most recent examples are donations to our hospital and 
community college. These donations are most certainly appreciated and 
welcomed. Unfortunately, we need them. But a tincup approach to funding 
infrastructure is far from adequate and in fact, can be quite 
dangerous. Such dependency can have a dampening affect on communities 
insisting on regulations necessary for sound development and their own 
self protection.

                                 * * *

    BLM's proposed 2008 commercial lease sale would occur long before 
the results from the current oil shale research and development program 
can be known and only fuels speculative mania. Particularly in these 
times of $60+ per barrel of oil.
    Again, none of the projects on federal R&D leases will even have 
been built by the time BLM holds a commercial sale in 2008. None will 
have produced any meaningful results as to their impacts, technical 
viability, or energy and personnel needs. Each of the five in-situ 
projects being tested is the first of its kind, and nowhere on the 
planet has large-scale oil shale development occurred.
    At this point, what we don't know about a modern oil shale industry 
far outweighs what we do know. The U.S. oil shale industry is in its 
infancy, and neither the government, the industry, nor the public can 
possibly know the full range of environmental and social impacts of the 
development until the R&D projects are completed.
    Everyone agrees that commercial development of the West's oil shale 
resources is more than a decade away, and so a measured approach is 
warranted. We need to know that the technology works, and that it will 
not result in unacceptable impacts to the land or western Colorado 
communities. Let me say it one more time: we need to GO SLOW and 
proceed smartly on oil shale. And what does this mean? I strongly 
encourage the members of this committee to prohibit steps leading to a 
commercial lease sale until research and development has proven that 
oil shale is economically viable without taxpayer subsidies, will 
comply with all existing environmental protections, and will not result 
in unacceptable environmental and social impacts.
    Rather than rush headlong into commercial leasing, the BLM should 
let research and development occur and prove that the technology works 
before it takes steps towards conveying large chunks of oil shale land.
    Thank you Chairman Costa and the rest of the members of the 
subcommittee for your time.
                                 ______
                                 
    Mr. Costa. Thank you, Ms. Kelley, for your testimony and 
for staying within the five-minute rule. I appreciate that very 
much. Our next witness is a Conservation and Policy Chair for 
the New Mexico Wildlife Federation. From Albuquerque, New 
Mexico, Mr. Oscar Simpson.

 STATEMENT OF OSCAR SIMPSON, PUBLIC LANDS COMMUNITY ORGANIZER, 
                  NATIONAL WILDLIFE FEDERATION

    Mr. Simpson. Thank you.
    Mr. Costa. Turn that on, and make sure you are speaking 
closely into that.
    Mr. Simpson. Thank you. Testing.
    Mr. Costa. That works better.
    Mr. Simpson. Yes. Thank you, Chairman Costa, and members of 
the committee. My name is Oscar Simpson. I am the former 
President of the New Mexico Wildlife Federation. I am the 
Conservation Policy Chair for the New Mexico Wildlife 
Federation, and I work for the National Wildlife Federation 
representing the hunters and anglers of New Mexico. I am a 
native New Mexican, a Republican and an avid sportsman who has 
hunted and fished the majority of my 59 years.
    From 1980 to 1998 I was involved in the public lands 
wildlife policy on a volunteer basis. My primary focus during 
this time was on public land management and its effects on 
hunting and fishing. So I feel especially fortunate to sit 
before you today and share some of my personal experiences.
    I also have over 30 years of professional experience with 
water resource management and regulation. I worked in the 
private sector for eight years, for the State of New Mexico for 
17 years. As a state employee I dealt with regulation of oil 
and gas development for four years, and then with public water 
supplies for 14 years. For the past nine years I have primarily 
dealt with Federal and state management of water, habitat and 
wildlife resources and impacts from oil and gas development.
    I learned to hunt and fish. I learned to fish in Pecos, New 
Mexico, at the age of two, and I was taught by my father and 
grandfather to hunt and fish. My favorite places to hunt are 
throughout New Mexico and southwest Colorado where I hunt elk, 
deer, antelope and quail.
    For the past 30 years, I have seen tremendous changes to 
New Mexico and across the west. Over the past seven years the 
rapid pace of irresponsible--and I stress irresponsible--oil 
and gas development leads me to conclude that Congress needs to 
take immediate steps to fix the way the Bureau of Land 
Management regulates the oil and gas industry.
    I am here today with a simple message. The Energy Policy 
Act of 2005 is nothing short of an assault on our western 
culture and our way of life. I would like to thank the 
Republicans. I would like to think that Republicans have always 
supported the values of common sense conservation, and that has 
been done in the past. Hunting and angling is a treasured 
recreational activity handed down through the generations and a 
way of life in the west.
    I want sportsmen to be able to pass our treasured legacy on 
public lands down to the next generation. In regards to Title 
III of the Energy Policy Act of 2005, sportsmen and our 
organization have expressed concern over its impacts to 
wildlife and the western way of life. We support the following 
changes to oil and gas permitting and implementation.
    Number one, Congress should require that development occur 
with the smallest footprint possible with a minimum effect to 
fish and wildlife resources. Congress should mandate the use of 
best management practice such as directional drilling, well 
clustering, low surface occupancy standards, maximizing spacing 
between wells and well clusters, phased development and 
restoration of sites impacted by energy development including 
eradication of evasive species.
    Number two, where state and wildlife agencies have adopted 
policies or guidelines with respect to energy development and 
sensitive wildlife habitats, BLM should make these requirements 
a mandatory minimum level of protection. Item number three, the 
practice of Federal agencies waiving permit stipulations has 
contributed to the public controversy over oil and gas leasing 
and to the perception that environmental concerns are less 
important than extraction of industry. Existing fish and 
wildlife stipulations must be upheld and not waived.
    Item number four, too many areas that are of vital 
importance to fish and wildlife and water resources are leased 
for energy development. Congress should mandate that BLM and 
the Forest Service develop agency specific policy directives 
that prohibit new leasing in fragile but unprotected areas. And 
finally number five, BLM routinely diverts biologists away from 
their primary duties to assist in processing drilling permits 
of inspection and monitoring funding for permitting and leasing 
activities.
    I briefly highlighted how the BLM should manage energy 
development and protect our wildlife in the public lands. 
Unless Congress takes immediate legislative action to reform 
the oil and gas provisions of Title III of the Energy Policy 
Act of 2005, nothing will change. Other witnesses will follow 
and they have already followed, and they will give specific 
changes to my consideration. Now that happened in the first 
policy. Now I would like to turn your attention to a few slides 
up there that we have highlighted.
    Mr. Costa. Quickly.
    Mr. Simpson. The first slide illustrates the Permian Basin. 
The dots from your distance are basically well pads, and it 
shows the density. You know they have been drilling in the 
Permian Basin for a long time. My grandfather started in the 
oil and gas industry on the Permian Basin just across from the 
Texas side, and I have had lots of information from him before 
he died about how development occurred and what happened.
    Next slide. This shows a closer picture of the true impacts 
over time and what really happens on the surface--huge, high 
density from 18 or so levels of production all reflected on the 
surface of the land. Next slide. And it shows an oblique angle 
of the same circumstances. That shows it is not small impacts. 
This has developed over years of drilling and activity. So that 
really shows you what the impacts truly are.
    Next slide. And this is the San Juan Basin. I have hunted 
and fished there, and over time especially in the last 17 or 
actually since the 1980s tremendous increase, and it shows. It 
is just now showing what is going to happen. Basically what 
will happen now in the increase of activities going to happen 
in the Permian Basin.
    Next slide. And this shows a side angle of basically what 
the big, long, wide strip is. It is where a pipeline was put 
in. So you can see the impacts to the roads, the drill pads, 
the infrastructure basically. It is a death of a thousand cuts 
because the more in field drilling and the more drilling--
pretty soon you have loss of wildlife, loss of habitat and 
impacts to the groundwater and surface water resources. Thank 
you very much.
    [The prepared statement of Mr. Simpson follows:]

Statement of Oscar Simpson, National Wildlife Federation, Public Lands 
     Organizer, Conservation and Policy Chair, New Mexico Wildlife 
                  Federation, Albuquerque, New Mexico

