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




 
 H.R._: ``AMERICAN-MADE ENERGY AND INFRASTRUCTURE JOBS ACT''; H.R._: 
    ``ALASKAN ENERGY FOR AMERICAN JOBS ACT''; H.R._: ``PROTECTING 
INVESTMENT IN OIL SHALE: THE NEXT GENERATION OF ENVIRONMENTAL, ENERGY, 
  AND RESOURCE SECURITY ACT'' (PIONEERS ACT); AND H.R. _: COAL MINER 
    EMPLOYMENT AND DOMESTIC ENERGY INFRASTRUCTURE PROTECTION ACT.''

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

                          LEGISLATIVE HEARING

                               before the

                       SUBCOMMITTEE ON ENERGY AND
                           MINERAL RESOURCES

                                 of the

                     COMMITTEE ON NATURAL RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                       Friday, November 18, 2011

                               __________

                           Serial No. 112-85

                               __________

       Printed for the use of the Committee on Natural Resources



         Available via the World Wide Web: http://www.fdsys.gov
                                   or
          Committee address: http://naturalresources.house.gov
      



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                     COMMITTEE ON NATURAL RESOURCES

                       DOC HASTINGS, WA, Chairman
            EDWARD J. MARKEY, MA, Ranking Democratic Member

Don Young, AK                        Dale E. Kildee, MI
John J. Duncan, Jr., TN              Peter A. DeFazio, OR
Louie Gohmert, TX                    Eni F.H. Faleomavaega, AS
Rob Bishop, UT                       Frank Pallone, Jr., NJ
Doug Lamborn, CO                     Grace F. Napolitano, CA
Robert J. Wittman, VA                Rush D. Holt, NJ
Paul C. Broun, GA                    Raul M. Grijalva, AZ
John Fleming, LA                     Madeleine Z. Bordallo, GU
Mike Coffman, CO                     Jim Costa, CA
Tom McClintock, CA                   Dan Boren, OK
Glenn Thompson, PA                   Gregorio Kilili Camacho Sablan, 
Jeff Denham, CA                          CNMI
Dan Benishek, MI                     Martin Heinrich, NM
David Rivera, FL                     Ben Ray Lujan, NM
Jeff Duncan, SC                      John P. Sarbanes, MD
Scott R. Tipton, CO                  Betty Sutton, OH
Paul A. Gosar, AZ                    Niki Tsongas, MA
Raul R. Labrador, ID                 Pedro R. Pierluisi, PR
Kristi L. Noem, SD                   John Garamendi, CA
Steve Southerland II, FL             Colleen W. Hanabusa, HI
Bill Flores, TX                      Vacancy
Andy Harris, MD
Jeffrey M. Landry, LA
Jon Runyan, NJ
Bill Johnson, OH
Mark Amodei, NV

                       Todd Young, Chief of Staff
                Lisa Pittman, Chief Legislative Counsel
               Jeffrey Duncan, Democratic Staff Director
                David Watkins, Democratic Chief Counsel
                                 ------                                

              SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES

                       DOUG LAMBORN, CO, Chairman
              RUSH D. HOLT, NJ, Ranking Democratic Member

Louie Gohmert, TX                    Peter A. DeFazio, OR
Paul C. Broun, GA                    Madeleine Z. Bordallo, GU
John Fleming, LA                     Jim Costa, CA
Mike Coffman, CO                     Dan Boren, OK
Glenn Thompson, PA                   Gregorio Kilili Camacho Sablan, 
Dan Benishek, MI                         CNMI
David Rivera, FL                     Martin Heinrich, NM
Jeff Duncan, SC                      John P. Sarbanes, MD
Paul A. Gosar, AZ                    Betty Sutton, OH
Bill Flores, TX                      Niki Tsongas, MA
Jeffrey M. Landry, LA                Vacancy
Bill Johnson, OH                     Edward J. Markey, MA, ex officio
Mark Amodei, NV
Doc Hastings, WA, ex officio


                                 ------                                
                                CONTENTS

                              ----------                              
                                                                   Page

