[Senate Hearing 110-1114]
[From the U.S. Government Publishing Office]




                                                       S. Hrg. 110-1114

 A PERSPECTIVE ON THE ENDANGERED SPECIES ACT'S IMPACTS ON THE OIL AND 
                              GAS INDUSTRY

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

                             FIELD HEARING

                               before the

                              COMMITTEE ON
                      ENVIRONMENT AND PUBLIC WORKS
                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                       AUGUST 23, 2007--TULSA, OK

                               __________

  Printed for the use of the Committee on Environment and Public Works










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               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                       ONE HUNDRED TENTH CONGRESS
                             FIRST SESSION

                  BARBARA BOXER, California, Chairman
MAX BAUCUS, Montana                  JAMES M. INHOFE, Oklahoma
JOSEPH I. LIEBERMAN, Connecticut     JOHN W. WARNER, Virginia
THOMAS R. CARPER, Delaware           GEORGE V. VOINOVICH, Ohio
HILLARY RODHAM CLINTON, New York     JOHNNY ISAKSON, Georgia
FRANK R. LAUTENBERG, New Jersey      DAVID VITTER, Louisiana
BENJAMIN L. CARDIN, Maryland         JOHN BARRASSO, Wyoming1
BERNARD SANDERS, Vermont             LARRY E. CRAIG, Idaho
AMY KLOBUCHAR, Minnesota             LAMAR ALEXANDER, Tennessee
SHELDON WHITEHOUSE, Rhode Island     CHRISTOPHER S. BOND, Missouri

       Bettina Poirier, Majority Staff Director and Chief Counsel
                Andrew Wheeler, Minority Staff Director
                                 ------                                

1Note: During the 110th Congress, Senator Craig 
    Thomas, of Wyoming, passed away on June 4, 2007. Senator John 
    Barrasso, of Wyoming, joined the committee on July 10, 2007.
















                            C O N T E N T S

                              ----------                              
                                                                   Page

                            August 23, 2007
                           OPENING STATEMENTS

Boxer, Hon. Barbara, U.S. Senator from the State of California...     1

                               WITNESSES

Tuggle, Benjamin, Regional Director, U.S. Fish and Wildlife 
  Service........................................................     5
    Prepared statement...........................................     8
Buchanan, Tom, on behalf of Oklahoma Farm Bureau.................    13
    Prepared statement...........................................    15
Sullivan, Robert J. Jr., Sullivan and Company, LLC, On behalf of 
  Oklahoma Independent Petroleum Association.....................    16
    Prepared statement...........................................    18
Bower-Moore, Dru, Regulatory Advisor, Western Division Devon 
  Energy 
  Corporation....................................................    20
    Prepared statement...........................................    22
Haught, Jim, Manager, Environmental Services ONEOK, Incorporation    27
    Prepared statement...........................................    29

                          ADDITIONAL MATERIAL

Statements:
    United States Department of the Interior, Office of the 
      Solicitor, The Meaning of ``In Danger of Extinction 
      Throughout all or a Significant Portion of its Range''.....    41
    Environmental Assessment Division, Argonne National 
      Laboratory, 
      Environmental Policy and Regulatory Constraints to Natural 
      Gas 
      Production.................................................    77
    Energy Bar Association, Energy and the Environment: The 
      Future of Natural Gas in America, Energy Law Journal.......   201

 
 A PERSPECTIVE ON THE ENDANGERED SPECIES ACT'S IMPACTS ON THE OIL AND 
                              GAS INDUSTRY

                              ----------                              


                       Thursday, August 23, 2007

                                       U.S. Senate,
                 Committee on Environment and Public Works,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10 o'clock a.m. 
in Courtroom 1, U.S. District Court, 333 West 4th Street, 
Tulsa, OK, Hon. Barbara Boxer (chairman of the committee) 
presiding.
    Present: Senator Boxer.

           OPENING STATEMENT OF HON. BARBARA BOXER, 
           U.S. SENATOR FROM THE STATE OF CALIFORNIA

    Senator Inhofe. The hearing will come to order. And first 
of all, today's hearing is about the oil and gas industry, an 
industry that's absolutely essential to Oklahoma.
    The oil and gas industry represents 10 percent of our gross 
State product and employs more than 55,000 Oklahomans. For the 
past 15 years, Oklahoma's oil and gas producers have paid 
production taxes in excess of $400 million annually. This money 
funds schools and roads and health services and other services. 
So a healthy oil and gas industry is critical, not only to the 
livelihood of Oklahomans, but to the Nation's overall energy 
security. For example, 10 percent of the Nation's natural gas 
reserves are in Oklahoma, and for the past 2 years, the 
industry has produced energy valued in excess of $10 billion.
    Now some of our witnesses may not be aware of this, but I 
actually started out in the business, I think, Mr. Sullivan, 
you're aware of this. Since I'm older than everybody in this 
room, some of you won't know what I'm talking about when I tell 
you that I was a tool dresser on a cable tool rig, and that is 
in the Osage field up there, so I drilled an awful lot of that 
shallow stuff up there, and that's hard work, but it's 
certainly essential to our economy, and you can see some 
rebound taking place right now.
    It's more important than ever to foster the domestic 
development of oil and gas resources. Today we'll hear from 
witnesses about how the Endangered Species Act has impacted 
that production.
    Enacted in 1973, the ESA, Endangered Species Act, remains 
one of our most celebrated environmental laws despite the fact 
that it has not reached many of its stated objectives and has 
cost the country billions in the process.
    For example, a 2004 Department of Energy report on natural 
gas, and without objection, that will be a part of the record, 
stated that ``Critical habitat designations and section 7 
consultations under ESA have caused enormous delays to natural 
gas projects with an estimated cost to the economy of $261 to 
$979 million over the past 30 years.'' And that's a lot. In 
Oklahoma, the ESA protection of the American Burying Beetle has 
proven a formidable barrier to oil and gas exploration, 
production and distribution. The American Burying Beetle was 
listed in 1989 based on museum collectors' data. Nearly 20 
years later, actual field data showed that the populations of 
the beetle were and are very extensive.
    According to the Fish and Wildlife Ecological Service, 
there may be more than 72,000 beetles in Oklahoma alone. And 
this doesn't sound like they're endangered of extinction to me.
    But the lack of robust science in the listing process is 
not the only issue. The conservation policies have also taken 
their toll on the energy industry. As we will hear from one of 
our producers today, a long-standing policy for winter oil and 
gas construction activities in Oklahoma was suddenly changed 
without notice to the industry, costing millions of dollars, 
and unfortunately, changing the rules in the middle of the 
game; it's become more of a rule than an exception.
    Earlier this year we got a bit of good news. The Service 
announced it would begin a status review of the American 
Burying Beetle, something the ESA requires the Service do every 
5 years. The beetle has been waiting for 13 years. And I hope 
the Service will have some answers for us today about what they 
have learned and when we can expect some decisions.
    The problem goes beyond the oil and gas industry to the 
consumer, who ultimately pays the price. For example, over 
regulation drives up natural gas prices for farmers and 
ranchers, another industry critical to Oklahoma.
    Natural gas accounts for 90 percent of the total--actual 
total costs of manufacturing fertilizer, an obviously important 
component for farming. And we'll hear today from the Farm 
Bureau. We've discussed this many times, that people are not 
aware of the connection between natural gas and our Ag 
community.
    Since 2000, 24 nitrogen fertilizer plants have shut down, 
and that leaves only six remaining. Some people are not aware 
of this, but two of those six are located here in Oklahoma.
    Oklahoma's farmers get hit more than once. They not only 
face increasing natural gas prices, but have ESA issues of 
their own.
    In an attempt to be good stewards and to avoid the 
burdensome designation of the critical habitat of the Arkansas 
River Shiner, the Oklahoma Farm Bureau created a voluntary 
species management plan. Today we'll hear how that project is 
going.
    You know, I always remember, when we were talking about 
that, we had--the Ag leadership happened to come in the room 
and hear what we're up against there in Washington, I say to 
you Tom, and so I want you not to be shy in your testimony 
today.
    Sadly the ESA is just one of a host of laws, although well 
intended, frustrate domestic energy production in this country.
    After decades of activist judges and lawsuits by anti--
energy special interests, environmental laws are not used to 
ensure that human actions do not harm the environment, but are 
used to stop human activity altogether.
    These interests don't believe what all Oklahomans know to 
be true, and that is that we can develop our energy resources 
without sacrificing the environment.
    I'm proud that Oklahoma leads the rest of the country in so 
many ways when it comes to energy exploration, production, and 
research as well as the protection of the environment. The 
Oklahoma Energy Research Board, for example, is a model for 
many other States.
    The fact of the matter is that this engine we call 
``America needs energy to run.'' If our domestic oil and gas 
producers are prevented from producing that energy, then 
businesses are hurt and people lose their jobs.
    Here are just a couple of examples: According to the 
American Chemistry Council, one out of every ten chemical--
related jobs has vanished in the last 5 years.
    The first--the America forest and paper industry has lost 
more than 120,000 high paying manufacturing jobs and closed 
more than 220 plants.
    In fact, the Pacific Northwest timber industry was 
essentially shut down some 10 to 15 years ago to protect the 
Northern Spotted Owl. And it's now thought that many of the 
spotted owl's problems were not from logging, but due to 
competition for food and habitat from other owls.
    The obstacles to efficient development of our natural 
resources are many. Most of them have nothing to do with 
scarcity of resources, but are created by those in Washington 
DC who say they dislike relying on foreign oil but do 
everything to prevent domestic production.
    You know, that's one of the greatest frustrations I have 
coming from an oil State, to be there serving with some of the 
people in Congress, listening to individuals talk about how bad 
it is to be relying on foreign resources, then turn around and 
do everything they can to keep us from producing. And this is 
something that we face every day.
    When Congress resumes in September, we'll have a conference 
committee to reconcile the differences between the Senate and 
the House energy bills.
    And I say ``energy bills,'' even though they're not energy 
bills. The House Energy Bill is a lousy bill, the Senate Energy 
Bill is a lousy bill, and I don't know how we can expect 
anything out of conference because of the rules that we have. 
They can't go beyond the purview of the House and the Senate, 
but we're going to try to do better in the years to come.
    And I want to welcome all the witnesses and look forward to 
sharing your wisdom with my colleagues and Congress on both 
sides of the aisle.
    As I said to you before we started, the value of these 
hearings is, we are able to get testimony and get it into the 
record and heighten the visibility of this problem that we have 
right now.
    We have a number of great witnesses today. We start off 
with Dr. Ben Tuggle who's the Regional Director of the U.S. 
Fish and Wildlife, took the place of Dale Hall, who's been a 
good friend of ours for many times.
    We have Tom Buchanan on behalf of the Farm Bureau. Bob 
Sullivan, a very good friend with the independent producers. 
Dru Bower-Moore, the Regulatory Advisor, Western Division of 
Devon. And as I told Dru, I was in Devon on Monday and enjoyed 
visiting with probably 200 or 300 of their employees. And Jim 
Haught, the manager of ONEOK.
    Well, let's start off--and what I'd like to do is have each 
person, if you would, take one panel at a time starting with 
Dr. Tuggle. If you'd try to restrict your opening remarks to 5 
minutes, and we'll have a timer up here, that would probably 
help us.
    Your entire opening remarks will be made a part of the 
record. And we'll recognize you at this time, Dr. Tuggle.
    [The prepared statement of Senator Boxer follows:]

          Statement of Hon. Barbara Boxer, U.S. Senator from 
                        the State of California

    Good morning. Today's hearing is about the oil and gas 
industry, an industry that is absolutely critical to Oklahoma.
    The oil and gas industry represents 10 percent of our gross 
State product and employs more than 55,000 Oklahomans. For the 
past 15 years, Oklahoma's oil and gas producers paid production 
taxes in excess of $400 million annually. This money funds 
schools, roads, health care and other services. A healthy oil 
and gas industry is critical not only to the livelihood of 
Oklahomans but to the Nation's overall energy security. For 
example, 10 percent of the Nation's natural gas reserves are in 
Oklahoma and for the past 2 years, the industry has produced 
energy valued in excess of $10 billion.
    It is more important than ever to foster the domestic 
development of oil and gas resources. Today, we will hear from 
witnesses about how the Endangered Species Act has impacted 
that production.
    Enacted in 1973, the Endangered Species Act remains one of 
our most celebrated environmental laws despite the fact that it 
has not reached many of its stated objectives and has cost the 
country billions in the process. For example, a 2004 Department 
of Energy report on natural gas (insert into the record), 
stated that critical habitat designations and section 7 
consultations under ESA have caused enormous delays to natural 
gas projects with an estimated cost to the economy of $261 to 
$979 million over the past 30 years.
    In Oklahoma, the ESA protection of the American Burying 
Beetle has proven a formidable barrier to oil and gas 
exploration, production and distribution. The American Burying 
Beetle was listed in 1989 based on museum collector's data. 
Nearly 20 years later, actual field data show that the 
populations of the beetle were and are very extensive. 
According to the Fish and Wildlife Ecological Service, there 
may be more than 72,000 beetles in Oklahoma alone. This doesn't 
sound like a species that is ``in danger of extinction.''
    But the lack of robust science in the listing process is 
not the only issue. The conservation policies have also taken 
their toll on the energy industry. As we will hear from one of 
our producers today, the long-standing policy for winter oil 
and gas construction activities in Oklahoma was suddenly 
changed without notice to the industry, costing millions of 
dollars. Unfortunately, changing the rules in the middle of the 
game is the rule rather than the exception when implementing 
ESA.
    Earlier this year, we got a bit of good news. The Service 
announced it would begin a status review of the American 
Burying Beetle; something the ESA requires the Service to do 
every 5 years. The beetle has been waiting for 13 years. I hope 
the Service will have some answers for us today about what they 
have learned and when we can expect some decisions.
    The problem goes beyond the oil and gas industry to the 
consumer, who ultimately pays the price. For example, 
overregulation drives up natural gas prices for farmers and 
ranchers, another industry critical to Oklahoma. Natural gas 
accounts for up to 90 percent of the total costs of 
manufacturing fertilizer, an obviously important component of 
farming. Since 2000, 24 nitrogen fertilizer plants have shut 
down. Only 6 U.S. plants remain, three of which are in 
Oklahoma.
    And Oklahoma's farmers get hit more than once. They not 
only face increased natural gas prices but have ESA issues of 
their own. In an attempt to be good stewards and to avoid the 
burdensome designation of critical habitat for the Arkansas 
River Shiner, the Oklahoma Farm Bureau created a voluntary 
species management plan. Today we will hear how this project is 
going.
    Sadly, the ESA is just one of a host of laws that, although 
well intended, frustrate domestic energy production in this 
country. After decades of activist judges and lawsuits by anti-
energy special interests, environmental laws are not used to 
ensure that human actions do not harm the environment but are 
used to stop human activity all together. These interests don't 
believe what all Oklahomans know to be true--that we can 
develop our energy resources without sacrificing the 
environment. I am proud that Oklahoma leads the rest of the 
country in so many ways when it comes to energy exploration, 
production, and research, as well as protection of the 
environment. The Oklahoma Energy Research Board, for example, 
is a model for many other States.
    The fact of the matter is that this engine we call America 
needs energy to run. If our domestic oil and gas producers are 
prevented from obtaining that energy, then businesses are hurt 
and people lose their jobs. Here are just a couple of examples. 
According to the American Chemistry Council, ``one in every 10 
chemical-related jobs has vanished in the past 5 years.'' The 
American Forest & Paper Industry ``has lost more than 120,000 
high paying manufacturing jobs and closed more than 220 
plants.'' In fact, the Pacific Northwest timber industry was 
essentially shut down 10--15 years ago to protect the Northern 
Spotted Owl. It is now thought that many of the spotted owl's 
problems were not from logging but due to competition for food 
and habitat from other owls.
    The obstacles to efficient development of our natural 
resources are many. Most of them have nothing to do with 
scarcity of resources, but are created by those in Washington 
DC who say they dislike ``relying on foreign oil'' but do 
everything they can to prevent domestic production. When 
Congress resumes in September, we will have a conference 
committee to reconcile differences between the Senate and House 
energy bills. If the goal is to actually improve U.S. energy 
security, these bills not only fail to meet the mark but they 
also put in place a new set of roadblocks. I had hoped we could 
do better. I want to welcome all the witnesses and I look 
forward to sharing your wisdom with my colleagues in Congress 
on both sides of the aisle.