    Chairman Jim Costa, Ranking Member Steven Pearce and members of the 
Committee, thank you for inviting me to address this committee and for 
the opportunity to express my experience and views on the 
Implementation of Title III, Oil and Gas Provisions, of the Energy 
Policy Act 2005.
    My name is Oscar Simpson and I am the former President of the New 
Mexico Wildlife Federation, a sportsmen and conservation organization 
that was founded in 1914 by Aldo Leopold. I am the Conservation Policy 
Chair for the New Mexico Wildlife Federation and work for the National 
Wildlife Federation representing the hunters and anglers of New Mexico. 
The National Wildlife Federation is the largest mainstream conservation 
organization in the United States representing approximately 4 million 
members and supporters in the U.S. and nearly 25,000 members and 
supporters in New Mexico. I am a native New Mexican and an avid 
sportsman who has hunted and fished for the majority of my 59 years. I 
have had the good fortune to recreate in many areas throughout the 
western United States enjoying our public lands majestic landscapes and 
abundant wildlife. From 1980 to 1998, I was involved in public land and 
wildlife policy on a volunteer basis. My primary focus during this time 
was on public land management and its effects on hunting and fishing, 
so I feel especially fortunate to sit before you today and share some 
of my personal experiences.
    I also have over 30 years of professional experience with water 
resource management and regulation. I worked in the private sector for 
eight years and for the State of New Mexico for 17 years. As a state 
employee I dealt with the regulation of oil and gas development for 
four years and then with public water supplies for 14 years. For the 
past nine years, I have primarily dealt with federal and state 
management of water, habitat and wildlife resources and impacts from 
oil & gas development.
    I am here today with a simple message, the Energy Policy Act of 
2005 is nothing short of an assault on our western culture and way of 
life. Hunting and angling is a treasured recreation activity handed 
down through the generations and a way of life in the West. I want 
sportsmen to be able to pass our treasured legacy on public lands down 
to the next generation. The impacts from this law have affected hunters 
and anglers from all walks of life. It has diminished the quality and 
quantity of our hunting experiences in the Rocky Mountain West. We have 
been locked out of the decision making process and denied our 
birthright.
    Not only is hunting and angling a key aspect of Rocky Mountain 
culture, it is a key aspect of our economy. According to the Sonoran 
Institute there are over 38 million hunters and anglers in the United 
States, generating $70 billion to the economy per year. In New Mexico, 
a combined 351,000 hunters and anglers generated $14 million in fees 
alone in 2000.
    I have seen with my own eyes that energy development in the Rocky 
Mountain West can affect fish and wildlife habitat and hunting and 
angling opportunities in profound ways. While we sportsman are 
pragmatic in our approach and realize that energy development is a 
legitimate use of public lands, we also believe that it should occur in 
a manner that minimizes habitat fragmentation and water quality 
degradation. Every oil and gas project on public lands should 
specifically be designed to avoid and minimize impacts to fish and 
wildlife habitat and water resources.
    According to the Department of the Interior's January, 2003 Energy 
Policy and Conservation Act (``EPCA'') study, 85 percent of federally 
owned oil resources and 88 percent of federally owned gas resources in 
the Rocky Mountain states are available for exploration and drilling. 
Over the past seven years there has been an exponential rate of oil & 
gas development on these land in the Rocky Mountain West. In 2004, the 
BLM issued a record number of 6,130 drilling permits on BLM lands. 
Unfortunately administrative streamlining and Congressional legislation 
have forced the federal Bureau of Land Management (BLM) to promote oil 
& gas development of our public lands with little regard for that 
development's impact on water, wildlife and the ecosystem. In short, 
the Bush administration has clearly elevated oil and gas development as 
the dominant use on our public lands and I have witnessed it first 
hand.
    In my experience, the effect of oil and gas development on wildlife 
and habitat are severe and wide-ranging, and are not limited to the 
direct areas that are disturbed for various phases of oil and gas 
development (drill pads, roads, pipelines, power lines, compressor 
stations, road traffic, etc).
    For instance, the Pinedale Anticline in Wyoming and the Powder 
River Basin in Montana and Wyoming are case studies that directly 
highlight the damage that misguided oil and gas development causes for 
wildlife. For example, a multi-year study in the Pinedale Anticline has 
documented a 46% decline in mule deer use of prime habitats during the 
first four years of gas development. Since 2002, the mule deer 
population in the Anticline has fallen from 5,228 to only 2,818 in 
2005, in other words this much beloved game species has declined by 
half in just three years. The study found no evidence of a similar 
decline in the nearby ``control area'' on the Wind River Front, where 
no drilling is occurring. This study clearly shows what those of us who 
see the on the ground impacts of oil and gas on a daily basis have 
known for a long time, when oil and gas development is done without 
specific regard for wildlife conservation, it leads to direct 
detrimental impacts on game and fish species (Sawyer, et al. 2006).
    A BLM commissioned study which analyzed the potential impacts of 
coalbed methane development on sage grouse in the Powder River Basin of 
Montana and Wyoming, found that areas where methane wells are being 
drilled did not have the same strong population growth recorded 
elsewhere in the basin. The study found bird populations in 2005 were 
at only 12% of what they were in 2000. Populations that were outside 
the area impacted by development were closer to 70% of their previous 
numbers (Naugle, et al. 2006).
    Oftentimes I hear the argument that the impacts of oil and gas to 
wildlife are minimal because there is a small surface area that is 
directly disturbed by development. However, it is well documented that 
the damage to wildlife habitat from oil and gas development extends 
well beyond the areas where wells, roads and other supporting 
facilities are placed. Oil and gas development leads to substantial 
fragmentation of wildlife habitat, which in turn leads to avoidance of 
large areas of the affected landscape due to behavioral responses of 
wildlife and game species. This results in a significant reduction of 
viable habitat and the chance of survival for wildlife.
    According to the Wyoming Game and Fish Department (WGFD), ``As 
densities of wells, roads, and facilities increase, the effectiveness 
of adjacent habitats can decrease until most animals no longer use the 
habitat.'' WGFD also notes that while ``direct loss or removal of 
habitat is always a concern,'' there are additional problems because 
``oil and gas developments are typically configured as point and linear 
disturbances scattered throughout broader areas.'' WGFD specifically 
discusses how an apparently low percentage of direct disturbance on the 
land can cause substantial problems for wildlife; the report states:
        ``Collectively, the amount of disturbance may encompass just 5-
        10% of the land. However, avoidance and stress responses by 
        wildlife extend the influence of each well pad, road, and 
        facility to surrounding habitats.''
    The damage caused by such oil and gas drilling is dramatic: studies 
have shown that road densities of two miles per square mile causes a 
50% reduction in elk populations, while six miles of roads per square 
mile drives almost 100% of the elk from the area (Lyon 1983).
    Pronghorn are even more sensitive to disturbance. The BLM stated in 
1999 Draft EIS for development of the Pinedale Anticline that pronghorn 
are adversely affected at road densities of one mile per square mile 
(BLM 1999).
    The National Wildlife Federation is not opposed to energy 
development on public lands, however, we expect our public lands to be 
developed in a responsible manner that embraces multiple use, and 
minimizes the impacts of oil and gas development to the other uses of 
these lands. The BLM can avoid or at least limit the damage from oil 
and gas development by controlling the amount of development (and 
resulting surface disturbance and destruction) that occurs and by 
requiring that oil and gas operators develop federal resources with 
maximum efforts to minimize damage.
    In regards to Title III of the Energy Policy Act of 2005, sportsmen 
in our organization have expressed concern over its impacts to wildlife 
and the western way of life. We support the following changes to oil 
and gas permitting and implementation.
      Congress should require that development occur with the 
smallest footprint possible and with the minimum effect to fish and 
wildlife resources. Congress should mandate the use of Best Management 
Practices such as directional drilling, well clustering, no surface 
occupancy standards, maximizing spacing between wells and well 
clusters, phased development, and restoration of sites impacted by 
energy development including eradication of invasive species.
      Where state wildlife agencies have adopted policies or 
guidelines with respect to energy development in sensitive wildlife 
habitats, BLM should make these requirements a mandatory minimum level 
of protection. In addition, Congress should require the Forest Service 
and BLM to maintain viable populations of native wildlife in natural 
patterns of abundance and distribution.
      The practice of federal agencies waiving permit 
stipulations has contributed to the public controversy over oil and gas 
leasing and to the perception that environmental concerns are less 
important than extraction of energy. Existing fish and wildlife 
stipulations must be upheld. If changes are proposed, they should take 
place with public scrutiny and environmental review. Congress should 
enact a requirement that energy company and federal agency proposals to 
waive protective measures for fish and wildlife are conditioned on 
public involvement and environmental analyses. In addition, BLM and the 
Forest Service should place sensitive fish and wildlife habitats under 
irrevocable no surface occupancy stipulations.
      Too many areas that are of vital importance to fish, 
wildlife, and water resources are leased for energy development. 
Congress should mandate that BLM and the Forest Service develop agency-
specific policy directives that prohibit new leasing in fragile but 
unprotected areas, such as proposed Wilderness areas, national 
conservation areas, National Forest roadless areas, BLM areas of 
critical environmental concern, eligible wild and scenic river areas, 
and state designated fisheries of significance (for example, blue 
ribbon/gold medal trout streams). Lands in these categories have 
special fish, wildlife, hunting, and angling resource values that are 
incompatible with oil and gas development.
      BLM routinely diverts biologists away from their primary 
duties to assist in processing drilling permits. In addition, funding 
intended for wildlife conservation programs is diverted toward energy 
development programs. The result is that crucial fish and wildlife 
management activities and monitoring of energy development impacts on 
fish and wildlife are falling behind with potentially deleterious 
effects on hunting and angling. Congress should prohibit the diversion 
of inspection and monitoring funding for permitting and leasing 
activities.
    Instruction Memorandum No. 2003-234, issued by this Administration, 
required BLM staff to review all existing lease stipulations to 
determine if they were still ``necessary and effective'' and directed 
that, if ``lease stipulations are no longer necessary or effective, the 
BLM must consider granting waivers, exceptions, or modifications.'' 
Now, the agency should be directed to undertake a review on a similar 
scale to add lease stipulations and strictly limit opportunities for 
waiver, exceptions and modification, and also to add conditions of 
approval (COAs) for drilling permits, that will protect wildlife 
habitat and other natural resources.
    I have briefly highlighted how the BLM should manage energy 
development and protect our wildlife and public lands. Unless Congress 
takes immediate legislative action to reform the oil and gas provisions 
of Title III of the Energy Policy Act of 2005 nothing will change. 
Other witnesses will follow that will recommend specific changes for 
your consideration.
Citations:
    Naugle, David E., K. Doherty and B. Walker. ``Sage-Grouse Winter 
Habitat Selection and Energy Development in the Powder River Basin: 
Completion Report.'' Wildlife Biology Program, College of Forestry and 
Conservation, University of Montana, Missoula, Montana (2006). 
Available on-line at: http://www.voiceforthewild.org/SageGrouseStudies/
Winter_habitat_report.pdf
    Sawyer, H., R. Nielson, F. Lindzey, and L. McDonald. ``Winter 
habitat selection of mule deer before and during development of a 
natural gas field.'' Journal of Wildlife Management 70(2006):396-403. 
Available online at: http://www.west-inc.com/reports/big_game/
Sawyer%20et%20al%202006.pdf
    Bureau of Land Management. 1999. Draft EIS for the Pinedale 
Anticline Oil and Gas Exploration and Development Project, Sublette 
County, WY. U.S. Department of the Interior, Bureau of Land Management, 
Pinedale Field Office, Pinedale, WY.
    Lyon, L.J. 1983. Road density models describing habitat 
effectiveness for elk. Journal of Forestry 81: 592-596.
    New Mexico Department of Game and Fish, Conservation Services 
Division. 2005. Habitat Fragmentation and the Effects of Roads on 
Wildlife and Habitats. This document is available on NMGF's website at: 
http://www.wildlife.state.nm.us/conservation/habitat_handbook/
EffectsofRoads.htm
    Wyoming Game and Fish Department. 2004. Minimum Recommendations for 
Development of Oil and Gas Resources Within Crucial and Important 
Wildlife Habitats on BLM Lands. This document is available on WGFD's 
website at: http://gf.state.wy.us/habitat/index.asp.
    Backcountry Bounty: Hunters, Anglers and Prosperity in the American 
West, 2006. See www.sonoran.org/programs/socioeconomics/
backcountry_bounty.html.
Summary of best management practices recommendations:
      Directional drilling to permit oil and gas development 
while reducing surface impacts to important areas;
      Closed loop drilling to protect water and soil from toxic 
chemicals;
      Clustered development based upon best available 
technology to minimize surface area development and impacts, and to 
reduce noise and dust caused by traffic to and from drill sites;
      Use of existing roads to the maximum degree possible and 
minimization of the length and environmental impact of new roads 
constructed to service well locations;
      Formally consult with State divisions of wildlife and 
other agencies before setting the number of active drill pads within an 
area to identify important fish and wildlife habitats;
      Maximize surface spacing and minimize surface disturbance 
and habitat fragmentation;
      Shorten the duration of ongoing disturbance by 
prohibiting intermittent drilling;
      Require interim reclamation and immediate, complete post-
drilling restoration of land, including rigorous control of noxious 
weeds, such that any land not in use or needed for ongoing operations 
will be reclaimed;
      Require operators to apply best available control 
technology to reduce noise, water and air pollutants;
      Ensure that wildlife corridors are left undeveloped to 
allow for wildlife movement;
      Increase bonding to a level and form that is sufficient 
to cover all reclamation.
      Designating areas off limits to future oil and gas 
leasing pursuant to BLM or Forest Service land use plans.
                                 ______
                                 