Hearing held on Friday, November 18, 2011........................     1

Statement of Members:
    Hastings, Hon. Doc, a Representative in Congress from the 
      State of Washington........................................     7
        Prepared statement of....................................     8
    Johnson, Hon. Bill, a Representative in Congress from the 
      State of Ohio..............................................     9
    Lamborn, Hon. Doug, a Representative in Congress from the 
      State of Colorado..........................................     2
        Prepared statement of....................................     3
    Markey, Hon. Edward J., a Representative in Congress from the 
      State of Massachusetts.....................................     5
        Prepared statement of....................................     6
    Young, Hon. Don, the Representative in Congress for the State 
      of Alaska..................................................    37

Statement of Witnesses:
    Alexander, Ryan, President, Taxpayers for Common Sense.......    32
        Prepared statement on H.R. 3410..........................    34
    Dana, Todd, Chairman and CEO, Uintah Resources, Inc..........    54
        Prepared statement on H.R. 3408..........................    56
    Eikenberry, Bill, Rancher, and Former Wyoming State Associate 
      Director, Bureau of Land Management, U.S. Department of the 
      Interior...................................................    59
        Prepared statement on H.R. 3408..........................    61
    Gardner, J. Steven, P.E., President and CEO, ECSI, LLC.......    64
        Prepared statement on H.R. 3409..........................    66
    Helmericks, Mark, Founder of Colville, Inc., Colville 
      Village, Alaska............................................    15
        Prepared statement on H.R. 3407..........................    16
    McGinley, Patrick C., Professor of Law, West Virginia 
      University College of Law..................................    72
        Prepared statement on H.R. 3409..........................    73
    Milito, Erik, Upstream Director, American Petroleum Institute    27
        Prepared statement on H.R. 3410..........................    29
    Sweeney, Tara M., Senior Vice President, External Affairs, 
      Arctic Slope Regional Corporation..........................    11
        Prepared statement on H.R. 3407..........................    12
    Van Tuyn, Peter, Alaska Conservationist and Environmental 
      Attorney, Bessenyey & Van Tuyn, LLC, on behalf of the 
      Alaska Wilderness League...................................    17
        Prepared statement on H.R. 3407..........................    18
    Wagner, Hon. Frank W., Senator, The General Assembly of 
      Virginia...................................................    25
        Prepared statement on H.R. 3410..........................    26
    Zaluski, Joseph J., Executive Vice-President, ECSI, LLC......    68
        Prepared statement on H.R. 3409..........................    70

Additional materials supplied:
    Hrenko, Rikki, CEO, Enefit American Oil Company, Statement 
      submitted for the record...................................   102
    U.S. Department of the Interior, Statement submitted for the 
      record.....................................................    98
                                     



  LEGISLATIVE HEARING ON H.R._: (STIVERS) ``AMERICAN-MADE ENERGY AND 
  INFRASTRUCTURE JOBS ACT''; H.R._: (HASTINGS OF WA AND YOUNG OF AK) 
``ALASKAN ENERGY FOR AMERICAN JOBS ACT''; H.R._: (LAMBORN) ``PROTECTING 
INVESTMENT IN OIL SHALE: THE NEXT GENERATION OF ENVIRONMENTAL, ENERGY, 
AND RESOURCE SECURITY ACT'' (PIONEERS ACT); AND H.R._: (JOHNSON OF OH) 
 ``COAL MINER EMPLOYMENT AND DOMESTIC ENERGY INFRASTRUCTURE PROTECTION 
                                 ACT.''

                              ----------                              


                       Friday, November 18, 2011

                     U.S. House of Representatives

              Subcommittee on Energy and Mineral Resources

                     Committee on Natural Resources

                            Washington, D.C.

