[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]



THE AMERICAN ENERGY INITIATIVE, PART 4: H.R. ------, THE JOBS AND ENERGY 
                         PERMITTING ACT OF 2011

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

                                HEARING

                               BEFORE THE

                    SUBCOMMITTEE ON ENERGY AND POWER

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               ----------                              

                             APRIL 13, 2011

                               ----------                              

                           Serial No. 112-37


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov






   THE AMERICAN ENERGY INITIATIVE, PART 4: H.R. ------, THE JOBS AND 
                     ENERGY PERMITTING ACT OF 2011

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

                                HEARING

                               BEFORE THE

                    SUBCOMMITTEE ON ENERGY AND POWER

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 13, 2011

                               __________

                           Serial No. 112-37











      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov

                                _____

                  U.S. GOVERNMENT PRINTING OFFICE
67-886 PDF                WASHINGTON : 2011
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                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman

JOE BARTON, Texas                    HENRY A. WAXMAN, California
  Chairman Emeritus                    Ranking Member
CLIFF STEARNS, Florida               JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky                 Chairman Emeritus
JOHN SHIMKUS, Illinois               EDWARD J. MARKEY, Massachusetts
JOSEPH R. PITTS, Pennsylvania        EDOLPHUS TOWNS, New York
MARY BONO MACK, California           FRANK PALLONE, Jr., New Jersey
GREG WALDEN, Oregon                  BOBBY L. RUSH, Illinois
LEE TERRY, Nebraska                  MICHAEL F. DOYLE, Pennsylvania
MIKE ROGERS, Michigan                ANNA G. ESHOO, California
SUE WILKINS MYRICK, North Carolina   ELIOT L. ENGEL, New York
  Vice Chair                         GENE GREEN, Texas
JOHN SULLIVAN, Oklahoma              DIANA DeGETTE, Colorado
TIM MURPHY, Pennsylvania             LOIS CAPPS, California
MICHAEL C. BURGESS, Texas            JANICE D. SCHAKOWSKY, Illinois
MARSHA BLACKBURN, Tennessee          CHARLES A. GONZALEZ, Texas
BRIAN P. BILBRAY, California         JAY INSLEE, Washington
CHARLES F. BASS, New Hampshire       TAMMY BALDWIN, Wisconsin
PHIL GINGREY, Georgia                MIKE ROSS, Arkansas
STEVE SCALISE, Louisiana             ANTHONY D. WEINER, New York
ROBERT E. LATTA, Ohio                JIM MATHESON, Utah
CATHY McMORRIS RODGERS, Washington   G.K. BUTTERFIELD, North Carolina
GREGG HARPER, Mississippi            JOHN BARROW, Georgia
LEONARD LANCE, New Jersey            DORIS O. MATSUI, California
BILL CASSIDY, Louisiana              DONNA M. CHRISTENSEN, Virgin 
BRETT GUTHRIE, Kentucky              Islands
PETE OLSON, Texas
DAVID B. McKINLEY, West Virginia
CORY GARDNER, Colorado
MIKE POMPEO, Kansas
ADAM KINZINGER, Illinois
H. MORGAN GRIFFITH, Virginia

                                 _____

                    Subcommittee on Energy and Power

                         ED WHITFIELD, Kentucky
                                 Chairman
JOHN SULLIVAN, Oklahoma              BOBBY L. RUSH, Illinois
  Vice Chairman                        Ranking Member
JOHN SHIMKUS, Illinois               JAY INSLEE, Washington
GREG WALDEN, Oregon                  JIM MATHESON, Utah
LEE TERRY, Nebraska                  JOHN D. DINGELL, Michigan
MICHAEL C. BURGESS, Texas            EDWARD J. MARKEY, Massachusetts
BRIAN P. BILBRAY, California         ELIOT L. ENGEL, New York
STEVE SCALISE, Louisiana             GENE GREEN, Texas
CATHY McMORRIS RODGERS, Washington   LOIS CAPPS, California
PETE OLSON, Texas                    MICHAEL F. DOYLE, Pennsylvania
DAVID B. McKINLEY, West Virginia     CHARLES A. GONZALEZ, Texas
CORY GARDNER, Colorado               HENRY A. WAXMAN, California (ex 
MIKE POMPEO, Kansas                      officio)
H. MORGAN GRIFFITH, Virginia
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)

                                  (ii)









                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Ed Whitfield, a Representative in Congress from the 
  Commonwealth of Kentucky, opening statement....................     1
    Prepared statement...........................................     2
Hon. Cory Gardner, a Representative in Congress from the State of 
  Colorado, opening statement....................................     2
Hon. Bobby L. Rush, a Representative in Congress from the State 
  of Illinois, opening statement.................................     4
Hon. Joe Barton, a Representative in Congress from the State of 
  Texas, opening statement.......................................     6
Hon. John Shimkus, a Representative in Congress from the State of 
  Illinois, opening statement....................................     6
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, opening statement...............................     7
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, prepared statement...................................   479
Hon. Gene Green, a Representative in Congress from the State of 
  Texas, prepared statement......................................   480

                               Witnesses

Lisa Murkowski, a United States Senator from the State of Alaska.     9
    Prepared statement...........................................    10
Mark Begich, a United States Senator from the State of Alaska....    11
    Prepared statement...........................................    12
Don Young, a Representative in Congress from the State of Alaska.    13
    Prepared statement...........................................    15
Dan Sullivan, Commissioner, Department of Natural Resources, 
  State of Alaska................................................    19
    Prepared statement...........................................    22
David Lawrence, Executive Vice President, Exploration and 
  Commercial Development, Shell..................................    49
    Prepared statement...........................................    51
    Answers to submitted questions...............................   484
Rosemary Ahtuangaruak, former Mayor, Nuiqsuit, Alaska............    92
    Prepared statement...........................................    94
Richard K. Glenn, Executive Vice President, Lands and Natural 
  Resources, Arctice Slope Regional Corporation..................   172
    Prepared statement...........................................   174
Scott Goldsmith, Professor of Economics, Institute for Social and 
  Economic Research, University of Alaska Anchorage..............   177
    Prepared statement...........................................   179
Erik Grafe, Staff Attorney, Earthjustice.........................   386
    Prepared statement...........................................   388
Robert J. Meyers, Senior Counsel, Crowell & Moring...............   425
    Prepared statement...........................................   427

                           Submitted Material

Letters, dated April 12, 2011, from the County of Santa Barbara 
  Board of Supervisors to Mrs. Capps, Mr. Whitfield and Mr. Rush.   454
Letter, dated April 8, 2011, from Thomas J. Barrett, President, 
  Alyeska Pipeline Service Company, to subcommittee leadership, 
  submitted by Mr. Scalise.......................................   469
Rule XI letter, dated April 13, 2011, from Minority Members to 
  Mr. Whitfield..................................................   476
Discussion draft, H.R. --------, a Bill to amend the Clean Air 
  Act regarding air pollution from Outer Continental Shelf 
  activities.....................................................   481

 
   THE AMERICAN ENERGY INITIATIVE, PART 4: H.R. ------, THE JOBS AND 
                     ENERGY PERMITTING ACT OF 2011

                              ----------                              


                       WEDNESDAY, APRIL 13, 2011

                  House of Representatives,
                  Subcommittee on Energy and Power,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:00 a.m., in 
room 2322 of the Rayburn House Office Building, Hon. Ed 
Whitfield (chairman of the subcommittee) presiding.
    Members present: Representatives Whitfield, Shimkus, 
Walden, Terry, Burgess, Scalise, McMorris Rodgers, Olson, 
McKinley, Gardner, Pompeo, Griffith, Barton, Rush, Inslee, 
Green, Capps, Gonzalez, and Waxman (ex officio).
    Staff present: Gary Andres, Staff Director; Charlotte 
Baker, Press Secretary; Anita Bradley, Senior Policy Advisor to 
Chairman Emeritus; Maryam Brown, Chief Counsel, Energy and 
Power; Garrett Golding, Legal Analyst, Energy; Cory Hicks, 
Policy Coordinator, Energy and Power; Ben Lieberman, Counsel, 
Energy and Power; Katie Novaria, Legislative Clerk; Phil 
Barnett, Staff Director; Alison Cassady, Senior Professional 
Staff Member; Greg Dotson, Energy and Environment Staff 
Director; Caitlin Haberman, Policy Analyst; and Alexandra 
Teitz, Senior Counsel, Environment and Energy.

  OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN 
           CONGRESS FROM THE COMMONWEALTH OF KENTUCKY

    Mr. Whitfield. It is 10 o'clock and I am going to call this 
hearing to order. This is our fourth in a series of hearings on 
our American Energy Initiative, and that initiative is designed 
to explore obstacles to helping America become independent on 
its energy needs, both for transportation and also relating to 
the production of electricity. Our goal is try to find and 
locate and identify obstacles to that independence and then try 
to take actions to deal with it.
    In addition to identifying obstacles, we are also trying to 
be proactive in ways to make it easier for production of 
domestic resources. Today, this hearing focuses on one part of 
this initiative, and that is the Jobs and Energy Permitting Act 
of 2011, which has been released in the form of a discussion 
draft by the gentleman from Colorado, Mr. Gardner.
    [The information appears at the conclusion of the hearing.]
    I would just say that this came about because we identified 
a problem off the coast of Alaska in which a company trying to 
do exploration has been involved in a process that has taken 
over 5 years to obtain a permit. And that was precisely the 
purpose of our hearings on American Energy Initiative is to, as 
I said, locate those obstacles, identify those obstacles, and 
then try to deal with it.
    So at this time I would like to yield to the gentleman from 
Colorado for a more thorough explanation of his discussion 
draft.
    [The prepared statement of Mr. Whitfield follows:]

                Prepared Statement of Hon. Ed Whitfield

    The hearing is called to order. This is our 4th in a series 
of hearings on the American Energy Initiative, which seeks to 
comprehensively address high gasoline prices and other energy 
challenges facing the nation. Today's hearing focuses on one 
part of the American Energy Initiative, the ``Jobs and Energy 
Permitting Act of 2011,'' which has been released in the form 
of a discussion draft by the gentleman from Colorado, Mr. 
Gardner.
    The overall goal of the American Energy Initiative is to 
best utilize all the tools available to us to address our 
energy challenges. First and foremost, that means increasing 
production of domestic energy, and the subject of the Jobs and 
Energy Permitting Act is the state with far and away the 
greatest untapped domestic oil potential--Alaska. The estimates 
of available oil there are very promising. In fact, it could 
replace ALL of our imports from Saudi Arabia.
    But the federal red tape preventing that potential from 
being realized poses a daunting challenge. The discussion draft 
seeks to streamline the red tape and bring that oil online in 
the years ahead. That it has taken one energy producer over 5 
years to get a Clean Air Permit in the OCS is unprecedented, 
even for EPA.
    The benefits of accessing Alaskan oil would be substantial. 
More Alaskan oil would mean lower future prices at the pump as 
well as reduced reliance on imports from unstable and 
unfriendly countries. That alone is ample reason to move 
forward, but increased Alaskan production would have the added 
benefit of creating tens of thousands of well paying energy 
industry jobs. It would also provide billions in federal, 
state, and local revenues--and do so without raising taxes.
    Expanded domestic oil production is strongly supported by 
the American people, but as we will learn, it is even more 
strongly supported by the Alaskan people, including those who 
live in the North Slope closest to where most of the new 
production would occur. We ought to listen to the Alaskan 
people, rather than lecture to them.
    Alaskans care about the environment, and they will insist 
that energy production leave as light a footprint on their 
state as is possible.
    The state of Alaska wants to make a major contribution to 
solving the energy problems the nation faces, and the Jobs and 
Energy Permitting Act of 2011 ensures that they are not 
prevented from doing so.
    I yield the balance of my time to Mr. Gardner.

  OPENING STATEMENT OF HON. CORY GARDNER, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF COLORADO

    Mr. Gardner. Thank you, Mr. Chairman. Thank you for the 
hearing today. I look forward to working with you and other 
members of the committee. And thank you to the witnesses that 
will be testifying today.
    I come from an energy-producing State and I have had the 
privilege of collaborating with many colleagues from other such 
States in a project that are calling the American Energy 
Initiative. Of course, there are significant regional 
differences. The oil and gas industry in the Rockies faces 
different technical, economic, and legal challenges than oil 
and gas in the Gulf of Mexico or elsewhere. And coal production 
in Colorado and other Western States has both similarities and 
differences with our Appalachian counterparts.
    But whichever energy-producing State we come from, one 
thing that we all having in common is that the Federal 
Government is holding us back from meeting our potential to 
produce more domestic energy. Changing that is going to be a 
big part of the American Energy Initiative.
    This is our fourth multi-day hearing on the American Energy 
Initiative and today we are going to focus on offshore oil and 
gas production and especially streamlining the process of 
offshore permitting. These impediments have already delayed 
activities in the Beaufort Sea off of Alaska's North Slope 
where exploration has yet to even begin on leases that were 
signed over 5 years ago. The Jobs and Energy Permitting Act of 
2011 discussion draft seeks to address current problems in 
EPA's offshore permitting requirements.
    Offshore Alaska holds tremendous potential but not if we 
allow the status quo to continue. Production in the arctic OCS 
could provide a million barrels of oil a day, comparable to 
what we currently get from Saudi Arabia. But unlike Saudi 
Arabia, this domestic production is blocked by a convoluted 
permitting system in place that is difficult, if not 
impossible, to navigate. The fact that the owner of the leases 
had already secured something like 35 permits but could not 
start drilling because it could not get the 36th would be funny 
if not for the adverse consequences in lost domestic energy and 
lost jobs.
    Keep in mind we are not talking about an area the Federal 
Government has placed off-limits to energy leasing, of which 
there are far too many. We are talking about an area that was 
already leased but for which the lease is essentially being 
nullified with red tape. That needs to change.
    The current anti-domestic-energy philosophy is not what the 
American people want. No matter how many times President Obama 
insists that America doesn't have enough domestic oil to make 
any difference, the public isn't buying it. They want our oil 
supplies unlocked and understand full well the benefits of 
doing so. They see the impact that production has in their 
communities in the jobs it brings. This bill alone has the 
potential to create 40,000 to 50,000 jobs annually and $75 
billion in payroll. And we are not just talking about jobs and 
income in Alaska. Increased oil production in Alaska will 
result in jobs across the United States.
    One thing I can attest to is that a majority of Coloradans 
support increased energy production in the State. Yes, we 
expect strong environmental safeguards, but we don't want those 
safeguards to be exploited by activists into an excuse to shut 
the energy industry down.
    Coloradans are proud to live in a State that produces 
energy for the rest of the Nation and recognizes the benefits 
in terms of high-paying jobs, as well as state and local 
revenues. And as we will soon here, that sentiment is true of 
native Alaskans as it is of native Coloradans. In fact, there 
are very few elected officials from Alaska who support the 
existing constraints on energy production there.
    We have a great panel, including some who came from very 
far away to be here and who booked their flights in the midst 
of a potential government shutdown. So we really, truly 
appreciate your time to be here today. And I look forward to 
learning more about Alaska's energy situation and what we in 
Congress can do to improve it. Thank you very much for the 
opportunity to hear this bill today and for your work and 
testimony today.
    Mr. Whitfield. Thank you, Mr. Gardner. At this time, Mr. 
Rush, you are recognized for 5 minutes.

 OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Mr. Rush. I want to thank you, Mr. Chairman, and I want to 
thank all of the guests who are going to be with us today.
    Mr. Chairman, today we hear testimony regarding the 
discussion draft of the so-called Jobs and Energy Permitting 
Act of 2011. This will amend Section 328 of the Clean Air Act 
that addresses air pollution from Outer Continental Shelf 
drilling activities. While I have some reservations about the 
bill as written, my biggest concern with today's hearing is 
that we will not have the opportunity to hear from 
representatives from the Environmental Protection Agency. As I 
am told, they were not given sufficient advanced notice in 
order to appear before us today. And I find it very troubling 
that we are here to discuss amending sections of the Clean Air 
Act without the benefit of having EPA's expertise to help guide 
and inform our decision.
    As you know, Mr. Chairman, Ranking Member Waxman and I 
wrote you a letter and Chairman Upton on Friday asking you to 
postpone this hearing until we could have the appropriate 
representatives from EPA to testify before us. And I am surely 
disappointed that this reasonable request could not be met 
since this bill would make significant changes to the Clean Air 
Act, rules that EPA is in charge of implementing. I only hope 
that as this discussion draft moves through the legislative 
process that we will get a chance to hear from EPA directly at 
any future hearing scheduled on this bill in order to help 
inform the final product.
    As far as the discussion draft itself is concerned, one of 
my main concerns deals with expediting the permitting process, 
which may limit the opportunities for review as well as public 
input. While I am not necessarily against streamlining the 
permitting process in general, I want to make sure that we are 
giving local communities adequate time to comment on proposed 
permits before they are enacted.
    Another concern deals with shifting the judicial review 
away from the Environmental Appeals Board, which has almost 20 
years of experience in the highly technical area of preventing 
of significant deterioration or PDS permits that moving the 
process to D.C. Circuit Court of Appeals, which lacks any of 
this technical expertise. Requiring local stakeholders to 
travel all the way to Washington, D.C., in order to raise 
concerns about local air quality impacts could prove to be 
overly costly and also burdensome if not outright impossible 
for less well-to-do communities.
    Finally, I look forward to hearing more discussion 
regarding the application of emissions control requirements 
under the new Convention of Significant Deterioration, CSD 
program of the Clean Air Act. Other than the proposed 
legislation, support vessels such as ice riggers and oil spill 
response vessels, which may contribute a majority of the air 
pollution associated with drilling activities, would not be 
subject to best available control technology emission reduction 
requirements or other requirements adopted under the CSD 
program. I would like a better understanding of how this would 
impact air quality for our local communities.
    So I look forward to today's hearing and I look forward to 
hearing all of our witnesses today in order to get a better 
understanding of how this proposed legislation would impact 
local stakeholders, as well as how it would benefit oil and gas 
companies conducting the drilling in the Outer Continental 
Shelf. Mr. Chairman, I yield the balance of my time to the 
ranking member if he wants my time and his time as well. If 
anybody else is wanting some time? OK. I yield back the balance 
of my time.
    Mr. Whitfield. Mr. Rush, I would just make one comment. We 
did invite EPA representatives to attend today's hearing and 
Friday's hearing. They have refused to come. I believe they 
have a lot of qualified people over there and maybe just 
because Gina McCarthy was unable to come, I know they have 
enough qualified people to come and attend these hearings. We, 
as you know, have a full schedule of hearings. We intend to 
move a lot of legislation, and we are not going to allow EPA to 
dictate our schedule.
    At this time I recognize the gentleman from----
    Mr. Rush. Mr. Chairman, if I may respond?
    Mr. Whitfield. Yes.
    Mr. Rush. I think that it is reasonable that the EPA should 
be given adequate notice. Now, I just don't think that we can 
continue just to barrel through this without EPA given adequate 
notice and I think that is reasonable.
    Mr. Whitfield. I think we did give them adequate notice and 
hopefully they will come to our next hearing.
    At this time I will recognize the gentleman from Texas for 
5 minutes.
    Mr. Barton. I thank the gentleman. You know, I don't think 
it takes a rocket scientist to understand we are reviewing a 
lot of things that the EPA is involved in, with all due respect 
to my good friend Mr. Rush. It is a 3-minute cab ride from the 
EPA building. It is a 10-second phone call. And if they don't 
know that they are going to be called to testify before this 
subcommittee and this full committee numerous times in the next 
2 years, they need to take an IQ test because they are going to 
be called. And if Mr. Waxman and Mr. Rush needs to let them 
know that, if they don't understand what Mr. Whitfield and Mr. 
Upton are saying, maybe we are not saying it in the right way 
or the right tone, but it is no surprise that we are going to 
be asking the EPA to come and justify or at least give their 
comments on some of the things that we are doing.
    Well, I am very glad to see my good friend Mr. Young. We 
have a tremendous expert here in Congress and a former chairman 
of two committees and we know he is an expert on Alaska. And 
after he does whatever he does he will be back.
    Mr. Rush. He better hurry up because we have got a lot of 
business to take care of.