    [NOTE: Pictures submitted for the record by Mr. Simpson have been 
retained in the Committee's official files.]
    Mr. Costa. Thank you very much. You exceed your time but we 
will allow that. The next witness is Mr. Paul Cicio. Am I 
pronouncing that properly?
    Mr. Cicio. Yes, sir. Thank you.
    Mr. Costa. OK. Thank you, Mr. Cicio, representing the 
Industrial Energy Consumers of America. Please proceed on your 
testimony.

              STATEMENT OF PAUL CICIO, PRESIDENT, 
             INDUSTRIAL ENERGY CONSUMERS OF AMERICA

    Mr. Cicio. Thank you, Chairman Costa and Ranking Member 
Pearce for this opportunity. Unfortunately the U.S. remains in 
a serious natural gas crisis. It started in the mid 2000 time 
period, and we do appreciate the efforts by Congress and the 
Administration to accelerate the production of natural gas, and 
in particular the more efficient processing of permits to drill 
and greater access to Federal lands.
    While U.S. prices of natural gas have been on average the 
highest in the world since 2000, we believe that the combined 
actions by Congress and the Administration have averted much 
higher prices. Use of public lands for production of natural 
gas is essential given the increasing demand for this high 
quality fuel. For example, it would be impossible for the 
United States to reduce greenhouse gas emissions without 
increased use of natural gas by all sectors.
    The U.S. Geological Survey says that less than 5 percent of 
our Federal lands are used for oil and gas production. It is in 
the interest of the public that such Federal lands are used, 
and we believe that you can increase supply of natural gas 
without compromising the environment. The only reason that we 
are currently not rationing natural gas today is because of the 
shutdown to manufacturing plants throughout the United States 
which resulted in the loss of three million high paying 
manufacturing jobs.
    These plant shutdowns reduced the manufacturing sectors 
natural gas consumption by 23.4 percent which freed up 1.5 
million trillion cubic feet of natural gas, and it freed it up 
for other consumers. As a result, the U.S. is balancing its 
supply of natural gas on the backs of good manufacturing jobs.
    According to the Energy Information Administration, natural 
gas prices for homeowners, farmers and manufacturers have 
increased an average of 77 percent since year 2000. For every 
$1 per million btu increase in the price of natural gas, 
consumers will pay $22 billion more per year. In year 2006, 
consumers paid a staggering $75.7 billion more for their 
natural gas than they did in year 2000. High natural gas prices 
directly increase the cost of home heating and cooling, 
fertilizer and crop drying for farmers and the competitiveness 
of manufacturing.
    As significant as these costs are, the total cost of high 
natural gas prices is actually much greater. Electricity 
produced from natural gas is now setting the marginal price for 
electricity in a growing portion of the United States which 
means as natural gas prices have gone up so has electricity 
prices. Electricity prices have increased by 19 and a half 
percent since year 2000. Consumers will pay $65 billion more 
per year for electricity in 2006 than they did in 2000, and the 
rate is accelerating.
    Besides the above mentioned costs, it is essential that we 
add the cost associated with the loss of the three million high 
paying manufacturing jobs or 18 percent--and I repeat that--18 
percent of our total manufacturing employment since 2000. High 
U.S. natural gas prices are completely unnecessary since the 
U.S. is blessed with an abundant 100 year plus supply of 
natural gas, most of which is off limits.
    Our country's natural gas supply is fragile. From year 2001 
to 2006, natural gas production has fallen by 5.8 percent 
despite the fact that the number of producing wells have 
increased by 34 percent, and that is according to the EIA. 
There is essentially no reserve production capacity. Many 
believe it will take up to five years before we see material 
production from the areas of the Gulf of Mexico just opened for 
leasing. The Alaska natural gas pipeline is no closer to 
startup. Canadian supply has fallen by 4.9 percent since 2001, 
and that trend is expected to continue.
    LNG supply continues to be unreliable and major natural gas 
producing countries are meeting with the intention of creating 
a cartel similar to that of OPEC. Thank you for the opportunity 
to speak with you.
    [The prepared statement of Mr. Cicio follows:]

    Statement of Paul Cicio, Industrial Energy Consumers of America

    Good afternoon. I am Paul Cicio, President of the Industrial Energy 
Consumers of America (IECA). I would like to thank Chairman Costa and 
Ranking Member Pearce and the Committee for the opportunity to share 
our views on this important topic. We look forward to working with you.
    The U.S. remains in a serious natural gas crisis that started in 
mid 2000 and we appreciate the efforts by Congress and the 
Administration to accelerate production of natural gas and in 
particular, the more efficient processing of permits to drill, greater 
access to federal lands and the reduction of unnecessary duplicative 
environmental evaluation. While U.S. prices of natural gas have been, 
on average, the highest in the world since year 2000, we believe the 
combined actions by Congress and the Administration have averted much 
higher prices.
    Use of public lands for production of natural gas is essential 
given the increasing demand for this high quality fuel. For example, it 
would be impossible for the U.S. to reduce greenhouse gas emissions 
without increased use of natural gas by all sectors. The U.S. 
Geological Service (USGS) says that less than 5 percent of our federal 
lands are used for oil and gas production. In our view, it is in the 
public interest that such federal lands are used. We believe that the 
U.S. can increase supply of natural gas without compromising our 
environment.
    In our view, the only reason the U.S. is not rationing natural gas 
today is because high natural gas prices since year 2000 have 
significantly contributed to the shutdown of manufacturing plants thru 
out the country, resulting in the loss of 3.0 million high paying jobs. 
These plant shutdowns reduced the manufacturing sectors' natural gas 
consumption by 23.4 percent since year 2000 which freed up over 1.5 
trillion cubic feet of natural gas for other consuming sectors. As a 
result, the U.S. is balancing its supply of natural gas on the backs of 
good manufacturing jobs. This is neither good energy, economic nor 
employment policy. Unfortunately, this trend will continue so long as 
high relative natural gas prices exist.
    According to the Energy Information Administration (EIA), natural 
gas prices for homeowners, farmers and manufacturers have increased by 
an average of about 77 percent since year 2000. For every $1.00 per mm 
Btu increase in the price of natural gas, U.S. consumers will pay $22 
billion more each year. In year 2006, consumers paid a staggering $75.7 
billion more for their natural gas than they did in year 2000. High 
natural gas prices directly increase the cost of home heating and 
cooling; fertilizer and crop drying costs for farmers; and the 
competitiveness of the manufacturing sector. As significant as these 
costs are, the total cost impact of high natural gas prices is much 
greater.
    Electricity produced from natural gas is setting the marginal price 
for electricity in a growing portion of the US, which means, as natural 
gas prices have gone up, so has electricity prices. Electricity prices 
have increased by 19.5 percent since year 2000. Consumers will pay $65 
billion more per year for electricity than they did in year 2000 and 
the rate of increase has accelerated. It is unknown what portion of 
this increase is directly attributable to the higher price of natural 
gas. Because of higher natural gas and electricity prices, Congress 
will spend another $2 billion for Low Income Home Energy Assistance 
Program (LIHEAP) this year.
    Besides the above mentioned costs it is essential we add the costs 
associated with the loss of 3.0 million high paying manufacturing jobs 
or 18 percent of our total manufacturing employment since year 2000. 
And, despite three years of robust U.S. economic growth, manufacturing 
employment has not risen. The high price of U.S. natural gas versus 
other parts of the world is a deterrent to building new grass root 
plants here.
    High U.S. natural gas prices are completely un-necessary since the 
U.S. is blessed with an abundant 100 year supply of natural gas, most 
of which is off-limits to exploration. IECA encourages the Congress to 
increase domestic production of natural gas by continuing to expand 
access to federal onshore lands and the outer continental shelf, and 
provide stable energy and investment policies that reflect the long 
lead times and financial risk necessary to ensure E&P companies will 
invest in the United States versus a foreign country. (This is a 
serious concern since E&P capital and jack-up rigs can easily move to 
other parts of the world.) Doing so is our best hope for greater 
supply, reliability and lower natural gas prices for all consumers. The 
increased supply of natural gas will also be needed to reduce 
greenhouse gas emissions.
    In our view, our country's natural gas supply is fragile. From year 
2001 to 2006 natural gas production has fallen by 5.8 percent despite 
the fact that the number of producing wells increased by 34 percent, 
according to the EIA. In fact, the E&P industry recently set a 21 year 
high mark for wells completed. Reinvestment of 100 percent of cash flow 
by the E&P industry is largely responsible for a small near-term 
production up-tick.
    There is essentially no reserve production capacity like we had in 
the 1990s and average production per well continues to drop 
precipitously. Many believe it will take up to five years before we see 
material production from areas of the Gulf of Mexico recently opened to 
leasing. The Alaska Natural Gas Pipeline is no closer to startup. 
Canadian supply has fallen by 4.9 percent since 2001 and represents 
about 16 percent of our supply. Canadian officials forecast slowing 
exports to the US.
    LNG supply continues to be unreliable and major natural gas 
producing countries continue to meet with the intention of creating a 
cartel similar to that of OPEC for crude oil. Three countries, Russia, 
Iran and Qatar control 58.3 percent of the world reserves and are 
positioned to control price and terms.
    Countries like China and India are investing billions of dollars in 
oil and gas resources around the world, securing energy for their 
economic growth. Resource rich countries continue to consolidate state 
control over their oil and natural gas resources. The majority of these 
countries is not democratic governments and not considered friendly to 
the United States.
    For all of these reasons, we believe the U.S. remains in the 
throngs of a serious natural gas crisis that have energy and economic 
security implications for every American. The Industrial Energy 
Consumers of America sincerely looks forward to working with the 
Committee on these important matters.