                              ----------                              


    The Subcommittee met, pursuant to call, at 9:34 a.m., in 
Room 1324, Longworth House Office Building, Hon. Doug Lamborn 
[Chairman of the Subcommittee] presiding.
    Present: Representatives Lamborn, Hastings, Fleming, 
Flores, Landry, Johnson, Thompson, Duncan of South Carolina, 
Amodei, Rivera, Young, Southerland, and Markey.
    Mr. Lamborn. The Committee will come to order, there being 
present a quorum, which under Committee Rule 3(e), is two 
Members.
    The Subcommittee on Energy and Mineral Resources is meeting 
today to hear testimony on four bills. The first one is the 
American Made Energy and Infrastructure Jobs Act, H.R. 3410. 
There is also Alaskan Energy for America Jobs Act, H.R. 3407; 
Protecting Investment in Oil Shale the Next Generation of 
Environmental Energy and Resources Security Act, H.R. 3408; and 
Coal Miner Employment and Domestic Energy Infrastructure 
Protection Act, H.R. 3409.
    Mr. Lamborn. Under Committee Rule 4(f), opening statements 
are limited to the Chairman and Ranking Member of the 
Subcommittee. However, it is my intention to recognize the Full 
Committee Chairman and Ranking Member as well as the author of 
one of the pieces of legislation.
    I ask unanimous consent to include any other Member's 
opening statement in the hearing record if submitted to the 
clerk by close of business today.
    Hearing no objection, so ordered.

    STATEMENT OF THE HON. DOUG LAMBORN, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF COLORADO

    Mr. Lamborn. I now recognize myself for 5 minutes. Today 
the Subcommittee is considering a package of bills designed to 
create and save jobs, open American lands for energy 
development, and generate new revenue for the American 
Treasury. Combined, these bills provide one of the largest 
single actions Congress could take to promote American energy 
security. Using our Federal lands for energy production is 
critical to our national security. These resources are the 
property of the American people, and it is only the opening of 
these lands and promoting their development that will bring 
forth the value of the minerals on these lands.
    Among the bills before the Committee today is the 
Protecting Investment in Oil Shale the Next Generation of 
Environmental Energy and Resource Security Act, or PIONEERS 
Act, that will facilitate the development of our oil shale 
resources in the United States. Our Nation is blessed with some 
of the largest, richest deposits of oil shale in the entire 
world. According to the U.S. Geological Survey, the Western 
United States may hold more than 1.5 trillion, with a T, 
barrels of oil, six times Saudi Arabia's proven resources and 
enough to provide the United States with energy for the next 
200 years. Furthermore, it is estimated that hundreds of 
thousands of American jobs could be created by the development 
of our oil shale.
    Unfortunately, the policies of this Administration have 
actively harmed both research and development of oil shale. 
After changing oil shale lease terms, making them so limited 
that there was practically no interest in the land offered by 
the Bureau of Land Management and announcing they would be re-
reviewing the current rules for commercial leasing, the 
Administration has stifled oil shale development and research.
    At a field hearing held this year by this Subcommittee in 
Grand Junction, Colorado, we heard testimony from numerous 
witnesses stating that consistent policies and regulatory 
certainty were greatly needed in order to advance oil shale in 
the United States. My legislation aims to open up land for both 
research and commercial development of oil shale and to create 
stable policies that the industry can rely on. This will create 
good-paying jobs for Americans, contribute to our energy 