   OPENING STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Barton. This hearing, Mr. Chairman, is going to be a 
revelation to the country, I believe, when they find out what 
the EPA has not done up in Alaska. We have tremendous oil and 
gas potential in the Outer Continental Shelf. And under the 
Clean Air Act, the EPA, unlike the Gulf of Mexico, has the 
right to give some of these permits. When you hear some of the 
representatives from some of the industry testify later in 
today, I think panel members are going to be stunned that the 
reason these permits haven't been given is because they can't 
decide whether it is a stationary source or a mobile source 
because it is a drilling ship, not a drilling platform. They 
can't decide where to measure air quality, whether they measure 
it at the side of the ship, onshore, or someplace in between. 
It is the most bureaucratic gobbledygook I have ever 
encountered. You know, there is absolutely no question that the 
EPA has the authority but just because you have the authority 
doesn't give you the opportunity just to sit on your hands and 
think of one bureaucratic excuse after another to not make a 
decision. And that is, I believe, what we are going to find 
today.
    We need to have a responsible drilling program. The 
President himself with respect to this particular area of our 
country stated in his blueprint for secure energy future on 
March the 30th that the administration remains committed to 
facilitating development in this region, which will require 
consideration across the Federal Government. He went on to 
state that a cross-agency team would be created to coordinate 
and facilitate efficient offshore permitting.
    So I am going to yield the balance of my time to Mr. 
Shimkus. But this hearing is one that we really need to pay 
attention to because of the huge potential we have for domestic 
oil and gas production in the OCS off the coast of Alaska.
    And with that I yield the balance of my time to Mr. 
Shimkus.
    Mr. Shimkus. Thank you, Mr. Barton.

  OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    America is one of the few countries that sees its natural 
resources as a hindrance, not as a national advantage. We have 
said this numerous times, and as gas prices go up, we have to 
make sure we fully use our natural resources.
    I know about Alaska and I know about jobs. My late father-
in-law worked on the Alaskan pipeline. He was a microwave 
communication engineer. He flew the pipeline. He was one of 
many people who came up from the lower 48 to get good-paying 
jobs and raised a family of three. So fossil fuel energy 
development is job creation in an economy that needs jobs.
    And I will end on this. There are over 17,000 employees in 
the Environmental Protection Agency. Seventeen thousand. 
Surely, one of them could have come to the hearing, I would 
imagine. Maybe one could have come to the hearing and all of 
the other hearings we are going to be holding in the future.
    Mr. Rush. Will the gentleman yield?
    Mr. Shimkus. I would be happy to yield.
    Mr. Rush. I understand that the janitor is available. And 
he said----
    Mr. Shimkus. Well, for some of us maybe the janitor would 
give better testimony than some of the career bureaucrats they 
have in the EPA. I yield back.
    Mr. Whitfield. The gentleman from California, Mr. Waxman, 
is recognized for 5 minutes.

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. Waxman. Mr. Chairman, today's hearing examines 
legislation to amend the Clean Air Act provisions that protect 
air quality when offshore oil and gas are developed. I hope we 
can reach agreement on this legislation but I cannot support it 
in its current form.
    This legislation is being considered at the behest of a 
single company in response to two permit applications in 
Alaska, yet would apply broadly to the East and West Coast and 
part of the coast of Florida. Here, Shell has identified an 
area where the statute is ambiguous. As a result, permits are 
delayed while EPA, the stakeholders, and the Environmental 
Appeals Board work to resolve these issues. I believe it would 
be appropriate for this committee to provide clarity on these 
matters. I hope we can work together to develop legislative 
language that would resolve those issues in an appropriate and 
targeted manner.
    But as we provide clarity, we must also realize these are 
large industrial facilities located off-coast where people live 
and in waters where people fish and whale. Shell's Discover 
operation emits more pollution than a 1,000-megawatt natural 
gas power plant and almost as much as a new oil refinery. Our 
goal should be to resolve this issue without sacrificing air 
quality. Shell has also raised concerns about the length of 
time of the permitting process. This is also an area where it 
is critical to strike the proper balance.
    The Clean Air Act has always provided for extensive and 
open stakeholder input to EPA's decision making. This is an 
essential principle of the law. It ensures that the government 
is responsible to citizens who want clean air and to industry, 
which wants to conduct activities that emit air pollution. 
While Shell has raised legitimate concerns about the permit 
process, the language before us goes too far. It eliminates the 
opportunity for any administrative review of EPA decisions 
except for a narrow exception that would apply only to the 
permit application. It moves all judicial appeals from the 
regional circuit courts of appeals to the D.C. circuit, and it 
requires EPA to issue final permits in 6 months, which will 
limit the time for public comment and may preclude the EPA from 
developing the record necessary to support its final decisions 
in court.
    One effect of these changes would be to make it much more 
difficult for local citizens who are directly affected by air 
pollution from a project to raise concerns requiring Alaskans 
to fly to Washington, D.C. To challenge a permit decision is a 
real burden. Eliminating administrative reviews creates an 
additional hurdle for citizens. Administrative reviews are 
faster, less formal, don't impose fees, don't require a lawyer, 
and are often conducted by videoconferencing. They also do not 
allow participants to recover attorney's fees.
    I am also concerned about how this proposal will affect 
California and other States. In California, EPA has delegated 
the authority to issue permits for offshore oil and gas 
activities to local air pollution control agencies. The changes 
in this bill would override state and local interpretations, 
laws, and regulations that California has adopted to help meet 
its severe air pollution problems. It would also remove all 
appeals of California's permits from state hearing boards and 
state courts to the D.C. circuit. This is a significant 
infringement of local control over local air pollution matters.
    I want to close with a comment on process. I am 
disappointed that EPA is not present to testify today. If we 
are going to reach consensus, we are going to need the input of 
the Agency experts, as well as witnesses from California and 
other affected areas. Chairman Whitfield has today rejected our 
request. His position appears to us that it is reasonable to 
give the Agency just a few days' notice and expect EPA to be 
able to send a witness to the hearing today. I understand Gina 
McCarthy is testifying today on a legislative matter before 
another committee. That is not fair. That is not how we treated 
administration witnesses in prior Congresses. For that reason, 
the Democrats on the committee are invoking our rights under 
Rule 11 to request a minority day of hearings. I believe 
scheduling our requested hearing will help the committee 
produce balanced legislation that achieves its stated goal and 
has a chance of enactment. I look forward to what the witnesses 
have to say. And we will withdraw that petition, Mr. Chairman. 
You indicated you will have EPA at other hearings. I didn't 
know if you meant other hearings on this bill or other hearings 
on other bills. But on this bill we do want EPA, we do want 
other witnesses to be able to testify, and we are giving you 
that Rule 11.
    Mr. Whitfield. Thank you, Mr. Waxman. At this time I would 
like to introduce the first panel.
    Mr. Rush. Mr. Chairman, if I might before we hear the first 
panel, Mr. Shimkus has just shared with me an email that he 
received. The husband of our former member Jane Harman, Sidney, 
passed a few moments ago earlier and I was just wanting to 
inform all the members of the subcommittee and also inviting 
them to keep the Harman family in their prayers.
    Mr. Whitfield. Thank you, Mr. Rush, and thank you, Mr. 
Shimkus, for letting us know about that.
    We are delighted to have these elected representatives on 
our first panel. They really do not need any introduction but 
Representative Don Young from the State of Alaska, Senator Lisa 
Murkowski from the State of Alaska, and Senator Mark Begich 
from the State of Alaska. We know that that State is certainly 
impacted by decisions or lack of decisions made by EPA on air 
quality permits.
    And at this time, Mr. Young, I would like to recognize you 
for 5 minutes for your opening statement.
    Mr. Young. Mr. Chairman, if I could, I would like to go 
down the seniority rule. I am the senior member but we do have 
two Senators here and they have lots of things to do on the 
other side. So at this time I would like to recognize Senator 
Murkowski, the senior Senator from that side, and I would yield 
to her and then I will take my time when she finishes.
    Mr. Whitfield. Well, Mr. Young, you are being so kind 
today, which we appreciate.
    Mr. Young. If you take a look at my eyes, you know I am 
being kind.
    Mr. Whitfield. Well, Senator Murkowski, I will recognize 
you for 5 minutes.

STATEMENTS OF HON. LISA MURKOWSKI, A UNITED STATES SENATOR FROM 
THE STATE OF ALASKA; HON. MARK BEGICH, A UNITED STATES SENATOR 
FROM THE STATE OF ALASKA; AND HON. DON YOUNG, A REPRESENTATIVE 
              IN CONGRESS FROM THE STATE OF ALASKA

                STATEMENT OF HON. LISA MURKOWSKI

    Ms. Murkowski. Thank you, Mr. Chairman, and I thank my 
colleague, Congressman Young. We are not going to suggest how 
many fights you get in on behalf of the State of Alaska, but 
you are playing the role here today.
    Mr. Whitfield. Do you have your microphone on, Senator?
    Ms. Murkowski. Maybe I just need it a little bit closer. Is 
that better? Thank you, Mr. Chairman, and ladies and gentleman, 
thank you for your attention to this issue this morning. The 
fact that you have the full Alaska delegation represented here 
today, Republicans, Democrats, House and Senate together to 
testify on this issue I think speaks to the significance and 
the importance of this to those of us in Alaska.
    Congressman Young has recognized me as the senior Senator, 
but I am also the ranking member of the Senate Committee on 
Energy and Natural Resources, as well as the ranking member on 
the Appropriations Subcommittee on Interior and the 
Environment. So we have been paying, of course, particular 
attention to this issue on the Senate side.
    You are going to hear some good testimony here today. But I 
think one of the most critical pieces that you will hear is the 
fact that America's most critical piece of infrastructure, the 
Trans-Alaska Pipeline, is now less than 1/3 full. The 
tremendous resources that are beneath Alaska's OCS could help 
us fill up that pipeline, slash America's dependence on foreign 
oil, create new jobs, and generate new government revenues at a 
time when we are all seeking those. And yet despite these much-
needed benefits, even exploration has been blocked because of 
the EPA's continued inability--or perhaps simple 
unwillingness--to issue valid air permits.
    You are going to hear the specifics of EPA's failure to 
comply with both the intent of the Clean Air Act and with 
Congress' directive in the fiscal year 2010 Interior and EPA 
Appropriations bills. And I will simply say right at the outset 
it doesn't really matter what your opinion is about offshore 
oil or gas development, in the Arctic or elsewhere, it is 
absolutely indefensible--indefensible--for a permit application 
to take 6 years--6 years--when the EPA Administrator has 
testified, as she did in my Appropriations subcommittee, that 
there is no anticipated human health risk that is at issue. She 
has stated full out there is no human health risk here. So it 
has been 6 years and counting, Mr. Chairman, despite no 
anticipated risk.
    I would also suggest to the members of this committee that 
it is likewise indefensible to allow the EPA's failure to serve 
as a de facto veto over the national energy security interests 
of the Outer Continental Shelf. The OCS Lands Act assigns the 
Interior Department with the mission of the expeditious 
development of energy resources--and those resources belong to 
the American people, not to any corporation and certainly not 
any federal agency. It cannot be the EPA's decision, nor their 
Environmental Appeals Board's decision, that determines whether 
Americans benefit from their holdings in the OCS.
    The EPA's core competencies are supposed to involve both an 
understanding of human health impacts and a command of air 
quality permitting regimes so that a regulated operation--be it 
a power plant, a factory, a drilling rig--can have a level of 
reasonable expectation about the timing of their application, 
especially when there is no human health risk at issue. 
Instead, we are witnessing core incompetency. The air 
permitting process has been confused and really taken advantage 
of by those who have found the Clean Air Act to be less of an 
air quality statute and more of a hidden, blunt instrument that 
can be used to stop energy exploration.
    This is no longer a matter of understanding the process 
better or taking even greater steps to ensure air quality 
concerns are addressed. If the EAB cannot accept a permit that 
took this long and this much accommodation to issue, then EAB 
has no place in the process. And likewise, if the EPA can't 
demonstrate some competency, especially as congressional urging 
and intent becomes more clear, then EPA should not expect to 
keep its authority for long.
    Mr. Chairman, members of the committee, I am grateful for 
the opportunity to testify to you, with you this morning. I do 
note the discussion going back and forth about the invitation 
to EPA to testify. I think it is an important issue and that 
EPA should be involved and I think clearly an invitation to 
come and sit before you and provide that information is 
important. I will remind you, however, that given the very busy 
schedule that we have on the other side, Senator Begich and I 
were able to clear the decks, but I think just about a day-and-
a-half notice. This is important to us. I would think that the 
EPA would think it is important to them as well. Thank you.
    [The prepared statement of Ms. Murkowski follows:]

               Prepared Statement of Hon. Lisa Murkowski

    Chairman Upton, Ranking Member Waxman, and distinguished 
members of the Committee, thank you for the invitation to 
testify today about outer Continental Shelf air quality issues. 
As the Ranking Member of the Senate Committee on Energy and 
Natural Resources, the Ranking Member of the Appropriations 
Subcommittee on Interior and the Environment, and above all the 
Senior Senator for the State of Alaska, my interest in this 
issue could not be greater.
    You are all by now aware that one of America's most 
critical pieces of infrastructure, the Trans Alaska Pipeline, 
is now less than one-third full. The tremendous resources 
beneath Alaska's OCS could help refill that pipeline, slash 
America's dependence on foreign oil, create new jobs, and 
generate new government revenues. Yet despite these much-needed 
benefits, even exploration has been blocked because of the 
Environmental Protection Agency's continued inability - or 
simple unwillingness - to issue valid air permits.
    My fellow witnesses will testify to the specifics of EPA's 
failure to comply with both the intent of the Clean Air Act and 
with Congress' directive in the Fiscal Year 2010 Interior and 
EPA Appropriations bill. I will simply say at the outset that 
no matter what anyone's opinion is about offshore oil and gas 
development, in the Arctic or elsewhere, it is indefensible for 
a permit application to take six years when the EPA 
Administrator has testified, as she did in my Appropriations 
subcommittee, that there is no anticipated human health risk at 
issue. That's six years and counting, Mr. Chairman, despite no 
anticipated risk.
    I would also suggest to the members of this committee that 
it is likewise indefensible to allow the EPA's failures to 
serve as a de-facto veto over the national energy security 
interests of the outer Continental Shelf. The Outer Continental 
Shelf Lands Act assigns the Interior Department with the 
mission of the expeditious development of energy resources - 
and those resources belong to the American people, not any 
corporation and certainly not any federal agency. It cannot be 
the EPA's decision, nor their Environmental Appeals Board's 
decision, that determines whether Americans benefit from their 
holdings in the OCS.
    The EPA's core competencies are supposed to involve both an 
understanding of human health impacts and a command of air 
quality permitting regimes so that a regulated operation - be 
it a power plant, a factory, or a drilling rig - can have a 
level of reasonable expectation about the timing of their 
application, especially when there's no human health risk at 
issue. Instead, we're witnessing core incompetency. The air 
permitting process has been confused and really taken advantage 
of by those who have found the Clean Air Act to be less of an 
air quality statute and more of a hidden, blunt instrument that 
can be used to stop energy exploration.
    This is no longer a matter of understanding the process 
better or taking even greater steps to ensure air quality 
concerns are addressed. If the EAB cannot accept a permit that 
took this long and this much accommodation to issue, EAB has no 
place in the process. And likewise, if the EPA cannot 
demonstrate some competency, especially as Congressional urging 
and intent becomes more clear, then EPA should not expect to 
keep its authority for long.
    Mr. Chairman and members of this committee, I am grateful 
for the opportunity to testify before you. Chairman Upton, I 
thank you for your engagement on this important issue. This is 
an area where Congress can act - and I believe must act - to 
considerably improve our nation's energy policy.

    Mr. Whitfield. Thank you, Senator Murkowski. Senator 
Begich, you are recognized for 5 minutes.

                 STATEMENT OF HON. MARK BEGICH

    Mr. Begich. Thank you very much, Chairman Whitfield, and 
Ranking Member Rush, and the members of the subcommittee. Thank 
you for the opportunity to cross the Capitol to testify today 
and congratulations on pursuing the American Energy Initiative.
    As our economy regains steam from the worst economic crisis 
since the Great Depression, developing America's energy 
resources for Americans and by Americans is a vital part of our 
recovery. About a month ago, President Obama proposed 
essentially that when he called for an increased domestic oil 
and gas development and cutting foreign oil imports by a third 
by 2025. The President even said his administration was 
``looking at potential new developments in Alaska both onshore 
and offshore.'' We Alaskans were glad to hear the President use 
the word ``Alaska.'' As American's energy storehouse for better 
than a quarter of a century, we are anxious to continue 
supplying our Nation a stable source of energy, just as we have 
done since the oil starting to flow through the Trans-Alaska 
Pipeline in 1977.
    Simply put, Alaska has enormous untapped oil and gas 
reserves, an estimated 40 to 60 billion barrels of oil on state 
and federal lands and waters. That is approaching a decade's 
worth of U.S. consumption. And we also hold the Nation's 
largest conventional natural gas reserves, more than 100 
trillion cubic feet of this clean-burning fuel. There is no way 
you can do an energy plan without Alaska being a part of it for 
our economic security and our national security.
    As is always the case, it is the details that matter. While 
we welcome the President's interest in increased energy 
development in our State, his administration--and those which 
preceded him--have enacted roadblocks to this laudable goal. I 
know the hearing today focuses on offshore activity, but the 
problem is widespread. In the National Petroleum Reserve-
Alaska, ConocoPhillips has been working for years to secure a 
permit to build a bridge into a petroleum reserve to develop 
oil only to be stalled by the Army Corps of Engineers and EPA.
    In the offshore, Shell has been working for 5 years and now 
approaching 6 years, invested more than $3 billion for the 
opportunity to drill exploratory wells in Alaska's Chukchi Sea. 
They have gotten very close last year, but just when it 
appeared the development had the green light a few weeks ago, 
an internal EPA Environmental Appeals Board sent the air 
quality permit back to the drawing board.
    Mr. Chairman, I have to confess that I haven't studied your 
bill closely. But I do endorse the call for a change. Business 
as usual simply isn't working when it comes to increased oil 
and gas development in my State. That is why I recently offered 
two relevant proposals to change.
    First, creation of a federal coordinator for the Arctic 
OCS. This would be modeled after legislation the late Senator 
Ted Stevens passed establishing a federal gas pipeline 
coordinator. This office would have authority to work across 
the agencies causing Alaska so much heartburn today--the EPA, 
Army Corps of Engineers, and the Interior Department. The 
federal OCS coordinator would work with the State of Alaska and 
affected local governments to streamline development in the 
Chukchi and Beaufort seas, which hold such promise for the 
future of oil and gas development for our State and for this 
country.
    Second, I would suggest, along with my colleague Senator 
Murkowski, that legislation to transfer the authority to 
regulate air quality in OCS oil and gas development off Alaska 
from EPA to the Interior Department, as is done in the Gulf of 
Mexico. Your legislation appears to make the EPA process work 
more like the Interior Department. Either way, we need to get 
to a place where one agency is in charge, where the process is 
the same across the country, and where people who invest time 
and money get a result on a reasonable time frame.
    Thank you for your efforts. As you see today, this is a 
combined effort by our delegation that Alaska oil and gas 
development is critical to our national energy portfolio, our 
national security, and our economic security. So we are just 
honored to be here. Thank you, Mr. Chairman.
    [The prepared statement of Mr. Begich follows:]