                                 * * *

    IECA is a nonprofit organization created to promote the interests 
of manufacturing companies for which the availability, use and cost of 
energy, power or feedstock play a significant role in their ability to 
compete in domestic and world markets. Corporate board members are top 
energy procurement managers who are leaders in their industry, 
technical experts, strongly committed to energy efficiency and 
environmental progress. Membership companies are from diverse 
industries which include: paper, steel, chemicals, plastics, food 
processing, industrial gases, brick, aluminum, cement, brewing, 
construction products, glass, fertilizer, pharmaceutical.
                                 ______
                                 
    A letter submitted for the record by Mr. Cicio follows:
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
Mr. Costa. Thank you very much, and thank you for your 
testimony. All right. We are now at that point of questioning, 
and I would like to begin. Mr. Bramble, Senator Bramble excuse 
me, the testimony you gave I thought was valuable. I am 
wondering though given the history of the boom and bust cycle 
of oil shale if you have concerns with regards to the 
technologies that are being considered, whether or not we do 
not set ourselves up for another boom and bust cycle until the 
suitable research and development has taken place prior to, as 
we would say in the farm, putting the cart before the horse, as 
it relates to where we go. I mean the potential reserves are 
vast but are we there yet?
    Mr. Bramble. The answer is no, I do not think we are there 
yet. In Utah we have initiated what is called the USTAR, Utah 
Science and Technology Research. We have established an energy 
research center in the Uintah Basin. One of the real questions 
is if you expect to have the significant resources necessary to 
develop the technology to efficiently and effectively utilize 
oil shale but then you restrict the ability to leases I think 
that makes it very, very difficult from a financial perspective 
to say spend all the money to do the research to see if you can 
do it sustainably but then you do not issue the leases.
    Mr. Costa. I understand. I mean, I hear you, although there 
was testimony back in the 1980s by some of the major energy 
companies that had made commitments only to later see those 
commitments withdrawn. Mr. Bartis, I am interested in the 
publication that you have done. First of all, I would like to 
understand a little more about the potential of oil shale. In 
part of my district we have vast oil resources, and we have 
grades and qualities of the grades. We have some very sweet oil 
that is used for different purposes and has a higher value, and 
we have other types of oil that we have that is high viscosity 
count and obviously gets a lower price and is more costly to 
extract. Where does oil shale fall in this category?
    Mr. Bartis. Well it is one of the more expensive resources 
to develop. For example, I can give you an analogy with the tar 
sands and the heavy oils. As you increase the heaviness though 
the oil becomes more expensive to extract, and if you go to 
Canada and look at the tar sands that are in Canada, and you 
picked that up in your hand, it will be sticky. It will be 
tarry, and to get that out of the sand you have to raise the 
temperature to about the temperature of boiling water. The get 
oil shale out of rock, you have to raise the temperature much 
higher.
    Mr. Costa. Yes. I guess. In page 11 of your book, you talk 
about mining and crushing and then retorting, and then spin oil 
shale on deposit, and then oil upgrading. Is that oil upgrading 
that level where does that get into the level of the quality of 
the oils?
    Mr. Bartis. When you upgrade it. All the evidence we have 
is that you can produce very high quality oils from oil sale. 
It is a matter of cost. What is it going to cost you to produce 
that very high quality?
    Mr. Costa. In light of that, are you advocating a more 
measured approach prior to commercial development, given your 
knowledge of what state of the technology that we are at now?
    Mr. Bartis. Right now we do not have anyone to our 
knowledge that is ready to go forward with a commercial plant. 
There is nobody out there that is credible that is ready to go 
forward with a real commercial plant at this time. They need to 
do some preliminary testing. So we will not have any ready for 
some years.
    Mr. Costa. So when Shell Oil testified in western Colorado 
in a hearing in 2006 and said they would be ready to go with 
commercial development by the end of the decade and then two 
months ago I believe there was a suggestion that commercial 
development was probably several years off than that, what is 
your best guess to the commercial viability in terms of a 
timeline?
    Mr. Bartis. Well Shell is certainly the farthest along from 
what we can tell but I heard them give a talk actually this 
morning at Governor Mansion's conference, and they said they 
would be in a position at the earliest within the early part of 
the next decade.
    Mr. Costa. The next decade. All right. Ms. Kelley, as a 
rancher--you and your family--what are some of the most 
significant concerns about the impact of this effort on oil 
shale in terms of the livelihood and the local economy? You 
already testified about the expectation game and how it 
impacted folks but do you believe it is compatible with your 
current ranching operations?
    Ms. Kelley. Not at the present time, no. I think to have 
large-scale commercial development of oil shale without 
appropriate research and development technology in place, where 
it is just expanding at a rapid level, would greatly impact the 
diversity of our economy. The most sustainable economies that 
we have in that region at the present time are ranching and 
farming and hunting and fishing, the recreational economy. So 
it could have a debilitating effect, yes.
    Mr. Costa. All right. My time is expired. The gentleman 
from New Mexico is recognized.
    Mr. Pearce. Thank you, Mr. Chairman. Mr. Cicio, if you got 
the question how much oil is available for production the U.S., 
how would you go about answering that?
    Mr. Cicio. I do not really know.
    Mr. Pearce. If I were to tell you that it depends on the 
price, would that mean anything?
    Mr. Cicio. Well most certainly.
    Mr. Pearce. In New Mexico, at $6 oil which we saw in the 
late 1990s, very little production occurred. At $7, an 
increment more. When we got to $20, then oil was pretty well 
accessible in that region, and so when I hear about the boom 
and the bust, about the highest we got in the 1980s was around 
$30. Economically is there a different model when you hit $70 
oil?
    Mr. Cicio. Most certainly. I mean the point is that--and it 
is the same point for natural gas--if you have higher base 
prices for crude oil then it allows for greater expenditure of 
technology to allow for projects to go forward.
    Mr. Pearce. Absolutely. The tar sands are at some point 
whether it is $20, $40, $60, $80, $1,000, some point they 
become economically viable. Is that more or less correct?
    Mr. Cicio. That is correct.
    Mr. Pearce. And so when I hear Ms. Kelley say that the 
boom-bust cycle was a deep problem and she does not want to see 
that happen again, can we overlay the boom-bust cycle of the 
1980s with now? Did we ever reach $70 oil or the equivalent of 
$70 oil?
    Mr. Cicio. No, I do not believe we have.
    Mr. Pearce. Yes. So the economics of that time. Just like 
the ranchers, the price of cows went up to $1.10 per pounds. 
You can get sorrier ranchers that are able to ranch at $1.10 
than you can at 70 cents which a lot of times the price was at 
70 cents. So economics really play a large part in the 
decision.
    Mr. Simpson, you had a quote that says you believe that the 
Energy Policy Act of 2005 is nothing short of an assault on our 
western culture and our way of life. Do you believe that the 
two U.S. Senators from New Mexico want to protect the western 
culture and our way of life? Are you aware that they were two 
of the four people in the room? Any one of the four could 
delete any policy.