security, and decrease our dependency on foreign oil.
    Just Wednesday, Secretary Salazar said there were many 
questions still surrounding oil shale development. I agree. 
However, the Secretary's response has been to inject confusion 
and to restrict research. This bill takes a different tack. 
Instead, it will provide certainty and promote research. 
Companies were planning large investments in Colorado. However, 
many are now working with and investing in other nations, like 
Estonia and Jordan.
    Another bill before us today is the Coal Miner Employment 
and Domestic Energy Infrastructure Protection Act. The bill 
limits the authority of the Secretary of the Interior to issue 
new burdensome regulations under the Surface Mining Control and 
Reclamation Act of 1977 until December 31, 2011. This will stop 
the reckless rush of rulemaking by the Office of Surface Mining 
that has resulted in millions of wasted dollars and confusion 
by all parties as to the real impacts of the ongoing rulemaking 
by the OSM.
    Instead, this timeout will give OSM time to meet the 
requirements of a National Environmental Policy Act and 
generate a legally defensible regulation and to hear and 
address the concerns raised by the cooperating agencies, coal-
mining States, citizens, and industry. These are concerns that 
were raised in the April Budget oversight hearing for the 
Office of Surface Mining and subsequent oversight hearings on 
the Obama Administration's rewrite of the stream buffer zone 
rule, including a field hearing by this Subcommittee held in 
Charleston, West Virginia.
    Broad concern was raised after chapters of the draft 
environmental impact statement showed potential job losses in 
the neighborhood of 7,000 coal mine jobs and a reduction in 
coal production in 22 States. The Administration has backed 
away from their job loss estimates and begun to publicly 
criticize the contractor hired by OSM to prepare the EIS. 
Eventually OSM and the contractor, Polu Kai, came to a mutual 
agreement to terminate the contract. As one might imagine, 
while OSM blames the contractor for problems with the EIS, the 
contractor has raised concerns with OSM's management of the 
process.
    In particular, the numerous changes to the scope of the 
rule the EIS was to support. This may be a classic case of 
shooting the messenger when the message of massive job loss is 
too uncomfortable.
    Today we will hear from two of the subcontractors, Steven 
Gardner and Joe Zaluski, who worked for Polu Kai Services, on 
the Administration's rewrite of the stream buffer zone rule. I 
look forward to their testimony and hearing a different 
perspective on the rulemaking process.
    I know Chairman Hastings is here today, and I expect he 
will talk more about the other two bills before the Committee, 
so I will end my comments with just one last thought: Americans 
are desperate for new jobs, and blue-collar workers in our 
trades have been particularly hard hit by the economic 
downturn. Critics will say these bills are a give-away to the 
oil industry. Nothing could be further from the truth. These 
bills are designed to open lands to create opportunity, 
opportunity for Federal and local governments to receive 
revenues without having to borrow them, opportunity for 
companies to pay billions of dollars to the Treasury for the 
right to hire millions of new workers to explore, discover, and 
develop these resources, workers who are experts in the skilled 
trades, craftsmen, pipefitters, electricians, workers who will 
have good paying jobs with benefits to feed and support their 
working families. I look forward to hearing from the witnesses 
today.
    In lieu of the Ranking Member of the Subcommittee not being 
here, I would like to recognize the Ranking Member of the Full 
Committee for 5 minutes.
    [The prepared statement of Mr. Lamborn follows:]