                 Prepared Statement of Hon. Mark Begich

    Chairman Whitfield, ranking member Rush and members of the 
subcommittee.
    Thank you for the opportunity to cross the Capitol to 
testify today. And congratulations for pursuing the American 
Energy Initiative.
    As our economy regains steam from the worst economic crisis 
since the Great Depression, developing America's energy 
resources for Americans and by Americans is a vital part of our 
recovery.
    About a month ago, President Obama proposed essentially 
that when he called for increased domestic oil and gas 
development and cutting foreign oil imports by a third by 2025.
    The President even said his administration is - quote - 
"looking at potential new development in Alaska, both onshore 
and offshore."
    We Alaskans were glad to hear the President use the "A" 
word: Alaska. As America's energy storehouse for better than a 
quarter century, we are anxious to continue supplying our 
nation a stable source of energy just as we have been doing 
since oil starting flowing through the trans-Alaska pipeline in 
1977.
    Simply put, Alaska has enormous untapped oil and gas 
reserves - an estimated 40 to 60 billion barrels of oil on 
state and federal lands and waters. That's approaching a 
decade's worth of U.S. consumption.
    And we also hold the nation's largest conventional natural 
gas reserves - more than 100 trillion cubic feet of this clean-
burning fuel.
    As is always the case, it's the details that matter. While 
we welcome the President's interest in increased energy 
development in our state, his administration - and those which 
preceded him - have enacted roadblocks to this laudable goal.
    I know the hearing today focuses on offshore activity, but 
the problem is widespread. In the National Petroleum Reserve-
Alaska, ConocoPhillips has been working for years to secure a 
permit to build a bridge into a petroleum reserve to 
development oil - only to be stalled by the Army Corps of 
Engineers and EPA.
    In the offshore, Shell has been working for five years and 
invested more than $3 billion for the opportunity to drill 
exploratory wells in Alaska's Chukchi Sea.
    They got very close last year, but just when it appeared 
the development had the green light a few weeks ago, an 
internal EPA Environmental Appeals Board sent the air quality 
permit back to the drawing board.
    Mr. Chairman, I have to confess that I haven't studied your 
bill closely. But I do endorse the call for a change.
    Business as usual simply isn't working when it comes to 
increased oil and gas development in my state.
    That's why I recently offered two relevant proposals for 
change.
    First, creation of a federal coordinator for the Arctic 
OCS. This would be modeled after legislation the late Senator 
Ted Stevens passed establishing a federal gas pipeline 
coordinator.
    This office would have authority to work across the 
agencies causing Alaska so much heartburn today - the EPA, Army 
Corps of Engineers and Interior Department.
    The federal OCS coordinator would work with the State of 
Alaska and affected local governments to streamline development 
in the Chukchi and Beaufort seas, which hold such promise for 
future oil and gas development.
    Second, I suggested legislation to transfer the authority 
to regulate air quality in OCS oil and gas development off 
Alaska from EPA to the Interior Department, as is done in the 
Gulf of Mexico. Your legislation appears to make the EPA 
process work like what Interior does now.
    Either way, we need to get to a place where one agency is 
in charge, where the process is the same across the country and 
where people who invest time and money get a result on a 
reasonable time frame.
    Thank you for your efforts and as you see today, these are 
ideas that almost all of our state can get behind.
    Thank you, Mr. Chairman, for this opportunity.

    Mr. Whitfield. Senator Begich, thanks so much for your 
testimony. Now, Mr. Young.

                  STATEMENT OF HON. DON YOUNG

    Mr. Young. Mr. Chairman, much has been said in my statement 
by the two Senators and I won't repeat it. I ask unanimous 
consent to submit it for the record. Mr. Chairman, they both 
put out the information. 5 years we have been waiting for a 
permit. We did get a permit from EPA. Then the Appeals Board 
turned it down. In the continuing resolution we passed earlier 
on this year, we took away the authority of the Appeals Board 
to do so. And I think that is important because we have gone 
through this. And really it is all about a ship. And this ship 
has put millions of dollars to make sure that they have clean 
air. And the EPA finally declared that they did have clean air 
and yet the Appeals Board, on an interest group, turned down 
the permit, another 5 years.
    But I want to go back to the concept of this Nation and 
where we are today. I think you may have read the paper today 
on the cost of fuel. And it will affect the economy. And by the 
way, the people in Chicago is about 4.36 a gallon now. It will 
be $5 by the 1st of July. Now, that does stifle this economy. 
And some people say we have to get off of fossil fuel economy. 
But the meantime I saw my President go down to Brazil and say 
we are going to be your partners. We are going to buy your oil. 
Now, that doesn't make sense to me. Never has made sense to me 
when we spend billions of dollars to send money overseas, 
taking jobs away from Americans and making us more dependent 
upon foreign countries to run our economy. You can't do that.
    We have a big budget battle going on right now. That budget 
battle has really been caused by the lack of being able to 
develop our fossil fuels. And by the way, don't buy this 
concept there is any shortage of fossil fuels. If you read the 
science, we have as much fossil fuels as most of the foreign 
countries do, and especially in Alaska. We figure there is 27 
billion barrels of oil in Chukchi alone, probably 10 billion in 
Beaufort Sea. That is a tremendous amount of oil.
    Now, I am not talking about Florida. I am not talking about 
California, West Virginia, or any other State. I am talking 
about Alaska alone with a pipeline right now is 1/3. Fort 
Greely got shut down this last winter. It got shut down because 
we had a small spill that was controlled by the way the line 
was developed. And we were able to take and restart it.
    And by the way, you talk about the EPA. That is an Agency 
that has run amok. They arrived there in Alaska and tried to 
tell the State that they were going to take control, that it 
was their responsibility, and we could not start the pipeline 
without their oK. If it had been stuck down 2 more days, it 
would have frozen that pipeline. The oil would not flow. And 
that is 12 percent of our economy today, our oil production 
today in the United States. It was at one time 25 percent.
    So I am suggesting your legislation is long overdue. You 
know, the EPA is an agency right now that thinks that they can 
thumb their nose at you--I didn't thumb my nose at you--and not 
answer questions. They should be here. Now, I can't quite 
understand that. Like you say 17,000 employees and they 
couldn't--send a janitor down. I think it would be a good idea. 
Because what they say--don't you even touch this. We are now 
the authority. We are now the Government of the United States 
and don't you even question us. This so-called oilfield is 70 
miles offshore and we are really talking about a rig, a drill 
ship, one ship which they put all the efforts into it to make 
sure that it got clean air. And to have an agency say no, 
national security doesn't count. We are worried about the 
inhabitants, and by the way, the inhabitants, you are going to 
hear testimony later from one of them.
    But I communicate and I represent that whole State. There 
are two Senators, one Congressman. And you will find out they 
worked very hard--Shell has worked very hard with Point Barrow 
and the others for committing in those areas and in fact they 
have an agreement working together with the local communities.
    Now, of course, you are going to have dissent. We know 
that. Dissent usually fueled by outside interests. And we know 
that, too. We will fight this battle. And by the way, I am the 
only person in this room that had the pipeline built in 1973. 
We passed that legislation out of Congress. Whatever we have to 
do in this Congress, if we want energy independence, we have to 
have that one provision I put in that bill, and that is a 
provision there shall be no lawsuits by interest groups to stop 
a project in the name of national security.
    And we did that. We built that pipeline in 3 years. It is 
one of the greatest wonders of human construction that has ever 
been seen and has worked beautifully through earthquakes and 
other activities. It can be done, but we have to get oil back 
in that pipeline. And one way we can do it is through your 
legislation. Thank you, Mr. Chairman.
    [The prepared statement of Mr. Young follows:]

                  Prepared Statement of Hon. Don Young

    Chairman Whitfield and Ranking Member Rush, thank you for 
holding this hearing and giving me this opportunity to testify.
    Since 2005, companies have spent $4 billion dollars and 
acquired 680 leases off the Arctic coast of Alaska but have 
been unable to drill them, not because of safety or 
environmental reasons, but due to the federal government's 
inability or unwillingness to issue them.
    But through all of this, the primary problem has been EPA's 
inability to issue an adequate air permit for a drill ship that 
would operate for a maximum of 120 days in an offshore area 
approximately 70 miles from the closest humans.
    The Federal government's inability to issue viable permits 
to drill offshore Alaska is keeping resources and domestic jobs 
from the American people.
    EPA's failure has jeopardized tens of thousands of high-
paying jobs, and threatened the long-term viability of the 
Trans Alaska Pipeline System and our Nation's energy security 
during a time of high energy prices and unrest in many energy 
producing countries.
    USGS estimates that the Chukchi alone holds 27 billion 
barrels of oil and 132 trillion cubic feet of gas. In 
comparison, when Prudhoe Bay was discovered, there was only 
expected to be 10 billion barrels. 16 billion barrels later, 
Prudhoe Bay is still in development.
    However, development opportunities on state lands are 
rapidly decreasing, and the Trans Alaska Pipeline is running at 
one-third capacity. At much lower throughputs, the pipeline 
will not be able to operate safely or economically.
    Recently, Alaska's Governor issued a goal of reaching 1 
million barrels a day of throughput in TAPS. Without the 
federal government's support, this will be hard to meet. The 
Jobs and Energy Permitting Act represents a positive step 
towards securing an American energy future, reaching the goals 
of deficit reduction, and providing well-paying American jobs 
here at home.

    Mr. Whitfield. Thank you, Mr. Young. And I want to thank 
all of you for taking time today. I know that you do have very 
busy schedules and we appreciate your testifying on this 
important subject matter.
    Senator Begich, you made a comment which I certainly agree 
with and that is that there should be one agency responsible 
for issuing these permits. And I would ask Senator Murkowski, 
do you agree with that or not?
    Ms. Murkowski. I don't know that I would agree with that if 
the agency is the EPA. The EPA has demonstrated a level--the 
word that I used in my testimony was incompetency in this. When 
you have the administrator of the EPA admit in open record 
that, in fact, there is no human health risk and could not 
defend the fact that it has taken over 5 years to issue an air 
quality permit, then I would suggest to you that we need to 
figure out a way that we have a process that works. Look to how 
the process works down in the Gulf of Mexico where the 
Department of Interior--through MMS or now BOEMRE--has worked 
to facilitate it. They have figured it out. It is 45 days on 
average to issue a permit there, 5 years plus by the EPA. So it 
is not just making sure that there is one agency in charge but 
that there is an agency that has a competency to issue these 
permits.
    Mr. Whitfield. Well, that is a good comment. I certainly 
agree with that. And I find it interesting that we are in this 
situation where we got Department of Interior issuing these 
permits in the Gulf and EPA everywhere else on the Outer 
Continental Shelf. And the fact that on the average it has 
taken Department of Interior 45 days, we do need an expedite 
process and I believe that they can make those decisions 
certainly in a quicker way than 6 years.
    One of the things that is disturbing me is that President 
Obama talks a lot about energy independence and yet I get the 
clear impression that his Cabinet officials, particularly the 
EPA, are doing the direct opposite of what he is saying. He 
talks a lot about green energy and we know that somewhere down 
the road green energy is going to play a major role in 
producing energy in America, but it is not there yet. And as 
Mr. Young said, we have so much fossil fuel in this country 
that this administration is doing everything possible to make 
it more expensive to burn fossil fuel. Even the Secretary of 
Energy made that comment. He said that gasoline prices should 
be more like what they are in Europe. So do you get the sense 
that EPA, with this administrator, is a serious obstacle to 
America becoming independent on fuel issues? Yes, sir?
    Mr. Begich. I would like to respond. I think there is a 
disconnect from what the President says and what the agencies 
are doing. I mean, you know, an example that we just gave on 
the 5 years to get a permit, they are halfway through their 
lease. So they have less than 5 years to perform on that lease. 
So the economics of it now become even more difficult. And if 
you think about the whole issue of are we going to become less 
dependent on foreign oil of countries that are not our 
friends--and there is plenty of them that we are buying from--
the only way you do that is you have to develop domestically. 
You know, that is why I made the comments that I heard him say 
``Alaska,'' which we are very happy he said it. The question is 
will the agencies perform on that directive or that statement? 
And so far that has not been the case, at least in my limited 2 
years here in the Senate.
    Mr. Whitfield. Yes, Senator Murkowski?
    Ms. Murkowski. Mr. Chairman, you ask a very pertinent, very 
important question, and I would agree with my colleague that in 
fact the agencies are acting as an impediment to how we truly 
gain not only energy independence, but when we talk about 
national security interest, it is so integrally tied and 
related to energy.
    Congressman Young has mentioned the rising price of gas at 
the pump and all of our constituents are coming to us and 
saying what can you do to decrease that price, to lower the 
price? There is not a lot that we can do right here today to 
bring it back down below $3 from where we are right now. But 
there are some things that this President and this 
administration can do to keep the prices from going up. We 
might not be able to get them to go down, but let us keep them 
from going up.
    And what we are seeing right now with this level of agency 
kind of pile-on if you will, it is keeping us from doing what 
we need to do as a Nation to gain our own energy independence 
through increased domestic production. And whether it is the 
EPA regulations as they relate to emissions, whether it is the 
failure to advance a permit for a bridge so that we can access 
oil on the National Petroleum Reserve, these are agency 
decisions that are cutting off our ability for energy 
independence and raising the prices of energy to Americans all 
over the country, not just in Alaska.
    Mr. Whitfield. It is my understanding that this platform 
out in the Beaufort Sea, if it started production, would be 
producing something like 1 million barrels a day, is that 
right?
    Mr. Young. Beaufort Sea is not quite as much as Chukchi but 
would probably be a million barrels a day. We were producing 
2.2 million barrels at one time out of Prudhoe Bay.
    Mr. Whitfield. OK.
    Mr. Young. And that has that capacity.
    Ms. Murkowski. And if I might just add, Mr. Chairman, we 
have not given up on opening up ANWR, an incredible reservoir 
just to the east of Prudhoe Bay. That, too, could yield a 
million barrels a day. Now, think about what that means to us 
in our economy and our jobs and our revenues into this country, 
$153 billion that this country could benefit from.
    Mr. Whitfield. Absolutely. Mr. Rush, you are recognized for 
5 minutes.
    Mr. Rush. Thank you, Mr. Chairman. Mr. Chairman, I am kind 
of bemused at the finger-pointing at the EPA for essentially 
coupling the EPA's activities with the activities of the Obama 
administration. I recall--and you can correct me if I am wrong 
here--I think the current EPA administrator has been in office 
for about 2 years. And as the Senators, who I really deeply 
respect and Chairman Young who I deeply, deeply respect, they 
both have indicated that this permitting process has been 
delayed for about 5 years. So it seems as though the EPA under 
the Bush Administration was the first one to delay these 
permits. Is that true?
    Mr. Young. I would suggest one thing. There is no 
administration to blame for the EPA but the fact that Richard 
Nixon created it. And he created a lot of other problems, too. 
But the truth of the matter is is I am not laying this blame on 
the President, because I think there is a disconnect with the 
President and the EPA, but that is the creation of power that 
has been generated over the years. You know, this is not the 
first time I have done battle with the EPA. They have been 
trying to insist on an arsenic quality in water on the Kenai 
Peninsula where we put in a project because of the EPA 20 years 
ago to meet the standard. And now they come back and say you 
have got to do it again with no science behind it.
    Mr. Rush. Mr. Chairman, I do understand. I just want to 
make sure that--you know, it seems as though there are some who 
are trying to point their fingers----
    Mr. Young. No, I am not.
    Mr. Rush [continuing]. At the President and I don't think 
that the President at this time is responsible for these 
delays.
    Now, let me just ask--either of you can answer this or all 
of you can answer this--I understand the EPA did issue permits 
but they were invalidated by the EAB. Can you tell the 
committee the circumstances of why the EAB invalidated the 
permits and whether or not you agree with those circumstances? 
Or what were the particulars?
    Ms. Murkowski. I think you will get some additional 
testimony on this this afternoon just looking through the 
witness list here. But I think the simple story is is that in 
fact a permit was issued. The EAB then came in and determined 
that the issuance of that permit was not supported because 
there had been subsequent changes to the EPA requirements. So 
in other words, you have been working on a process for a period 
of years. You get that through the process, the permit is 
issued, and then the EAB comes in and says well, in fact we 
have changed the rules. We have changed the requirements. In 
other words, we have moved the goalposts. And so this permit 
that was issued is no longer a valid permit. Again, there are 
clearly more details that I think will be spoken to later, but 
it was a situation where the rules were changed, I think, in 
the middle of the process, again, thwarting the ability to gain 
a permit that had been in process for 4 years.
    Mr. Begich. If I can respond, too, Congressman, just to 
echo those comments, but also the bigger picture here, the 
amount of time it takes as compared to the Gulf of Mexico to do 
the same kind of operation even, in some cases, deeper water, 
clearly, higher pressure, clearly, than what we operate and 
hope to operate in the Arctic. And I guess my point--and I 
agree 100 percent with Senator Murkowski--that the goalpost was 
kind of moved down the line, but put that aside. For us to take 
this many years may be the ConocoPhillips development on the 
petroleum reserve established by the country----
    Mr. Rush. With all due respect, I only have a few more 
minutes and I have another point I want to make. And I just 
want to say that, you know, I am concerned also about the 
length of time that these permits are taking.
    But on a matter of Administrator Jackson's statement that 
was alluded to earlier. I have looked at her statements about 
health impacts and there is a context in which she made this 
statement. She did not say that these operations have no 
potential for health impacts. She was discussing the permit 
that EPA had granted which required Shell to install air 
pollution controls. The EAB had asked EPA to provide better 
analysis showing that the final permit, in fact, protected 
local communities and set aside environmental concerns. In that 
context, Administrator Jackson expressed confidence that 
further analysis would show that EPA's permit was, in fact, 
sufficiently protective. Nothing in her statement supports the 
notion that we can shortchange air quality protection because 
these sources don't threaten health.
    If we had EPA here, we could hear from them directly on 
this point, Mr. Chairman. I yield back the balance of my time.
    Mr. Whitfield. It is the practice of this subcommittee that 
when we have a panel of witnesses that are in the Senate or in 
the House that the chairman and ranking member are the only 
ones who will ask questions.
    So I want to thank you all very much for taking time to be 
here. We look forward to working with all of you as we pursue 
this legislation. Thank you very much.
    Mr. Young. Thank you.
    Mr. Whitfield. At this time, we will call the second panel 
of witnesses. On the second panel, we have the Honorable Dan 
Sullivan, who is the commissioner of the Alaska Department of 
Natural Resources. We have Mr. David Lawrence, who is the 
executive vice president of exploration and commercial 
development with Shell. We have Ms. Rosemary Ahtuangaruak, 
former mayor of Nuiqsut, Alaska. We have Mr. Richard Glenn, who 
is the executive vice president, Arctic Slope Regional 
Corporation. We have Dr. Scott Goldsmith, who is professor at 
the Institute for Social and Economic Studies at the University 
of Alaska. We have Mr. Erik Grafe, who is staff attorney for 
Earthjustice. And we have Mr. Robert Meyers, who is senior 
counsel of Crowell & Moring.
    I want to thank all of you for taking time to be with us 
this morning as we discuss this discussion draft.
    And at this time, Mr. Sullivan, I appreciate your coming 
all the way from Alaska, and I will recognize you for 5 minutes 
for your opening statement.