    In other words, one hand raises and they could make a line. 
They could draw a line through any piece of the Energy Policy 
Act. Does this surprise you that both Senators, a Republican 
and a Democrat, from New Mexico signed every single provision? 
They did not object to the provisions that are in there. In 
other words, that was the conference committee. The conference 
committee, their rule was any one of the four of you raise your 
hand, Mr. Dingell, Mr. Barton, Mr. Bingaman, and Mr. Domenici, 
and you can delete a provision. Does that surprise you? Do you 
think they want to obstruct, they want to assault our western 
culture and our way of life?
    Mr. Simpson. My response is basically no, I am not 
surprised that they signed off on this. They received lots of 
comments from sportsmen and a wide diversity of the public 
saying raise the caution to what you are doing. I think 
basically they are not opposed to the western culture. Based on 
what we see and what we see continuing, the lack of BLM 
managing our public lands especially the environmental impacts 
and the Federal government's GAO report said point blank, BLM 
cannot live up to its environmental responsibility.
    So that is the fact. What we are telling you is we agree 
with that, and we need to change the status quo or else you are 
going to have dramatic increases in the problems which will 
eventually over time----
    Mr. Pearce. Thank you very much. If I could reclaim my 
time. Senator Bramble, let us say that we are successful. I 
mean we have a trajectory of hearings that really begin to look 
like we are going to try to limit the access to public lands 
for oil and gas production, much as we have limited the timber 
sales. We have not had a timber sale in New Mexico for over 20 
years, and in some of our national forests I think we are 
headed that direction. If we do that, tell me a little bit 
about what is going to happen to the royalty revenue and the 
tax revenue that is going to come into Utah. Tell me a little 
bit about the impact in your state.
    Mr. Bramble. Right now under our current scenario somewhere 
around $350 to $500 million a year is generated to state and 
local governments directly from oil and gas. If it is repealed 
and because Utah has such a significant portion of our land 
developable, natural resource developable, in other words oil 
and gas line is owned by the Federal government, it would be 
devastating. It would take several hundred million dollars out 
of the economy. There is about 10,500 jobs in the State of 
Utah--which is significant to our state--that would be lost.
    Mr. Pearce. All right. Thank you, Mr. Chairman. I see my 
time has expired. I appreciate it.
    Mr. Costa. Thank you. Mr. Simpson, I appreciated listening 
to your testimony as with the other witnesses. As I indicated 
on the outset of this hearing, one of the areas that we are 
trying to determine is what constitutes best management 
practices. Clearly you indicated from your own background in 
your career that you have some good thoughts as it relates to 
management practices.
    You talked about directional drilling, well clustering, 
site restoration in your testimony. The Department of Interior, 
as you probably noted, in their testimony at the previous panel 
indicated that they are trying to incorporate such best 
management practices. Do you think that, in fact, they are--in 
their efforts to implement the 2005 Act--getting there as it 
relates to your own testimony?
    Mr. Simpson. Bottom line is no. That is why I made the 
statements I have said.
    Mr. Costa. And that is based upon your experience in New 
Mexico or is that----
    Mr. Simpson. I have experience in New Mexico. I have looked 
at southwest Colorado. I have looked at Pinedale Anticline. I 
have taught some classes to citizens about inspection, how to 
enforce. I have looked at South Dakota, Wyoming, Colorado, New 
Mexico. Extensively in New Mexico, and the answer is there is a 
lot of hot air about best management practices. It sounds good. 
In practicality, it is not implemented. There is some 
implementation of it but if industry is too expensive or 
limited in drilling or rigs or stuff, disbanding that and going 
forth with what they have.
    Otero Mesa is a good example of what they did that. The BLM 
developed a plan of developing to protect the water resource 
and the wildlife habitat using directional drilling and 
existing roads and basically that was scrapped for a----
    Mr. Costa. So you are saying that they are not getting 
there, and you do not believe they can?
    Mr. Simpson. They can if you make them. If Congress makes 
it and requires it in legislation, that is why I am saying 
legislation needs to be revised, and we need to make BLM 
accountable, and it needs to be a transparent process where the 
public can see what is going on.
    Mr. Costa. All right. Thank you. Mr. Cicio, I appreciate 
your testimony. You used a number, and I have heard it before 
but you know I am always somewhat trite, bad on when people 
talk about proven reserves whether we are talking about oil or 
natural gas, and you talked about 100 years of proven reserves 
for natural gas. Can you substantiate that based upon what 
known set of facts of use and availability?
    Mr. Cicio. That is a number that I received from the 
Department of Interior. That is technically recoverable. I 
believe the number is something like 1,040 trillion cubic feet 
of natural gas.
    Mr. Costa. You know we talked about in a related subject 
about only 5 percent of the public lands are available to oil 
and gas production on public lands yet the areas of public 
lands which actually have oil and gas reserves are 85 percent 
currently leased. Of those, it is my understanding that 
approximately 35 percent are actually in production, and yet as 
we know in the last 10 years production has increased on public 
lands both for natural gas and oil. So I am really trying to 
understand is there a problem as it relates to access, and we 
know that the application for permits, APDs, have increased 
dramatically?
    Mr. Cicio. Yes. I think the fact is that oil and gas 
companies need a large inventory of leases available for them 
because it is taking longer and longer time periods to get 
through the permitting, all of the permitting process, and 
equipment is harder to get now, manpower is harder to get now. 
The process all the way from leasing to production is----
    Mr. Costa. Well I understand in terms of being fiscally 
prudent and wise investors you want to you know look ahead and 
you have you know different fluctuations in prices so obviously 
you want to have reserves available but I think is it really 
accurate to say that only 5 percent of the public lands are 
available to oil and gas production? I mean you know I guess it 
is subject to definition. I do not think we want to drill next 
to the Washington Monument but there is a lot of public lands 
that are out there.
    Mr. Cicio. Yes. Well that is a number that I believe I took 
off of the Department of Interior website that said it was 
either 5 or 6 percent. I used the 5 percent because that is 
what I took off the----
    Mr. Costa. The bottom line is oil and gas production has 
dramatically increased in the last 10 years, as has the permits 
that are available.
    Mr. Cicio. Well actually production of natural gas has 
fallen since 2000.
    Mr. Costa. But on public lands?
    Mr. Cicio. I do not know the number----
    Mr. Costa. We should check.
    Mr. Cicio.--between public versus private.
    Mr. Costa. I understand.
    Mr. Cicio. I am talking about U.S.
    Mr. Costa. I understand. I just want to try to be clear. My 
time has expired. So Mr. Sali I believe was next.
    Mr. Sali. Mr. Chairman, first I would ask unanimous consent 
that the testimony of Terry O'Connor, written testimony from 
Shell Exploration and Production Company, be added to the 
record of the hearing today.
    Mr. Costa. Without objection, yes.
    [The statement submitted for the record by Mr. O'Connor 
follows:]

Statement of Terry O'Connor, Vice President, Communications, Regulatory 
    and Government Affairs, Shell Exploration & Production Company, 
                        Unconventional Resources