 OPENING STATEMENT OF BENJAMIN TUGGLE, REGIONAL DIRECTOR, U.S. 
                   FISH AND WILDLIFE SERVICE

    Dr. Tuggle. Thank you, Senator. I certainly appreciate the 
opportunity to be here.
    Senator Inhofe. Now can you move your microphone up close 
because we want to make sure we get an accurate record of this 
proceeding.
    Dr. Tuggle. OK. How is that?
    Senator Inhofe. That's better.
    Dr. Tuggle. I'm often told I have a soft voice by everybody 
except my staff.
    Senator Inhofe. But carry a big stick, is that it?
    Dr. Tuggle. That's the idea. Good morning. I am Dr. 
Benjamin Tuggle. I'm the Regional Director for the U.S. Fish 
and Wildlife Service in the Southwest Region, which includes 
the great State of Oklahoma, Texas, New Mexico, Arizona.
    Before providing my testimony, Senator, I'd like to thank 
you for allowing me the opportunity to appear before you today 
for this field hearing.
    As a regional director, I oversee the Service's role in the 
administration of the Endangered Species Act, as well as a 
number of other Federal responsibilities related to the Act in 
this region.
    My formal testimony, which has been provided for the 
record, discusses the history, biology, and extensive 
conservation efforts that have been taken on the part of the 
Service for the American Burying Beetle and the Arkansas River 
Shiner. However, I would like to focus my oral remarks today on 
the efforts being taken by the Service to work with industries 
inherently involved in the conservation of these species 
through their compliance with the Endangered Species Act. And I 
refer specifically to the industries that are associated with 
oil and gas and agriculture.
    The cooperative activities I will mention today represent 
but a snapshot of the extent of our extensive efforts to 
streamline endangered species compliance while also ensuring 
protection and conservation of endangered species.
    As you know, Senator, the mission of the Fish and Wildlife 
Service is to work with others to conserve, protect and enhance 
fish and wildlife and plants and their habitats for the 
continued enjoyment of the American people.
    Our role regarding energy development is multifaceted. For 
example, the Service facilitates the environmentally sound 
exploration and production of privately held minerals on the 
national wildlife refuge system lands in order to minimize 
impacts to other resources.
    We work in partnership with the oil and gas operators to 
streamline this process so that the financial and operational 
needs of the operators are met while fulfilling our role and 
responsibility to protect species and environment for the 
American people.
    We also work closely with other entities such as the BLM, 
Environment Protection Agency, and the Corps of Engineers in 
the assessment of potential impacts to natural resources where 
the requirement of the National Environmental Policy Act, or 
NEPA applies. And we consult with States and local agencies to 
ensure their regulatory requirements are also met.
    The Service participates in the necessary clearances for 
protecting resources, such as the Endangered Species Act 
consultation for threatening endangered species, monitoring, 
and compliance activities and establishing mitigation and 
reclamation standards for individual species.
    It's important to note that neither the American Burying 
Beetle nor the Arkansas River Shiner consultations have ever 
stopped a project from going forward. This is not to say that 
some of the projects haven't experienced delays in the past due 
to the compliance with the ESA. However when operators 
coordinate with us early and frequently in projects, they are 
much more likely to experience no delays in ESA consultation as 
we move forward with their schedule.
    When endangered species consultation is required of the 
Service on a particular activity, the Service works to expedite 
these actions as quickly as possible and to identify steps that 
would be taken to minimize the impacts, not only to the 
schedule, but also to the species.
    Furthermore, the Service has taken proactive steps to 
ensure the mission priorities are met while also streamlining 
the consultation process so that the financial and operational 
needs of oil and gas and agriculture operations are met.
    I will spend the remainder of my time to just identify some 
of the examples of these proactive means that I've been 
speaking about earlier.
    In 2004, the Service worked on and completed a Memorandum 
of Understanding with five major oil and gas companies in 
Eastern Oklahoma, operating within the range of the American 
Burying Beetle. By signing the MOU, the oil and gas operators 
voluntarily agreed to implement agreed upon Best Management 
Practices to proactively conserve the beetle.
    As a result, the Service does not anticipate their 
operations negatively impacting the beetle or its habitat.
    Similarly, we have also finalized an MOU with a seismic 
exploration company operating within the range of the American 
Burying Beetle in Eastern Oklahoma.
    Furthermore, we have worked with the Oklahoma Corporation 
Commission to assist operators and the Commission in 
operating--in addressing rather, the American Burying Beetle 
during the seismic operation permit application process.
    The Service is working with the Oklahoma Department of 
Transportation and the Federal Highway Administration on a 
programmatic biological opinion for the American Burying 
Beetle.
    This programmatic opinion will facilitate implementation of 
Federal, State and county projects funded by the Federal 
Highway Administration by----
    Senator Inhofe. Let me interrupt you just a moment. This is 
a little awkward for me because I can't see the timing here. In 
Washington we have the timing where everyone can see it. How 
are we doing there?
    Senator Clerk. We're out of time.
    Senator Inhofe. We're out of time. Try to wrap up if you 
would, Dr. Tuggle.
    Dr. Tuggle. I will and I apologize for taking much longer.
    Senator Inhofe. That's fine.
    Dr. Tuggle. I would like to highlight in summary just the 
fact that we have used virtually every tool at our disposal to 
be able to streamline this process.
    One of the things that I would like to highlight before my 
time is through, is, we've used nonprograms, such as the 
Partners for Fish and Wildlife to work with landowners to try 
to provide funds to be able to work with those landowners so 
they can put conservation measures in place. And we also want 
to thank you for spearheading the legislation that gave us 
organic legislation in that regard.
    Senator Inhofe. That was very successful. In fact, we had a 
hearing with some of the--I think, one of the same witnesses on 
that legislation.
    Dr. Tuggle. In closing, the Service remains committed to 
successfully conserving and recovering endangered species while 
working with the industry that's impacted by these regulatory 
activities.
    We recognize the species conservation must not come at the 
cost of diminishing the ability of the United States to ensure 
its energy future. And only by working together can we achieve 
our goals.
    I want to also thank you for showing the leadership to 
bring this meeting, this field hearing today. And also I'd like 
to answer any questions that you have for me.
    [The prepared statement of Dr. Tuggle follows:]

           Statement of Benjamin Tuggle, Regional Director, 
                     U.S. Fish and Wildlife Service

    Good afternoon, I am Dr. Benjamin Tuggle, Regional Director 
of the U.S. Fish and Wildlife Service's (Service) Southwest 
Region, which includes the States of Texas, New Mexico, Arizona 
and Oklahoma. Before presenting my testimony, I would like to 
thank Senator Inhofe for the opportunity to appear here today 
and participate in this oversight hearing. As Regional 
Director, I oversee the Service's role in the administration of 
the Endangered Species Act, as well as a number of our other 
Federal responsibilities related to the Act, in the region.
    My statement today will focus on the Southwest Region's 
role in the conservation and recovery of two Governmentally 
listed species: the American burying beetle and Arkansas River 
shiner, as well as the Service's efforts to streamline 
Endangered Species Act compliance for these two species in 
Oklahoma.


                        american burying beetle


    The American burying beetle was listed as endangered under 
the Endangered Species Act in 1989 and the Final Recovery Plan 
was signed in 1991. Once found throughout the eastern United 
States, the American burying beetle is now only found in nine 
States: South Dakota, Nebraska, Michigan, Ohio, Oklahoma, 
Texas, Arkansas, Rhode Island, and Massachusetts. The beetle's 
current range represents a 95 percent reduction from its 
estimated historic range. Within Oklahoma, the species is known 
or believed to occur in 34 counties in the eastern part of the 
State.
    Numerous American burying beetle surveys have been 
conducted by private and Governmental entities within the 
eastern third of Oklahoma over the past several years, 
including a large number of surveys conducted by the oil and 
gas industry. These surveys vary annually with regard to where 
they are conducted and during what time of year, but indicate, 
on average, relative population stability from 1992 to 2006. In 
contrast, survey population data from other States within the 
species' historic range vary widely.
    In late 2003 and early 2004, the Service worked on and 
completed a Memorandum of Understanding (MOU) with five major 
oil and gas companies in eastern Oklahoma operating within the 
range of the American burying beetle. The MOU provided best 
management practices for avoiding or minimizing adverse impacts 
to the beetle from oil and gas-related activities. By signing 
the MOU, the oil and gas operators voluntarily agreed to 
implement the best management practices to proactively conserve 
the beetle.
    As a result, the Service does not anticipate their 
operations will result in take, which is prohibited under 
section 9 of the Endangered Species Act.
    Similarly, we are also finalizing an MOU with a seismic 
exploration company operating within the range of the American 
burying beetle in eastern Oklahoma. This MOU provides best 
management practices for avoiding or minimizing adverse impacts 
to American burying beetles from non-Federal oil and gas 
seismic activities. Furthermore, we are working with the 
Oklahoma Corporation Commission to assist operators and the 
Commission in addressing the American burying beetle during the 
seismic operations permit application process.
    In May 2005, the Service completed a Programmatic 
Biological Opinion for the American burying beetle with the 
Environmental Protection Agency (EPA) concerning oil and gas-
related activities in eastern Oklahoma that required a Clean 
Water Act storm water construction permit. The Service's 
Biological Opinion streamlined the consultation process so that 
the permits could be issued to oil and gas operators in only 7 
days. The Energy Policy Act of 2005, however, negated the need 
for permitting of most oil and gas activities. Consequently, 
the Biological Opinion is no longer applicable and consultation 
with the Service in regard to storm water permits for oil and 
gas activities is rare.
    In September 2005, the St. Louis Zoo hosted an American 
burying beetle conservation conference in St. Louis, Missouri. 
The conferees identified a need for a species-specific working 
group, along with a 5-year status review for the species and an 
updated and revised recovery plan. In May 2007, the Service 
hosted a follow-up conference in Tahlequah, OK to present new 
research on the American burying beetle and similar species. 
The event was open to the public and staff from the U.S. Senate 
Environment and Public Works Committee attended. The 5-year 
review of the status of the American burying beetle should be 
finalized in early 2008. After the 5-year review is completed 
the Service will begin working on the revised recovery plan for 
the beetle.
    The Service is also working with Northeastern State 
University, the University of Oklahoma, the Oklahoma Department 
of Wildlife Conservation, and Camp Gruber National Guard 
Training Center to determine the reproductive habitat 
preferences of the American burying beetle. The results from 
this research have the potential to identify specific 
geographic areas of suitable habitat for American burying 
beetle reproduction. The Oklahoma Department of Wildlife 
Conservation plans on using roughly $30,000 of the Cooperative 
Endangered Species Fund dollars in fiscal year for an American 
burying beetle microhabitat reproductive study.
    The Service is in the preliminary stages of discussing 
development of an umbrella Habitat Conservation Plan (HCP) for 
the American burying beetle within the State of Oklahoma. The 
goal of this umbrella HCP is to authorize incidental take under 
the Endangered Species Act and allow both State and private 
entities to continue their otherwise legal activities while 
also providing for conservation of the species and its habitat. 
We will keep Congress apprised of our progress.
    Last, the Service is also currently working with the 
Oklahoma Department of Transportation and the Federal Highway 
Administration on a programmatic Biological Opinion for the 
American burying beetle in eastern Oklahoma. This programmatic 
opinion will facilitate implementation of Federal, State and 
county projects, funded by the Federal Highway Administration, 
by streamlining traditional individual section 7 consultation 
requirements related to the American burying beetle by 
condensing it into one consultation. We expect this streamlined 
process to simplify project scheduling.


                         arkansas river shiner


    The Arkansas River shiner has disappeared from more than 80 
percent of its estimated historical range and is now almost 
entirely restricted to about 508 miles of the Canadian River in 
Oklahoma, Texas, and New Mexico. An extremely small population 
may also exist in the Cimarron River in Oklahoma and Kansas, 
based on the collection of 16 individuals from 1985 to 1992. 
The Arkansas River Basin population of the Arkansas River 
shiner was listed as a threatened species in 1998 due to 
habitat loss. A final decision on critical habitat designation 
was promulgated on April 4, 2001. On April 25, 2002, the New 
Mexico Cattle Growers Association and 16 other plaintiffs 
challenged the designation in court. A memorandum opinion from 
the U.S. District Court for the District of New Mexico was 
issued in that case. In accordance with the court's opinion, 
the Service completed a new final rule designating critical 
habitat for the Arkansas River shiner on October 13, 2005.
    The Service has conducted surveys for Arkansas River shiner 
populations since 2004 and recently implemented a more 
intensive sampling effort to gather additional information on 
the status of the species in both the Canadian and Cimarron 
rivers. Further research on the species is necessary before a 
number of recovery actions can be designed and implemented. We 
are currently developing proposals to fill these research gaps, 
which will likely include additional monitoring, research on 
competition with other species, effects on the species from 
changing water quality, and habitat assessments.
    Despite these data gaps, the Service continues to conduct 
proactive species recovery efforts. For example, we are working 
with the Service's Partners for Fish and Wildlife Program and 
are implementing a salt cedar task force to address the 
encroachment of non-native, invasive species which negatively 
impacts the Arkansas River Shiner by reducing the amount of 
water for the species to thrive.
    In Fiscal Year 2006, the Service awarded a private 
stewardship grant to the Oklahoma Farm Bureau for over $160,000 
for landowners to control invasive salt cedar along portions of 
the South Canadian River in Oklahoma. The Nature Conservancy 
also received a grant of $195,000 to benefit the Arkansas River 
shiner and its habitat, as well as other listed and candidate 
species.
    In addition, we are working with the Oklahoma Farm Bureau 
to develop a conservation plan for the Arkansas River shiner in 
Oklahoma, based on a plan developed in 2004 by the Canadian 
River Municipal Water Authority in the Texas panhandle. The 
plan identifies conservation actions that landowners may 
voluntarily complete for the benefit of the shiner and its 
habitat. The development and implementation of these two plans 
will provide an excellent mechanism for landowner involvement 
in our efforts to conserve the Arkansas River shiner and its 
habitat.
    The Service is also conducting a formal consultation with 
the Federal Highway Administration and the Oklahoma Department 
of Transportation on a proposed bridge replacement over the 
Canadian River. Reasonable and prudent measures to minimize 
impacts to the Arkansas River shiner, while not significantly 
impacting bridge construction activities, have been discussed 
with the Federal Highway Administration and the Oklahoma 
Department of Transportation. These include re-vegetating 
impacted areas with native grasses, maintaining flows by using 
multiple work roads, working outside of the Arkansas River 
shiner's spawning season, and limiting work within the actual 
river.
    Consultations on oil and gas operations with potential 
impacts to the Arkansas River shiner have been limited. 
Typically, the Service recommends directional drilling for 
pipelines crossing within occupied Arkansas River shiner 
habitat, as well as implementation of best management practices 
for spill prevention on new oil and gas operations. As 
mentioned above, most oil and gas-related activities are now 
excluded from the need to obtain storm water construction 
permits. Therefore, we anticipate that the number of informal 
consultations with the Service related to the Arkansas River 
shiner and oil and gas-related activities will be lower than in 
the past.