          Statement of The Honorable Doug Lamborn, Chairman, 
              Subcommittee on Energy and Mineral Resources

    Today the Subcommittee is considering a package of bills designed 
to create and save jobs, open American lands for energy development, 
allow for the continued production of privately owned coal resources 
and generate revenue for the American treasury. Combined these bills 
provide one of the largest single actions Congress could take to 
promote domestic energy security.
    Using our federal lands for energy production is critical to our 
national security. These resources are the property of the American 
people and it is only by opening these lands and promote their 
development will bring forth the value of the minerals on these lands.
    While there are a number of bills before the Committee today, I 
would like to begin with the Protecting Investment in Oil Shale the 
Next Generation of Environmental, Energy, and Resource Security Act--or 
PIONEERS Act--will facilitate the development of our oil shale 
resources in the United States.
    In the United States we are blessed with some of the largest, 
richest deposits of oil shale in the entire world. According to the 
U.S. Geological Survey, the Western United States may hold more than 
1.5 trillion barrels of oil--six times Saudi Arabia's proven resources, 
and enough to provide the United States with energy for the next 200 
years. Furthermore, it is estimated that 350,000 domestic jobs could be 
created by the development of our oil shale.
    Unfortunately, the policies of this Administration have actively 
harmed both research and development of oil shale. After changing oil 
shale lease terms, making them so limited that there was practically no 
interest in the land offered by the Bureau of Land Management, and 
announcing they would be re-reviewing the current rules for commercial 
leasing, the Administration has stifled oil shale development and 
research.
    At a field hearing this held by our Subcommittee in Grand Junction, 
Colorado, we heard testimony from numerous witnesses stating that 
consistent policies and regulatory certainty were greatly needed in 
order to advance oil shale in the United States. My legislation aims to 
open up land for both research and commercial development of oil shale 
and create stable policies that the industry can rely on to create 
good-paying jobs for Americans, contribute to our energy security, and 
decrease our dependency on foreign oil. Just Wednesday, Secretary 
Salazar said there were many questions still surrounding oil shale 
development. I agree, however, the Secretary's response has been to 
inject confusion and restrict research. Companies were planning large 
investments in Colorado; however, due to the Secretary's actions many 
are now working with and investing in other nations like Estonia and 
Jordan. This bill takes a different tack; it will provide certainty and 
create an environment to foster research and development of this 
important domestic resource.
    Another bill before us today is the Coal Miner Employment and 
Domestic Energy Infrastructure Protection Act. The bill limits the 
authority of the Secretary of the Interior to issue new burdensome 
regulations under the Surface Mining Control and Reclamation Act of 
1977 until December 31, 2011. This will stop the reckless rush of 
rulemaking by the Office of Surface Mining that has resulted in 
millions of wasted dollars and confusion by all parties regarding the 
real impacts of the ongoing rulemaking by the OSM. Instead this time 
out will give OSM time to meet the requirements of the National 
Environmental Policy Act and generate a legally defensible regulation 
and to hear and address the concerns raised by the cooperating 
agencies, coal mining states, citizens and industry. Concerns that were 
raised in the April Budget oversight hearing for the Office of Surface 
Mining and subsequent oversight hearings on the Obama Administration's 
re-write of the Stream Buffer Zone Rule.
    Broad concern was raised after chapters of the draft environmental 
impact statement showed potential job losses in the neighborhood of 
7000 coal mine jobs, and a reduction in coal production in 22 states. 
The Administration has backed away from their job loss estimates and 
began to publically criticize the contractor hired by OSM to prepare 
the EIS. Eventually OSM and the contractor, Polu Kai, came to a mutual 
agreement to terminate the contract. As one might imagine while OSM 
blames the contractor for problems with the EIS the contractor has 
raised concerns with OSM's management of the process in particular the 
numerous changes to the scope of the rule the EIS was to support.
    Today we will hear from two of the subcontractors, Steven Gardner 
and Joe Zaluski, who worked for Polu Kai Services on the 
Administration's rewrite of the Stream Buffer Zone Rule. I look forward 
to their testimony and hearing a different perspective on the rule 
making process.
    I know Chairman Hastings is here today and I expect he will talk 
more about the other two bills before the Committee, so I will end my 
comments with just one last thought.
    Americans are desperate for new jobs and blue collar workers in our 
trades have been particularly hard hit by the economic downturn. 
Critics will say that these bills are a give away to the oil industry. 
Nothing could be further from the truth, these bills are designed to 
open lands to create opportunity. Opportunity for companies to pay 
billions of dollars to the treasury, for the right to hire millions of 
new workers to explore, discover and develop these resources. Workers 
who are experts in the skilled trades: craftsmen, pipefitters, 
electricians. Workers who will have good paying jobs, with benefits, to 
feed and support their families. I look forward to hearing from the 
witnesses today.
                                 ______
                                 