STATEMENTS OF THE HONORABLE DAN SULLIVAN, COMMISSIONER, ALASKA 
DEPARTMENT OF NATURAL RESOURCES; DAVID LAWRENCE, EXECUTIVE VICE 
   PRESIDENT, EXPLORATION AND COMMERCIAL DEVELOPMENT, SHELL; 
 ROSEMARY AHTUANGARUAK, FORMER MAYOR, NUIQSUT, ALASKA; RICHARD 
   K. GLENN, EXECUTIVE VICE PRESIDENT, ARCTIC SLOPE REGIONAL 
 CORPORATION; SCOTT GOLDSMITH, PROFESSOR, INSTITUTE FOR SOCIAL 
  AND ECONOMIC STUDIES, UNIVERSITY OF ALASKA, ANCHORAGE; ERIK 
  GRAFE, STAFF ATTORNEY, EARTHJUSTICE; AND ROBERT J. MEYERS, 
                SENIOR COUNSEL, CROWELL & MORING

                   STATEMENT OF DAN SULLIVAN

    Mr. Sullivan. Thank you, Mr. Chairman. Good morning. 
Representative Rush, good morning, sir. My name is Dan 
Sullivan. I am the commissioner of the Alaska Department of 
Natural Resources. I am also a former attorney general of 
Alaska, former U.S. Assistant Secretary of State with 
responsibilities over global energy, finance, and economic 
issues, and I am currently a U.S. Marine Corps reserve officer 
as well.
    Mr. Chairman, I have submitted extensive written testimony 
for the record and would like to briefly touch on the main 
points.
    Our country faces very serious energy security challenges, 
and Alaska can and should be able to play a significant role in 
partnership with the Federal Government in helping our fellow 
citizens address these challenges. Unfortunately, right now 
that is not happening. And I would like to explain that in a 
little bit more detail.
    Alaska is home to one of America's most vital components of 
energy security infrastructure, the Trans-Alaska Pipeline 
System. As Congressman Young stated, Congress played the 
critical role in the creation and rapid construction of TAPS. 
You are the godfather of this critical American asset. 
Unfortunately, your godson sits two-thirds empty from its peak 
of 2.2 million barrels a day down to 640,000 barrels a day and 
declining. Working together, we are confident that we can fix 
this situation and further promote America's energy security.
    First, as was already mentioned, the North Slope of 
Alaska--by any measure both on- and offshore--remains one of 
the world's most productive hydrocarbon basins with estimates 
of convention and unconventional oil in the billions of barrels 
and estimates of natural gas in the trillions of cubic feet.
    Second, Alaska is one of the most environmentally stringent 
places on earth to explore and produce hydrocarbons. We are 
also one of the world's top innovators of safer environmental 
technologies.
    And third, the State of Alaska is doing all it can to 
reverse the TAPS throughput decline with a comprehensive set of 
reforms that include significant tax and fiscal reform, 
permitting overhaul, and the creation and construction of new 
infrastructure projects. But we are missing a critical partner, 
Mr. Chairman, and that is the Federal Government.
    The Federal Government's policies in Alaska have shifted 
from helping us protect our environment--which we support 
because we care deeply about it--to proactively shutting down 
resource development. Now, this is not just rhetoric. As 
Senator Begich said, this is a widespread problem in Alaska.
    If you look at pages 13 through 18 of my written testimony, 
I provide 7 specific examples in less than 2 years where the 
Federal Government has made decisions that will stall, kill, or 
delay resource development on state and federal lands in 
Alaska. This antidevelopment posture by our own Federal 
Government is the cause of enormous frustration and anger for a 
vast majority of Alaskans. Now, the State has done all it can--
countless meetings, letters, public comments, testimony, and 
yes, even suing our own Federal Government--to dissuade the 
federal administration from pursuing and continuing locking up 
Alaska's resources. Why? Because we believe in doing so, 
locking up the resources, it not only hurts Alaskans, it 
significantly undermines broader American interests.
    Rarely has there been a federal policy that fails on so 
many fronts. Jobs and economic growth, energy security, the 
national trade deficit, the federal budget deficit, and 
national security are all undermined when Americans are 
prevented from producing energy for our own citizens from the 
largest resource basin in the country. Ironically, this policy 
also undermines global environmental protection because it 
drives resource development overseas to places like Brazil, 
Russia, Saudi Arabia, Kazakhstan, Azerbaijan. Mr. Chairman, I 
have been to all these countries. This committee can be sure 
that they do not have nearly the stringent environmental 
standards that we have in Alaska.
    But my main purpose in traveling from Alaska today is not 
to complain but to redouble our efforts to achieve the federal 
partnership that we believe is so critical for Alaska and 
America's success.
    So in closing, Mr. Chairman, I believe there are three 
important things Congress can do. First, support Alaska's goal 
of one million barrels of oil through TAPS within 10 years. 
Attached at the end of my written testimony is a recent letter 
from Governor Sean Parnell of Alaska to President Obama asking 
the President to support this ambitious goal which Governor 
Parnell laid out last week. We believe the Congress should make 
achieving this goal a national priority, one million barrels of 
oil through TAPS within a decade.
    Second, continue to work on permitting reform to expedite 
and bring certainty to federal permitting decisions. During 
World War II, America built the 1,400-mile ALCAN Highway in 
less than a year. Today, a project like that would take 5 years 
just to fill out the EIS application.
    And finally, Mr. Chairman, Congress should continue its 
vigilant oversight role of federal agencies that make resource 
decisions in Alaska. As a former attorney general, I believe 
that some of these decisions are made with little regard to 
Congress' declared national policies and federal law, and I 
think it is important to recognize that.
    Thank you very much, Mr. Chairman.
    [The prepared statement of Mr. Sullivan follows:]



    
    Mr. Whitfield. Mr. Sullivan, thank you very much. Mr. 
Lawrence, you are recognized for 5 minutes.

                  STATEMENT OF DAVID LAWRENCE

    Mr. Lawrence. Thank you, Mr. Chairman, members of the 
committee. I appreciate the opportunity to speak to you today. 
I have been asked to talk about Shell's Alaska exploration 
program and the regulatory challenges that have blocked it.
    Mr. Whitfield. Is your microphone on, Mr. Lawrence?
    Mr. Lawrence. Thank you, Mr. Chairman. First, let me make 
three points. Our Nation needs oil and gas. Second, Alaska's 
Outer Continental Shelf has world-class resources. Third, 
developing these resources has broad and long-term benefits. It 
is widely recognized that the world's demand for energy will 
double by 2050 and to meet it, we will need all forms of 
energy.
    Government estimates say Alaska's offshore holds at least 
27 billion barrels of oil and it may be much, much more. We 
can't know until we can actually explore with the drill bit. We 
have been ready to do that since 2007. However, we have been 
blocked by regulatory barriers. One of the most frustrating, 
the inability to get a usable air permit from the EPA. This is 
a concern for Shell, but more importantly, it is a concern for 
the Nation.
    Put simply, Alaska's OCS is an imperative for energy 
supplies, the economy, and national security. Developing 
Alaska's resources will contribute substantially to meeting the 
energy needs of America's consumers and America's businesses. 
It is not unreasonable to assume that production from Alaska's 
OCS will ready 700,000 barrels per day for 40 years. That is 
equivalent to the 2010 oil imports from Iraq and Russia 
combined. In 2030, some have estimated that peak production 
could be over 1.4 million barrels per day. And that is more 
than our 2010 imports from either Saudi Arabia or Nigeria.
    Reducing foreign imports has immediate economic benefits. 
The balance of trade will improve. U.S. dollars will remain 
here in our own economy. Alaska's OCS development will create 
an average of nearly 55,000 jobs per year for generations. 
These are long-term, well-paying jobs both in Alaska and the 
lower 48. It will generate conservatively $197 billion in 
government revenue from royalties and taxes. The oil will move 
through the Trans-Alaska Pipeline, which continues to be a 
major supply line to the lower 48. Without additional 
production in Alaska, this critical infrastructure will 
collapse and we cannot stand by and allow this.
    Regulatory barriers that undermine the Nation's oil and gas 
leasing program should be a concern to policymakers. Consider 
the facts. At the government's invitation, Shell participated 
in offshore lease sales in Alaska. We paid the government more 
than $2 billion for those leases and invested more than $1.5 
billion to prepare for an exploration program that meets and 
exceeds all regulatory requirements. But despite our most 
intense efforts, we have yet to drill a single well. This is 
highly unusual. When the Federal Government holds a sale, it is 
saying OCS exploration and development is desired. If a company 
presents a plan that meets all regulatory requirements, that 
plan should be permitted.
    Unlike a development and production program, exploration 
here is a temporary, short-term operation. Our initial Alaska 
wells will each take just 30 days to complete. Data will be 
gathered and the well will be permanently plugged and 
abandoned. These are not complex wells. The wells in Alaska's 
OCS are vastly different from those in deeper water, 
specifically in terms of water depth and reservoir pressure. 
Much lower pressure means the mechanical barriers in Shell's 
well designs will have even greater safety margins and much 
lower risk profiles than we see elsewhere in the deepwater 
Gulf.
    Still, Shell has assembled an unprecedented oil spill 
response capability. And there is no question that the bar 
should be high in the Arctic. We support high standards and a 
robust permitting process. But the process must work. And the 
EPA permitting process has failed. The emissions from our 
program pose no threat to human health. The EPA administrator 
herself stated this during a recent Senate hearing.
    No company should endure the delays and waste we have 
experienced over the last 5 years. Certainly, this is an area 
that Congress should address. First, Congress should clarify 
where emissions from an OCS facility should be measured. For 
onshore facilities like a manufacturing plant, emissions are 
measured generally at what is referred to as ``the fence 
line.'' Offshore drilling ships have no fence lines and the 
public is many, many miles away.
    Second, Congress should provide a clear definition for the 
point in time when a drilling vessel becomes regulated by the 
Clean Air Act.
    And third, Congress should require EPA to take final agency 
action on an OCS air permit within 6 months of receiving a 
complete application and should centralize any potential 
judicial review of final permits in the D.C. Court.
    Thank you, and I look forward to answering your questions.
    [The prepared statement of Mr. Lawrence follows:]



    
    Mr. Whitfield. Thank you, Mr. Lawrence. Ms. Ahtuangaruak, 
you are recognized for 5 minutes.

               STATEMENT OF ROSEMARY AHTUANGARUAK

    Ms. Ahtuangaruak. Chairman, Ranking Member Rush, members of 
the committee, thank you for the invitation to participate in 
today's hearing.
    Mr. Whitfield. Would you move the microphone a little 
closer?
    Ms. Ahtuangaruak. My name is Rosemary Ahtuangaruak and I 
have lived on the coast of the Arctic Ocean for most of my 
life. I recently moved to Barrow, Alaska from Nuiqsut, Alaska. 
I have served as mayor on numerous councils and organizations 
related to tribal leadership and for a long time as a community 
health aide. I am testifying on behalf of Alaska Wilderness 
League.
    I am here to tell you how oil and gas development affects 
those of us who live on the Arctic Slope. This bill you are 
considering, to allow the oil industry to sidestep regulations 
on pollution as set forth by the Clean Air Act, will have a 
devastating impact on my people, who have called the Arctic 
home for thousands of years. If you allow this bill to move 
forward, you are telling me and everyone who lives in the 
Arctic that we--proud Inupiats and Americans--are less 
important than a few foreign-owned oil companies like Shell 
Oil.
    Shell's proposed 2010 activities in the Chukchi Sea--much 
of which would be exempt under this law--would have released as 
much pollution as 825,000 cars driving 12,000 miles in a year 
and next year they are looking to more than double their 
proposed activities. Emissions from the oceangoing vessels that 
Shell is proposing to use include major contributors to global 
climate change. It has been well documented that air pollution 
travels long distances, and Shell's 2009 application for 
drilling permits showed that operations in the Chukchi Sea 
could cause significant health impacts to the Arctic Slope 
communities. We are rightfully concerned about the 
ramifications of these emissions and the overall actions as 
proposed.
    Currently, the oilfields across the North Slope emit twice 
the amount of nitrogen oxide as emitted in Washington, D.C. All 
onshore North Slope communities would be additionally impacted 
by Shell's offshore proposal, including my former home, 
Nuiqsut, just west of the Arctic National Wildlife Refuge. 
Nuiqsut is already surrounded by oil pipelines from the Alpine 
oil field less than 4 miles away and a yellow haze can be seen 
for miles and miles. During winter there are many natural gas 
flares. As a result, I spent many busy nights on call 
responding to community members' complaints about respiratory 
illnesses. Our people have markedly higher rates of pulmonary 
disease than the general U.S. population and may have genetic 
predispositions to disease that differ from other U.S. 
populations. Our people are substantially more vulnerable to 
morbidity and mortality from air pollution than are other 
Americans.
    When I started my career as a health aide in 1986, there 
was only one asthmatic patient. Then oil and gas was still many 
miles away. When I took my first break in '97, there were 60 
people who had to use respiratory medications. Industry got 
much closer to my home. For this village of more than 500 
people, a 600 percent increase in respiratory patients should 
get some type of response. Yet our voices continue to be 
ignored. Watching the eyes of babies fighting to breathe tears 
into you. Families have to fly sick children out of the village 
to Barrow or Anchorage. Knowing that the family has to send a 
parent with the child, what does it take from the family and 
the community?
    Our people depend on a lifestyle and diet that is radically 
different from other U.S. populations. I live a very 
traditional lifestyle--hunting, fishing, whaling, gathering, 
and teaching my family and community members the traditional 
and cultural activities as my elders taught me. The land, sea, 
and air provide for us through the long, dark winters. Because 
of this, the Inupiat culture is intricately tied to the Arctic 
Ocean and our exposure to pollution comes from both our time on 
the land and on the water. We spend much of our time on the 
water fishing, hunting, and otherwise feeding our families. Our 
hunters and fisherman are out on the ice in the winter all year 
long. In the springtime and summer, we are out hunting for 
seals and preparing for the whaling season. In the fall, we are 
fishing and whaling. When the water freezes, we are preparing 
the whale for storage and preparing for the feasting and 
sharing.
    Our people have used the Arctic Ocean since time immemorial 
for our subsistence practices. We don't just stay on land. Yet, 
despite the direct effects on our communities, this bill would 
also limit how my people participate in the clean air process 
while explicitly preserving the industry's right to appeal 
these same decisions. The Federal Government has continually 
failed in their responsibility to conduct government-to-
government consultation with my people. This bill would even 
more severely limit our voice in the process that directly 
affects our wellbeing.
    The Arctic Ocean is our garden. For thousands of years, we 
have stood watch over this garden and the animals that live in 
it. I ask you now, please don't keep us from fulfilling our 
sacred duty to protect this place and pass it on to our future 
generations.
    [The prepared statement of Ms. Ahtuangaruak follows:]



    
    Mr. Whitfield. Thank you. Mr. Glenn, you are recognized for 
5 minutes.

                 STATEMENT OF RICHARD K. GLENN

    Mr. Glenn. Thank you. Can you hear me?
    Chairman Whitfield, Ranking Member Rush, and subcommittee 
members, my name is Richard Glenn and I live in Barrow, Alaska. 
I am executive vice president of Lands and Natural Resources 
for the Arctic Slope Regional Corporation.
    The Arctic Slope Regional Corporation is one of the 12 
land-based Native regional corporations created pursuant to the 
Alaska Native Claims Settlement Act of 1971. ASRC owns 
approximately 5 million acres of land and is owned by the 
11,000 Inupiat Eskimo shareholders that mostly reside in 8 
villages of Alaska's North Slope.
    This discussion is timely. Right now, our region is 
preparing to assemble our leadership on this very topic. And we 
find that this issue boils down to community survival. Our 
villages are small and they are separated by great distance. No 
roads connect our villages. Barrow is located 340 miles north 
of the Arctic Circle, near the boundaries of the Chukchi and 
Beaufort Seas. We might not be able to see Russia from our 
front window, but we can sure see the changing Arctic and the 
Chukchi and Beaufort Sea.
    This is a region of tundra plains. It is devoid of trees. 
The average temperature in winter, well below zero. In Barrow 
where I live, the ground is frozen down to about 1,000 feet 
below surface. In our remote village, fuels can cost more than 
$10 a gallon; milk, $11 a gallon; diapers, $22. Despite these 
challenges, as my friend Rosemary said, the Inupiat have 
endured for centuries. We have a close relationship with both 
the land and the sea.
    In my lifetime, our communities have gone through great 
change. Today, our ``villages'' are really small cities. They 
have small city needs: power plants, water and sewer 
facilities, health services, fire protection, roads, and 
schools. Our people depend on these services which are provided 
for by our home rule municipality, the North Slope Burrow. It 
is the largest county in the country. It is based on locally-
derived property taxes that they are based on oil and gas 
exploration in our region. There is essentially no other 
economy in our region.
    The volume of oil being produced in Alaska is in steep 
decline, as this committee has heard. This threatens the future 
of our communities and our culture that we have worked so hard 
to sustain. We have asked ourselves, what will our 
grandchildren do? Where will they go to school? What will power 
their villages?
    We understand that current onshore resources are not enough 
to stem the decline in production, which directly affects our 
communities. It may seem odd to some of you that Eskimos in 
Northern Alaska are seeking ways to increase the volume of oil 
moving through the Trans-Alaska Pipeline, but here we are. Safe 
and responsible oil and gas development is the only industry 
that has remained in our region long enough to foster village 
improvements. We have coal, natural gas, and oil, and in some 
places in our region, we have them in great abundance. 
Development of these resources is critical to our survival.
    The people of the North Slope also have a heightened 
concern for the environmental effects of oil and gas 
exploration and development. No one has more at stake than we 
do regarding environmental risks. The animals that we depend 
upon for our food and our culture migrate over large ranges in 
the land and in the ocean. Like most of my fellow community 
members, I depend on them. I depend on the sea resources for 
sustenance. I have served as a co-captain in my extended 
family's whaling crew.
    In studying the issues related to offshore development, we 
focused on safety and prevention. And we were favorably 
impressed by the timing, the technology, and the safeguards 
introduced by Alaska's OCS explorers. Our eyes are open on this 
issue. We know there are risks and we believe they have been 
mitigated appropriately.
    Regarding air quality, we note that the exploration areas 
in the Arctic are more than 50 miles away from the nearest 
community. There are also significantly fewer drilling 
operations envisioned for the Alaska OCS than the Gulf of 
Mexico. We question why, despite these differences, there are 
Clean Air Act requirements that apply to OCS sources in Alaska 
that don't apply to those same sources in the Gulf of Mexico.
    Thank you for giving this important issue your attention. 
Our intent is to remain at the table with both government and 
industry. Let me be clear. Without development in our region, 
our communities will not survive. Please allow us to meet our 
responsibilities to our grandchildren and future generations. 
As Congress goes forward and debates this issue, remember the 
impacts your decisions will have on our communities, our 
culture, and our people.
    [The prepared statement of Mr. Glenn follows:]



    
    Mr. Whitfield. Thank you, Mr. Glenn. Dr. Goldsmith, you are 
recognized for 5 minutes.