    Good Afternoon, Mr. Chairman and Members of the Committee. On 
behalf of Shell Exploration & Production Company, I am delighted to 
appear before you today to provide some perspective on the impacts of 
the passage of the Energy Policy Act of 2005 insofar as Section 369 is 
concerned.
    As you recall, Section 369 relates specifically to oil shale, tar 
sands, and other strategic unconventional fuels. My comments today will 
be limited to Shell's ongoing oil shale research and development 
activities in northwestern Colorado. This Committee's records will 
reflect that on June 23, 2005 I previously submitted written as well as 
oral testimony explaining in some detail the unique nature of Shell's 
patented in situ conversion process (``ICP'') technology, including its 
potential environmental and technical advantages relative to previous 
but unsuccessful efforts to develop America's enormous oil shale 
resources. In a sentence, the ICP technology involves no open pit or 
underground mining but instead involves drilling holes into the 
subsurface and inserting electric heaters to heat the oil shale strata 
to a temperature that will allow hydrocarbon bearing liquids and gas to 
be recovered through conventional means. The recovered hydrocarbons are 
then processed into very clean transportation fuels--jet fuel, diesel, 
and gasoline plus gas. Rather than present unnecessarily redundant 
information today, I merely wish to reference my 2005 testimony at this 
time and proceed to the stated purpose of this hearing. Nevertheless, I 
will be delighted to answer any questions you might have as to the ICP 
technology.
    At the outset Shell would like to take this opportunity generally 
to thank both the previous as well as the present Congress (and more 
specifically the Natural Resources Committee and this Subcommittee) for 
the wisdom and insight you displayed by including the Section 369 
provisions into the Energy Bill. When ultimately implemented, those 15 
pages of policy, recommendations and directives may very well have the 
impact of stimulating a new domestic energy industry that over time 
could strategically contribute to U.S. and regional energy security, 
especially for liquid transportation fuels.
    We would like to complement the Department of Interior for 
following the Congressional directive contained in Section 369(c) by 
creating and then executing a framework for an oil shale Research, 
Development and Demonstration (``RD&D'') leasing program. This is a 
small but vitally important first step toward possible 
commercialization of U.S. oil shale. Last December BLM issued five 160-
acre RD&D leases in northwestern Colorado. The RD&D program represents 
an appropriate balance of stimulating cautious, phased oil shale 
development--in many ways a process much different from the process 
that resulted in the boom and bust atmosphere that severely impacted 
Colorado and Utah communities in the late 1970s and early 1980s. In a 
manner discussed in more detail later in this testimony, the BLM's RD&D 
program--and the separate but related Section 369(e) commercial leasing 
program of the Energy Policy Act--will enable the States and the 
impacted communities to become partners at the table to ensure that 
their local and regional concerns are addressed up front in the 
process. Shell believes that this Federal/State/local and industry 
partnership arrangement at the front end, prior to actual commercial 
development decisions being made, is critical to the long-term success 
of any oil shale commercialization plan.
    Let us turn now to the various provisions within Section 369 that 
Shell believes are potentially most impactful for the sustainable 
development of our Nation's vast oil shale resources. Although a 
complete list of the potentially beneficial provisions is quite 
lengthy, in the interests of time and space I will discuss what we 
believe are the four most important provisions to Shell's ongoing oil 
shale research:
    1) Section 369(b) sets forth a Declaration of Policy that the 
development of oil shale, tar sands, and other unconventional fuels are 
strategically important domestic resources that should be developed to 
reduce America's growing dependence on foreign oil imports, provided 
that such development is conducted with an emphasis on sustainability 
by considering potential impacts to States and communities and using 
practices to minimize environmental impacts. This Section is in general 
harmony with a core business principle of Shell of pursuing the 
development of projects in a sustainable manner--balancing short-term 
and long-term interests, plus integrating economic, environmental, and 
social considerations into business decisions.
    Past unsuccessful attempts to develop oil shale in the Colorado-
Utah region have resulted in a perception--actually more correctly, a 
mis-perception--by some people that oil shale should never again be 
considered for commercial development in the United States. We believe 
it was important that Congress set forth its Declaration of Policy, 
declaring that if technologies can be developed that will allow for 
production of liquid transportation fuels plus gas in a sustainable 
manner that is economically feasible, environmentally responsible, and 
socially sustainable, such development should be encouraged, not 
discouraged, by Federal policy makers.
    2) Section 369 contains at least 8 provisions [(b)(3), (e), 
(g)(2)(D) and (E), (h)(2)(D), (i)(2), (k)(1), (M)(2), and (r)] that 
either encourage or actually mandate that impacted States and 
communities be treated as partners in the planning process. While the 
language and scope of each of these provisions varies depending upon 
the stated objective, their cumulative intent is clear: to wit, that 
unlike the mistakes in the past, the United States Government must not 
just communicate with the states and communities, but must collaborate, 
cooperate, and seek the input of state and local governments in all 
stages of oil shale planning processes.
    Over the course of the past 6 years Shell has met one-on-one and in 
small groups with well in excess of 1,000 local stakeholders--local 
government officials, ranchers and farmers, NGOs, business leaders, 
conservationists, and general public members--who have expressed an 
interest in our ongoing field research. In addition, we have held no 
less than 11 community meetings in four local communities (8 such 
meetings in the past 20 months) plus have jointly participated with BLM 
in a series of additional public meetings prior to issuance of the RD&D 
leases. All such meetings were advertised in local and regional 
newspapers as completely open to the public. We have learned much from 
those visits and have made many adjustments to our plans in response to 
what we have learned.
    One of the many messages we have heard countless times over the 
years from a variety of stakeholders is that when attempts were made to 
develop oil shale in the late 1970s and early 1980s, the Federal 
Government would come to the communities to tell them what they were 
going to do but rarely would they seek local advice and input. This 
perceived one-way communications policy unfortunately fostered more 
than a bit of resentment and distrust of the Federal Government by 
local community leaders. Fortunately, over time, and with proper 
compliance with the partnership and collaboration provisions of Section 
369 being addressed both in spirit as well as in fact, joint alignment 
and trust by and among the various levels of government can be rebuilt.
    3) Section 369(j) contains an amendment to the Mineral Leasing Act 
of 1920 that is of critical importance to Shell. Prior to the passage 
of the Energy Act of 2005, any individual, company or other entity that 
held a single federal oil shale lease would have been absolutely barred 
from acquiring any additional oil shale leases from the federal 
government. Similar restrictions had originally existed for other 
leasable minerals but over the years prior Congresses had addressed 
this antiquated provision for other minerals but not for oil shale. Had 
Congress refused to allow companies such as Shell to secure more than 
one federal lease, the probability of Shell proceeding with plans 
eventually to develop a commercial oil shale project would have been 
significantly diminished. But since Congress amended the MLA to allow 
companies to hold multiple oil shale leases, Shell has been able to 
advance the scope and dimensions of its R&D planning. Let me provide 
some specifics:
    Shell was successful in securing 3 RD&D leases. On the first lease 
we have initiated plans to develop a small, integrated pilot project we 
call OST--short for Oil Shale Test--that could in an optimal sense be a 
final scale up project before a commercial decision is made, hopefully 
early in the next decade. But now that we are legally able to secure 
more than one lease, we are directing our attention to a fascinating 
new electric heater design we are anxious to test in oil shale. We call 
it a triad heater. It has been developed in our laboratories in Houston 
but has yet to be field tested in a potential commercial setting. We 
are excited to test this technological innovation on our second RD&D 
lease. The potential significance of the triad heater is that, if 
successful, it could reduce our power requirements, access lower grade 
oil shale, improve our energy balance, help oil shale economics, and 
perhaps even reduce our CO2 footprint. Without the passage 
of Section 369(j), we would have had no suitable location to 
meaningfully test this new heater technology.
    The third RD&D lease involves yet another exciting variation of the 
base OST test, this one being located in a multiple mineral area that 
encompasses a large portion of the Piceance Basin in which nahcolite 
(baking soda) is interspersed with the kerogen (the correct geologic 
name of the hydrocarbon material in the oil shale). This is likely a 
more complex test involving, not just the recovery of oil shale using 
the ICP technology, but first recovering the nahcolite using another 
Shell patented methodology. Once again, this exciting field test would 
not have been possible without the passage of the Energy Policy Act of 
2005.
    Let me make it clear: none of these three RD&D tests are a 
certainty for success. Each carries with it significant technical, 
environmental and economic challenges. Overcoming these challenges, 
however, should improve the environmental and economic sustainability 
of commercial oil shale development. But without the assistance of this 
Committee, of Congress and of BLM, none of the 3 projects would be the 
subject of discussion today.
    4) Pursuant to the provisions of Section 369(k), the Secretary of 
Interior is designated as lead Federal agency for the purposes of 
coordinating all applicable Federal authorizations and environmental 
reviews--in coordination with applicable State and local agencies. We 
urge DOI to continue to work toward issuance of regulations to 
implement this provision at an early date. While Shell is not seeking 
to have any waivers of environmental protection standards, we do 
believe it is strategically important to identify and implement 
procedures to consolidate multiple permitting requirements, to process 
multiple permitting processes concurrently rather than sequentially, 
and to seek out mechanisms to minimize and eliminate costly delays of 
project approvals wherever possible.
    In closing, what are additional steps that this Congress and /or 
the BLM should consider to stimulate responsible oil shale development 
leading to commercialization? Let us identify three important strategic 
steps we would recommend:
    1.  Secure fair commercial and operating terms (royalty, conversion 
fee, diligence, buffer zones, etc.) especially for first generation oil 
shale projects, as BLM develops its commercial oil shale regulatory 
program in 2007. Late in 2006 BLM sought comments through an Advanced 
Notice of Proposed Rulemaking to develop a federal oil shale regulatory 
program, as required by Section 369(d)(2). How these commercial and 
operating terms are ultimately finalized may very well be the key 
determining factor when and even if Shell and the industry are able to 
achieve future commercial development of oil shale in the United 
States.
    2.  Secure passage of an amendment to the Mineral Leasing Act to 
allow royalty credits for early infrastructure development investments 
in and around communities likely to be impacted from commercial oil 
shale development. One of the difficult realities of future large scale 
energy development projects on Federal lands is that, even though the 
royalty (on the Federal side) and severance tax (on the state side) 
revenue streams may very well be substantial, these revenue streams do 
not commence until many years after initial project construction and 
development commences. Local communities will need expanded/additional 
schools, improved/new roads and many other public services and 
facilities long before increased government revenues become available. 
Congress has a unique opportunity to help mitigate the inevitable 
infrastructure needs of the surrounding communities by creating an 
incentive for project developers to invest in a variety of local 
government infrastructure mitigation projects at an early stage. One of 
the best ways would be to create a credit against subsequent royalty 
payment obligations if such infrastructure investments were made by the 
federal oil shale lessee in alignment with the communities. [We point 
out that a similar credit structure is being considered by the Alberta 
Provincial Government to induce early infrastructure development in the 
Canadian extra heavy oil sands areas.]
    3.  Create a favorable legal and regulatory regime at the Federal 
level for investment in carbon capture and storage. Geologic storage of 
carbon dioxide can be an important tool for managing greenhouse gas 
emissions from a range of facilities throughout the economy and this 
tool should be considered for application to oil shale projects. A 
variety of incentives, both financial and legal, to encourage 
CO2 capture and sequestration could provide opportunities 
for potential oil shale operators to reduce their carbon footprint. We 
support the Department of Energy's plan to promote large-scale carbon 
storage pilots through the Regional Sequestration Partnership. These 
pilots should provide a better scientific framework under which carbon 
storage, measurement, monitoring and verification take place. The 
Energy Policy Act contains several provisions encouraging the 
sequestration of carbon, including Section 354 (enhanced oil recovery 
(``EOR'') from federal leases), Section 503 (carbon sequestration 
projects on Native American lands), Section 805 (production of hydrogen 
from fossil fuels), Sections 962-963 (carbon capture for coal-based 
facilities), and Section 1307 (clean coal investment credit). However, 
the existing provisions do not address carbon sequestration in the 
context of oil shale and tar sands production.
    There are several regulatory and legal issues that should be 
clarified to facilitate geologic carbon storage. The Environmental 
Protection Agency has announced guidelines for pilot underground 
injection wells for carbon sequestration but has not yet clarified 
policies for commercial-scale projects. Issues that relate to ``pore 
space'' rights plus potential conflicts with other mineral activities 
as well as surface use should also be addressed. Establishing clarity 
on the issue of long-term liability for stored carbon dioxide should be 
a priority since this is a potentially significant obstacle to industry 
investment. To encourage the location of a clean coal facility in 
Texas, the legislature adopted a law addressing this issue. Until other 
states--and more preferably the Federal government--create similar 
protections, companies will be reluctant to invest in pilots or 
commercial CO2 storage activities. Congress should consider 
expanding its financial incentives for pilot and large-scale 
CO2 storage to cover a broader range of carbon sequestration 
projects.
    This completes Shell's testimony.
    I will be happy to answer any questions you might have.
                                 ______
                                 