                               conclusion


    In closing, the Service remains committed to successfully 
conserving and recovering endangered and listed species, such 
as the American burying beetle and Arkansas River shiner. We 
also remain strongly committed to working cooperatively with 
our partners and other stakeholders.
    Thank you again for the opportunity to participate in the 
hearing today. This concludes my statement and I would be happy 
to answer any questions you may have.

    Senator Inhofe. Thank you, Dr. Tuggle. I wasn't going to 
say anything about the Partnership Act, but it was very, very 
successful. What I like about that is, it lets the Government 
work with the people, with the property owners. And if left to 
manage their own resources in a very environmentally sound way, 
conservation way, they will do it. So I think that's been a 
very successful program. We're glad to get it expanded.
    You said something just a minute ago that I had not picked 
up before. You said that these consultations had never--or I 
guess section 7 never stopped a project, had delay, but not 
stopped; is that accurate?
    Dr. Tuggle. Yes, sir.
    Senator Inhofe. Let me ask you this question also: Will 
your schedule allow to you stay for the remainder of it, for 
the second panel, so that you would be here?
    Dr. Tuggle. Yes, sir.
    Senator Inhofe. That would be very helpful. Now, Dr. 
Tuggle, you heard me in my opening remarks, I talked about the 
5-year status review of the American Burying Beetle. I'd like 
to know when you think that would be completed and what kind of 
conclusions do you think we might anticipate from that, and 
what kind of actions do you think the Service may be taking?
    Dr. Tuggle. Well, that 5-year review is due for completion 
sometime within the next couple of months. The lead region for 
that is our northeast region. And we've had several 
conversations with them on the content of that 5-year review. 
But the 5-year review will focus on surveying techniques, will 
focus on the latest information, scientific information that we 
have regarding the status of those populations. And we 
anticipate after that 5-year review will give us enough 
information to not only talk about the recovery plan, but 
whether that species is in better shape than we thought it was 
in when we originally had it listed.
    Senator Inhofe. You said it's a different region is going 
to be the lead. What does the lead do that you would not be 
involved in? How does that change----
    Dr. Tuggle. Well, there's a cooperation that would take 
place. The difference, when we say a ``lead,'' they're 
responsible for actually writing the document, but we have a 
great deal of input in terms of the content of that document.
    Senator Inhofe. Because we're addressing the beetle right 
now, and I don't know whether that's as prevalent in that 
region as it is here.
    Dr. Tuggle. Right. Exactly.
    Senator Inhofe. March 16 of 2007, the Solicitor with the 
U.S. Department of Interior issued a memorandum on the meaning 
of--and I'm quoting now, ``In danger of extinction throughout 
all or a significant portion of its range,'' the statutory 
threshold of an endangered species. And I want to make that a 
part of the record also without objection.
    Now as I mentioned in my opening statement, the population 
of the American Burying Beetle have been found to be very wide 
spread, and would suggest to me that the beetle is not in 
danger of extinction in Oklahoma.
    I ask you, how is this memorandum going to be incorporated 
into the 5-year review, or will it be considered as part of the 
evidence to be entered into the record?.
    Dr. Tuggle. Well, I think in the 5-year review, when we get 
the census in terms of the monitoring information, we will be 
able to use the significant portion of the range as we talk 
about downlisting and de-listing a species. And, therefore, if 
we talk about it from a standpoint of a significant portion of 
the range in Oklahoma, and we have a robust population, then we 
would be able to apply that principle in terms of how that 
species, the burying beetle, would be affected in Oklahoma.
    Senator Inhofe. I see. Dr. Tuggle, the recovery plan for 
the American Burying Beetle was finalized in 1991, and based on 
little data as I understand it, and millions of dollars have 
been spent on research, beetle surveys, conservations and 
species protection.
    Do you think the recovery plan, a 16-year old document 
based on 20-year old data should be updated at the end of this 
five-year review?
    Dr. Tuggle. Absolutely, sir. In fact, the essence of the 5-
year review will give us a great deal of information in terms 
of how that recovery plan should look, and also whether we've 
reached a point with the population standards if we would 
should downlist or delist the species.
    Senator Inhofe. That's good. On May 18 of 2001, the 
President issued Executive Order No. 13211 that requires 
agencies to prepare statements of energy effects for any 
regulation that significantly affects energy supply or its 
distribution and its use.
    In proposing to list the polar bear, the Fish and Wildlife 
Service did not prepare such a statement but rather issued a 
blanket statement that--and I'm quoting now--``This rule does 
not expect to significantly affect energy supplies, 
distribution and use.''
    Twenty-five percent of the U.S. domestic supply of oil 
comes from Alaska. If the polar bear is listed, every permit or 
other action taken by the companies in that region will have to 
go through a section 7 consultation, just--it will be a 
necessary requirement, in my opinion. And, you know, how can 
the Service justify not preparing this statement?
    You know, I was there when they came out with that 
statement on the polar bear when, in fact, of the 15 
populations of the polar bear, with the exception of the West 
Hudson Bay area, you're actually getting either sustained or 
increased populations in those areas.
    And it's my understanding that the reason for the depleted 
population in the West Hudson Bay area was due primarily to 
hunting regulations.
    But anyway, I can't see that they could say that this rule 
is not expected to significantly affect energy supplies, 
distribution or use under these circumstances.
    What do you think about that?
    Dr. Tuggle. Well, I've had the benefit of working with the 
Interior group when I was still in Washington on the 
construction--of a potential construction of the natural gas 
pipeline coming off the north slope and whether it was going to 
go through Alaska or into Canada. And the benefit of that has 
been the fact that we've been able to sit down ahead of time to 
start to get some idea about how that pipeline might affect 
sensitive species.
    In my opinion, strictly my opinion, I think that when that 
statement was issued, it may have been from a standpoint of not 
really knowing the impact potentially. And then trying to give 
it enough time so that we can get the scientific information 
from USGS that we would need to see about distribution, 
population size, and the other things that are associated with 
how the population is distributed.
    But I also want to add that there are mechanisms such as 
programmatic biological opinions that can streamline the 
consultation process. The more that we know about the 
population size, the more we know about particular routes that 
may be taken, we get a better idea about how that might impact 
the species.
    Senator Inhofe. You know, I remember, and were you around 
when they were discussing that, as far as the pipeline is 
concerned, its effect on the caribou?
    Dr. Tuggle. Yes, sir.
    Senator Inhofe. And have you been up there and seen during 
the summer months how the caribou, the only shade they can find 
up there is the pipeline?
    Dr. Tuggle. Yes, sir.
    Senator Inhofe. All right. In the final regulation 
designating the critical habitat of the Arkansas River Shiner, 
the Service stated that it would review the need for critical 
habitat in certain areas once the Oklahoma Farm Bureau Plan had 
been implemented.
    I'd ask, does the Service plan to propose excluding these 
areas in the future?
    Dr. Tuggle. I think that, you know--and I apologize, I 
can't give you a straight answer because I'm at a disadvantage 
in terms of my knowledge on where we might modify the critical 
habitat, but I think at this point we're pretty satisfied with 
the way the critical habitat looks. That does not mean we would 
not be flexible in the future if we found that it might be more 
prudent to exclude areas.
    We're trying to focus our attention on the conservation 
measures that would make the habitat better. I think that if we 
have good quality habitat, then that diminishes our need for 
critical habitat.
    Senator Inhofe. Dr. Tuggle, I appreciate it very much. 
We'll go ahead now and conclude this first panel if you don't 
mind staying around.
    Dr. Tuggle. Absolutely.
    Senator Inhofe. I would ask the other four witnesses that 
we've already introduced, if you'd please come forward to the 
table.
    Dr. Tuggle. Thank you.
    Senator Inhofe. I've asked the timer to give me a little 
sign when the 5-minutes comes up, because as I say, your entire 
statement will be made part of the record and we want to get to 
our questions here.
    We'll probably take them in order starting with you, Tom, 
and working across, if that's all right.
    Mr. Buchanan. That would be fine, sir.
    Senator Inhofe. You're recognized, Mr. Buchanan, for your 
opening statement.

            STATEMENT OF TOM BUCHANAN, ON BEHALF OF 
                      OKLAHOMA FARM BUREAU

    Mr. Buchanan. Thank you, Senator. First, I want to let you 
know that I, on behalf of Ag producers in Oklahoma, am very 
appreciative of the opportunity to be before you and the ladies 
and gentlemen here. We appreciate the opportunity. Thank you.
    I am Tom Buchanan. I'm from Jackson County, Oklahoma, in 
the southwestern part of the State. I have farmed for 27 years 
and manage currently the Lugert-Altus Irrigation District.
    The Lugert-Altus Lake was constructed by the Bureau of 
Reclamation during World War II. It first provided water to the 
farmers in the district in 1946 and has continually supplied an 
irrigation source.
    The district covers 48,000 acres of farmland with about 330 
different landowners. Our primary crop is cotton. The gross 
receipts from the district are approximately $48 million 
annually. A giant boost to the local economy.
    Today I would like to address how the Endangered Species 
Act affects the oil and gas industry, which then directly 
impacts farming.
    Farmers appreciate God's creatures as much as anyone. 
However, the ESA impacts our operations by increasing input 
costs and threatening our water supplies.
    Oklahoma ranks second in the Nation for production of 
natural gas; fourth in the Nation of wheat and cattle; and 
fifth in the Nation for peanuts.
    Our State has been called ``the State of soil and oil.'' 
However, high prices for oil and gas have negative impacts on 
productive agriculture. Natural gas is the most costly 
component used in manufacturing nitrogen fertilizer. Fertilizer 
prices have more than doubled over the past 15 years with no 
reprieve in sight.
    A recent Energy Information Administration outlook 
forecasts natural gas prices rising by 9.2 percent in 1907, and 
increasing another 3.7 percent in 1908.
    World demand for fertilizer grew by 13 percent between 1901 
and 2005 According to the Fertilizer Institute. Next year, 
Oklahoma farmers will face even steeper bills to fertilize 
crops.
    The ESA is yet another factor contributing to the high cost 
of fertilizer by slowing down natural gas production. The 
American Burying Beetle, listed as endangered under the ESA, 
has delayed and impeded oil and gas production in Oklahoma.
    Another species of concern in Oklahoma is the Arkansas 
River Shiner, a threatened minnow found in two of our largest 
rivers. The Oklahoma Farm Bureau Legal Foundation, along with 
20 other organizations, worked with the U.S. Fish and Wildlife 
Service to refine critical habitat for the shiner.
    The Canadian River Municipal Authority had a 154 mile 
section of its management plan excluded for critical habitat. 
The OFB Legal Foundation is working to finalize a voluntary 
conservation management plan for the shiner in order to remove 
sections of the Cimarron and Canadian rivers from critical 
habitat also. These organizations have been proactive about 
preserving the shiner to protect their own water supplies. 
After the Klamath Basin crisis, many fear the needs of 
endangered species trump the needs of the humans.
    To illustrate the extensive impact of ESA, Oklahoma's 
essential industries could be adversely impacted by the listing 
of a species that lives thousands of miles from here. The Fish 
and Wildlife Service has proposed listing polar bears as a 
threatened species based solely on projected impacts of global 
warming.
    Under the ESA, any activity authorized, funded or carried 
out by a Federal agency that might contribute to global 
warming, such as permits for livestock or oil and gas 
production, would be subject to consultation with the Fish and 
Wildlife Service to make sure that the proposed activity would 
not jeopardize the continued existence of polar bears.
    Consultations can take from 90 to 120 days to complete and 
result in permanent delays. Because the Service is required to 
consider the cumulative effects of all actions, even those 
activities with little impacts, such as, one Oklahoma livestock 
facility could be denied a permit or have its terms 
substantially altered because of supposed impacts to polar 
bears.
    Under the ESA, taking does not have to be direct, but can 
also constitute indirect impacts to species that might affect 
their breeding, feeding or sheltering. Livestock and oil and 
gas producers could conceivably be liable for taking polar 
bears, if they contribute to global warming.
    Another concern to agriculture is the Federal regulatory 
reach of the Clean Water Act or CWA. Water is essential to 
agriculture production. The scope of Federal jurisdiction is 
important to farmers and ranchers because jurisdictional 
determinations directly impacting agriculture activities, have 
the potential to interfere with the use of private land, and if 
applied too broadly, impede our ability to produce food and 
fiber.
    As currently drafted, S. 1870 and H.R. 2421 not only expand 
the geographic scope of CWA jurisdiction, but sweep many 
current agricultural activities into the regulatory reach of 
CWA simply because such activities may be conducted near some 
ditch, swale, wash, erosion feature or an ephemeral stream that 
would be deemed a water of the United States.
    Is the time up, ma'am?
    Senator Inhofe. Yes, you're getting close there. You can 
wrap it up real quickly, if you would.
    Mr. Buchanan. America's agricultural productive capacity is 
unprecedented in world's history. It allows our farmers and 
ranchers to meet the demands of our Nation's growing population 
while maintaining the most affordable and safest food supply in 
the world.
    Farmers have made great strides in improving our 
environment, which is in better condition than any other time 
in our lives. The ESA continues to be a problem, while at the 
same time Congress is considering CWA legislation that would 
further burden productive agriculture with unprecedented 
regulation.
    Thank you, sir.
    [The prepared statement of Mr. Buchanan follows:]