  STATEMENT OF THE HON. EDWARD J. MARKEY, A REPRESENTATIVE IN 
            CONGRESS FROM THE STATE OF MASSACHUSETTS

    Mr. Markey. Thank you, Mr. Chairman, very much.
    Yesterday, the Republican leadership unveiled what they 
deemed to be a new plan to fund construction projects for our 
Nation's roads and bridges.
    Unfortunately, the majority's drilling bills would barely 
get us started down the road of paying for a transportation 
bill. The four bills we are considering today would only 
generate 1/15th of the revenue that we would need to fund 
transportation projects for the next 6 years. These bills would 
leave us $70 billion short of funding our transportation 
projects over that time.
    Even the Ranking Member of the Senate Environment and 
Public Works Committee, Senator Inhofe, acknowledged this week 
that increased drilling would not be able to fund a 
transportation bill, stating, quote, there is no money in 
expanded energy production.
    Now, Senator Inhofe and I seldom see eye-to-eye, but on 
this issue I have to agree with him. We should leave no stone 
unturned as we look to get our Nation's fiscal house in order 
and get our economy moving again, but we don't need to drill 
under every single rock to do it. Just increasing the number of 
drill holes won't allow us to eliminate our Nation's potholes.
    In reality, the Republican plan to pay for our 
transportation projects is nothing more than the same drilling 
proposals they have offered time and time again. These bills 
would once again place drill rigs off our beaches, up and down 
the East and West Coast. These bills would once again open our 
Nation's most pristine wildlife refuge to drilling, and just 
because the majority now wants to use any drilling revenue to 
fund transportation projects doesn't mean that we haven't been 
down this road before.
    On the debt deal, the Republicans said it was my way or the 
highway. On the continuing resolution, they said it was my way 
or the highway. And now when it comes to funding the 
transportation bill, they are saying my way or our highways; we 
can't fix our roads unless big oil gets its fix.
    But there is a better way. This week Democrats on the 
Natural Resources Committee introduced legislation that would 
generate nearly four times as much revenue as these drilling 
bills through ensuring that oil, gas, and mining companies are 
paying their fair share. Our legislation would generate more 
than $19 billion in all over the next 10 years by closing 
loopholes that allow these companies, some of the most 
profitable companies in the history of the world, to drill and 
mine resources without paying a dime to the American people. 
Our bill would raise roughly $1 billion by encouraging 
companies to begin drilling on the leases they already have, 
just offshore. Oil companies are currently sitting on leases 
that hold more than 11.5 billion barrels of oil. The 
legislation would raise more than $9 billion by ending free 
drilling by big oil companies on public lands offshore in the 
Gulf of Mexico. It would raise more than $6 billion over the 
next 10 years by updating the 1872 Mining Law that allows 
mining companies to extract gold, silver, uranium, and other 
minerals without paying taxpayers any royalties, and through 
ensuring that companies pay to clean up their abandoned mine 
sites.
    Big oil has recorded $101 billion in profits through the 
first 9 months of this year. These companies aren't just the 1 
percent. They are the 1 percent plus. But the majority still 
wants to allow these oil companies to stage an occupy movement 
off our Nation's beaches.
    As we look to fund our Nation's highways, we don't need 
more drilling gimmicks. We need a concrete plan. We can pave 
the way for a transportation bill by ensuring that the American 
people get a proper return on the resources below public lands. 
We are at an intersection for our Nation's economic well-being. 
As we are looking to put American families back to work by 
funding transportation projects, the clear place to start is by 
ending the free ride for oil and mining companies on public 
lands.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Markey follows:]

     Statement of The Honorable Edward J. Markey, Ranking Member, 
                     Committee on Natural Resources