                  STATEMENT OF SCOTT GOLDSMITH

    Mr. Goldsmith. Thank you, Chairman Whitfield, Ranking 
Member Rush, and committee members. My name is Scott Goldsmith. 
I have been a professor of economics at the University of 
Alaska for 35 years and recently co-authored a study of the 
economic effects on the State from development of the oil and 
gas resources from the OCS off the North Shore of Alaska. 
Funding for the study was provided by Shell Exploration and 
Production. I am testifying on my own behalf and not as a 
representative either of the university or Shell.
    In 2006, the Department of Interior MMS estimated that the 
undiscovered, economically recoverable oil in the Beaufort and 
Chukchi Seas was 12.5 billion barrels--assuming $60 as a price 
of oil--more than the initial estimate of recoverable oil from 
Alaska's Prudhoe Bay field, the largest ever discovered in 
North America. The economically-recoverable natural gas was 
estimated to be 50 trillion cubic feet.
    Industry interest in the Alaska OCS is reflected in the 3 
recent lease sales. 2 sales in the Beaufort Sea in 2005 and 
2007 generated $367 million in bonuses and 1.1 million acres 
leased. The Chukchi sale in 2008 generated $2.3 billion in high 
bids and 2.8 million acres leased.
    Development of these resources could result in production 
of more than 1 million barrels of oil a day for more than a 
generation. This could reduce foreign imports, currently 10 
million barrels per day, by 10 percent and improve our balance 
of trade by $36 billion a year, assuming $100 per barrel of 
oil.
    Of course there are many technical, economic, logistical, 
environmental, and other challenges to achieving that 
production goal, and under the best of conditions it would take 
nearly a decade to reach first production. At the time our 
study was done, we projected that production could begin in 
2018. Today, first production is still at least 10 years away, 
in 2021.
    Petroleum has been the most important economic driver for 
Alaska since it became a State in 1959. The economy today would 
be half as big without petroleum and hard-pressed to support a 
basic level of services for its citizens. Without petroleum 
about 60 percent of all jobs would be dependent on the Federal 
Government.
    16 billion barrels of oil has been produced from state 
lands on the North Slope over the last 35 years, but the 
largest fields--Prudhoe Bay and Kuparuk--have been in decline 
for 20 years. Development of nearby small fields, hard-to-reach 
reservoirs, and unconventional reserves face economic 
challenges, and all projections are for a continued decline in 
onshore production. Because of this, the State faces an 
uncertain future. Providing industry access to petroleum 
reserves on federal lands offers the best path to continued 
economic prosperity for the State.
    OCS development could add an annual average of 35,000 jobs 
to the Alaska economy over the next 50 years, offsetting the 
likely job loss from the continued decline of production on 
state lands. These would be high-paying year-round jobs with a 
combined payroll of $75 billion. These jobs and the sales of 
Alaskan businesses providing support activities could be the 
foundation for a sustainable economy for the State for a more 
than a generation.
    Under current law the Federal Government retains 
essentially all the public revenues from leases, bonuses, and 
royalties from the Alaska OCS. We estimate state revenues of 
$17 billion spread over 50 years. Local governments directly 
impacted by development would receive $3.5 billion over that 
same period. These revenues would be small compared to current 
state spending, but large compared to the communities on the 
North Slope.
    Alaska OCS development could also generate annual average 
employment of 28,500 in the rest of the US and substantial 
revenues. At an oil price of $100, federal revenues from 
royalties, income taxes could be $226 billion over the next 50 
years. State income and sales taxes outside Alaska could be $7 
billion. Moving forward with the Alaska OCS would enhance the 
potential for further development of Alaska's other petroleum 
resources.
    Alaska OCS development would enhance the viability of a gas 
pipeline to supply Alaska natural gas to the lower 48 because 
it would increase the amount of gas available to a pipeline. 
OCS oil flowing through the Trans-Alaska Pipeline would keep 
the cost of transportation low, enhancing the economic 
viability of smaller onshore reserves. It would extend the 
useful life of the pipeline that some suggest is in danger of 
shutting down from technical challenges. It would increase the 
options for development of unconventional resources. Delays in 
development put these opportunities at risk.
    Because of petroleum, the Alaska economy has remained 
relatively strong through the recent recession. But oil 
production today is only 1/3 the level of 20 years ago and 
continuing to fall at 6 percent a year. Looking forward, 
Alaskans are asking what will sustain the economy for the next 
generation and understandably concerned. Moving forward with 
OCS development would be a strong positive signal that 
opportunities exist for a strong economic future for the State 
and its citizens.
    [The prepared statement of Mr. Goldsmith follows:]



    
    Mr. Whitfield. Thank you very much. Mr. Grafe, you are 
recognized for 5 minutes.

                    STATEMENT OF ERIK GRAFE

    Mr. Grafe. Thank you very much, Mr. Chairman, members of 
the committee. Thank you for inviting me to participate in 
today's hearing.
    My name is Erik Grafe and I am an attorney with 
Earthjustice, national public interest conservation law firm. I 
work and reside in Anchorage, Alaska.
    By way of background, Americans Arctic Ocean has sustained 
human communities for thousands of years and is home to some of 
the world's most iconic wildlife species. However, fundamental 
gaps exist in our basic scientific understanding of the region. 
Further, global warming is transforming it dramatically. In 
recent years, offshore oil and gas activities have also 
increasingly threatened the Arctic Ocean as permitting and 
planning decisions have been rushed forward without adequate 
baseline data, coordination, public involvement, or oil spill 
planning.
    The bill under consideration today would add another 
threat. It seeks to create a loophole for offshore drilling in 
the Arctic Ocean by exempting it from the important protections 
of the Clean Air Act, one of the country's bedrock human health 
laws. This is no trivial matter. To put it in context, when 
Shell Oil Company proposed exploration drilling in the Chukchi 
Sea in 2010, its operations alone would have emitted roughly as 
much carbon dioxide as the annual household emissions of 21,000 
people, or roughly 3 times the----
    Mr. Whitfield. Mr. Grafe, excuse me. Could you move the 
microphone a little bit closer?
    Mr. Grafe. Sure. OK. It has got to be very close.
    21,000 people or roughly three times the entire population 
of Alaska's North Slope borough. And that is just one drilling 
company drilling wells in one summer's drilling season.
    I will focus on two of the most harmful provisions of this 
bill. First, the bill seeks to exempt a great majority of 
emissions from Arctic offshore drilling from stringent 
pollution controls. In the Arctic, the lion's share of 
pollution from offshore drilling is caused by vessels that 
accompany the drillship like icebreakers, not from the actual 
drillships themselves.
    In Shell's proposed 2010 drilling, for example, up to 98 
percent of air pollution came from Shell's associated vessels. 
This bill seeks to exempt those vessels from the Clean Air 
Act's Prevention of Significant Deterioration Program. The 
program, as its name suggests, is intended to prevent existing 
air quality levels from deteriorating. In 1990, President Bush 
signed into law an amendment to the Clean Air Act that applied 
the PSD program to offshore oil drilling. The program has two 
main tools for reducing air pollution, requiring that industry 
not violate quality standards and requiring that it apply best 
available control technology to reduce its pollution.
    This bill would count emissions from associated vessels and 
icebreakers in determining whether drilling operations trigger 
the PSD requirements but then it would exempt those vessels 
from those requirements. It would apply the requirements only 
to the drillship. The icebreakers are the major source of 
pollution from offshore drilling.
    And these emissions are a health concern. For example, in 
Shell's proposed 2010 drilling, icebreakers and support vessels 
could have emitted over 1,000 tons of nitrogen dioxide, a toxin 
for which even short-term spikes in concentration can prompt 
asthma, bronchitis, emphysema, and pneumonia. The bill would 
make it law that the oil industry does not have to apply the 
best available control technology to these or any other 
pollutants coming from its icebreakers. It would seriously 
undermine the purposes of the Clean Air Act and the PSD 
program.
    Weakening health protections in the Arctic is particularly 
troubling because communities along the North Slope of Alaska 
have markedly higher rates of pulmonary disease and are 
substantially more vulnerable to mortality from air pollution. 
For example, rates of chronic lung disease on the North Slope 
are dramatically higher than in the general U.S. population.
    Second, the bill seeks to limit the public's participation 
decisions about pollution from offshore that directly affect 
their health. For example, it would prevent citizens from 
seeking an administrative review of permits but would preserve 
that right for oil companies.
    And it would limit the amount of time EPA has to grant or 
deny an air permit application. Again, the provisions are 
particularly troubling in the context of the Arctic because 
many of the communities most directly affected by Arctic 
offshore drilling decisions are remote and unconnected to the 
road system. These communities, moreover, will bear the vastly 
disproportionate burden of the pollution from offshore 
drilling. If anything, they should be given more time and 
opportunity to engage in meaningful public participation about 
decisions that disproportionately affect them. Instead, this 
bill significantly weakens those rights.
    Protecting the Arctic and its people from air pollution 
that directly threatens human health and contributes to already 
rapidly changing climate in the region should be of the highest 
concern. This is what the Clean Air Act and the 1990 amendments 
were meant to do. This committee should not weaken these 
protections. It should reject this bill. Particularly in light 
of last spring's Deepwater Horizon oil spill, Congress should 
focus on facilitating a renewable energy future and science-
based protective management of the Arctic Ocean, not on 
creating loopholes for offshore oil drilling in the region.
    Thank you very much.
    [The prepared statement of Mr. Grafe follows:]



    
    Mr. Whitfield. Thank you. Mr. Meyers, you are recognized 
for 5 minutes.

                 STATEMENT OF ROBERT J. MEYERS

    Mr. Meyers. Thank you, Mr. Chairman, members of the 
committee. I appreciate the opportunity to testify.
    As with any sort of matter of this nature, I think it is 
first appropriate to look at the legislative history of this 
provision. My written testimony contains some of that. I don't 
pretend that is comprehensive. But with respect to where 328 
came from, there was precursor legislation in the House and the 
Senate. These bills seem to basically have been addressing 
situations off the coast of California in the 1970s and 1980s. 
And we are focused primarily with respect to the onshore impact 
of the emissions.
    But in any event, when we look at the history here, 
Congress settled the issue of how it wanted to regulate OCS 
sources through enactment of Section 328 of the Clean Air Act. 
Now, you know, in one sense, I think that is what Congress 
intended to do in the Clean Air Act, but this testimony you 
have received otherwise. I think it is clear that the matter 
seems to be very unsettled. Various interpretations with regard 
to the Clean Air Act have been offered up to the regional 
office. Various interpretations of the Clean Air Act have been 
offered up to the EAB, and EAB has issued a very lengthy 
opinion on the same. So I would emphasize, too, that under the 
process that EPA is following right now, the permit at issue 
here for the litigation--or potential litigation I suppose--
would be the Frontier Discoverer. And that is not considered to 
be final.
    But, you know, I think this situation stands in stark 
contrast to what Congress and EPA seemingly intended by 
enactment of Section 328 in the first place where if you look 
at EPA's OCS regulations, right in the beginning they state, 
``In implementing, enforcing, and revising the OCS rule and in 
delegating authority hereunder, the Administrator will ensure 
that there is a rational relationship to the attainment and 
maintenance of federal and state ambient air quality standards 
and the requirements, and that the rule is not used for the 
purpose of preventing exploration and development of the OCS.'' 
This is in the EPA regulatory text.
    In proposing the OCS regulations in 1991, EPA stated that 
it intends that the OCS rule will result in ``a more orderly, 
less burdensome system of air quality permitting process for 
OCS sources.'' This may certainly speed up the permitting 
process, which may reduce costs in some instances, particularly 
offsetting the additional cost associated with the rule's more 
stringent requirements for controls and offsets. I think the 
fact that it has taken years to decide matters concerning the 
operation of drilling ships in the Arctic demonstrates that 
EPA's intentions at a minimum have not been fulfilled.
    My written testimony also recounts the various efforts 
under Title II of the Clean Air Act regarding the control of 
emissions from marine vessels. As my testimony recounts, EPA 
has been aggressively addressing such emissions for over a 
decade and will continue to implement standards and new fuel 
requirements over the next decade. These regulations did not 
exist in 1990 when Congress enacted 328 and represented 
significant change to the circumstances from those that 
Congress sought to address. These regulations affect all 
classes of marine vessels. These regulations affect new vessels 
and remanufactured vessels. These regulations affect fuel 
sulfur levels that are used. And the U.S. has further--as I 
point out in my testimony--entered into international 
negotiations with respect to the control of fuel off the 
coastline. All these factors are new, all these factors did not 
exist in the 1990s, and all these factors will affect vessels.
    With regard to the discussion draft, the legislation 
essentially has three substantive sections. With regard to air 
quality measurement, it adds a specification that the air 
quality impact of an OCS source will be measured with respect 
to the correspondent onshore area. My interpretation of this is 
that it is consistent with the language and legislative history 
of the Clean Air Act. Now, I know that has been a matter of 
contention in terms of the current permit, but I think it 
maintains the proper focus of NAAQS, which has been with regard 
to primary NAAQS, a focus on protection of public health with 
an adequate margin of safety.
    Now, with respect to the OCS source definition, the section 
provides that direct emissions of vessels servicing an OCS 
source shall be ``counted'' but shall not be basically subject 
as a stationary source under the PSD program. I think I would 
fundamentally disagree that the Clean Air Act requires that 
vessels install BACT. This position does not appear in the 
legislation. This position, in fact--in the EAB decision with 
regard to the Frontier Discoverer permit--the EAB agreed that 
vessels are not within this. This decision is also reflected in 
the 1991 regulations.
    And then finally, just with regard to the EAB itself, as I 
note in a footnote in my testimony, I would point out that the 
Agency considers that the existing statutory deadlines in the 
Clean Air Act do not apply when the EAB is considering a 
permit.
    [The prepared statement of Mr. Meyers follows:]