      Statement of Tom Buchanan, on behalf of Oklahoma Farm Bureau

    I'm Tom Buchanan from Jackson County, Oklahoma, in the 
southwestern part of the State. I have farmed for twenty-seven 
years and manage the Lugert-Altus Irrigation District.
    The Lugert-Altus Lake was constructed by the Bureau of 
Reclamation during World War II. It first provided water to 
farmers in 1946. The District covers 48,000 acres of farmland 
with about 330 landowners. Our biggest crop is cotton. The 
gross receipts from the District are approximately 48 million 
dollars annually.
    Today I would like to address how the Endangered Species 
Act affects the oil and gas industry, which then affects 
farming. Farmers appreciate God's creatures as much as anyone. 
However, the ESA impacts our operations by increasing input 
costs and threatening our water supplies.
    Oklahoma ranks second in the Nation for production of 
natural gas, fourth in the Nation in wheat and cattle 
production, and fifth in the Nation for pecan production. Our 
State has been called the State of ``soil and oil.'' However, 
high prices for oil and gas have negative impacts on production 
agriculture. Natural gas is the most costly component used in 
manufacturing nitrogen fertilizer. Fertilizer prices have more 
than doubled over the past 15 years, with no reprieve in sight. 
A recent Energy Information Administration outlook forecasts 
benchmark natural gas prices rising by 9.2 percent in 2007 and 
increasing another 3.7 percent in 2008. World demand for 
fertilizer grew by 13 percent between 2001 and 2005, according 
to The Fertilizer Institute. Next year, Oklahoma farmers will 
face even steeper bills to fertilize crops.
    The ESA is yet another factor attributing to the high cost 
of fertilizer by slowing down natural gas production. The 
American Burying Beetle, listed as endangered under the ESA has 
delayed and impeded oil and gas production in Oklahoma.
    Another species of concern in Oklahoma is the Arkansas 
River shiner, a ``threatened'' minnow found in two of our 
largest rivers. The Oklahoma Farm Bureau Legal Foundation, 
along with 20 other organizations, worked with the U.S. Fish 
and Wildlife Service to refine critical habitat for the shiner. 
The Canadian River Municipal Water Authority had a 154 mile 
section of the Canadian River excluded from critical habitat 
based upon its management plan. The OFB Legal Foundation is 
working to finalize a voluntary conservation management plan 
for the shiner, in order to remove sections of the Cimarron and 
Canadian Rivers from critical habitat. These organizations have 
been proactive about preserving the shiner to protect their own 
water supplies. After the Klamath Basin crisis, many fear the 
needs of endangered species trump the needs of the humans.
    To illustrate the extensive impact of the ESA, Oklahoma's 
essential industries could be adversely impacted by the listing 
of a species that lives thousands of miles from here. The Fish 
and Wildlife Service has proposed listing polar bears as a 
threatened species, based solely on projected impacts of global 
warming.
    Under the ESA, any activity ``authorized, funded or carried 
out'' by a Federal agency that might contribute to global 
warming (such as permits for livestock or oil and gas 
production) would be subject to consultation with the Fish and 
Wildlife Service to make sure that the proposed activity would 
not jeopardize the continued existence of polar bears. 
Consultations can take 90--120 days to complete and result in 
permit delays. Because the Service is required to consider the 
``cumulative effects'' of all actions, even those activities 
with little impacts, such as one Oklahoma livestock facility, 
could be denied a permit or have its terms substantially 
altered because of possible impacts to polar bears.


                                 genif


    Under the ESA, taking does not have to be direct, but can 
also constitute indirect impacts to species that might affect 
their breeding, feeding and sheltering. Livestock and oil and 
gas producers could conceivably be liable for ``taking'' polar 
bears, if they contribute to global warming.
    Another concern to agriculture is the Federal regulatory 
reach of the Clean Water Act or CWA. Water is essential to 
agriculture production. The scope of Federal jurisdiction is 
important to farmers and ranchers because jurisdictional 
determinations directly impact agricultural activities, have 
the potential to interfere with the use of private land and, if 
applied too broadly, impede our ability to produce food and 
fiber. As currently drafted, S. 1870 and H.R. 2421 not only 
expand the geographic scope of CWA jurisdiction but sweep many 
agricultural activities into the regulatory reach of CWA simply 
because such activities maybe conducted near some ditch, swale, 
wash, erosion feature or ephemeral stream that would be deemed 
a ``water of the United States.''
    The 1972 conference report of the CWA states ``Congress 
intends the term `navigable waters' be given its broadest 
possible constitutional interpretation unencumbered by agency 
determinations which have been made or may be made for 
administrative purposes.'' It is one thing to give a term like 
``navigable waters'' broad meaning and quite another to 
statutorily eliminate it or give it no meaning what so ever. 
Deleting ``navigable waters'' from the CWA significantly 
changes--rather than clarifies--original congressional intent.
    America's agricultural productive capacity is unprecedented 
in the world's history. It allows our farmers and ranchers to 
meet the demands of our Nation's growing population while 
maintaining the most affordable, safest food supply in the 
world. Farmers have made great strides in improving our 
environment, which is in better condition than any other time 
in our lives. The ESA continues to be a problem, while at the 
same time Congress is considering CWA legislation that would 
burden production agriculture further with unprecedented 
regulation.

    Senator Inhofe. Thank you, Mr. Buchanan. Mr. Sullivan.

STATEMENT OF ROBERT J. SULLIVAN JR., SULLIVAN AND COMPANY, LLC, 
    ON BEHALF OF OKLAHOMA INDEPENDENT PETROLEUM ASSOCIATION

    Mr. Sullivan. Thank you, Senator, and good morning. My name 
is Bob Sullivan. For 32 years I've been an independent oil and 
gas producer. Eighteen of those years have been either sideways 
or negative financial experiences for me and my family. 
Fourteen have been positive. Needless to say, exploring for 
domestic oil and gas reserves is a high risk and volatile, and 
it's a very personal thing to me. The health of our industry 
indeed, directly impacts me and my family.
    I appreciate the opportunity to appear here today, and I 
offer my remarks on behalf of the Oklahoma Independent 
Petroleum Association, or OIPA which is an association of 
approximately 1,700 independent oil and gas producers who have 
similar concerns.
    In Oklahoma, independent producers make up the majority of 
the energy industry producing 96 percent of our State's crude 
oil and 88 percent of our natural gas.
    In the minds of you and your fellow legislators, we 
independent producers should not be confused with major oil 
companies who are fully integrated with transportation, 
refining, marketing, and research and development capabilities.
    We independents live or die with production revenues at the 
wellhead and their associated costs. Part of these costs 
include providing gross production taxes to the State that 
account for over $1 billion of our $7 billion State budget.
    As an independent producer, as an Oklahoman, and as an 
American, I am very concerned about the trend of environmental 
regulations in this country in general and the Endangered 
Species Act in particular.
    The ESA is in dire need of significant reforms to ensure 
protection and recovery of endangered species while allowing 
for economic natural resource development. Only 20 out of over 
1,300 species have been recovered, equating to a success rate 
of about one and a half percent. Let me offer some examples of 
the negative impact of the Act on the oil and gas industry.
    The American Burying Beetle located in the eastern part of 
Oklahoma was listed as an endangered species in 1989 based upon 
museum and collectors' data--not on actual comprehensive field 
or survey data.
    Since its listing, the beetle has been found in many areas 
and is more widespread than originally thought which raises 
questions of its listing.
    In Oklahoma, the Fish and Wildlife Service policy was to 
allow oil and gas construction activities to occur only in 
winter months when the American Burying Beetle was thought to 
hibernate.
    In 2002, the Fish and Wildlife Service Tulsa office changed 
its policy relating to the wintertime oil and gas construction 
activity without notification to the public and without new 
data to support such a change.
    This change in policy came to light when the USFWS Tulsa 
office determined that a wintertime pipeline construction 
project to connect a natural gas well would adversely affect 
the American Burying Beetle. The project was unnecessarily 
delayed costing the operator, royalty owners, the State of 
Oklahoma, and other various parties millions of dollars.
    There is no data that indicates the American Burying Beetle 
population has been affected in any manner by oil and gas 
activities in wintertime or in summertime. However, the oil and 
gas industry is implementing the Wildlife Service requirements 
such as baiting away to protect the beetle.
    Baiting away as I'm sure you know is putting dead chickens 
on the ground to see if the beetles want to eat. And it occurs 
to me, Senator, that in addition to the oil and gas operators, 
there are at least two more parties that would find that 
distasteful, one would be the taxpayers, and the other would be 
the chickens.
    Independent producers take their environmental 
responsibilities very seriously. But the rare exception of an 
occasional rogue independent producer, the people I work with 
and compete against in the search for oil and gas are very 
responsible citizens. We spend far more time, effort and money 
on environmental precautions and safeguards that exceed State 
and Federal regulations than most, if not all, other 
industries.
    Whatever environmental regulations apply to our operations, 
we voluntarily exceed them, first, because we're simply good 
citizens who want to do the right thing, and second, because we 
know the painful consequences of environmental mishaps in our 
field operations.
    Furthermore, some 14 years ago Oklahoma's producers and 
royalty owners formed the Oklahoma Energy Resources Board, 
OERB, for the purpose of cleaning up unsightly land scars 
across our State that were caused by our industry prior to the 
establishment of both State and Federal environmental 
regulations. OERB also provided the general public and our 
schools with extensive education programs about the industry.
    To fund this environmental initiative, OERB collects self-
imposed levies on oil and gas production from producers and 
royalty owners, and annually spends approximately $12 million 
to clean up sites and to honor these education programs.
    Since inception, almost 8,000 sites across Oklahoma have 
been cleaned up at no cost to the landowner or the taxpayers.
    As a responsible operator in the field, my experience has 
been that most environmental initiatives coming from the 
Federal Government are based on emotion and not on solid, 
convincing, unbiased, scientific facts.
    Sensible environmental regulations to protect the 
environment and public and private property owners are not only 
needed, but embraced by independent producers.
    Senator Inhofe. Mr. Sullivan, try to wrap it up if you 
would, please.
    Mr. Sullivan. OK. I had a comment about global warming I'll 
pass on.
    Senator Inhofe. No, I want to hear that.
    Mr. Sullivan. I thought that would get you. Kind of a 
baiting, you know. . . As an example of overreaching the 
current--is the current global climate debate. Any climate 
change policy established by our Federal Government must ensure 
that all major greenhouse gas emitting countries must be 
included without ignoring developing countries that are 
accelerating the carbon dioxide emissions.
    Although I'm personally not yet convinced that human 
activities are causing harmful global climate change, I do 
agree there are some common sense steps we can take while that 
debate is being resolved.
    Clean burning natural gas must be recognized as a viable 
solution to greenhouse emissions and the sequestration of 
CO2 is very apt in this case.
    I'll finish up here by just saying in summary, the 
independent producers willingly and enthusiastically embrace 
our role as responsible stewards of the environment. Our daily 
performance in the field and our demonstrated success through 
OERB conclusively support the seriousness with which we take 
our role.
    Senator, I do thank you in taking leadership in the Senate 
for common sense environmental regulations. That's what we need 
here is common sense.
    [The prepared statement of Mr. Sullivan follows:]

   Statement of Robert J. Sullivan Jr., Sullivan and Company, LLC on 
          behalf of Oklahoma Independent Petroleum Association

    Good morning Senator Inhofe, my name is Bob Sullivan.
    For 32 years I have been an independent oil and gas 
producer. Eighteen of those years have been either sideways or 
negative financial experiences for me and my family. Fourteen 
years have been positive. Needless to say, exploring for 
domestic oil and gas reserves is a high risk, volatile 
business. As a point of interest, I pay for the food, clothing, 
shelter, and education for my wife and six children out of the 
same checking account that I pay for drilling exploratory 
wells. The health of our industry is a very personal matter to 
me.
    I appreciate the opportunity to appear here today, and I 
offer my remarks on behalf of the Oklahoma Independent 
Petroleum Association, which is an association of approximately 
1,700 Oklahoma independent oil and gas producers who have 
similar concerns. In Oklahoma, independent producers make up 
the majority of the energy industry producing 96 percent of our 
State's crude oil and 88 percent of our natural gas. In the 
minds of you and your fellow legislators, we independent 
producers should not be confused with major oil companies who 
are fully integrated with transportation, refining, marketing, 
and research and development capabilities. We independents live 
or die with production revenues at the wellhead and the 
associated costs. Part of these costs includes providing gross 
production tax to the State that accounts for over $1 billion 
of the State's $7 billion budget.
    As an independent producer, as an Oklahoman, and as an 
American, I am very concerned about the problems our industry 
faces regarding the Endangered Species Act (ESA).
    The ESA is in dire need of significant reforms to ensure 
protection and recovery of threatened and endangered species 
while allowing for economic natural resource development. Since 
its inception, only 20 species have been recovered, equating to 
a success rate of less than 1.5 percent. The following 
information provides examples of why ESA reform is needed.
    1. Improved Data

     The U.S. Fish and Wildlife Service (USFWS) uses limited 
or incomplete data, deemed ``best available'' data, to make 
listing, policy and critical habitat decisions. For example, 
the American Burying Beetle, located in the eastern part of 
Oklahoma, was listed as an endangered species in 1989. This 
listing was based on museum and collector's data--not actual 
comprehensive field or survey data. Since its listing, the 
beetle has been found in many areas and is more widespread than 
originally thought which raises questions regarding its initial 
listing.
     Oil and gas exploration and production activities have 
been conducted in eastern Oklahoma for well over 50 years. 
There is no evidence or data that indicates the American 
Burying Beetle population has been affected in any manner by 
oil and gas exploration and production activities in wintertime 
or summertime, yet our industry is implementing various 
requirements to avoid a ``taking''. There is no scientific data 
showing that the USFWS's ``baiting away'' requirements are 
effective in protecting the American Burying Beetle. For all we 
know, this technique draws them to our sites.
     For many years in Oklahoma, the USFWS's policy was to 
allow oil and gas construction activities to occur in the 
winter months when the American Burying Beetle was thought to 
hibernate. In 2002, the USFWS Tulsa Field Office changed its 
policy related to winter time oil and gas construction activity 
without any notification to the public and without new data to 
support such a change. This change in policy came to light when 
the USFWS Tulsa Field Office determined that a winter pipeline 
construction project to connect a natural gas well would 
adversely affect the American Burying Beetle. The project was 
unnecessarily delayed costing the operator, royalty owners, the 
State of Oklahoma, and other various parties millions of 
dollars.

    2. Scheduled Recovery Plan Updates. The ESA requires that 
the USFWS conduct a status review of each listed species every 
5 years. The 1991 Recovery Plan for the American Burying Beetle 
is being reviewed and updated this year for the first time. New 
information needs to be considered and incorporated into these 
plans on a timely basis. For example, the American Burying 
Beetle is thriving in Oklahoma, and it is apparent that 
industry's activities are not harming the species; however, our 
industry continues to implement requirements to protect it.
    3. Management Action Plans. There are no requirements for 
the USFWS to clearly identify, prioritize and fund specific 
data or research needs to determine the true threats to a 
listed species. In addition, there are no specific management 
actions or goals to remediate those threats, or to monitor the 
progress of those actions to determine if they are effective. 
Species like the American Burying Beetle have been studied for 
years with little knowledge gained about the species that can 
be used to promote its recovery.
    4. Consistent Protection Requirements. In many instances, 
species cross USFWS regional jurisdictions. The various USFWS 
regions do not have consistent protection requirements. For 
example, in Oklahoma, the requirement for oil and gas operators 
to avoid ``taking'' an American Burying Beetle is different 
from the requirements in Arkansas and Texas.
    5. Listing and Critical Habitat. Listing requirements 
should be better defined and critical habitat should be 
eliminated or more narrowly defined and designated only if 
alternative options do not exist or do not work. Other options 
to avoid listing and critical habitat designations should 
include voluntary pre-listing activities and voluntary 
conservation efforts by industry, associations, and private 
citizens.
    6. Economic Impacts. The USFWS does not consider the 
economic impacts to industries such as the oil and gas industry 
during listing decisions or internal policy decisions to 
protect a species. The impacts to the oil and gas industry 
operators, especially small operators, can be costly. These 
costs cannot be transferred to a customer as compared to other 
industries.
    7. Timing of Protection. In some instances, the USFWS 
begins protection of a species before it is formally listed. 
These USFWS's pre-listing requirements are passed on to other 
Federal agencies like the Bureau of Land Management where they 
are incorporated into their permit to drill requirements.
    8. Unnecessary & Unproductive Litigation. Many 
environmental groups file lawsuits to force the USFWS to list a 
species or to designate critical habitat. A large portion of 
the USFWS's budget over the past few years has gone to fighting 
these types of lawsuits instead of protecting the species. 
Changes should be made to the ESA to limit the number of 
lawsuits and utilize available funds where it is most needed--
protecting the listed species.
    Finally, on a related issue, legislation is being 
considered that will greatly expand the jurisdiction of the 
Clean Water Act by changing the waters that are Governmently 
regulated from ``navigable waters'' to ``waters of the U.S.'' 
If this occurs, it will increase the number of Corps of 
Engineers' Section 404 permits our industry would have to 
obtain resulting in more endangered species consultations with 
the USFWS.
    We can do better than this, and I am confident that you can 
lead us to a better regulatory climate. Independent producers 
stand ready to assist with sensible regulatory improvements.
    Thank you for the opportunity to present this opinion 
today.