    Mr. Sali. Thank you, Mr. Chairman.
    Mr. Costa. You may proceed.
    Mr. Sali. Representative Kelley, you have concerns about 
whether we will repeat the boom or bust cycle that we have seen 
historically. What suggestions do you have that would prevent 
or minimize that boom-bust cycle while we are allowing the 
development of oil shale resources on public lands?
    Ms. Kelley. I think it is absolutely essential that we go 
through the entire course of the research and development 
phase. I think it is vital. There was a point in Mr. Bartis' 
testimony that I do not want the committee to miss, and that is 
if we fail by prematurely generating commercial oil shale 
development and it closes at this point, it fails at this 
point, you will never in my opinion because of public sentiment 
see oil shale development again. It will never happen.
    Mr. Sali. When will that development or research phase be 
through?
    Ms. Kelley. I do not know. I am in close contact with the 
Shell officials, and have had numerous discussions and research 
and development is a fluid process. It is not a static timeline 
process that has direct completion dates. You would like to 
have it that way but it does not happen that way. It is a trial 
and error process, and let us see how it works first.
    Mr. Sali. How will we know when that research and 
development phase is finished?
    Ms. Kelley. I think the companies are the ones that are 
going to know before we will.
    Mr. Sali. So if the companies tell us it is time to move on 
oil shale production then we should move ahead?
    Ms. Kelley. Not necessarily. They have to prove that the 
technology works.
    Mr. Sali. Well we are going to be asked to make a decision 
about this, and you are telling us that we should hold up and 
not move too fast. Is now the time?
    Ms. Kelley. No, now is not the time. Let us go slow.
    Mr. Sali. How do you know that it is not the time if you 
said a few minutes ago you did not know when that time would 
be?
    Ms. Kelley. Well I think it is a matter of semantics but I 
think ultimately let us see the research and development phase 
go through its completion.
    Mr. Sali. But you do not know when that time will be done?
    Ms. Kelley. No, I do not.
    Mr. Sali. Do you support oil and gas development in the 
Alaska National Wildlife Refuge or outer continental shelf?
    Ms. Kelley. I do not have any opinion on that, sir.
    Mr. Sali. All right. Thank you. Senator Bramble, we have 
been going through a number of hearings this year with titles 
such as the evolving west and dealing with I think you know the 
idea that we ought to curtail at least some of the oil and gas 
and coal and timber leasing and production in the west. We had 
one hearing titled the evolving west that we were going to move 
to you know an economy that was based on tourism. We had 
another hearing entitled access denied.
    I think we are seeing here today some indications that we 
ought not to proceed with certainly the oil shale development. 
If oil and gas and coal and timber production on Federal lands 
was cut off in your state, what would be the revenue impact to 
your state revenue?
    Mr. Bramble. Directly on oil, gas and coal it would be 
about half a billion dollars. The impact would be far greater 
when you consider the jobs and the other parts of the economy. 
I do not have a number for that.
    Mr. Sali. Do you have any idea what the impact would be to 
the Federal government? Let me rephrase that. How much would 
the Federal government need to appropriate to make your state 
whole for that lost royalty revenue, severance taxes, those 
jobs and whatnot? Do you have some kind of a multiplier that--
--
    Mr. Bramble. It would take somewhere--at a 5 percent rate 
of return--somewhere in the range of $10 billion at just the 
current revenue from oil, gas and coal. Set aside $10 billion 
to account for that.
    Mr. Sali. All right. Thank you, Mr. Chairman.
    Mr. Costa. I thank the gentleman from Idaho for your 
questions and for your interest. The questions that I have 
here, I do not know what the right time is for oil shale. I am 
certainly intrigued by the documents and some of the testimony 
that has been given but I did think, Mr. Bartis, if I heard you 
correctly, that you said a reasonable expectation was 10 years. 
Did I hear that correctly or am I----
    Mr. Bartis. Yes. For large scale commercial development, it 
is at least 10 years away. Those kinds of decisions. That does 
not mean that companies like Shell or others may need leased 
lands or lands out there, Federal lands, to do first of a kind 
commercial plants, and as we recommended, I believe it is very 
important that Interior work with the Department of Energy, 
with the Environmental Protection Agency so full size, first of 
a kind commercial plants can be expeditiously built, and to get 
a fair and equitable framework for such activities.
    But at the present time, there is a big difference between 
giving them that right and trying to put in place regulations 
that are fair and equitable to both the taxpayers and industry 
when we know so little about what the costs of development are. 
What those processes can do for us. So there is a need to go 
forward and to be ready to go forward but that does not mean we 
have to put in place a permanent framework for leasing.
    Mr. Costa. No, no. I think you put it in perspective which 
is what I am trying to fathom at this point in time given the 
challenges that the potential energy provides. I am going to 
reserve the balance of my time to ask witnesses as I desire to 
submit written answers to my questions, and in the interest of 
time I would like to defer to the gentleman from Utah, Mr. 
Bishop.
    Mr. Bishop. Thank you, sir. I am assuming under unanimous 
consent you have allowed me to join you in today's committee 
panel.
    Mr. Costa. Yes.
    Mr. Bishop. I just want to make this formal somehow.
    Mr. Costa. Well you are formally welcomed here, and we do 
have a colleague of yours, the Senator from Utah, whom I 
suspect you know.
    Mr. Bishop. Yes, and even though I was here all morning, I 
am feeling like this becomes my office room. I wish you would 
not hold quite as many of these hearings. I would not have to 
be here quite as often but I would be remiss if I did not take 
the opportunity to welcome the distinguished Majority Leader 
from the State Senate in Utah, Senator Bramble.
    I appreciate his efforts on behalf of the constituents of 
the State of Utah and what they do even though you know it is a 
Senator, and we understand as a former Speaker of the House in 
Utah, we understand where the true power should lie but I 
welcome you here, and I appreciate your efforts on this.
    You know one of the things I find somewhat ironic is that 
as we are piddling around today Governor Huntsman in the State 
of Utah is finishing off his energy summit which is a broad 
based approach. If you could just spend a second talking about 
what the goals of that summit is and what you see as the vision 
of Utah moving into this particular area, and I have some other 
specific questions afterwards.
    Mr. Bramble. I think the bottom line is Governors of the 
western states, business leaders, environmental interests are 
looking to develop a plan. A plan for a sustainable energy 
development and moving toward energy independence, responsible 
development of energy while at the same time recognizing 
environmental concerns.
    Mr. Bishop. You have spoken to the significant amount of 
money that comes from royalty payments and severance taxes in 
the State of Utah. I found it interesting when people were 
talking about the potential of a boom and bust cycle. Does the 
fact that you use these as ongoing revenue, I mean as one-time 
revenue as opposed to ongoing have a significance to try and 
buffer the state on any of that in the future?
    Mr. Bramble. It does. In Utah we look at the revenues from 
oil and gas--even though technically from a CPA's perspective 
they would be considered ongoing--because of the volatile 
nature we appropriate those on a one-time basis.
    Mr. Bishop. There are two ways in which revenue comes from 
this kind of energy production at the state. One obviously is 
the royalty payments which you were talking about you do as one 
time. The other comes from the property taxes that will 
naturally develop from that. Utah, as an old school teacher, I 
realize that probably the biggest expense you have--and I am 
assuming this is correct--is in education in the State of Utah.
    Mr. Bramble. It is.
    Mr. Bishop. Well between 50 to 60 percent of your entire 
budget goes into education?
    Mr. Bramble. That is correct.
    Mr. Bishop. And Utah has one of those unique equalization 
programs for education I understand which simply means that 
money that is produced in taxes, property taxes, will be 
equalized throughout the state so that whatever the state 
legislature sets as the limit, if a county goes over that, it 
is redistributed amongst the poorer counties, which since the 
1980s you have never had to do because no property taxes ever 
reached the limit. You have subsidized every district.
    I do though remember when I was first in the legislature 
that there was periods of time when we were actually doing some 
recapturing, and it happened to come from the Uintah Basin, 
which we were talking about the potential of oil and tar sands. 
If you draw the magic line between Montana and New Mexico, 
everything east of that, 4 percent of all the land is owned by 
the Federal government. Everything west of that, 57 percent is, 
and that is skewed somewhat because Montana is pretty low, like 
about 30 percent. California has about 50 percent.
    We have the great fortune of having about 70 percent of our 
land controlled by the Federal government. If you also look 
about education funding in the nation, 13 of the 15 states that 
have the slowest growth in education are those western public 
lands states. Twelve of the 15 states with the largest class 
size are those western public land states, and in fact the only 
correlation you can make with the inability of funding public 
education is with the amount of public land that is controlled 
by the Federal government.
    The only way we are going to actually meet the needs of 
education in the State of Utah and those kids is to try and 
somehow generate new kinds of jobs and new type of employment 
and the best way of doing that is the recapture program we have 
in education. If, for example, these counties in that oil shale 
basin could generate the kind of property tax that we are 
looking at in the future, that means that kids in my county 
which is the only county in Utah that has absolutely no 
resources whatsoever except for gravel, we actually have a 
chance to fund our public education system, both maintenance 
and operations as well as capital outlay.
    So I urge you forward in your efforts because from my kids' 
future that is going to be one of the most important things. I 
am just wondering. I have a few minutes later. Have any of you 
heard of the program on the panel of conservation and action?
    Let me just commend that program to you for one second. 
Most of the energy production is going to be made by 
independent petroleum producers, names of companies that no one 
in this room has ever heard of or ever will. They obviously 
have an IPAMS which is their organization which works in 
conjunction with 21 environmental groups including The National 
Wildlife Foundation for a program called conservation and 
action which is an effort in all of these areas to enhance the 
conservation, reclaim the property, and encourage wildlife 
opportunities for all those particular members.
    In May they will be having an event in Wyoming which is 
Sportsmen for Wyoming Range, which is a specific effort of 
trying to get the industry as well as the sportsmen populations 
to work together to create greater opportunities. One of the 
things we found out in the last hearing we had on this--I see 
my time is almost up--is that----
    Mr. Costa. Twenty seconds.
    Mr. Bishop.--Crestar, for example, when they started 
drilling their lands actually had to build roads into those 
drills, those wells, which added and expanded access for 
sportsmen. Opportunities they had never had before because all 
of a sudden roads now existed to get to the areas in which they 
could hunt and they could fish. I have run out of time but I do 
want to thank you, Chairman Costa, for allowing me to be here, 
and I want to especially thank Senator Bramble for coming back 
here and testifying. I am very proud to have a fellow Utahan 
here. I do not feel quite so outnumbered right now.
    Mr. Costa. Well thank you, and before you arrived I know 
that Senator Bramble was waiting in anticipation of your 
involvement in this subcommittee, and we are pleased that you 
are here. You are always welcome.
    Mr. Bishop. I bet he was on bated breath but thank you 
anyway.
    Mr. Costa. All right. I will defer my time because I do 
want to wind this up, and as I did say, I reserve the balance 
to submit to you written questions to which we would like to 
have a response. Back to the gentleman from New Mexico, and 
then we will close the hearing.
    Mr. Pearce. Thank you, and we promised to be finished by 
four. So I am tearing back to two questions, and if you could 
answer very quickly. Ms. Kelley, do you mind or do you find 
objectionable wind or solar energy production on Federal lands?
    Ms. Kelley. No, sir.
    Mr. Pearce. You understand that the entire research and 
development phase is not complete? Both are subsidized heavily? 
That neither one are productive? Mr. Cicio, again keeping in 
mind that we are talking about the availability of affordable 
energy, tell us again one more time--and do it very quickly--
the impact of guessing wrong in energy production. How many 
jobs have we lost, and how many jobs are at stake, and if we 
begin to drive the cost of natural gas higher? Run through that 
one more time, and do it very quickly.
    Mr. Cicio. Yes. Since the year 2000, since natural gas 
prices have gone up, we have lost three million manufacturing 
jobs.
    Mr. Pearce. Outsourced jobs.
    Mr. Cicio. Outsourced jobs.
    Mr. Pearce. OK. Three million jobs, and did I understand 
$75 billion additional because the price of gas has spiked 
higher and higher?
    Mr. Cicio. We are paying $75 billion more in 2006 than in 
2007 because of the price of natural gas. That is just the 
delta increase.
    Mr. Pearce. If we continue in this vein, how many more 
manufacturing jobs are we going to lose in the next two years?
    Mr. Cicio. Well without question manufacturing relies on 
energy to operate. We will continue to lose jobs so long as the 
price of natural gas in the United States is much higher than 
elsewhere in the world.
    Mr. Pearce. Thank you. Thank you, Mr. Chairman. I 
appreciate it. It was a little over four, but I appreciate it.
    Mr. Costa. All right. Not a problem. I want to thank all of 
the witnesses, both in this panel and then on the first panel, 
for your testimony and for your patience with the Subcommittee. 
I want to thank the members of the Subcommittee and those who 
are new add-ons for your involvement today, and we will 
continue to try to accumulate our efforts. We have a hearing 
Tuesday. Excuse me. Today is Tuesday. Thursday afternoon I 
believe at two o'clock, and we will look toward the same sort 
of punctual response and good testimony. Thank you very much. 
The Subcommittee is now adjourned.
    [Whereupon, at 4:02 p.m., the Subcommittee was adjourned.]