    
    Mr. Whitfield. I want to thank you, Mr. Meyers, and thank 
all of you for your testimony.
    Mr. Lawrence, what was the date that you all signed for 
this lease? What day did you acquire this lease?
    Mr. Lawrence. We have had multiple lease sales. The first 
one was in 2005. We had a subsequent one in 2007 and then 
subsequently in 2008. And that was the big one in the Chukchi. 
At that, Mr. Chairman, we bid record amounts, $2 billion, and 
we did that because what we saw is the tremendous resource 
potential.
    Mr. Whitfield. Now, if you had this air permit issued 
tomorrow, what would be the time frame for you to start 
production of oil?
    Mr. Lawrence. At this point in time, we would be looking at 
something that would start probably in the middle of the next 
decade. And I point that out for the following reasons. If we 
had been allowed to begin at the time that we thought we would 
start when we received these permits, we had hoped to start at 
the early part of the next decade or even in this decade.
    Mr. Whitfield. And if you had the air permit tomorrow, how 
many additional permits would you have to have before you could 
start production?
    Mr. Lawrence. We currently worked right now with 35 permits 
to be able to work through this, so there is a large amount of 
coordination between different agencies to be able to do that. 
We have made satisfactory progress on most of those permits, 
and we expect that we will be able to work through those. 
However, there is always a chance that some of those may not 
come through.
    Mr. Whitfield. But you need a total of 35 permits?
    Mr. Lawrence. Thirty-five permits to be able to drill.
    Mr. Whitfield. Now, it is my understanding, Mr. Meyers or 
someone on the panel, that this EAB board is not really in the 
Clean Air statute but was simply created by one of the 
administrators of EPA. Is that correct?
    Mr. Lawrence. That is correct. It was created under 
regulations issued by EPA. It is, in fact, a part of EPA. And 
so it is a regulatory creation.
    Mr. Whitfield. OK. Now, Mr. Meyers, would you be able to 
explain the primary differences between the criteria to issue a 
permit by the Department of Interior for OCS production and the 
EPA process?
    Mr. Meyers. Well, the current regulations that DOI apply to 
require under 1334(a)(8) I believe of the regulations that the 
DOI apply national ambient air quality standards. With regard 
to how EPA addresses it, they are acting under authority under 
328. And effectively under 328, what they are doing is applying 
other parts of the act.
    If I might parenthetically assert here, I don't read the 
legislation to exempt the sources from the Clean Air Act. The 
legislation effectively interprets certain provisions within 
328 but it doesn't exempt the OCS source from PSD BACT review. 
That is maintained.
    Mr. Whitfield. OK. Ms. Ahtuangaruak, you had mentioned in 
your testimony that you oppose this legislation. And what 
particular part do you object to?
    Ms. Ahtuangaruak. The exemptions to industry to allow them 
to increase the pollutions in our area is that. And also the 
push to allow industry to move forward with their process for 
bringing concerns into the right process where we would be 
limited as local citizens.
    Mr. Whitfield. But the exemptions--and Mr. Meyers, you said 
there are no exemptions, is that correct?
    Mr. Meyers. No, it doesn't exempt OCS sources from PSD BACT 
review.
    Mr. Whitfield. OK.
    Mr. Grafe. Mr. Chairman, I have an opinion.
    Mr. Whitfield. Yes, Mr. Grafe?
    Mr. Grafe. Thank you very much. As Mr. Meyers said----
    Mr. Whitfield. Move your mike.
    Mr. Grafe. As Mr. Meyers said, the provision would still 
regulate and apply PSD to the OCS source, which you would 
define as the drillship which produces maybe 2 percent of the 
pollution from Arctic offshore drilling. Most of the pollution 
from Arctic offshore drilling comes from the associated 
vessels, which this particular piece of legislation seeks to 
exempt from the application and best available control 
technology and other PSD requirements, as I think----
    Mr. Whitfield. Do you agree with that, Mr. Meyers?
    Mr. Meyers. They never were included under BACT. They are 
mobile sources. Title II of the act regulates mobile sources. 
Marine vessels are non-road sources as I point out in my 
testimony, I think, this interpretation of the Clean Air Act to 
say that BACT applies to a mobile source.
    Mr. Whitfield. OK.
    Mr. Grafe. Your Honor, may I respond?
    Mr. Whitfield. Yes.
    Mr. Grafe. The Section 328 when it was passed directed that 
the PSD program be applied to OCS sources and has written when 
it passed, it said apply PSD and BACT to OCS sources direct 
emissions from the associated vessels like icebreakers are 
direct emissions from the OCS source. It would seem odd to 
determine that, you know, from a policy perspective to look at 
those emissions when you are determining, well, does the PSD 
program apply?
    Mr. Whitfield. My time has expired, but I am assuming you 
would disagree with that, Mr. Meyers, but just say yes or no.
    Mr. Meyers. Absolutely.
    Mr. Whitfield. OK. We will meet afterwards and we will get 
you two together and we will talk about it.
    Mr. Rush, you are recognized for 5 minutes.
    Mr. Rush. Mr. Chairman, I might, if I could, remind the 
committee that this is a Shell operation and the matter that 
these witnesses are discussing, and it is important that we get 
the environmental and public health protection right in this 
instance.
    And Mr. Chairman, I want to remind you and other members, 
especially my Republican friends that might just don't make it 
right. This bill is designed to help 1 company commence to 
drill but standards set by this committee would apply to all 
future offshore projects in the Arctic as well. And Mr. 
Chairman, I want to again reiterate my concern that if the EPA 
had been here today as a witness to describe how this bill 
would affect public health and the environment over the long-
term as more oil companies are attempting to drill in the 
delicate Arctic ecosystem, then we might be further along and 
we might be able to get this right.
    My question is directed to Mr. Grafe. Mr. Grafe, can you 
speak to the cumulative health impacts of offshore oil and gas 
drilling as more companies enter the Arctic waters?
    Mr. Grafe. Yes, thank you. Shell is the first one that 
would be out there, and its pollution alone was significant and 
taking up very high, up to 70, 80 percent of the allowable 
increments that you are allowed to sort of add air pollution 
into the air. And that is just one operator, and there are 
other operators who have announced plans to attempt to get 
drilling permits starting soon. And so it is a big problem 
because one operator is taking up all the space and polluting a 
whole lot, and as more come, there will be much more pollution.
    Mr. Rush. Ms. Ahtuangaruak, can you talk about some of the 
impacts that you have seen regarding climate change and air 
pollution on the ground in the Arctic region?
    Ms. Ahtuangaruak. We are definitely seeing some changes to 
the Arctic. For us one of the important concerns is whether or 
not the caribou are going to cross the rivers to get to the 
calving grounds, whether or not there is going to be 
appropriate growth of vegetation for the calves that are going 
to help with their survival rates and their health, whether or 
not there is enough insects that are produced for the birds 
when they migrate up for their new growth of their young ones, 
whether or not there is adequate ice for us to go out and do 
our traditional cultural activities, under-ice fishing. If we 
don't have the ice forming the way it is supposed to, we may 
not get the fish when we want to get them when they are 
available to us when we can get like before the eggs hatch, 
those kinds of things; whether or not we are going to have the 
platforms to bring the whale up onto the ice. Those are all 
very important concerns. Whether or not we are going to have 
ice on the shore during the fall storms, those things effect 
erosion rates along the coast tremendously and it has already 
caused tremendous problems.
    The increased rains are affecting us. We are having 
tremendous amounts of erosion, especially on the Colville 
River. There are areas that I have seen over 500 feet eroded in 
just a few years. It affects the air in general, they way that 
the particles are in the air, how it affects us and our health. 
Some of these things have not been well studied. The 
particulates in our environment are most of the studies are at 
70 degrees. We don't have many days at that temperature.
    There is a lot of effects that go there. For health 
concerns, as a health aide when I started, I was taught by our 
people what is normal. I didn't used to hear a lot of wheezing 
in patients. I had one person who used an inhaler, but as I 
continued to work and further my education, I started counting 
these things. When I came back from PA school, there were 35 
people that were having to use medications.
    Mr. Rush. Thank you so very much. We are getting the 
picture. I want to move on because my time is winding down.
    Mr. Grafe, the question is are you opposed to any drilling 
in the Arctic region and is there any satisfactory level of 
controls and protection that will satisfy you in terms of 
drilling in the Arctic region at all?
    Mr. Grafe. We are not against drilling in the Arctic 
region. We are for the application of environmental laws to 
that drilling to protect human health and to protect the 
natural wildlife resources of the region.
    Mr. Rush. Mr. Chairman, I yield back.
    Mr. Whitfield. Mr. Shimkus, you are recognized for 5 
minutes.
    Mr. Shimkus. Thank you, Mr. Chairman. Press reports 
indicate that Administrator Jackson is coming to the Hill to 
speak to Rob Andrews, a Democrat from New Jersey. We sure would 
have loved to have her at this hearing. She is also meeting 
with Southern Company CEO today in the D.C. area, so I think it 
just goes back to the debate that I think EPA is dodging the 
hearing and not coming. And let us just put that back on the 
table as we talk about why EPA is not here.
    Does anyone believe that shutting down TAPS is a good idea? 
Mr. Sullivan, yes or no?
    Mr. Sullivan. Absolutely not, sir.
    Mr. Shimkus. OK. Mr. Lawrence?
    Mr. Lawrence. No.
    Mr. Shimkus. Ms. Ahtuangaruak?
    Ms. Ahtuangaruak. No.
    Mr. Shimkus. So you don't think shutting down TAPS would be 
a good idea?
    Ms. Ahtuangaruak. There is a lot of people that require 
these jobs.
    Mr. Shimkus. OK, great. Thank you. Mr. Glenn?
    Mr. Glenn. No.
    Mr. Shimkus. Mr. Goldsmith?
    Mr. Goldsmith. No, it would be devastating for the economy.
    Mr. Shimkus. Mr. Grafe?
    Mr. Grafe. No, it would be bad for the economy for Alaska--
--
    Mr. Shimkus. Great.
    Mr. Grafe [continuing]. But we need to----
    Mr. Shimkus. Mr. Meyers?
    Mr. Meyers. No.
    Mr. Shimkus. So everyone agrees that TAPS is a very 
important--and if you all were here for the opening statements 
I have a brief connection because my father-in-law--who is 
deceased--worked on it. So one of the great migration up there 
for benefit of a better life.
    But TAPS is challenged, is it not, Mr. Sullivan?
    Mr. Sullivan. Yes, sir, principally because of the lower 
throughput.
    Mr. Shimkus. And what happens? What happens if you continue 
to have lower throughput?
    Mr. Sullivan. Well, at lower rates of throughput, the 
velocity is slower, the temperature of the oil is slower, and 
what it does, it creates more technical problems.
    Mr. Shimkus. Like what?
    Mr. Sullivan. Like the possibility of leaks but also the 
possibility of, as we experienced this winter, we had a 
shutdown that, to be honest, was quite a dicey situation. It 
was shut down for 5 days in the middle of a very cold Alaska 
winter.
    Mr. Shimkus. What does that mean? We don't really 
understand cold until you talk about Alaskan cold.
    Mr. Sullivan. Oh, there were spots on the pipeline route 
that were down to 35, 40 below 0.
    Mr. Shimkus. So you need the flow to keep it warm enough so 
that it doesn't crack?
    Mr. Sullivan. So it doesn't crack, so you don't have 
technological challenges, and when it is lower throughput, you 
have water that drops out, you have wax buildup. So there is a 
number of things that the State is doing that the private 
sector is doing to address those, but the number one way to 
address the technical challenge and environmental risks that 
come with lower throughput is to actually increase throughput.
    Mr. Shimkus. Increase throughput.
    Mr. Sullivan. Which is what we are focused on.
    Mr. Shimkus. Yes, Mr. Goldsmith, can you talk about--being 
from the University of Alaska--the economic impact of shutdown 
of TAPS?
    Mr. Goldsmith. It would be devastating because it would in 
one swoop knock out about 1/3 of the total jobs for the 
economy, those jobs associated with activity on the North Slope 
production----
    Mr. Shimkus. So we need more supply to keep TAPS operating?
    Mr. Goldsmith. Exactly.
    Mr. Shimkus. It is critical.
    Mr. Goldsmith. And it would also devastate Alaska's revenue 
picture because we get about 90 percent of our revenues from--
--
    Mr. Shimkus. Mr. Glenn, and of course we are also 
challenged at understanding this great area that you represent 
and have a title of executive vice--what is your----
    Mr. Glenn. Vice President of Lands and Natural Resources--
--
    Mr. Shimkus. So what does that mean? I mean in common 
terminology when we have governors and we have councilmen and 
we have counties, what is it? Is that a hired position? Is it 
an elected position?
    Mr. Glenn. We were created by Congress. We were created to 
resolve the issues of claims of aboriginal title and to avoid 
the mistakes, perhaps, of the lower 48 Native Americans. So 
they created these 12 land-based corporations. So we are not a 
fact of Congress but we have imbued our regional corporation 
with the values of our people. We are owned by the Inupiat 
Eskimos who live in Northern Alaska.
    Mr. Shimkus. So is it safe to say that your being present 
here today is representing those tribal areas----
    Mr. Glenn. Yes.
    Mr. Shimkus [continuing]. And the unity of the----
    Mr. Glenn. I am speaking for the residents of the North 
Slope and I am speaking as someone who is currently employed by 
this regional corporation but who also has been employed and 
worked with our local home-rule municipality, which depends on 
industry in its region for its tax base.
    Mr. Shimkus. Do citizens in Alaska still get a check based 
upon oil production in Alaska across the board?
    Mr. Glenn. You get a permanent fund distribution annually.
    Mr. Shimkus. Every year?
    Mr. Glenn. Yes.
    Mr. Shimkus. An annual check? And has that amount gone up 
or gone down? Anyone know?
    Mr. Glenn. It fluctuates but I bet Dr.----
    Mr. Goldsmith. Yes, last year it was $1,281 and it 
fluctuates between 1,000 and 1,500.
    Mr. Shimkus. And what happens if TAPS shuts down?
    Mr. Goldsmith. That wouldn't go away immediately, but it 
would disappear pretty quickly because the permanent fund would 
be needed for----
    Mr. Shimkus. And I only have 26 seconds left. I really 
appreciate the testimony. It is really great.
    Mr. Meyers, I want to ask about this Environmental Appeals 
Board. Did we ever authorize it in this statute?
    Mr. Meyers. In the Clean Air Act, no.
    Mr. Shimkus. So the EPA did a permit and so a regulatory 
appeals board really denied it. That is the process, right?
    Mr. Meyers. No----
    Mr. Shimkus. It is really the stationary debate and I will 
end on this because my time is up. Mr. Grafe, my point would be 
if you have refineries, a stationary source, we don't regulate 
and include the emissions of trucks that go in and out of the 
refinery. And that is the debate of your position that tugboats 
going to and from the stationary source should be part of that 
calculation, and I would reject that.
    I yield back my time.
    Mr. Whitfield. The gentleman from California is recognized 
for 5 minutes.
    Mr. Waxman. Thank you, Mr. Chairman.
    Under the Clean Air Act, EPA's decision-making is deeply 
informed by the views of stakeholders. This is one of the Clean 
Air Act's great strengths. We need to be very careful about 
changes in the act that may have the effect of reducing 
stakeholders' ability to weigh in on Agency decisions. We often 
hear from industry as well as the public that they want EPA to 
consider their views and no one wants to go to court except as 
a last resort.
    In the case of Shell's plan to drill offshore, many groups, 
including the Inupiat community in Alaska had serious concerns 
about the impact of Shell's proposed operations on public 
health and the environment. They were able to petition the 
Environmental Appeals Board to review EPA's decision to grant 
Shell an air permit. This bill that is before us would 
eliminate the right of concerned citizens as well as industry 
to petition the board for review.
    Mr. Grafe, can you describe the role of the Environmental 
Appeals Board plays in allowing Alaskans to participate in the 
permitting process?
    Mr. Grafe. Yes. The Environmental Appeals Board allows 
participation by Alaska citizens without having to file filing 
fees. They don't need a lawyer. They can participate by phone. 
It accesses for them an ability to challenge permits if they 
have been participating in the administrative process.
    Mr. Waxman. Well, I think that there is a lot to be said 
for allowing issues to be resolved administratively rather than 
forcing everybody to the court. The Environmental Appeals Board 
also has tremendous expertise because it considers all permit 
appeals.
    Mr. Meyers, you described the bill's approach of requiring 
all appeals to go the D.C. circuit as ``centralized for 
consistency.'' Doesn't the Environmental Appeals Board already 
provide such centralization and consistency?
    Mr. Meyers. I would agree it probably centralizes. I am not 
sure in terms of consistency. It does referencing other 
decisions. I think they have only been involved in this one 
decision.
    Mr. Waxman. In fact, under the bill, onshore drilling 
preconstruction permits would be reviewed by the Environmental 
Appeals Board while offshore drilling preconstruction permits 
would be reviewed by the D.C. circuit. The result is greater 
fragmentation, not centralization.
    I want to point out about this appeals board, it was set up 
administratively under President Bush and it is consistent with 
the law that says the EPA can act administratively and the 
administrator doesn't have to be personally involved in every 
decision, so she can delegate it to this board.
    The bill does allow permit applicants, the oil companies, 
to file an administrative petition for reconsideration if they 
oppose an EPA permit decision.
    Mr. Lawrence, do you think it is fair to allow only oil 
companies and no one else to request administrative 
reconsideration of a permit?
    Mr. Lawrence. We actually welcome and comply and more than 
comply with the regulatory requirements that we have. We 
welcome input to those decisions. The primary concern that we 
have is with the timing and the timeliness of those decisions.
    Mr. Waxman. Right. I think fairness means we provide the 
same procedural rights to all stakeholders, rather than 
providing special access only to favored parties, and it sounds 
like you don't disagree with that point of view.
    Mr. Lawrence. When I look at what we have done through out 
consultative processes, we have consulted with more than 450 at 
more than 450 different times across----
    Mr. Waxman. I am not talking about who you consult with. I 
am talking about who we----
    Mr. Lawrence. And we would certainly support comments into 
an EPA process.
    Mr. Waxman. Ms. Ahtuangaruak, I am interested in your view 
about whether it makes sense to have Alaskans come to 
Washington, D.C., to resolve local clean air issues. How long 
did it take you to travel here for today's hearing?
    Ms. Ahtuangaruak. I started flying on Sunday night and I 
got here Monday afternoon about 4 o'clock.
    Mr. Waxman. Do you think it is appropriate to require 
Alaskans to come to Washington, D.C.----
    Ms. Ahtuangaruak. It would be a great taxing effort for 
those that have respiratory difficulties to try to take that 
trip. Many of them would not be able to come down and provide 
testimony on their concerns.
    Mr. Waxman. The bill would also exempt vessel servicing a 
drillship such as icebreakers and oil spill response vessels 
from having to install pollution controls.
    Mr. Grafe, what percentage of the pollution would this 
exempt from pollution controls and are there controls that 
could reasonably be applied to these vessels?
    Mr. Grafe. It would exempt up to 98 percent of the 
pollution from Arctic offshore drilling from those controls. 
And although I am not an expert in the technology of air 
pollution control, I believe there are controls like catalytic 
converters, et cetera, that could be put on those ships.
    Mr. Waxman. OK, thank you. I see my time has expired. Thank 
you, Mr. Chairman.
    Mr. Whitfield. Mr. Walden, you are recognized for 5 
minutes.
    Mr. Walden. Thank you, Mr. Chairman.
    Mr. Meyers, where is the EAB located?
    Mr. Meyers. It is within EPA.
    Mr. Walden. Physically, is it here in Washington?
    Mr. Meyers. Yes.
    Mr. Walden. And so if somebody wants to come appear before 
or protest something, have a hearing, where do they have to 
come?
    Mr. Meyers. Well, I have not practiced before the EAB 
myself.
    Mr. Walden. But it is here in Washington, right?
    Mr. Meyers. It is here in Washington, D.C. There was a 
reference to allowing testimony by videoconferencing. I 
couldn't testify to----
    Mr. Walden. Which would make sense.
    Mr. Grafe. I can speak to that if you would like.
    Mr. Walden. Briefly.
    Mr. Grafe. You can call in. You don't have to come.
    Mr. Walden. Yes.
    Mr. Grafe. You don't need a lawyer and there are no filing 
fees so it is an easier access system for regular citizens.
    Mr. Walden. You don't need a lawyer?
    Mr. Grafe. No, you don't.
    Mr. Walden. What a wonderful place.
    Mr. Sullivan, first of all, thank you for your varied 
service to the country and to the State of Alaska. I spent my 
first year in college at Fairbanks in 1973, '74, and traveled 
around Alaska. I have relatives up there.
    I want to ask you, you mentioned in your testimony lack of 
transparency, the administration's federal lands policy, 
something my constituents in Eastern Oregon are very concerned 
about. Can you just very briefly talk to this new Wild Lands 
policy that has come out and the impact you see in Alaska?
    Mr. Sullivan. Yes, sir. That is just another good example. 
It is mentioned in the testimony but it is Department of 
Interior, as far as we can tell, internal guidance on possibly 
having federal lands take on the use of a wilderness 
designation without actually (a), being oKed by Congress, and 
even going through a regulatory process. And I will just very 
quickly mention one of the things that we have been trying to 
do is get input as a State----
    Mr. Walden. Right.
    Mr. Sullivan. --with the Federal Government. We have been 
asking for input. We have been asking for a heads-up on all 
these different changes, these lists that I have put----
    Mr. Walden. Right.
    Mr. Sullivan. In that particular instance, I had a meeting 
with a fairly senior Department of Interior official all about 
State of Alaska wants input on any major decisions, notice, oh 
yes, we are going to provide that. Within 12 hours after that 
meeting, they announced the Wild Lands policy, which given that 
we are the largest holder of BLM lands is going to affect 
Alaska and possibly overturn what the NPRA is focused on, which 
is a congressional focus on resource development. And we think 
they could try and change that through administrative FEA.
    Mr. Walden. We are already experiencing problems in the 
Northwest with power line sidings that now are having to be 
stopped and reviewed under this new Wild Lands policy to see if 
it really has to be treated as wilderness.
    Mr. Lawrence, what are your global competitors' experiences 
with governments such as Norway, Russia, Greenland and Canada 
regarding how they allow drilling in the Arctic and how do your 
spill response capabilities compare to other companies in the 
Arctic region?
    Mr. Lawrence. Yes. Thanks very much. And it is not only our 
global competitors but ourselves. We are active in those areas 
also. If we look at our global competitors, there has just been 
significant discovery made offshore Norway. That was just 
announced last week in the Barents. There is significant 
activity offshore Russia in the Sakhalin area. We are part of 
that. There is significant activity offshore Greenland in a 
major lease sales and we are also part of that but the----
    Mr. Walden. So what is your timing process going through 
their regulations and all?
    Mr. Lawrence. The timing processes are much expedited in 
places as diverse as Norway and Russia.
    Mr. Walden. So you are 5 years here. What are you running 
there?
    Mr. Lawrence. Years versus 5 years.
    Mr. Walden. How long?
    Mr. Lawrence. Years versus 5 years.
    Mr. Walden. All right. Dr. Goldsmith, I was actually on the 
Fairbanks campus, not the Anchorage campus.
    What effect would market certainty on Alaska OCS coming to 
full scale have on oil prices in the short- and long-term? See, 
we are back in kind of a speculation mode here I realize in the 
market. But there are projections long-term of oil being $120 a 
barrel. We will try it anyway. But $120 a barrel, I mean part 
of it is supply and demand, right? And that affects market 
price?
    Mr. Goldsmith. I think the major impacts would be on 
national security, on the balance of trade. I don't think that 
it would have a significant effect on the price of oil because 
of the way the world market works. Saudi Arabia could just cut 
back by a million barrels a day.
    Mr. Walden. You referenced in your testimony 35,000 jobs 
long-term. I think it was Mr. Lawrence said 50,000 jobs. I will 
take either of those numbers right now. But it is significant, 
right?
    Mr. Goldsmith. It is significant in the Alaska perspective, 
certainly, yes. We are a small state and there are a large 
number of jobs and they are all very high-paying jobs. So they 
are important jobs.
    Mr. Walden. I thank all of you for your testimony. Thank 
you, Mr. Chairman.
    Mr. Whitfield. Thank you. Mrs. Capps, you are recognized 
for 5 minutes.
    Mrs. Capps. Thank you, Mr. Chairman. I am going to begin 
by, unfortunately, expressing my frustration with this process. 
While I appreciate that this committee has invited witnesses 
from Alaska to testify, the potential effects of this 
legislation go well beyond that State. It is important for this 
subcommittee, I believe, to hear from EPA as well as other 
states affected, particularly California, about this 
legislation prior to marking it up. For that reason and others, 
I have to say that in its current form, I cannot support this 
draft bill. If enacted, it would result in significant 
increases in air pollution in Santa Barbara County, which I 
represent. At this point I would ask unanimous consent to enter 
a letter addressed to you from the County of Santa Barbara into 
the record.
    Mr. Whitfield. Without objection.
    [The information follows:]