    Senator Inhofe. I thank you, Mr. Sullivan.
    Ms. Bower-Moore.

   STATEMENT OF DRU BOWER-MOORE, REGULATORY ADVISOR, WESTERN 
               DIVISION, DEVON ENERGY CORPORATION

    Ms. Bower-Moore. Thank you Mr. Chairman. My name is Dru 
Bower-Moore and I'm a regulatory specialist in Wyoming for 
Devon Energy Corporation where I specialize in public land 
issues. I have dealt extensively with issues affecting 
industries' ability to access and develop public lands of which 
the Endangered Species Act plays a significant role.
    We would like to thank the committee for the opportunity to 
testify at the field hearing and for the opportunity to offer 
you new ways to improve the law.
    Devon supports the original purpose of the Endangered 
Species Act, which was to provide protection for species that 
have been proven, through peer-reviewed science, to be 
threatened with extinction. However, the Endangered Species 
Act, as currently utilized, is not achieving its purpose. 
Congress needs to act to reform and improve the listing and de-
listing components of the law and prevent its abuse by special 
interest groups.
    The Endangered Species Act, during its 30-year history, has 
produced minimal success for recovery of a species once 
designated as threatened or endangered. Yet, the Fish and 
Wildlife Service is inundated with petitions to list a species.
    Citizen nominations for proposed additions to list a 
species under the Endangered Species Act pose substantial 
problems not only to the Fish and Wildlife Service, which must 
respond to the petitions, but also for other Federal agencies, 
States, lessees, and private landowners.
    To be clear, the problem is not protection of truly 
endangered--threatened or endangered species, rather, it is the 
fact that anyone can submit a petition to list a species and 
the law currently contains no requirement that such a petition 
be supported by the use of best scientific and commercial data.
    Regardless of the science supporting the petition, or lack 
thereof, the Service has 90 days to respond.
    Furthermore, if the Fish and Wildlife Service issues a 
positive finding on a petition, it negatively impacts States, 
landowners and resource users because a species is elevated to 
a new level of protection even though it has not been formally 
designated and despite the fact that the petition may not be 
supported by sound, scientific evidence demonstrating the need 
to list.
    Once a petition has been filed, State and Federal agencies 
have internal policies that elevate the animal or plant to a 
sensitive or special status species worthy of additional 
protection. This standard is then applied in the NEPA process 
with the potential result of additional mitigation measures to 
protect the species which are imposed.
    Once a petition is filed, the species is treated as a de 
facto endangered species before the Fish and Wildlife has even 
completed its analysis. While this action results in a 
heightened level of protection to prevent listing under ESA, 
such protection and its attendant costs may not be warranted if 
the 90-day finding is not supported by sound, scientific 
evidence.
    The Fish and Wildlife Service should not be required to 
spend precious staff time on petitions lacking scientific 
merit.
    The Endangered Species Act must provide a threshold 
requirement regarding the information filed in support of a 
petition to list. Unless and until the threshold is met, the 
Service would not be required to act on the petition.
    We urge Congress to amend ESA to provide a threshold level 
for information required to support a petition.
    Congress must make the Fish and Wildlife Service 
accountable for the timely implementation of a recovery plan 
once a species is listed. One way to achieve this is to mandate 
that the recovery plan be developed concurrently with the 
Service's decision to list the species. Presently, the agency 
decides to list a species and then later determines the 
recovery levels for that species.
    The Service can often take years after the listing before 
issuing a recovery plan. It is far more logical to require the 
recovery plan to be formulated at the same time the species is 
listed. The recovery plan should also be required to identify 
population goals for the species' recovery in addition to its 
protection of critical habitat.
    Therefore, we urge Congress to revise ESA to require the 
formulation of a recovery plan concurrently with a decision to 
list and to require that once the objective in the recovery 
plan has been met, hard release language would provide that the 
species be automatically de-listed.
    While ESA issues play a significant role in our ability to 
access and develop Federal lands, there are other factors that 
impact our ability to produce energy in a timely manner. The 
National Environmental Policy Act process on public lands is 
exhaustive and is becoming more cumbersome over time.
    The NEPA documents are taking longer to complete due to the 
added and multiple layers of analysis to determine impacts. 
Some EISs are taking six to 7 years for approval, meanwhile 
development of oil and gas activity is put on hold until that 
analysis is completed. That's affecting our ability to get 
natural gas to the consumer.
    This delay in issuing APDs is significantly impacting our 
ability to provide energy to consumers in a timely manner. The 
process needs to be more efficient and the provisions in the 
Energy Policy Act of 2005 worked to achieve that.
    Devon Energy and other companies in the large independent 
sector have a record of investing more than we earn, and 100 
percent or more of our total cash-flow is reinvested to find 
and produce more energy.
    Senator Inhofe. OK, try to wrap up, Ms. Bower-Moore.
    Ms. Bower-Moore. I'm just about done, Senator. But we 
cannot risk making multibillion dollar decisions only to have 
royalty, tax or regulatory policies change, pulling project 
economics from underneath us. The U.S. Senate must maintain the 
Energy Policy Act of 2005 provisions to prevent a decrease in 
energy supplies and an increase in costs to the consumer.
    In conclusion, Mr. Chairman, we thank you again for the 
opportunity to share Devon's thoughts on this important issue.
    [The prepared statement of Ms. Bower-Moore follows:]

  Statement of Dru Bower-Moore, Regulatory Advisor, Western Division, 
                        Devon Energy Corporation

    Mr. Chairman and members of the Committee, my name is Dru 
Bower-Moore and I am a regulatory specialist in Wyoming for 
Devon Energy Corporation where I specialize in public land 
issues. I have worked in the public lands field for over 18 
years and previously held the position of Vice President for 
the Petroleum Association of Wyoming. In these positions, I 
have dealt extensively with issues affecting industries ability 
to access and develop public lands of which the Endangered 
Species Act plays a significant role. We would like to thank 
the Committee on Environment and Public Works for the 
opportunity to testify at this field hearing regarding ``A 
Perspective on the Endangered Species Act's Impacts on the Oil 
and Gas Industry'' and for the opportunity to offer ideas for 
improving the current law.
    Devon Energy is a leading U.S.-based independent oil and 
gas exploration and production company with significant 
operations in the Intermountain West, offshore, the Gulf of 
Mexico and in the mid-continent region. Although we do have 
international operations, 90 percent of our production is 
focused on North America.


              defining the endangered species act problem


    Devon supports the original purpose of the Endangered 
Species Act (ESA), which was to provide protection for species 
that have been proven through peer-reviewed science to be 
threatened with extinction. However, the Endangered Species 
Act, as currently implemented by the U.S. Fish and Wildlife 
Service (FWS) is not achieving this purpose. Congress needs to 
act to reform and improve the listing and de-listing components 
of the law and prevent its abuse by special interest groups.
    In order to operate on Federal lands, both the lessee and 
the applicable Federal agency must comply with a myriad of laws 
designed to protect the environment. Devon works closely with
    Federal agencies to comply with requirements of the Federal 
Land Policy and Management Act (FLPMA), the National 
Environmental Policy Act (NEPA), and ESA, among others, before 
beginning any operations on Federal lands. Under Section 7 of 
ESA, Federal agencies are required to consult with the FWS if 
candidate, proposed, threatened, or endangered species and 
their habitat have been identified in the area within which a 
project is proposed. The environmental analysis for a proposed 
project (and required impact mitigation) can become complex and 
costly given the number of issues that Bureau of Land 
Management (BLM) is required to address. Add in the analysis of 
the project area for the occurrence of species of concern or 
its habitat [currently 138 candidate, 4 proposed, and 607 
threatened endangered species (figures as of August 2007 from 
the U.S. Fish and Wildlife Service website)], and the project 
costs escalate as do the mitigation requirements. Species do 
not need to occur in the project area to be covered by the 
analysis if suitable habitat exists; therefore, additional 
conservation measures are most often required by the agency.
    The consultation process between the land managing agencies 
and the FWS, which can include the development of a biological 
assessment, biological opinion, or both, determines whether 
such a project may affect a candidate, proposed, threatened, or 
endangered species and, if necessary, includes recommendations 
for the protection of the identified species and its habitat. 
Although there have been improvements in the last several 
years, in some States this integral step has become a 
bottleneck preventing the timely processing of permits. Because 
of the vast number of lawsuits filed against FWS, the very 
funds FWS needs to carry out these critical duties are being 
diverted to defend litigation. Without consultation and the 
necessary documentation from FWS, BLM and other Federal 
agencies are prevented from acting in a timely fashion on a 
proposed project, leading to unnecessary delays. We urge 
Congress to enact reforms to prevent such frivolous lawsuits; 
thereby, freeing FWS to carry out those duties that will truly 
serve the purposes of the ESA.


              endangered species act effects on landowners


    The Endangered Species Act, unlike some other Federal laws, 
applies generally to both private and Federal lands. However, 
ESA does not provide Federal agencies with the authority to 
inventory private lands for the potential existence of 
threatened or endangered plant or animal species. Despite this 
lack of authority, Federal agencies have been able, in the case 
of split eState situations (Federal mineral/private surface), 
to require a Federal lessee to inventory the private surface 
and provide such information to the Federal agency. In the 
absence of such information, the land managing agency assumes a 
``worst case scenario'' and devises additional protection 
measures and stipulations to be placed on the oil and gas 
project based on this assumption. This places unfair burdens on 
both the private surface owner and the Federal lessee. 
Moreover, it creates unnecessary conflict between the Federal 
mineral lessee and the private surface owner. The ESA should be 
revised to clearly State that no Federal agency has the 
authority to require an inventory of private surface merely 
because a proposed project is covering the underlying Federal 
minerals. In the absence of such a reform, a Federal mineral 
lessee is placed in the position of having to obtain 
information, oftentimes against the wishes of the applicable 
private surface owner, that the Federal agency has no right to 
obtain.
    If the law were revised to prohibit a Federal agency from 
requiring an inventory of private surface before being able to 
act on an application to develop the underlying Federal 
minerals, this would also serve to alleviate the concerns of 
the private surface owners regarding misuse of this information 
by other private parties and organizations. Even if Congress 
does not prevent the collections of such information, it should 
protect such information from misuse. Private parties should 
not be able to submit a Freedom of Information Act (FOIA) 
request to a Federal agency to obtain ESA survey information 
gathered on private lands as that documentation should be held 
in confidence unless the landowner agrees to release the 
information. Congress has already established this precedent in 
other laws, and it should enact a similar provision here to 
protect private property rights.
    Congress could provide further relief to both a Federal 
mineral lessee and an affected private surface owner by 
providing incentives to the private surface owner to allow 
access to its property. A reform of this nature would have a 
twofold benefit. First, it would encourage the recovery of 
potentially threatened and endangered species by providing the 
information necessary to truly assess the status of a species. 
Second, it would remove one of the conflicts between private 
surface owners and Federal mineral lessees.


                   incentives for voluntary programs


    Any reform of ESA should also include incentives for 
landowners and other public resource users to implement 
conservation measures on public lands. Notwithstanding the fact 
that the proposal to list the Mountain Plover was withdrawn in 
September 2003, several companies, including Devon, chose to be 
proactive with respect to protection of the species and its 
habitat. This group of companies approached FWS and began to 
negotiate a Memorandum of Understanding (MOU) to cooperate in 
``good faith'' and in a timely manner to develop a Candidate 
Conservation Agreement with Assurances (CCAA) for the Mountain 
Plover and the White-tailed Prairie Dog in Wyoming and 
Colorado. The CCAA would have provided assurances that if the 
Mountain Plover or White-tailed Prairie Dog were eventually 
listed as threatened or endangered, the FWS would not impose 
conservation measures on the agreement participants that were 
more stringent than those already agreed to by the parties. 
Because of the nature of landownership in the area to be 
covered by the CCAA, it would have been applicable to both 
Federal and private lands since sixty-six percent (66 percent) 
of the mineral and forty-nine percent (49 percent) of the 
surface eState is managed by Federal agencies in Wyoming.
    As the MOU was being finalized, the FWS published in the 
Federal Register a final rule (Safe Harbor Agreements and 
Candidate Conservation Agreements with Assurances; 69 Fed. Reg. 
24084, 24092--24094 (May 3, 2004) (codified at 50 C.F.R. parts 
13, 17) that virtually eliminated the ability we had to be 
proactive, and removed any incentive to protect a candidate 
species through the development of a CCAA. The final rule 
stated that Candidate Conservation Agreements with Assurances 
could only be developed on private lands.
    Congress must provide leadership in promoting voluntary 
efforts to conserve species and its habitat regardless of 
landownership. When 49 percent of the surface and 66 percent of 
the mineral eState in Wyoming are managed by Federal agencies 
who then lease these resources to others for development, the 
law must provide conservation opportunities to those who have 
leases to use either the surface or the mineral estate. If 
voluntary efforts to conserve a species are limited to solely 
privately owned lands, a valuable conservation tool will be 
needlessly removed. Although FWS is moving toward the recovery 
success of a few species under ESA, Congress should take all 
possible steps to provide avenues of conservation. Assurances 
and incentives to private entities, both landowners and energy 
companies, implementing voluntary conservation measures must be 
a part of ESA as this provides an essential tool to prevent the 
potential loss of a species and its habitat through a 
collaborative effort of private and public entities.