    [Additional material submitted for the record follows:]

    [An article from the Casper Star Tribune entitled ``Public 
comments: Slow development'' submitted for the record follows:]

CASPER STAR TRIBUNE
Wyoming's Statewide Newspaper

April 16, 2007

Public comments: Slow development

By WHITNEY ROYSTER Star-Tribune environmental reporter

    JACKSON--Public hearings on the Bureau of Land Management's 
proposal to manage lands around Pinedale found that citizens want the 
agency to slow energy development and do more to protect wildlife and 
natural resources.
    Last week, BLM officials held open houses in Rock Springs, Jackson, 
Pinedale and Marbleton, and not one member of the public speaking at 
the meetings supported the BLM's preferred alternative--a mix of oil 
and gas development with some areas deemed off-limits or off-limits to 
surface occupancy.
    The biggest turnout was in Pinedale, where a crowd spent several 
hours speaking into the public record about the proposed plan, which is 
out for public comment until May 18.
    ``The reality is that this type of input is exactly what we try to 
solicit through the planning process,'' said Steven Hall, spokesman for 
the BLM in Cheyenne. He said helpful comments are those that bring to 
light new information that helps inform the decision-making process.
    ``It's not useful to view this as a popularity contest on 
alternatives,'' Hall said.
    Many people said they didn't like any of the four floated proposals 
because they wouldn't do enough to protect wildlife and natural 
resources. That even included the alternative designed to be the most 
environmentally friendly, with more allowances for natural resources.
    Gordon Schwabacher, a Pinedale rancher, said in a telephone 
interview the document doesn't do enough overall to protect wildlife 
migration corridors and calving areas in the Upper Green River Valley.
    Mark Gocke, Star-Tribune correspondent A natural gas drilling 
derrick and cranes stand silhouetted against a colorful sunset south of 
Pinedale earlier this year. The Bureau of Land Management is seeking 
public comment on a plan that, in part, will determine where oil and 
gas activity takes place in the region.
    He said at the Pinedale meeting no one supported eliminating oil 
and gas drilling, but most believe more study is needed and the overall 
pace of development needs to slow.
    ``Everybody felt like this is going way too fast,'' he said, and 
the social impacts to Pinedale also need to be considered.
    The draft of the Pinedale resource management plan--a document that 
defines, in part, which of more than 1 million acres of land in the 
area will be available for oil and gas activity--comes at a time area 
residents are also faced with several other development documents.
    In December, a draft supplemental environmental analysis for the 
Pinedale Anticline was released. In that document, the BLM proposes 
allowing about four times more wells--up to about 4,000--on the 
Anticline but in a concentrated, heavily developed area along the top 
of the Mesa. And last year, the BLM approved a document allowing 3,100 
more wells in the already developed areas of the Jonah Field. Land 
managers and state officials have acknowledged that area will be a 
virtual sacrifice zone for wildlife, and off-site habitat improvement 
was a key component in the approval of that project.
    Those areas are also part of the BLM's Pinedale resource management 
area, and all alternatives in the latest plan indicate they are open 
for oil and gas development, along with a large area near LaBarge. Big 
differences in the BLM's preferred alternative and the most 
environmentally friendly option--Alternative 3--include the Wind River 
front area east of Cora, and a swath of land west of Pinedale. In the 
BLM's preferred plan, both those areas are deemed ``no surface 
occupancy,'' meaning the minerals would have to be tapped by wells 
drilled off site. In Alternative 3, those areas are deemed off-limits 
to drilling.
    BLM officials said in the Wind River front area, there is a lot of 
private land, and private landowners may agree to gas development. In 
the land west of Pinedale, there are already existing leases that have 
been issued. The two other alternatives include a ``no action,'' which 
maintains the current plan developed in 1988, and a second alternative 
that would maximize the production of oil and gas.
    In Jackson, Lloyd Dorsey with the Greater Yellowstone Coalition 
told BLM officials the wildlife it manages in the Pinedale area is 
``critical to the greater Yellowstone area.'' He said the agency is 
``in a critical place'' to protect the area's natural resources, 
including air quality.
    ``You won't get a second chance at a decision of this magnitude, 
and neither will we,'' Dorsey said.
    Dorsey said the preferred plan does not do enough to protect air, 
wildlife and human quality of life, and does not set aside enough 
habitat free from development.
    ``Your decision should not relax protected stipulations to assist 
our sage grouse, mule deer and pronghorn as they struggle to survive,'' 
he said. He supported Alternative 3.
    Alexandra Fuller also spoke at the Jackson public hearing, saying 
missing from the BLM's document is any thought from philosophers.
    ``The question that I think we're failing to ask is what 
environmental, cultural and social legacies are we leaving not just for 
our children but for future generations of other species,'' she said.
    Fuller said ``mainstream philosophical thought'' believes humans 
can only thrive when government and environment are in balance. She 
said the BLM can't leave the Pinedale area to extensive development, as 
future generations will not know the pristine place it once was.
    ``Some of those philosophical questions can have us talking for 
perhaps years,'' she said. ``I don't think that's bad. Talk a little 
bit more, drill a little bit less.''
    The public comment period on the Pinedale resource management draft 
plan closes May 18. Then land managers will review the comments and 
develop a final plan, expected later this year. The agency hopes to 
have a final decision in early 2008.
    Environmental reporter Whitney Royster can be reached at (307) 734-
0260 or at [email protected].
                                 ______
                                 
    [A letter submitted for the record by Colorado officials, 
including Hon. Keith Lambert, Mayor of Rifle, Colorado, et al., 
follows: 
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 

                               
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