    Mrs. Capps. The letter expresses concerns with provisions 
contained in the discussion draft that would weaken California 
State regulations limiting air pollution. Thank you.
    Mr. Grafe, I want to thank you for your testimony. I thank 
all the witnesses for your testimony today.
    I represent California's central coast in Congress. We are 
home to an active offshore oil and gas industry. Right now as I 
speak over 20 platforms are drilling in the Santa Barbara 
channel just a few miles off our coast. Those facilities emit 
air pollutants that are known carcinogens and cause respiratory 
problems. The facilities are also serviced and supported by 
marine vessels that release large amounts of air pollution.
    You write in your testimony that from 75 to 96 percent of 
the total of each regulated pollutant is emitted by support 
vessels in the Arctic. Are there no ways for the industry to 
control these emissions or are there, Mr. Grafe?
    Mr. Grafe. I think the technology exists that would be able 
to control those emissions if EPA applied them.
    Mrs. Capps. Is this technology readily available?
    Mr. Grafe. I believe it is, although I am not an expert on 
the technology. But I believe it is.
    Mrs. Capps. Would you agree with me that the draft bill 
would bar a permitting authority from requiring a company to 
apply those technologies in order to reduce pollution from 
these vessels?
    Mr. Grafe. I agree.
    Mrs. Capps. I am also concerned that the draft bill would 
bar the application of other clean air rules. For example, the 
California Air Resources Board has promulgated a harbor craft 
rule designed to help coastal areas come into attainment with 
ozone and particulate matter air quality standards. It appears 
that the proposed bill would exempt service and support vessels 
for OCS drilling operations from the current harbor draft 
requirements. Would you agree with me that the proposed bill 
would help companies escape regulation of the harbor craft rule 
recently adopted by the California Air Resources Board?
    Mr. Grafe. Yes, I think it would.
    Mrs. Capps. Mr. Chairman, I think that speaks to the need, 
at least from this perspective, for an additional hearing on 
this draft bill so that we can get some other folks to enter 
into the discussion. I think we need to have use of officials 
from California on the record. I know that there are many that 
have already expressed their concern to me about what is being 
designed.
    You list in your testimony a variety of health problems 
associated with the potential emissions from proposed offshore 
drilling. Santa Barbara County expects to realize significant 
air pollution reductions from service and support boats that 
serve the OCS drilling facilities as a result of the California 
Air Resources Board harbor craft regulation--VOCs, 40 tons per 
year; particulate matter, 8 tons per year; reactive organic 
compounds, 5 tons per year.
    So I am wondering if you would share with the committee 
some of the public health benefits that people living in my 
county or some similar folks that make their living in Santa 
Barbara Channel like fisherman, which I am sure is going to be 
the same in Alaska as well to see as a result of these 
reductions?
    Mr. Grafe. Lower rates of asthma, lower emergency room 
visits, et cetera.
    Mrs. Capps. Those are pretty big cost savings. It is 
important for a responsible regulation to occur, don't you 
agree, for our service and support vessels associated with OCS 
development?
    Mr. Grafe. I agree and that is true of Santa Barbara. It is 
true in the Arctic even more so perhaps.
    Mrs. Capps. Emissions from marine vessels represent the 
single largest source of smog-forming air pollution in Santa 
Barbara County. They account for over 40 percent of the air 
pollution emissions. I think it is important to the attainment 
and maintenance of the air quality health standards that all 
marine vessels applying anywhere in my opinion but at least in 
the areas that I represent, Santa Barbara Channel, are subject 
to air quality regulations.
    And whatever time I have left, Ms. Ahtuangaruak, I thank 
you so much for your testimony, for traveling to Washington. I 
think it is important for the committee to know the personal 
stories of people, a person that you know who would be impacted 
by this draft bill on your community, because you are the ones 
who will bear the results of the regulations.
    Ms. Ahtuangaruak. We have many people that have developed 
respiratory distress. I have grandchildren that have asthma. 
One of them is living with me right now. Anything that affects 
the air for this child would be devastating. For us, having to 
send a child out of the community to receive care when we are 
in the villages, it takes the parent with them. It takes all 
the hats that they wear with them. So it takes not just the 
patient but the hats that the family wears with them. It costs 
a lot for us to leave the village. We don't have many resources 
to help us while we are out there. We have minimal resources to 
obtain----
    Mr. Whitfield. You can go on but just summarize quickly.
    Ms. Ahtuangaruak [continuing]. Assistance for our efforts 
to receive healthcare. And it is very difficult. And it costs a 
lot.
    Mr. Whitfield. Thank you.
    Mrs. Capps. Thank you very much.
    Mr. Whitfield. Mr. Barton, you are recognized for 5 
minutes.
    Mr. Barton. Thank you. My good friend from California just 
talked about 20 active drilling platforms off the coast of 
California I assume near her district or in her district. Mr. 
Sullivan, how many platforms would be drilling today in Alaska 
if you had gotten the permits that you asked for?
    Mr. Sullivan. Well, Representative Barton, I know that--and 
maybe Mr. Lawrence can speak to this more specifically, but I 
know that last summer there were at least 5 exploration wells 
that were going to be drilled by Shell. That would have been 
hundreds of jobs for Alaskans and----
    Mr. Barton. Five for 4 months. Mr. Lawrence, is that a good 
number?
    Mr. Lawrence. Yes, that is correct.
    Mr. Barton. I think 5 is, what, 20 percent of 25 or 25 
percent. Mr. Sullivan, in your opinion is there a true public 
health concern for the people of Alaska if five platforms drill 
4 months a year?
    Mr. Sullivan. Mr. Barton, I am not a health expert, but I 
think that the answer in general is it would be minimal and I 
also think that it is important to recognize--and maybe Mr. 
Glenn can speak to this--that on the North Slope, including 
leaders such as the mayor of the North Slope Borough who is the 
senior elected official up there, there is support for this 
exploration drilling.
    Mr. Barton. Mr. Lawrence, can you tell me if California is 
self-sufficient in oil production in terms of do they produce 
enough oil in California that is turned into gasoline to take 
care of all the cars and trucks that are in California?
    Mr. Lawrence. No.
    Mr. Barton. And to the extent they import oil, isn't most 
of the oil they import, if it is domestically, isn't it from 
Alaska?
    Mr. Lawrence. Much of the oil that comes to California is 
coming from Alaska and much of that is dependent on TAPS.
    Mr. Barton. Could you, Mr. Lawrence, compare your 
interaction with the EPA in Alaska to your interaction around 
the world with other national environmental agencies?
    Mr. Lawrence. I have had the privilege to be able to look 
for oil and gas around the world in my role as leading Shell's 
exploration effort. This is perhaps the most difficult region I 
have ever been in in any country, in any location for working 
through the permitting process in Alaska.
    Mr. Barton. And how many billions of dollars has your 
company invested so far in these leases?
    Mr. Lawrence. We have spent over $2 billion on the leases. 
We have spent over $1.5 billion on exploratory activities, 
including science programs, including seismic programs, and 
including what we can do to develop this safety.
    Mr. Barton. And you had to be given the final permit to 
drill one well, right?
    Mr. Lawrence. In the time that I have waited to drill this 
one well in Alaska, I have drilled more than 400 wells, 
exploratory wells, worldwide.
    Mr. Barton. Mr. Meyers, you were general counsel for the 
minority of this committee when we passed the Clean Air Act 
amendments back in 1990, isn't that correct?
    Mr. Meyers. No, I was not general counsel at that point in 
time.
    Mr. Barton. You were on the Republican committee staff?
    Mr. Meyers. I was chief of staff to a member on the 
Conference Committee for the 1990 Clean Air Act amendments.
    Mr. Barton. So you were part of this, right?
    Mr. Meyers. I was a part of the discussions, yes.
    Mr. Barton. Do you have any recollection on this specific 
issue and those discussions?
    Mr. Meyers. Yes.
    Mr. Barton. Was it the intent, then, of those that--I was a 
junior member so I was not a conferee but I was a member of the 
committee. I certainly don't have a recollection that the way 
EPA is acting today was our intent. Can you enlighten us if you 
have a recollection when we put these things into the law?
    Mr. Meyers. Well, I think my personal recollection is not, 
obviously, part of the legislative history. When I looked at 
the legislative history of this, it seemed to be centered 
primarily on the experience of California, primarily on the 
experience of trying to address onshore air pollution, and 
trying to make sure that if somebody onshore, a factory had 
installed something that was a stationary source offshore would 
have to do something similar. That seems to be clearly what was 
intended.
    Mr. Barton. And my final question, Mr. Lawrence, can you 
have your staff compare the emissions of one of your drilling 
platforms to the emissions of a 747 airplane?
    Mr. Lawrence. Yes, we would be happy to provide that 
comparison.
    Mr. Barton. Because my guess is that a 747 is going to have 
more emissions flying in and out of LAX than one drilling 
platform operating 4 months off the coast of Alaska. That is my 
guess but I could be wrong.
    With that I yield back.
    Mr. Whitfield. Thank you, Mr. Barton. Mr. Green, you are 
recognized for 5 minutes.
    Mr. Green. Thank you, Mr. Chairman. Like my colleagues, I 
would like to express that we give EPA as much of advanced 
notice for these hearings simply because they need to be at the 
table and I would hope we would keep that reserve place that my 
colleague from Texas, Barton, mentioned that for the EPA 
administrator.
    Mr. Lawrence, first, congratulations. I have a district in 
Houston and I know Shell got one of the first actual drilling 
permits in the Gulf of Mexico, deepwater, and having a lot of 
Shell employees and refinery and chemical plant in our 
district, I was proud of that. I am glad the Agency is actually 
releasing more permits, not near as much as we need.
    But let me talk to you about Alaska because I have had the 
opportunity to be in Alaska. I was actually on a drilling rig 
in the Cook Inlet Kenai Peninsula in the North Slope both as a 
state legislator and as a Member of Congress back in the '90s. 
Let me ask you about this Environmental Appeals Board. EPA has 
twice issued permits and the Environmental Appeals Board has 
twice remanded the permits citing inadequate analysis at the 
port. Critics of the bill say that the language transfers any 
authority of the permit decisions from the EAB to federal 
courts, which I have a local shareholder involvement. However, 
as far as I know--and it was made earlier--that the same 
location is here in Washington and so would be the federal 
court. And I know that may have been under a Republican 
administration that the EAB was created, but there seems to be 
a problem. Can you elaborate on the EPA does not issue a final 
order in bringing an issue to judicial review is extremely 
difficult compared to what has been happening?
    Mr. Lawrence. Yes, I think the greatest challenge that we 
face is one of time. And to be clear, the drilling season in 
Alaska is at the most 4 months, from July 1 and it goes to at 
the latest October 30. The permitting process and the reviews 
of that permitting process and that challenge typically can 
take longer than the time that that drilling window is open. 
And what that does is effectively every time it goes through 
one of these review processes that extends beyond the time for 
the drilling window and causes delays for another year. It 
takes more than a year to plan the logistics to be able to 
drill a well in Alaska, to be able to do it safely, and that is 
what we are trying to do is to get out in front with enough 
clarity, certainty to move forward in a timely manner and to 
have our investments follow that path.
    Mr. Green. OK. And I understand over 6 years and 1.5 
billion and you cite Shell's work multiple years, the 3-D 
seismograph collection, first of its kind, baseline science 
shallow hazard surveys, geotechnical programs, numerous social 
investment initiatives and hundreds of meetings with North 
Slope residents. Additionally, you have utilized unmanned 
aircraft and seabed listening devices and unmanned submarines 
to name a few. And I know I read Mr. Grafe's grievances with 
the process, but all those things that Shell did, is that 
required in Norway or Denmark who has control of Greenland, or 
even Canada?
    Mr. Lawrence. We have done one of the most intensive 
preparations for this program that we have done in any theater 
around the world.
    Mr. Green. OK. In my time left I want to get back to the 
international issue because when we ran into the moratorium in 
the Gulf of Mexico, is said why don't we just apply Norway 
standards because I have been to Norway. I know all our majors 
are there in Statoil, at least the last time we had a lease in 
the Gulf actually was the highest bidder for leases. And if 
Norway can drill in the Gulf and we can drill off Norway and 
they have, I understand, the gold standard, Norway, Russia, 
Greenland, and Canada are exploring the same thing. Can you 
talk in detail about how far they are along in developing new 
resources and the successes or failures you have had.
    Mr. Lawrence. Yes, I would just like to be clear. I think 
we have the gold standard here in the U.S. also and I think we 
operate to that gold standard and we----
    Mr. Green. Is there anything different between our standard 
and what you would do in the high north and Norway?
    Mr. Lawrence. No, we have taken most of the best practices 
that we have had from both places looking at what we would do 
in Norway and what we would do in Alaska and compared those. 
Let me just say the development of those standards, we have 
been operating in places like the North Sea for many years. 
There are things such as a safety case, which describes 
identification of the hazards, ways to mitigate and put 
barriers to those hazards, clear roles and accountabilities for 
that. We support that. We implement those in all of the 
operations that we have.
    If we look at such things as how we would handle mitigants 
to stakeholders in communities, we have the same kind of 
practices in dealing in Norway as we would here. We have looked 
at discharge in Norway. How does that compare to discharge in 
Alaska? We have tried to take the best practices from both. So 
Norway has standards. We have strong standards here that 
protect the environment and we comply with and exceed those 
standards. In Russia, we are drilling wells, producing wells in 
Russia right now. Russia has similarly elevated their standards 
and we have complied with those. The difference is the 
uncertainty in the timeline with which you are able to move 
through those. And they provide clarity so you can get to the 
point in Russia where you are able to drill a well.
    And I would just say finally in Greenland we have now just 
applied for a permitting, but as you know, another oil company 
actually drilled wells off of Greenland after a much shorter 
time in accessing their permits.
    Mr. Green. Mr. Chairman, it is amazing that we are much 
slower than Russia. Thank you.
    Mr. Whitfield. That is a sad state of affairs. Mr. Gardner, 
you are recognized for 5 minutes.
    Mr. Gardner. Thank you, Mr. Chairman, and thank you again 
for your time and testimony and traveling so far to be here to 
many of you.
    But as I have noticed on this committee throughout the 
short 99 days that I have been in Congress, there seems to be a 
lot of things that get said that aren't the truth in terms of 
how they affect or impact the bill. And so I think there is a 
lot of miscommunication and confusion that is out there and the 
various testimony has presented. And so I want to clarify a 
little bit of this.
    The fact is these ships that people talked about will be 
and are regulated. They are regulated under Title II of the 
Clean Air Act. Is that correct, Mr. Meyers?
    Mr. Meyers. Yes. And as my written testimony points out, 
EPA has been very active in this area over the last 10 years.
    Mr. Gardner. So to say that they are completely exempted, 
gutted, is untrue.
    Mr. Meyers. Right.
    Mr. Gardner. And when somebody has a refinery, is the 
delivery truck to that refinery counted as the refinery's 
emissions?
    Mr. Meyers. That does not apply. Basically, the Clean Air 
Act contains a definition in 302(z) of a stationary source 
which excludes those emissions resulting directly from an 
internal combustion engine for transportation purposes or from 
a non-road engine--which is what a marine vessel is--or a non-
rotor vehicle.
    Mr. Gardner. So the train that delivers coal to the 
factory, the UPS truck delivers parts to the dealership, those 
aren't counted as part of that store's source.
    Mr. Meyers. I think the issue is--and as this legislation 
would still count those emissions. Those emissions will be 
counted and effectively attributed to the source for other 
purposes. The issue here is whether you are going to regulate a 
ship as a stationary source. And the act doesn't require that. 
That is the interpretation. The interpretation difference 
between myself and Mr. Grafe's interpretation of the act is he 
reads Section 165 differently than I do in terms of just the 
statutory construction. So we have fundamental disagreement on 
how PSD applies.
    Mr. Gardner. Thank you, Mr. Meyers. And then I have also 
heard that this takes away people's ability to address their 
grievances, to comment. Can you please tell me a little bit 
about how the notice-and-comment period would work under this?
    Mr. Meyers. Well, it doesn't affect any other procedures. 
It says basically that you have 6 months from the time you have 
a complete permit application and then it becomes a final 
agency decision. The issue here that we have been talking about 
with respect to EAB is that EPA is effectively taken a position 
in filings in the court case that the Clean Air Act statutory 
limits do not apply the EAB review.
    Mr. Gardner. So the assertion that the bill will prevent 
grievances from being heard is untrue?
    Mr. Meyers. Yes, basically it will be a shortened process 
but the public process provisions are not amended by the 
legislation and everybody has recourse to file a judicial 
petition.
    Mr. Gardner. Thank you. Do they need a lawyer to do that?
    Mr. Meyers. Pardon?
    Mr. Gardner. Do they need a lawyer to do that?
    Mr. Meyers. Well, as a lawyer I would say it is advisable 
but----
    Mr. Gardner. It is not the lawyer job creation act.
    Mr. Meyers. I believe it would be possible for somebody to 
appear on their own behalf but----
    Mr. Gardner. Thank you. And Mr. Sullivan, what certainty 
would the Jobs and Energy Permitting Act provide for businesses 
and job creators in Alaska?
    Mr. Sullivan. Representative Gardner, I think that is the 
key question because what I try to lay out in the written 
testimony is that across the board in terms of exploration and 
production of hydrocarbons on both state and especially federal 
lands, there is immense uncertainty across the board throughout 
the State of Alaska. That is why I provided all those different 
examples. And what we see, it is chilling investment companies. 
They don't know how to make decisions right now.
    Mr. Gardner. This would provide certainty?
    Mr. Sullivan. This would provide significant certainty in 
that----
    Mr. Gardner. Thank you. Mr. Lawrence, would the millions of 
acres leased in offshore Alaska where companies like yours have 
not been permitted by the government to drill be included in 
what President Obama refers to as ``idled leases'' when he 
talks about the use-it-or-lose-it issue?
    Mr. Lawrence. It is particularly painful to me to look at 
the use-it-or-lose-it issue as it would apply to Alaska since I 
have been trying to use it for the last 5-1/2 years.
    Mr. Gardner. You have been trying to use this--and thank 
you. That is good enough.
    Before Alaska, what was the longest amount of time you have 
witnessed between a lease being purchased and drilling 
operations commencing for permitting reasons?
    Mr. Lawrence. This is the longest that I have seen for 
permitting reasons.
    Mr. Gardner. For permitting reasons, thank you. Mr. Meyers, 
in your testimony, you mentioned that EPA's regulations 
promulgating the relevant Clean Air section, Section 328, 
should not be used for the purpose of preventing exploration 
and development of the OCS. However, after over 5 years, that 
appears to be exactly what is happening here. Would you agree?
    Mr. Meyers. Yes, I have not been involved in a lot of this 
but I think that the process has been excessive.
    Mr. Gardner. Mr. Sullivan?
    Mr. Sullivan. Yes.
    Mr. Gardner. Mr. Lawrence?
    Mr. Lawrence. Yes.
    Mr. Gardner. Mr. Glenn?
    Mr. Glenn. Yes.
    Mr. Gardner. Thank you. Thank you for your time today. I 
yield back my time.
    Mr. Whitfield. Thank you, Mr. Gardner. The gentleman from 
Kansas, Mr. Pompeo, is recognized for 5 minutes.
    Mr. Pompeo. Thank you, Mr. Chairman. I think we have gotten 
to most of the things that I wanted to talk about this morning, 
but I have just a couple of things that I would like to follow 
up on.
    Now, you may not all see this, but this is not the only 
place that EPA is working against American energy production. 
It is not just offshore. In fact, if you come to Kansas, you 
will see the same thing. You will see the same thing with 
respect to folks that are trying to grow live stock guise. EPA 
in my judgment has truly entered a realm that we have not seen 
in an awfully long time. And so when you see them taking rules 
and contorting them into places which do incredible harm to 
American job creation, I think what we are doing here today is 
just a tiny step along the task that I am glad Chairman 
Whitfield and Chairman Upton are leading us down.
    I wanted to ask you, Mr. Lawrence, or perhaps Mr. Sullivan, 
too, so you have been at this since 2006. There was a change in 
administrations then. Have you seen any significant change in 
the way EPA has been responsive to you as the administration 
changed?
    Mr. Lawrence. I would agree with the comment that was made 
earlier that with the EPA I don't see this as an administration 
issue. I think it is an issue that sits within the EPA.
    Mr. Pompeo. So it is internal to either the culture or the 
people----
    Mr. Lawrence. Yes, and again I am not an expert on the 
internal culture.
    Mr. Pompeo. Yes, I understand that. I am becoming one.
    Mr. Lawrence. Yes.
    Mr. Sullivan. If I may, I think what we try to do is lay 
out examples beyond the EPA with regard to resource development 
in Alaska and I do think that there has been a shift with 
regard to resource development and very proactively focused 
shutdown resource development mindset among a lot of federal 
agencies, not just the EPA. And that is what we try to do on 
our written testimony.
    Mr. Pompeo. I appreciate that. I guess my last question or 
perhaps a couple questions, Mr. Grafe, tell me a little bit 
about your practice and who are the funding sources for your 
practice?
    Mr. Grafe. Well, I don't have the exact funding sources, 
but we are a nonprofit law firm that represents at no cost 
communities, environmental groups, individuals, so we don't 
charge our clients. We get money from members who are members 
of our organization, just regular people. We have got some 
foundation money and if you would like I can provide--it is all 
publicly available.
    Mr. Pompeo. I would appreciate that. Is there any 
government money that comes to you either directly or through 
grants to foundations that in turn provide that capital to you?
    Mr. Grafe. No, I don't think we get----
    Mr. Whitfield. Mr. Pompeo, would you yield for just 1 
minute?
    Mr. Pompeo. Yes.
    Mr. Whitfield. What about being awarded legal fees after a 
case has been filed against the EPA?
    Mr. Grafe. Well, against--the Clean Air Act has provisions.
    Mr. Whitfield. But I mean does your law firm receive 
revenue from that?
    Mr. Grafe. Yes, we do receive revenue from----
    Mr. Whitfield. Thank you, Mr. Pompeo.
    Mr. Pompeo. Thank you, Mr. Chairman. I appreciate that. I 
was heading that direction but thanks for getting us there more 
quickly. I yield back the balance of my time.
    Mr. Whitfield. I am sorry.
    Mr. Pompeo. No, don't be sorry. I am thrilled.
    Mr. Whitfield. I recognize the gentleman from Virginia, Mr. 
Griffith, for 5 minutes.
    Mr. Griffith. Thank you, Mr. Chairman. Let me ask this of 
Mr. Sullivan. What has Canada's experience in Arctic drilling 
proven thus far? And I am looking at the geology climate, you 
know, and are there differences? What has Canada's experience 
been?
    Mr. Sullivan. Well, right now they have a very active 
program with regard to the oil sands and I think that has been 
an area where, although there is environmental concerns there, 
they have been addressed in many ways and they have very active 
production and investment in that part of Canada that is really 
creating thousands if not tens of thousands of jobs.
    Mr. Griffith. How does their regulatory framework compare 
to ours?
    Mr. Sullivan. I don't know the specifics but we could get 
back to you on----
    Mr. Griffith. That would be great but you are under the 
impression that it doesn't take 5, 6 years to get moving on a 
project?
    Mr. Sullivan. Absolutely. It doesn't.
    Mr. Griffith. All right. And then you listed off in your 
comments--and they may have been in your written statement but 
I couldn't find them--the various places that you had visited 
and that you had concerns that the EPA might actually be 
inadvertently harming the environment because they were 
allowing all of this production and activity to be pushed into 
other countries where they had no regulation or did not have 
regulations close to the regulations that we have in the United 
States. Could you expand on that for me, please?
    Mr. Sullivan. Sure. I think it is a point that is often 
overlooked because----
    Mr. Griffith. Me, too.
    Mr. Sullivan. --ostensibly this very anti-development 
policy that we are seeing in Alaska is supposedly undertaken to 
protect the global environment. We actually think it has the 
opposite effect because if you drive development and production 
from countries or places like Alaska that have world-class 
environmental standards to places overseas that don't. And as I 
mentioned, every one of those countries I mentioned I have been 
to, then you from a global environmental perspective, you are 
actually degrading the global environment because production is 
taking place in areas where it is not nearly as stringent as it 
would be in Alaska.
    Mr. Griffith. Could you tell me what those countries were 
again because----
    Mr. Sullivan. I mentioned Brazil, Russia, Azerbaijan, 
Kazakhstan, Saudi Arabia.
    Mr. Griffith. OK. And as a result of not using the energy, 
would you think that it might also be that we are also pushing 
some jobs in a similar vein over there that could be here that 
would also be regulated more here than they would be there?
    Mr. Sullivan. Absolutely. There is no doubt about that.
    Mr. Griffith. And when you talk about the global 
environment, you are talking about climate change and air 
quality issues, are you not?
    Mr. Sullivan. I am talking about degradation to the global 
environment, yes.
    Mr. Griffith. And wouldn't it be true that the nations that 
you mentioned, with the exception of maybe Saudi Arabia, all of 
that air is the same air that we are breathing a few days 
later?
    Mr. Sullivan. Well, not being a scientist, I think it is 
eventually all air that we are all breathing.
    Mr. Griffith. If I told you that there was a NASA study 
that said the air from the Gobi Desert got to the eastern shore 
of Virginia in 10 days, you wouldn't disagree with that?
    Mr. Sullivan. No.
    Mr. Griffith. And if it is going from Gobi to the eastern 
shore of Virginia, it is probably going from Russia and 
Kazakhstan to Alaska, would you not agree with that?
    Mr. Sullivan. Yes, sir.
    Mr. Griffith. Let me switch to my friend whose name I can't 
pronounce. Can you pronounce it for me again, ma'am?
    Ms. Ahtuangaruak. Ahtuangaruak.
    Mr. Griffith. It may take me a while to get that down. I 
have some genuine curiosity. I get global warming, rains, 
floods, caribou crossing the rivers. I didn't get the lack of 
growth in the plants that the caribou would eat once they cross 
the rivers and the insect production for the birds. Can you 
explain those to me and how that plays into this?
    Ms. Ahtuangaruak. The early growth of the plants are very 
important for the calves. And if the calves aren't able to get 
across the rivers before they break up, they may not get to the 
important----
    Mr. Griffith. So it is more the river than the plant 
production?
    Ms. Ahtuangaruak. All of it is related.
    Mr. Griffith. OK. I guess my concern was is that if the 
global warming theory has it that the rivers are flooded, it 
would seem to me that there would be more plant production. 
Now, I understand getting across the river. I got that part. Do 
you see where I am going?
    Ms. Ahtuangaruak. Yes.
    Mr. Griffith. Do you agree or disagree with me that there 
ought to be more plants if it is warmer.
    Ms. Ahtuangaruak. We need the animals to be there.
    Mr. Griffith. I understand that. I got that. I followed 
that part of it. I just didn't follow the other. How about the 
insects?
    Ms. Ahtuangaruak. With the insects it is related to the 
environment, the water, the growth of the plants, all of those 
are associated. If we are having changes in our environment and 
less of those things that are occurring naturally, it affects 
the amount of the insects that are available for the birds to 
eat.
    Mr. Griffith. I know this sounds like a crazy question, but 
it is the kind of stuff I actually like. Do you know how many 
insect species you have in that area?
    Ms. Ahtuangaruak. Not----
    Mr. Griffith. I don't know mine either. I am just curious.
    Ms. Ahtuangaruak. Not specifically. I know there was 114 
bees at one time studied in Alaska, but that is all I know for 
sure.
    Mr. Griffith. All right. I appreciate it very much. I yield 
back my time, Mr. Chairman.
    Mr. Whitfield. The gentleman from Louisiana, Mr. Scalise, 
is recognized for 5 minutes.
    Mr. Scalise. Thank you, Mr. Chairman. I appreciate you 
holding this hearing and bringing this legislation. Clearly, I 
think we have seen a pattern for over a year now with this 
administration, a broader sense with EPA, the inability to 
allow American people to go to work, creating American jobs and 
creating American energy. And it has been a big frustration of 
mine. In south Louisiana, we are experiencing--I appreciate the 
comments that we had on the first panel from Senator Murkowski 
and Senator Begich and our colleague Representative Young in 
the battles that are being fought in Alaska.
    And you know, it is very frustrating hearing some of the 
same stories, you know, in the case here, EPA, 6 years trying 
to get a permit for one company to go to explore to create jobs 
for American energy. And you know, we are seeing that in south 
Louisiana where so many of our people are still trying to get 
back to work drilling safely there. And over 12,000 jobs we 
have lost in the last 11 months in many cases because the 
administration is not allowing our people to go back to work 
who didn't do anything wrong, who had absolutely nothing to do 
with the mistakes of BP. These were companies who were drilling 
safely and producing energy for this country.
    And you know, it is interesting when you hear the President 
going to Rio and saying we are going to drill in Brazil and 
then he comes back to America and says oh, and we are going to 
reduce American reliance on foreign energy by 1/3. Well, you 
know, if you are shutting down production in America, you are 
going and bragging to the people of Brazil that you are going 
to drill there, and then you come back here and say oh, by the 
way, we are going to reduce our imports by 1/3, those numbers 
don't add up. And the American people, I think, get that. When 
you see the skyrocketing price of gasoline, I mean maybe their 
approach is if they let the gas prices get so high, then there 
would be a reduction in demand but it is because our economy 
would be crippled. And that is not a position we can allow 
ourselves to be in.
    And so I have got a few questions for the panel here. I 
will start with Mr. Sullivan. You know, we have heard 
statements from the administration that, you know, America 
doesn't have the resources and we need to get it from other 
places because we have got less than 2 percent of the world's 
reserves, but yet I hear that there are a lot of--especially 
with the new technology that is out there--there is a lot more 
reserves that we have in this country that are prohibited by 
the Federal Government from even being explored.
    So Mr. Sullivan, from your experience in Alaska, what would 
you respond to in relation to those claims by the 
administration that less than 2 percent of the world's reserves 
are in America?
    Mr. Sullivan. Well, I think first of all, the U.S. 
Geological Survey in 2008 showed that the North Slope of Alaska 
has estimates of 40 billion barrels of convention oil, 236 
trillion cubic feet of gas, and it noted that that is probably 
the largest area of oil in the Arctic of all the other 
countries. And that is just conventional. When we are talking 
about heavy and viscous and shale oil, you are going into 
several billions more barrels.
    So I think one of the important things we wanted to make 
sure the committee was aware that Alaska remains a world-class 
hydrocarbon basin compared to any other place in the world. It 
could supply America for decades.
    Mr. Scalise. And I appreciate that because I have heard 
similar numbers. I think Senator Begich said 40 to 60 billion 
barrels that they want to go and be able to explore for in 
Alaska, you know, of course, in the Outer Continental Shelf. In 
south Louisiana, there are many areas of the shelf that are 
closed off from exploration that have vast amounts of reserves 
as well. And of course, with the new technologies, the ability 
to go and explore and extract and of course the jobs that go 
with it.
    I want to ask Dr. Goldsmith, in terms of jobs lost, 
opportunity lost, energy security lost, by putting these delays 
in place, by having administrative bureaucracies shutting off 
our ability to go and access these 40 billion or more barrels, 
what does that mean in terms of jobs lost in America and energy 
security lost in America?
    Mr. Goldsmith. Well, I think the biggest risk is 
postponement so that the pipeline shuts down. And that would 
have the most dramatic effect on jobs both in Alaska and 
nationally. You would be talking about 100,000 jobs in Alaska 
and probably the same amount in the rest of the U.S. for sure.
    Mr. Scalise. So 200,000 jobs just on the effect--if I 
could, Mr. Chairman, I want to submit for the record--this is a 
letter from the Alyeska Pipeline Company, a company that 
operates the pipeline. And they do detail the importance of the 
pipeline and how----
    Mr. Whitfield. Without objection.
    [The information follows:]