                      petitions to list a species


    The Endangered Species Act, during its 30-year history, has 
produced minimal success for recovery of a species once 
designated as threatened or endangered. Yet, FWS is inundated 
with Petitions to list species. Citizen nominations for 
proposed additions to the list of species protected under ESA 
pose substantial problems not only for FWS, which must respond 
to the
    Petitions, but also for other Federal agencies, states, 
lessees and private landowners. To be clear, the problem is not 
protection of truly threatened or endangered species, rather, 
it is the fact that anyone can submit a Petition to list a 
species, and the law currently contains no requirement that 
such a Petition be supported by use of the best scientific and 
commercial data. Regardless of the science, or lack thereof, 
supporting a Petition, the FWS has 90-days to respond.
    In the absence of specific information, agencies typically 
give equal consideration to proposed and candidate species even 
though ESA's specific requirements regarding species status, 
distribution and habitat information are incomplete. The 
protective measures of ESA do not apply to the proposed species 
and its habitat. The protections of ESA are limited to those 
species actually listed as either threatened or endangered. 
However, in practice, the Federal land management agencies 
actually impose ESA protections to candidate and proposed 
species in addition to those truly threatened or endangered.
    The FWS should not be required to spend precious staff time 
on Petitions lacking scientific merit. We urge Congress to 
amend ESA to provide a threshold requirement regarding the 
information filed in support of a Petition to list. Unless and 
until that threshold is met, FWS would not be required to act 
on a Petition. This approach would have a twofold benefit. 
First, it would ensure that the information required to begin 
the listing process would be at least as stringent as the 
information required to de-list a species. Second, it would 
potentially free FWS from some of the frivolous lawsuits with 
which it is currently bombarded; thereby, allowing funds that 
would have otherwise been expended to defend the lawsuits to be 
used to carry out those activities that would truly serve the 
purposes of ESA.
    Recent petitions to list the Greater Sage Grouse and the 
White-tailed Prairie Dog are prime examples of Petitions filed 
without adequate supporting scientific information. Industry 
trade organizations, of which Devon is a member, submitted 
detailed, scientific comments challenging both petitions. In 
both instances, industry after a careful review of the 
petitions by qualified experts, found that the petitions 
contained numerous flaws, errors, inaccuracies, contradictions, 
misstatements, misrepresentations, unsubstantiated positions 
and biased opinions. Petitions of this nature do not rise to 
the level of scientific sufficiency to warrant any action by 
the FWS, much less a positive 90-day finding. The standards for 
filing a Petition and granting a positive 90-day finding must 
be raised to require adequate, peer-reviewed science.
    Furthermore if the FWS issues a ``positive finding'' it 
negatively impacts States, landowners and resource users 
because a species is elevated to a new level of protection even 
though it has not been formally listed as candidate, proposed, 
threatened, or endangered, and despite the fact that the 
Petition may not be supported by sound, scientific evidence 
demonstrating the need to list. Once a Petition has been filed, 
State and Federal agencies have internal policies that elevate 
the animal or plant to a ``Sensitive or Special Status 
Species'' worthy of additional protection. This standard is 
then applied during the NEPA process with the potential result 
that mitigation measures to protect the species may be imposed. 
Once a Petition is filed, the species is treated as de facto 
endangered before FWS has completed its analysis. While this 
action results in a heightened level of protection to prevent 
listing under ESA, such protection and its attendant costs may 
not be warranted if the 90-day finding is not supported by 
sound, scientific evidence.
    In addition, special interest groups are not only filing 
Petitions with the FWS to list a particular species with 
meager, if any, supporting scientific data, such groups are 
also seeking to have Federal agencies manage species habitat 
(whether the species is proposed for listing or not) as an Area 
of Critical Environmental Concern (ACEC). An ACEC designation 
usually carries additional restrictions on mineral development.
    The standards for filing a Petition to list and for issuing 
a 90-day finding must be more stringent, and FWS must be forced 
to undertake an analysis of the actual scientific data 
provided. Before a petition to list is granted a positive 
finding decision, it must be based upon the most current, 
viable, reliable, and accurate scientific data available. We 
urge Congress to amend ESA to provide a threshold level for 
information required to support a Petition to list; thereby the 
decision to list a species would be based on the same stringent 
standards as a decision to remove a species from the list.


                          recovery of species


    Congress must make FWS accountable for the timely 
implementation of a recovery plan once a species is listed. One 
way to achieve this is to mandate that a recovery plan be 
developed concurrently with FWS' decision to list a species. 
Presently, the agency decides to list a species, and then it 
determines the recovery levels for the species. FWS can often 
take years after the listing before issuing a recovery plan. It 
is far more logical to require the recovery plan to be 
formulated at the same time the species is listed. The recovery 
plan should also be required to identify population goals for a 
species' recovery and protection of its critical habitat. 
Currently, species are being listed for which there is little 
or no information about their populations or required habitats.
    If FWS does not have the information upon which to base a 
recovery plan how can it validly determine that a species is 
threatened? Therefore, we urge Congress to revise ESA to 
require the formulation of a recovery plan concurrently with a 
decision to list and to require that once the population 
objective in the recovery plan has been met, ``hard release'' 
language would provide that the species be automatically de-
listed.
    The ESA should also be reformed to allow consideration of 
isolated, but thriving species' populations. While we agree the 
FWS should be required to analyze a species throughout its 
entire range, it may not be necessary to list and protect a 
species as threatened or endangered range-wide. Not all 
populations may warrant the same level of protection in all 
areas, and ESA must provide flexibility in the management level 
for the species in different geographic locations.


                   frivolous environmental litigation


    Another important ESA reform issue to consider is 
litigation by ``special interest groups'' whose sole purpose is 
to delay or prevent development of natural resources. In 
Wyoming, virtually all lease sales, and most all of the project 
level EA's or EIS's, including geophysical projects, have been 
protested, appealed, or challenged at the agency level and in 
Federal court based on asserted violations of ESA and habitat 
destruction issues. The same is true for the other Rocky 
Mountain States.
    Clearly, ESA has become the ``tool'' of choice to prevent 
oil and gas development on Federal lands without regard for the 
increased costs and delays in decisionmaking by land management 
agencies and the resultant impacts on the United States 
taxpayers and others who use the public lands. The cost of 
``ESA abuse'' is high and litigation is abundant. Because 
Federal oil and gas lessees have contractual rights and 
obligations to develop Federal minerals, lessees are often 
required, or elect to intervene in these lawsuits to defend 
their rights. Intervention in these lawsuits obviously costs 
additional time and financial resources that could be put to 
better use developing domestic energy sources. If Congress 
enacts some of those reforms Devon has advocated here today, in 
particular requiring a threshold level for filing a petition to 
list and a 90-day finding, we believe such reforms will be a 
step in the right direction to preventing such abuses of ESA.


                             related issues


    While ESA issues play a significant role in our ability to 
access and develop Federal lands, there are other factors that 
impact our ability to produce energy in a timely manner. The 
National Environmental Policy Act (NEPA) process on public 
lands is exhaustive and is becoming more cumbersome over time. 
From the Resource Management Plan (RMP) stage to the 
Application for Permit to Drill (APD) issuance, there are at 
least four separate levels of NEPA analysis conducted, which 
includes consultation with several other cooperating agencies 
along the way. These NEPA documents (whether at the RMP or full 
field development phase) are taking longer to complete due to 
the added, and sometimes redundant, layers of analysis to 
determine impacts. Some EISs have taken 6 to 7 years for 
approval meanwhile development is put on hold until the 
analysis is completed. This delay in issuing APDs while 
extensive NEPA is conducted is significantly impacting our 
ability to provide energy to consumers in a timely manner. The 
process needs to be more efficient and the provisions in the 
Energy Policy Act of 2005 worked to achieve this purpose for 
example statutory categorical exclusions [See the section 
labeled ``Energy Policy Legislation].
    In addition we are seeing more requirements in the RMP and 
full field development EIS Records of Decision for monitoring 
and adaptive management prescriptions through ``performance 
based'' standards. While in theory it may make sense to monitor 
the impacts oil and gas activity has on other resources and 
adapt as necessary, in reality the land managing agencies do 
not have the funding or the staffing to comply with their 
obligations; thereby, leaving all of us vulnerable to 
litigation. Congress must consider appropriating additional 
funds for the land management agencies to comply with these 
requirements and prevent unnecessary legal challenges.


                       energy policy legislation


    Many Members of Congress did their part in passing the 
Energy Policy Act of 2005 to address the natural gas supply 
challenge by giving agencies a number of tools to allow them to 
process drilling permit requests in a more streamlined manner. 
Importantly, no environmental standard was waived nor was any 
step in the review process eliminated. Rather, Congress created 
several tools to allow agencies to process permits more 
efficiently.
    The Intermountain West currently supplies over 25 percent 
of the Nation's natural gas. The National Petroleum Council 
estimates that this region has 284 trillion cubic feet (Tcf) of 
technically recoverable natural gas, enough to supply all of 
Americas current household energy needs for 60 years. Tools 
such as categorical exclusions allow for more efficient use of 
these resources in the Intermountain West.
    Devon Energy and other companies in the large independent 
sector have a record of investing more than we earn, and 100 
percent or more of our total cash-flow is reinvested to find 
and produce more energy. But we cannot risk making multibillion 
dollar decisions only to have royalty, tax or regulatory 
policies change--pulling project economics out from under us.
    Instead of supporting laws that would assist industry in 
our ability to provide affordable energy to the citizens of 
this country and encourage less dependence on foreign energy, 
the House of Representatives recently passed the ``Energy 
Policy Reform and Revitalization Act'' (HR 3221). This 
legislation will effectively reduce funding and eliminate 
proactive steps to develop much needed energy resources, which 
in turn will slow the process and reduce supply. Congress 
should support laws that assume a good stable investment regime 
and smooth Government processes, which will promote continued 
investment in the development of this country's onshore and 
offshore oil and gas reserves. The U.S. Senate must maintain 
the ``Energy Policy Act of 2005'' provisions to prevent a 
decrease in energy supplies and an increase in costs to the 
consumer.


                            recommendations


    In conclusion, Devon Energy appreciates Congress's 
recognition of the important role the Endangered Species Act 
plays in allowing oil and gas exploration and development of 
Federal lands to meet the growing energy needs of this Nation. 
Devon recommends that Congress consider the following points:

     Provide adequate funding to FWS in order to prevent 
bottlenecks on consultations and to promote the timely 
processing of permits to provide the country with energy to 
meet increasing demands.
     Reform ESA to provide incentives for private property 
owners to allow access to their property for the limited 
purpose of evaluating the potential impacts of a proposed 
Federal action.
     Reform ESA to promote voluntary efforts to conserve 
species and its habitat on Federal lands by entities / lessees 
with contractual natural resource management responsibilities.
     Strengthen scientific justification criteria for listing 
Petitions to be as stringent as the scientific justification 
criteria required for the recovery and de-listing processes.
     Require recovery plans to be developed at the time the 
species is listed and include population goals in the listing 
proposal for species recovery and its critical habitat.
     Institute ``hard release'' language, which must be 
required by law, that would provide the species be 
automatically de-listed once population goals have been met.
     Appropriate adequate funds for implementation of recovery 
programs to avoid placing unnecessary monetary burdens on 
private entities.
     Reform ESA to provide flexibility in managing isolated 
populations in certain geographic areas to eliminate the ``one-
size-fits-all'' requirements.
     Congress must consider appropriating additional funds for 
the land management agencies to comply with these requirements 
and prevent unnecessary legal challenges.
     The U.S. Senate must maintain the ``Energy Policy Act of 
2005'' provisions to prevent a decrease in energy supplies and 
an increase in costs to the consumer.

    Mr. Chairman and members of the Committee, thank you again 
for the opportunity to share with you Devon's thoughts 
regarding ``A Perspective on the Endangered Species Act's 
Impacts on the Oil and Gas Industry'' along with an examination 
on ways to improve the current law.

    Senator Inhofe. Well, thank you very much for coming down 
to testify today.
    Mr. Haught.

STATEMENT OF JIM HAUGHT, MANAGER, ENVIRONMENTAL SERVICES ONEOK, 
                         INCORPORATION

    Mr. Haught. Thank you, Senator. And I want to thank you for 
the opportunity to provide testimony to the Committee from the 
pipeline perspective.
    The pipeline segment of the oil and gas industry is the 
critical link required to get energy from areas of production 
to the supply chain.
    My name is Jim Haught. I'm manager of Environmental 
Services at ONEOK, Inc. here in Tulsa where I have more than 15 
years of experience in environmental permitting for energy 
projects.
    The focus of this hearing, the endangered species and its 
impact on the oil and gas industry, is an extremely important 
and timely topic for our business and the people who depend on 
our industry.
    In ONEOK's more than 100 years in the industry, we've never 
had as many miles of pipeline scheduled for construction as we 
do today.
    ONEOK is the parent of three local distribution companies 
serving more than two million end-use customers, primarily 
homeowners and small businesses. ONEOK is also the general 
partner of a master limited partnership whose primary focus is 
the gathering, processing and transportation of natural gas and 
natural gas liquids, which include ethane, propane, and butane.
    Underground pipelines have proven to be the safest and most 
efficient method to transport these products. Altogether, we 
are currently involved in one and a half billion dollars worth 
of pipeline construction and related infrastructure projects 
nationwide. These projects will be instrumental in supplying 
the energy and raw products required to sustain the economy and 
the quality of life enjoyed by Americans.
    The topic of infrastructure development brings me to the 
subject of this hearing and the points I want to make today 
about the impacts the Endangered Species Act and environmental 
regulations in general on the development of these energy 
projects.
    First, I want to make it abundantly clear that ONEOK's core 
values include the protection of the country's environmental 
and cultural resources. We work hand-in-hand with regulatory 
agencies to conduct extensive wildlife and other environmental 
surveys and are extremely sensitive to environmental issues 
before, during, and after construction.
    We believe, however, that there are opportunities to 
improve the regulatory processes. Many of the current 
regulatory practices add to the permitting timeline and burden 
without producing significant environmental benefits.
    The balance between environmental preservation and economic 
health can best be achieved through regulatory processes that 
utilize a flexible and measured approach.
    A major point I want to make today is that pipeline 
construction projects are inherently different from many of the 
other construction projects subject to environmental 
regulations. Pipelines by nature are very narrow, they're 
linear, and they're buried. They pass through areas and have 
few above-ground facilities.
    Once construction is complete and the pipeline is covered, 
restoration is initiated to repair these disturbed areas and 
return them to normal contour and encourage revegetation. Local 
animal and plant species will return in time.
    Like all such construction projects, there are disturbances 
from pipeline construction. It should be noted, however, that 
following installation of a pipeline, there are often benefits 
to wildlife and plant species.
    The impact of the Endangered Species Act to the pipeline 
segment of the oil and gas industry varies with the locale and 
species of concerns we've heard. There is no doubt that the 
Endangered Species Act has had some successes as the foundation 
of maintaining and re-establishing populations of a number of 
threatened species. However, some of the processes through 
which the Act is implemented have negative impacts on the oil 
and gas industry and private landowners.
    Landowner concerns that result in delays completing 
endangered species requirements can threaten a project's 
schedule and potentially its viability.
    In areas of rapid energy development, some landowners have 
resisted granting access for wildlife surveys that are required 
beyond the boundary of the proposed project. These landowners 
report they consider it an intrusion on their private property 
rights for Federal agencies to require project applicants to 
conduct sometimes repeated investigations on their property 
outside of the project footprint.
    Although additional agency consultation or other means may 
be available to determine potential impacts if access is not 
granted, these options could result in unanticipated delays of 
months.
    Minor delays and permit issuance can sometimes 
significantly increase costs and/or cause major delays in 
project completion. Projects are often planned so that 
construction will occur during the time of the year that will 
minimize environmental impacts.
    Regulatory approved delays can push construction back to 
less desirable timeframes. For example, in much of the country 
construction pushed to winter is often slowed by poor weather 
conditions and shortened day lengths. This causes a longer 
construction period overall and a resulting increased potential 
for environmental impacts.
    In an effort to expedite the installation of energy 
pipelines, we recommend that agencies respond to the inherent 
difference between energy pipeline and other project types by 
continuing to implement processes to allow the permitting 
effort to be proportionate to the potential risks.
    In closing, we believe that practices can be developed that 
would allow energy-project permitting to be expedited while 
still ensuring adequate protection of the environment.
    The foundation for these changes would be that the 
magnitude of the permitting process would be proportional to 
the potential impacts of the project. This measured approach 
would lesson the burden on limited agency resources and promote 
efficiency.
    Expedited energy project approvals would be consistent with 
the current Executive and congressional guidance that already 
exists.
    What is the impact of the Endangered Species Act and other 
environmental protection programs on the oil and gas industry? 
In most cases, the impacts are reasonable. However, the impact 
of unnecessarily prolonged permitting periods and restrictions 
can be detrimental to the promotion of energy production.
    We ask that regulatory agencies be guided to develop 
creative opportunities to continue to protect the environment 
while promoting energy independence.
    Senator Inhofe. Try to wrap up now if you would, please.
    Mr. Haught. Thank you for your time.
    [The prepared statement of Mr. Haught follows:]

       Statement of Jim Haught, Manager, Environmental Services 
                          ONEOK, Incorporation

    The Endangered Species Act's Impacts on the Oil & Gas 
Industry Thank you, Senator Inhofe. And thank you for the 
opportunity to testify before the Committee on Environment and 
Public Works.
    My name is Jim Haught. I am Manager of Environmental 
Services at ONEOK, Inc. (ONEOK) here in Tulsa where I have more 
than 15 years experience in environmental permitting for energy 
projects. The focus of this hearing--the Endangered Species Act 
and its impact on the oil and gas industry--is an extremely 
important and timely topic for our business and the people who 
depend on our industry. As America's population and economy 
continue to grow, so does the need for energy and related raw 
products. We at ONEOK are working hard to satisfy that need. In 
ONEOK's more than 100 years in the industry, we have never had 
as many miles of pipeline scheduled for construction as we do 
today.
    ONEOK is the parent of three local distribution companies 
serving more than two million end-use customers, primarily 
homeowners and small businesses. ONEOK is also the general 
partner of a master limited partnership whose primary focus is 
the gathering, processing and transportation of natural gas and 
natural gas liquids, which includes ethane, propane and butane.
    Underground pipelines have proven to be the safest and most 
efficient method to transport these products. Altogether, we 
are involved in $1.5 billion worth of pipeline construction and 
related infrastructure projects nationwide. These projects will 
be instrumental in supplying the energy and raw products 
required to sustain the economy and the quality of life enjoyed 
by Americans.
    The topic of infrastructure development brings me to the 
subject of this hearing and the points I want to make today 
about the impacts that the Endangered Species Act and 
environmental regulations in general have on the development of 
these projects.
    First, I want to make it abundantly clear that ONEOK's core 
values include the protection of the country's environmental 
and cultural resources. We work hand-in-hand with regulatory 
agencies to conduct extensive wildlife and other environmental 
surveys and are extremely sensitive to the environment before, 
during and after construction. We believe, however, that there 
are opportunities to improve regulatory processes. Many of the 
current regulatory practices add to the permitting timeline and 
burden without producing significant environmental benefits. 
The balance between environmental preservation and economic 
health can best be achieved through regulatory processes that 
utilize a flexible and measured approach.
    A major point I want to make today is that pipeline 
construction projects are inherently different from the many 
other construction projects subject to environmental 
regulation. Pipelines are narrow, linear and buried. They pass 
through areas and have few above-ground facilities. Once 
construction is complete and the pipeline is covered, 
restoration is initiated in the disturbed areas to return them 
to normal contour and encourage re-vegetation. Local animal and 
plant species typically return in time.
    Like all such construction projects, there are disturbances 
from pipeline construction. It should be noted, however, that 
following installation of a pipeline there are often benefits 
to wildlife and plant species. Just recently, a wildlife 
manager told me that a previous pipeline project through the 
wildlife management area resulted in positive outcome from the 
corridor of mixed vegetation that attracted concentrations of 
large game and has helped promote an increase in the previously 
declining grouse population.
    The impacts of the Endangered Species Act to the pipeline 
segment of the oil and gas industry vary with the locale and 
species of concern. There is no doubt that the Endangered 
Species Act has been successful as the foundation for re-
establishing healthy populations of a number of previously 
threatened species. However, some of the processes through 
which the Act is implemented have negative impacts on the oil 
and gas industry and private landowners.
    Landowner concerns that result in delays completing 
endangered species requirements can threaten a project's 
schedule and potentially its viability. In areas of rapid 
energy development, some landowners have resisted granting 
access for wildlife surveys that are required beyond the 
boundary of the proposed project. These landowners report they 
consider it an intrusion on their private property rights for 
Federal agencies to require project applicants to conduct 
sometimes repeated investigations on their property outside of 
the proposed project footprint. Although additional agency 
consultation or other means may be available to determine 
potential impacts if access is not granted, these options could 
result in unanticipated delays of several months.
    Minor delays in permit issuance can sometimes significantly 
increase costs and/or cause major delays in project completion. 
Projects are often planned so that construction will occur 
during the time of year that will minimize environmental 
impacts. Regulatory approval delays can push construction back 
to a less desirable timeframe. For example, in much of the 
country construction pushed to winter is often slowed by poor 
weather and shortened day length. This causes a longer 
construction period overall and a resulting increased potential 
for environmental impacts.
    In an effort to expedite the installation of energy 
pipelines, we recommend that agencies respond to the inherent 
difference between pipeline and other project types by 
continuing to implement processes that allow the permitting 
effort to be proportionate to the potential risks. An example 
of a significant change would be the development of standard 
permits, similar to the U.S. Army Corps of Engineers' 
nationwide Permits, for pipeline construction. These permits 
would direct the applicant toward pre-approved guidelines to 
identify environmental impacts and then allow use of 
appropriate, approved mitigation measures.
    In closing, we believe that practices can be developed that 
would allow energy-project permitting to be expedited while 
still ensuring adequate protection of the environment. The 
foundation for these changes would be that the magnitude of the 
permitting process would be proportional to the potential 
impacts of the project. This measured approach would lessen the 
burden on limited agency resources and promote efficiency. 
Expedited energy project approvals would be consistent with the 
Executive and congressional guidance that already exists.
    What is the impact of the Endangered Species Act and other 
environmental protection programs on the oil and gas industry? 
In most cases, the impacts are reasonable and warranted. 
However, the impact of unnecessarily prolonged permitting 
periods and restrictions can be detrimental to the promotion of 
energy production.
    We ask that the regulatory agencies be guided to develop 
creative opportunities to continue protecting the environment 
while promoting energy independence. Thank you for the 
opportunity to testify today.