    
    Mr. Scalise. Less than 2 years ago I got to go to Alaska 
and we went to Prudhoe Bay. We went to Section 1002 of ANWR, 
which is talked about a lot. As Senator Murkowski said, you 
know, this is something we still ought to pursue as well. You 
know, and these are areas that Section 1002 of ANWR is not the 
visuals that a lot of people see with, you know, fields and 
caribou running around. Section 1002 looks just like Prudhoe 
Bay and yet it is closed off from production and a vast amount 
of reserves there.
    And we went to the pipeline where, you know, the threats 
from some of the same radicals who shut down exploration in 
Alaska for oil were saying don't build the pipeline. You will 
eliminate the caribou population. And we saw caribou everywhere 
around the pipeline. And they said I think the population has 
tripled because the caribou actually thrive in the environment 
because of the warmth of the pipeline. You know, you don't hear 
them revising those false statements. And you know, and yet 
they come out and just try to shut off more things.
    So I don't know if, Dr. Goldsmith, if you want to address, 
you know, not only what they said but the lifespan--what 
happens if no new areas are opened up and the pipeline does in 
fact dry up? What kind of resource would our country be losing?
    Mr. Goldsmith. Everybody has a different estimate of what 
the ultimate resources are on the North Slope but whoever 
estimates you accept, they are huge. And without the pipeline 
or some alternative means of getting that resource to market, 
we are losing a tremendous opportunity for the Nation.
    Mr. Scalise. Thanks. And final question, Mr. Lawrence. I 
know you talked about the use-it-or-lose-it provisions. We are 
experiencing that, too, in the Gulf where companies are not 
able to go and explore their leases because the Federal 
Government is not allowing them to, yet the clock keeps 
ticking. So it is like the referee is holding the ball and the 
clock is running and you are down by one, you just want the 
ball to take your shot and the ref is letting the clock run 
out. So I guess that is what you are experiencing with the 6-
year delay you have had?
    Mr. Lawrence. Certainly in Alaska, but remember, we are 
also very active in the Gulf of Mexico. We had just made 5 
discoveries in a row and we would very much like to appraise 
those discoveries and bring those online and we are delayed in 
that. It is a very difficult challenge requiring the best of 
our technologies to be able to go from a lease to finding the 
prospect, to finding the drill site. And if you look at some of 
the major developments in the Gulf of Mexico that have had--it 
takes that lease period to be able to apply that technology 
appropriately to be able to develop the lease and produce the 
oil and gas.
    Mr. Scalise. Thank you for your comments. Thank you, Mr. 
Chairman. I yield back.
    Mr. Whitfield. The gentleman from Texas, Mr. Olson, is 
recognized for 5 minutes.
    Mr. Olson. I thank the chair. I thank the witnesses for 
coming today for your testimony and your expertise. Home 
stretch. Last Member of Congress asking questions. My focus is 
going to be on three issues here. First of all, Shell's 
experience up there in the Chukchi Seas, lessons learned from 
the Gulf of Mexico spill, and the impact on Alaska of the oil 
and gas industry on the economy.
    And first of all, my question again for you, Mr. Lawrence, 
and Shell, I have many Shell employees in the district I 
represent and according to the testimony that many of you have 
put forth today and by the Alaska Delegation, Shell Oil Company 
again talks with EPA in February of 2006, so over 5 years ago, 
the start of a process that has yet to conclude. The EPA has 
twice issued permits and the EAB has twice remanded the permits 
citing inadequate analysis and support. My question for you, 
Mr. Lawrence, what specifically do you recommend that this 
Congress does to make EPA do its job?
    Mr. Lawrence. I think what we are looking for is first, the 
EPA should provide clear, thorough, robust recommendations in a 
timely fashion such that we can make the requisite business 
decisions that we need to make to invest for oil and gas in 
this country. Now, very specifically what we are recommending 
is three things. The first is we need simple clarity on where 
we will measure these emissions relative to the major source. 
And we would recommend, again, that that would be placed as a 
definition at where the fence line is. And we could say that 
the most logical place for that would be where the communities 
are. So that would be number one.
    The second thing that we would like to do is to say when we 
look at this clear definition of when it becomes a source. And 
that should not be very complicated. I would submit that 
something becomes a stationary source either when you start 
drilling--that would be the simplest way to do it--or you might 
say when you set anchors. Choose the simplest. Tell us what 
that is. That is what we will comply with and that is what we 
will move forward.
    And the third is that provide a time frame when those 
decisions must be taken because as I say, when the time frame 
for the process is significantly longer than when the drilling 
window is open, that simply precludes you from being able to 
make progress. And we would recommend a 6-month time frame.
    Mr. Olson. How does this unpredictable regulatory 
environment impact the investment up in Alaska? To put it 
another way, based on your experience up in the Chukchi Sea, 
why would any investment company go up there and invest in oil 
and gas?
    Mr. Lawrence. As the company that is responsible for having 
invested the $2.1 billion there, I think it is a great 
question. Every day, every month that goes by you have that 
money sitting there not being invested in other places that you 
could have invested those dollars. What that does, it really 
applies increased risk to where you are going to make those 
investments. And as we all know, in an environment of increased 
fiscal risk and increased uncertainty, that tends to drive 
investments elsewhere.
    Mr. Olson. Thank you for the answer. I will use the 
microphone this time. But I am going to have to cut this a 
little bit short so I just want to talk about the impact of 
these regulations on the Alaskan economy. And we have had 
testimony here from many of you. I heard as I was walking down, 
90 percent of the revenue that Alaska generates comes from the 
oil and gas industry? And so I mean what are the impacts of 
these regulations on Alaska's budget? Without it, I mean, how 
can you maintain the quality of life for the Alaskan people? 
And I would like to ask that question, Mr. Sullivan, Mr. Glenn, 
and Ms.--let me make sure I get this right, the pronunciation, 
I want to apologize--Ms. Ahtuangaruak. All right.
    Mr. Sullivan. Well, I will begin. We are very concerned 
about the TAPS throughput issue. We don't think that that needs 
to be the destiny of Alaska or the country to have continued 
throughput decline. And that was another reason I mentioned our 
governor, we have set out a goal for a million barrels through 
the TAPS in a decade, and we think it would be great if the 
Congress could support and make that a national priority. But 
if that continues or, as we had this winter, a shutdown, it 
would be devastating not only to the government funding, which 
is where we get the majority of our government funding, but 
also to the broader economy, as Dr. Goldsmith mentioned.
    Mr. Olson. Mr. Glenn?
    Mr. Glenn. For the continued operation of the pipeline is 
the lifeblood of our State, and most immediately, it is the 
single factor that has improved the quality of life for the 
people in our region. We are talking about where it is a huge 
technical problem just to flush a toilet or have safe running 
water. It is these quality-of-life improvements that have come 
to these far-flung communities has only been due to the 
presence of a stable oil and gas industry in our region.
    Mr. Olson. Mr. Goldsmith, I would ask you to be quick here.
    Mr. Goldsmith. I would just agree with what Mr. Sullivan 
and Mr. Glenn had said. Oil revenues are 90 percent of the 
total and without them I don't know how we would pay for 
education, health, other basic services throughout the State.
    Mr. Olson. Thank you, sir. And finally, last but certainly 
not least, Mayor Ahtuangaruak.
    Ms. Ahtuangaruak. Thank you. Shutting down the TAPS would 
definitely hurt many people but it should not be at the cost of 
the health of the people that are around the areas of oil and 
gas development.
    Mr. Olson. Thank you, ma'am. I thank the witnesses and 
thank the chair.
    Mr. Whitfield. Well, I also want to thank the witnesses. We 
appreciate you being here. I know many of you came from very 
long distances and your testimony was really important as we 
consider this discussion draft introduced by Mr. Gardner. And 
with that this----
    Mr. Rush. Mr. Chairman, I would like to submit for the 
record a Rule 2 letter signed by all the minority members of 
the subcommittee which requests----
    Mr. Whitfield. Is it Rule 2?
    Mr. Rush. Rule 11. Sorry, Rule 11 letter signed by all the 
members of the minority that requests an additional 
subcommittee hearing with the EPA representatives before the 
subcommittee markup on this bill.
    Mr. Whitfield. Well, I think the letter has been given to 
staff, but thank you very much. We will certainly take it into 
consideration.
    [The information follows:]



    
    Mr. Whitfield. And I would say once again that we did 
invite EPA, and the EPA administrator was on the Hill today. 
But we have got the letter and we are taking it under 
consideration and we will be back in touch with you quickly.
    With that, the hearing is concluded, and there will be 10 
days for additional materials to be entered into the record. 
Thank you very much.
    [Whereupon, at 12:47 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]




                                 
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