    Senator Inhofe. Thank you. And I do have a number of 
questions so what I'm going to do is ask questions and try to 
get brief answers. But Dr. Tuggle made a statement that I think 
is accurate in this region. I suspect it may not be accurate in 
other regions in terms of a project has not been stopped as a 
result of this--am I accurately quoting you Dr. Tuggle--has not 
been stopped as a result of these section 7 discussions.
    Do you folks agree with that? Any of the four of you 
disagree with it?
    I think the problem--and see if I've got this message 
right--may well be that while delays make it much less 
profitable, that perhaps some of the projects, while they were 
completed did not--were not profitable projects; is that 
accurate, or is that inaccurate?
    Mr. Sullivan. Accurate. I think that's correct.
    Senator Inhofe. Let's start with you, Mr. Buchanan. You 
made some comments. Would you like to elaborate any on the 
voluntary management plan for the Arkansas River Shiner?
    Mr. Buchanan. Certainly I would. I appreciate the 
opportunity because I would be very remiss if I did not take 
the opportunity to address that, and tell you, sir, that that's 
an opportunity that has existed amongst interested parties. 
It's allowed groups to come together and identify local 
problems and then certainly look at local ways to solve them to 
come up with a doable situation that does what needs to be 
done.
    With that said, the OFB legal foundation has worked 
cooperatively with the Tulsa Fish and Wildlife very 
progressively I would say, and I want you to know that we're 
very happy with that working relationship and are proud to say 
that we are partners with Tulsa in that effort.
    The voluntary management plan is more complicated that is 
being undertaken for the Canadian River municipal water simply 
because of the amount of miles that are being included in the 
river. So it will be a little more difficult and there will be 
more conversation involved, but it is ongoing, it is being 
progressive. It is coming up with the desired results. And the 
Canadian River Municipal Water Authority will hold a progress 
report and status meeting on November 1, and the Foundation 
will be on the program to further explain this.
    Senator Inhofe. Thank you very much.
    Mr. Sullivan, at a recent Senate Energy Committee, two of 
the Deutsche Bank energy experts stated that--and I'm going to 
quote this--``Anyone who blames record high U.S. gas prices on 
gouging at the pump, simply reveals their total ignorance of 
global supply and demand fundamentalists.''
    Mr. Sullivan, how can a politician be in favor of 
increasing our domestic production and yet be so punitive in 
their actions? Do you have any thoughts about that? With the 
exception of me.
    Mr. Sullivan. With your notable exception, and I appreciate 
it. But you cannot--you simply cannot have energy security 
while punishing the very people that can get you out of that 
security box.
    I don't know why it is in this country that we can't return 
to the National resolve that we had in World War II where we 
turned to industry to solve these problems. We turned to 
science to get us to the moon. Why can't we turn to the energy 
industry to get us off of this dependence on oil? We rather 
choose to bash and to punitively address the industry, the very 
people that can solve the problem. So you can't have it both 
ways.
    Senator Inhofe. Well, I understand that. I live with that 
on a daily basis. It is difficult, but I would like to have you 
specifically address the part--the reference that was made on 
gouging, because--and how that relates to the global supply and 
demand fundamentalists that he refers to.
    Mr. Sullivan. First of all, I would reiterate that we, as 
independents, we live or die at the wellhead with that price, 
and that price is set on a global--for oil I'm talking about 
and natural gas.
    Senator Inhofe. I think that's a good point.
    Mr. Sullivan. As an independent, we don't even have a 
chance to gouge. But having said that, I am convinced that 
there is enough of a pure market for oil worldwide and enough 
in the pure market for gas, at least continentally, that it 
would be very difficult to gouge.
    Senator Inhofe. Well thank you. That's good.
    Ms. Bower-Moore, according to a 2004 Department of Energy 
report--which I am going, without objection, to make that part 
of the record--on natural gas, critical habitat designations 
and section 7 consultations were estimated to have caused 
delays to a natural gas projection for 6 months to 2 years with 
an estimated cost over a 30-year period to the economy of 261 
to $979 million.
    The question would be, what has been your experience with 
delays of your company's projects due to the ESA?
    Ms. Bower-Moore. Unfortunately, Mr. Chairman, special 
interest groups are using the Endangered Species Act for 
political reasons most often and not biological reasons.
    So while ESA listings of a species are significant, it's 
the entire listing and de-listing process that has a 
significant impact on our ability to do business on public 
lands.
    Once a petition is filed, it is internally elevated by the 
land managers such as the Bureau of Land Management or the 
Forest Service that increase our mitigation costs, our 
protection costs and delays in the process. So once the 
petition is filed, the burden of proof changes for us as in 
innocent until proven, to guilty until proven innocent.
    Senator Inhofe. And of course those costs are passed on. 
That's the hardest thing for people to understand that nothing 
happens in a vacuum.
    And I'd ask you further, the Clinton administration issued 
50 percent more oil and gas leases. You know, you hear so much 
about this Administration and some of these special interest 
groups will have us believe that the Bush administration has 
issued the oil and gas leases at an unprecedented pace, and yet 
it's my understanding that the Clinton administration issued 50 
percent more oil and gas leases and less than one-tenth of 
these were challenged.
    I think it was Secretary Norton testified in 2005. Do you 
have any thoughts about that?
    Ms. Bower-Moore. Well, unfortunately, once again we see 
that environmental groups are using the Endangered Species Act 
to benefit themselves, and it does have an impact on our 
ability to do business on public lands. We think there are some 
things in the law that we could change that would help that.
    In addition, however, we would like to see Congress 
encourage incentives to the private sector for habitat 
enhancement projects and conservation measures established on 
Federal lands, not just private lands.
    And what we mean is, if a company such as Devon were 
willing to implement voluntarily habitat enhancement measures 
on areas that were not developing, we feel that we should be 
able to get some assurances from the Federal land management 
agencies that we can get something back in return for our 
efforts for that.
    Senator Inhofe. Well, let me suggest you put that down. 
This is something--a proposal that I think could be considered, 
we could be of some help to you in this. So why don't you do 
that for the record for this meeting.
    Mr. Haught, in your testimony you discussed how delays in 
the permitting process can actually pose a detriment to the 
wildlife environment by pushing construction into less 
desirable seasons of the year.
    Can you give us some examples of how this can actually 
hurt, as opposed to help the environment?
    Mr. Haught. Typically construction periods that are 
beneficial from a logistic standpoint for construction fall 
during the same times of year that have the fewest 
environmental impacts. They tend to be in the late spring, 
summer and early fall times. These times avoid, from an 
endangered species standpoint, most of the breeding season, 
nesting season for raptors and critical large game habitat 
times.
    By trying to consider both the environmental impacts of 
construction timing and the construction standpoint, we can 
back into a time to allow reasonable permitting periods to be 
able to accomplish this. When those permitting periods are 
extended, it will push those projects into the times of the 
year that--and the winter may encroach on critical habitat 
range for large game, and in the springtime will get into those 
breeding and nesting periods where you have more detrimental 
impacts that you would have had the project been allowed to 
occur on time.
    Senator Inhofe. In currently obtaining a 404--a section 404 
permit under the Clean Water Act, often triggers a section 7 
consultation under the ESA.
    Now if the Federal jurisdiction under the Clean Water Act 
were expanded, and you know what we're talking about here, to 
include isolated non-navigable waters, could that result in 
additional ESA consultations for your projects?
    Mr. Haught. Very timely question, Senator, and the answer 
to that is, yes, it would result in additional consultations 
required. Many times the Clean Water Act is the only trigger of 
Federal involvement for small distribution projects,
    In these instances we're talking about usually extensions 
of distribution systems, a very small diameter pipe that 
happened very rapidly, and this Federal trigger then pulls in--
from the Water Act--pulls in the endangered species' 
obligations.
    Senator Inhofe. That's right.
    How about you, Mr. Buchanan, in the Ag world?
    Mr. Buchanan. I would add that it's an extremely timely 
topic. In fact, sir, I came up yesterday to Tulsa to meet with 
the Corp on this exact issue. We have a problem in the Lugert-
Altus irrigation district with trying to conserve and be more 
efficient with our use of waters.
    And one of our proposed activities has triggered the 
potential of what we were just talking about. And it's an 
ephemeral stream at best. We feel that it is not navigable at 
all. It does not fall under the jurisdictions. And it creates a 
major problem whenever we're trying to achieve those 
efficiencies and conservation that the rest of the world wants 
us to do.
    Senator Inhofe. Give us an example of, under this ruling 
that we're talking about here, what could be considered 
navigable?
    Mr. Buchanan. Well, you're asking for my definition, I 
assume, and that's if I could put a boat on it and float it, 
that's navigable to me.
    Senator Inhofe. OK.
    Mr. Buchanan. And when we're in Western Oklahoma, you've 
got to have a very shallow-drafting boat to make that happen.
    Senator Inhofe. Yes, I understand that.
    Mr. Sullivan, or Ms. Bower-Moore, do you have any comments 
to make about that?
    Mr. Sullivan. Yes. When you start including culverts, 
ditches, arroyos in navigable waters and bring in all the 
regulations that go with that, trigger the ESA, you're taking a 
break and putting it right on the oil and gas industry and 
saying slow down.
    Senator Inhofe. Do you agree?
    Ms. Bower-Moore. I think it's been well said, Mr. Chairman.
    Senator Inhofe. Ms. Bower-Moore, according to the American 
Gas Association, ``America is not running out of natural gas 
and is not running out of places to look for natural gas. 
America is running out of places where we are allowed to look 
for gas.'' And that's a quote.
    Could you provide some examples from your experiences as to 
the truth of this statement?
    Ms. Bower-Moore. Mr. Chairman, one of my favorite sayings, 
as I speak in Wyoming, is minerals are where they are, and the 
reason we produce them at the levels and rates we produce them, 
is because the consumers' demand continues to increase.
    And so not only is the Endangered Species Act delaying or 
impeding our ability to access those resources, also the need 
for process as a whole is having that impact.
    One of the other things that we're seeing, Mr. Chairman, is 
that staffing for Federal land management agencies is becoming 
increasingly problematic. It is the same people within those 
agencies that are looking at all of the different projects on a 
larger level down to the APD level. And with the lack of 
manpower, the consistent turnover in the field office, and 
multiple analyses, they are all having a significant impact in 
our ability to meet the energy needs of this Nation in a timely 
manner.
    Senator Inhofe. Sometime it might be worth quantifying that 
as to how that's going to affect the ultimate cost.
    Mr. Sullivan, it's my understanding that the Fish and 
Wildlife Service sometimes creates the Best Management 
Practices for certain exploration activities during the course 
of a section 7 consultation.
    Does this pose problems for the independent operators?
    Mr. Sullivan. It certainly does. As I stated in my 
testimony, there's really no evidence the oil and gas 
activities have impacted the burying beetle at all. However, 
the Best Management Practices were developed for our business, 
and--including the baiting I referred to. And I just feel that 
we are environmental stewards who can figure out--when a 
serious problem is presented to us, we can figure out a way to 
protect the environment and still get up the reserves that this 
country needs.
    Senator Inhofe. Mr. Haught, you've been concerned with this 
private property rights. This happens to be one of my favorite 
subjects. In fact, way back--oh, gosh, 40 years ago or so it 
was, when I was--the first thing I did--first trip I took to 
Washington after being elected to the State
    Legislature was to--in fact, I was--being in this courtroom 
reminds me, I was with Ralph Thompson, at that time he was a 
first term, and David Boren, the three of us went to Washington 
to protest Lady Bird's Highway Beautification Act of 1965. And 
that was all about property rights. And we were protesting it 
in front of the committee called the Environment and Public 
Works Committee, the same committee I ended up chairing. It's 
kind of poetic justice.
    You're the second person today to voice concerns about 
private landowners and property rights. And they're very 
important to me.
    How can we minimize the effect of the environmental 
regulations on private landowners and at the same time speed 
energy resource development?
    Mr. Haught. It appears that most of the issues we have with 
landowners' concern with the ESA itself, comes in those areas 
of high energy development.
    The landowners tend not to object as much to the pipelines 
and activity that is going on as they do to the multiple 
attempts with the Government agencies to require these 
companies to conduct surveys on their private property.
    We think that this is an opportunity, one of the 
opportunities to follow the recommendations we made and look at 
the projects that are being presented on it on an individual 
basis and try to make those requirements proportionate to the 
potential impact.
    The pipeline issues, pipeline right-of-ways tend to be very 
narrow, and therefore, the surveys and the requirements there 
should be narrowed also.
    Senator Inhofe. Mr. Sullivan, what role do you see that the 
independent oil and gas operators play in securing American's 
energy future?
    Mr. Sullivan. I see it as an essential role, Senator. If we 
are going to, in the long term, get onto renewables or some 
alternative fuels, that's fine and I'm in favor of it, and am 
actually spending some of my time working on those things.
    But in the meantime, the short intermediate term, we are 
hooked on oil and natural gas. And it's the independent 
producer, and only the independent producer, who can help 
mitigate that problem. So we need to allow the independent 
producer the freedom of regulation and stifling rules and laws 
so we can do our thing and help this country while we're 
transitioning to long term--
    Senator Inhofe. A lot of people don't realize the role of 
that in marginal wells for example, and the very small--I heard 
a statistic not too long ago that apparently was true, that if 
we had everything flowing today that's been plugged up from the 
margin of wells, it would exceed what we're having to import 
from Saudi Arabia. Does that sound reasonable?
    Mr. Sullivan. I can't verify that number, but I can say 
that right here in the State of Oklahoma, for example, there 
are more reserves of oil and gas in the ground than we have 
produced since inception 100 years ago.
    Senator Inhofe. That's a good one to use.
    Mr. Sullivan. What's required to get them out is the 
economic incentive to do so. And everybody cusses the high 
prices, but it is causing us independents to go take those 
risks. And we're getting oil out of shale and out of places you 
wouldn't imagine because of these high prices. So we know where 
the reserves are. It's a matter of economics and the lack of 
discouragement from the Government to get--
    Senator Inhofe. You mentioned shale. That's a huge 
potential that we have out there.
    Mr. Sullivan. It is; it's huge. And, Senator, my little 
company, we, today, are spending virtually all of our resources 
going after reserves in your old stomping ground in Osage 
County, an old producing area that everybody knew was there but 
was heretofore uneconomic to get out. And now we've developed 
through technology, and through, yes, higher prices, we are 
incentivized to go get them.
    Senator Inhofe. Well, that's ironic, because many, many 
years ago, and the story I told you about, a tool dresser on a 
cable tool rig, we were actually going after the stuff that had 
been left by the big guys. Now you're doing this again in the 
same area.
    Mr. Sullivan. Exactly.
    Senator Inhofe. Mr. Buchanan, I wrote an article for the 
Energy Law Journal in 2005. And by the way, I'll insert that, 
without objection, into the record also. I refer to the fact 
that some environmental regulations derive natural gas demand 
while others simultaneously restrict natural gas supply.
    What effect does this have on farmers? You know, a lot of 
people don't know that relationship with the Ag community.
    Mr. Buchanan. Well, certainly. It's a very short answer, 
which is that regulations slow down production. And when demand 
is high, prices increase. That's how our markets work. High oil 
and gas prices negatively impact production agriculture since 
natural gas is the most common component in manufacturing 
nitrogen fertilizer.
    Senator Inhofe. Did you agree with my statistic in my 
opening statement, that it's 90 percent?
    Mr. Buchanan. Yes, sir. And it's becoming a burden that we 
cannot continue to carry, the cost of that nitrogen fertilizer.
    Senator Inhofe. Mr. Haught, one of the pipeline projects 
that ONEOK is currently working on--will go from
    Wyoming to Oklahoma, one of the pipelines. That pipeline 
will cross the boundaries of three Environmental Protection 
Agency regions; two Fish and Wildlife Service regions. And it's 
my understanding that the interpretations of ESA and other 
environmental laws can vary widely between the EPA and the Fish 
and Wildlife; and then from region to region, from State to 
State.
    What has been your experience working within this framework 
of regions in these States, and how has inconsistency between 
these States and agency regulations affected you?
    Mr. Haught. Senator, those variations in implementing the 
same requirements, the same acts are such that from a practical 
standpoint we have to treat each of those different, States 
different--different regions and even different districts 
within the same agency. Each of their processes are different 
enough that we tend to treat those as a different permitting 
process.
    Sometimes the variations may be as minor as a different 
form to accomplish the same thing, to as much as programmatic 
differences, wherein one agency, if there's a requirement, will 
put the onus on the project applicant to do the consultations 
and you can have a little more control of your timing destiny 
that way, whereas other agencies implement the same regulation 
may require that all contacts, all consultations, be agency to 
agency only.
    In this case the applicant doesn't have an opportunity to 
provide resources to that process and you're dependent upon 
staffing at the agencies who are--tend to be burdened with 
heavy workloads as it is. And many times it negatively impacts 
those projects.
    Senator Inhofe. Well, let me thank all of you. I've 
completed my checklist, but what I'd like to do at this time is 
kind of start over here maybe again with you, Mr. Buchanan, on 
anything you don't feel you were able to cover in your opening 
statement or any thoughts that have not been discussed that 
relate to this--today's discussion. Would you like to make any 
further comments, take 5 minutes or so?
    Mr. Buchanan. Certainly it won't be that long, sir. What I 
would like to add though to try to tie up--from an Ag 
viewpoint--it's been referred to, I believe Mr. Sullivan talked 
about the dependence, our foreign dependence on energy for this 
Nation, how you developed that taste and that thirst, and 
that's where we are satisfying that.
    From Ag viewpoint, what we see happening because of 
regulatory activities that are coming down to us, is that this 
Nation is on the road to becoming foreign dependent for their 
production of food and fiber.
    And when we consider safety issues, not only of National 
safety, but just on your dinner plate, safety of what you're 
eating, that is something we do not, cannot, and should not 
pursue. We have to maintain a healthy Ag economy in this 
Nation.
    Senator Inhofe. I think it's very important to have this as 
a part of this record.
    Mr. Buchanan. I would agree. Thank you, sir.
    Senator Inhofe. Mr. Sullivan, it's you that brought up the 
global warming, not me. But I would like to make an observation 
that in this recess, we've been in recess for 3 weeks now, and 
there have been more changes in scientific evidence having to 
do with anthropogenic gases affecting climate change than there 
has been in probably in the 6 months before that. And so it's 
kind of interesting that that's going on right now.
    It's also interesting that while we were all concerned 
about the Wharton Econometrics Survey, it talked about the 
expense of what it would cost to have some of these cap-and-
trade policies, in effect what it would cost a family of four.
    The MIT came out with another study saying that they are 
far too conservative, and that the current bills that are being 
considered would cost each family of four some $4,500 a year in 
what I would refer to as direct taxes.
    You know, that would be actually 12 times larger than the 
largest tax increase in recent history, and that was the 1993 
tax increase for America.
    I don't have a question that goes with that, other than do 
you agree, and is there anything else you'd like to elaborate 
on?
    Mr. Sullivan. I agree. And just in my closing remarks, 
Senator, I think--I remember in 1974, President Ford with some 
ballyhoo, came out with what he called ``Project 
Independence.'' And he was very concerned, as were others, 
about our country's dependence on foreign oil. We were 
importing 26 percent of our oil. We wore little lapel pins that 
said ``Project Independence.'' We're now importing 60 percent 
of our oil, and no one seems to care.
    So, Senator, to get up to 50,000 feet in one of your 
airplanes and look down on it, I think the big picture is 
simply as follows: We must, as a country, have the National 
resolve to focus on this very serious issue and solve it. We 
are in danger of--we are putting our destiny in the hands of 
other people, and they don't like us. We've got to change that.
    So the independents in this country, and especially in this 
State, are one of the key elements, as I said, in at least the 
short and intermediate term helping us solve that problem.
    We've got to get over onto renewals. And I'm a big fan of 
that.
    But this whole business about regulation and endangered 
species, it must take a different priority to that very 
important issue of getting this country off the dependence of 
foreign oil.
    Senator Inhofe. Thank you very much. Excellent statement.
    Ms. Bower-Moore.
    Ms. Bower-Moore. Mr. Chairman, the only one thing that I 
did want to quickly address that I didn't address in my oral 
testimony was regarding private landowners. And in the State of 
Wyoming we have a significant amount of split estate, Federal 
and mineral and private surface.
    In order to access that surface, it's a requirement that we 
do surveys for any proposed, threatened or endangered species. 
And it is a real thorn of contention with our landowners.
    If there is no way to change the law to prevent those 
surveys from being conducted regarding oil and gas projects, 
then we need to find a way that information would be--would not 
be available to be FOIA'd in the public arena because 
landowners have a fear that information will be used by special 
interest groups against them on their private property.
    Having said that, Mr. Chairman, thank you for letting us 
attend. And Devon is committed to protecting the environment 
and developing the resources this country desperately needs.
    Senator Inhofe. I know that's true.
    Mr. Haught.
    Mr. Haught. Thank you, Senator. I would just like to 
reiterate the concept that we wanted to express here, in that 
we're not--and I don't think anyone on this panel is probably 
totally against regulation--but I think we are for fair and 
balanced regulation that's proportionate to the potential 
impact so that we can have a risk benefit outcome that's--will 
help promote, not only our economy, but the energy industry 
also.
    We believe that mechanisms do exist or the authorizations 
do exist for agencies to be more creative and flexible in their 
permitting issues.
    We think that some direction to those agencies to consider 
those alternatives as they are presented would be something 
that we'd like to see.
    Senator Inhofe. That's good.
    Dr. Tuggle, I appreciate very much your remaining for the 
rest of it. If there's any last comment you'd like to make or 
any response to anything that's been said, you feel free to 
come forward. And I'm sure Mr. Sullivan will give you his chair 
for a minute or so.
    Dr. Tuggle. Senator, I certainly appreciate the comments 
that have been made, and I've taken a couple of notes here. And 
I think that one of the things that I would like to emphasize 
is the fact that, as you are aware, you've been briefed by our 
director on the proposed regulatory changes from a policy 
standpoint on how we administer the Endangered Species Act 
internally. And we are working on some of these common sense 
approaches.
    One of the things that I think is really incredible is the 
fact that, as we have talked about the development of Best 
Management Practices, we have reached out to industry.
    The Service does not perceive the industry as the bad 
players. We think that conservation is a part of the American 
fabric, and we certainly appreciate the fact that industry has 
stepped up and played a significant role in terms of protecting 
and conserving species.
    I think the thing that we're talking about here is, is a 
minimization of some of the inconsistencies as it relates to 
how we administer the Act.
    We think that some of the recommendations that we're going 
to be making with our reg changes may address some of these 
issues. And it boils down to what someone said early about 
common sense.
    But the fundamental premise is, is that the Service 
continues to reach out to industry or anybody that's affected 
by how we administer the Endangered Species Act with very 
proactive programs such as programmatic biological opinions, 
such as Best Management Practices and such as habitat 
conservation plans so that we can minimize these impacts from a 
regulatory standpoint and maximize the impacts from a 
conservation standpoint.
    Senator Inhofe. I appreciate that. And I hope that you will 
take some of this evidence back with you and share it with the 
Director and perhaps we can address some of these problems.
    I look forward to visiting with all of you in the future 
about how we're doing that. And I appreciate so much all five 
of you being here to testify today. And we are adjourned.
    [Whereupon, the committee was adjourned.]
    [Additional statements submitted for the record follow:]



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