    Yesterday, the Republican leadership unveiled what they deemed to 
be a new plan to fund construction projects for our nation's roads and 
bridges. Unfortunately, the Majority's drilling bills would barely get 
us started down the road of paying for a transportation bill. The four 
bills we are considering today would only generate one-fifteenth of the 
revenue that we would need to fund transportation projects for the next 
six years. These bills would leave us $70 billion short of funding our 
transportation projects over that time.
    Even the Ranking Member on the Senate Environment and Public Works 
Committee, Senator Inhofe, acknowledged this week that increased 
drilling would not be able to fund a transportation bill, stating 
``there is no money in expanded energy production.'' Senator Inhofe and 
I don't always see eye to eye, but on this issue I have to agree with 
him. We should leave no stone unturned as we look to get our nation's 
fiscal house in order and get our economy moving again but we don't 
need to drill under every single rock to do it. Just increasing the 
number of drill holes won't allow us to eliminate our nation's pot 
holes.
    In reality, the Republican plan to pay for our transportation 
projects is nothing more than the same drilling proposals they has 
offered time and time again. These bills would once again place drill 
rigs off our beaches up and down the East and West Coasts. These bills 
would once again open our nation's most pristine wildlife refuge to 
drilling. Just because the Majority now wants to use any drilling 
revenue to fund transportation projects doesn't mean that we haven't 
been down this road before.
    On the debt deal, the Republicans said it was ``my way or the 
highway.'' On the Continuing Resolution they said it was ``my way or 
the highway.'' Now when it comes to funding the transportation bill, 
they are saying ``my way or OUR HIGHWAYS.'' We can't fix our roads 
unless Big Oil gets its fix. But there's a better way.
    This week, Democrats on the Natural Resources Committee introduced 
legislation that would generate nearly four times as much revenue as 
these drilling bills through ensuring that oil, gas and mining 
companies are paying their fair. Our legislation would generate more 
than $19 billion in all over the next 10 years by closing loopholes 
that allow these companies--some of the most profitable companies in 
the history of the world--to drill and mine our resources without 
paying a dime to the American people.
    Our bill would raise roughly $1 billion by encouraging companies to 
begin drilling on the leases they already have--just offshore, oil 
companies are currently sitting on leases that hold more than 11.5 
billion barrels of oil. The legislation would raise more than $9 
billion by ending free drilling by Big Oil companies on public lands 
offshore in the Gulf of Mexico. It would raise more than $6 billion 
over the next 10 years by updating the 1872 mining law that allows 
mining companies to extract gold, silver, uranium and other minerals 
without paying taxpayers any royalties and through ensuring that 
companies pay to clean up their abandoned mine sites.
    Big Oil has recorded $101 billion in profits through the first 9 
months of this year. These companies aren't just the 1 percent, they're 
the one-plus percent. But the Majority still wants to allow these oil 
companies to stage an occupy movement off our nation's beaches.
    As we look to fund our nation's highways, we don't need more 
drilling gimmicks, we need a concrete plan. We can pave the way for a 
transportation bill by ensuring that the American people get a proper 
return on the resources below public lands.
    We are at an intersection for our nation's economic well being. As 
we are looking to put American families back to work by funding 
transportation projects, the clear place to start is by ending the free 
ride for oil and mining companies on public lands.
                                 ______
                                 
    Mr. Lamborn. I now recognize the Chairman of the Full 
Committee, Representative Hastings, for 5 minutes for his 
opening statement.

    STATEMENT OF THE HON. DOC HASTINGS, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF WASHINGTON

    Mr. Hastings. Thank you very much, Mr. Chairman.
    Thank you for the courtesy of having me here. Earlier this 
month, Speaker Boehner outlined plans for an energy and 
infrastructure jobs bill that would link expanded American 
energy production with initiatives to repair and improve 
infrastructure. This would promote long-term private-sector job 
growth and remove barriers that stand in the way of American 
energy production. The Natural Resources Committee is doing its 
part to advance this effort by moving forward with 
consideration of measures under its jurisdiction that will be 
included in the Speaker's bill.
    The bills before us today are not just energy bills; they 
are job bills. Increased energy production is one of the best 
ways to help jump start our economy. It will create over a 
million energy jobs and thousands of indirect jobs in a variety 
of sectors in every State throughout our country. Increased 
energy production is one of the easiest ways to generate new 
Federal revenue. Through lease sales, bonus bids, and royalties 
the Federal Government can raise billions of dollars by 
allowing new production on Federal lands and in Federal waters.
    Given the tremendous economic benefits, not to mention the 
national security implications, there is no reason why we 
should not provide access to our own energy resources here.
    In contrast to the actions taken by the Obama 
Administration with its new 5-year plan, the bill introduced by 
Mr. Stivers of Ohio would open new offshore areas for energy 
production. These are areas with vast energy resources that are 
currently blocked from development.
    A majority of Americans support increased offshore 
drilling, and the bill includes proposals that have already 
received bipartisan support in the House. We should move 
forward with a smart plan that allows new drilling to occur in 
areas with the greatest energy potential.
    And it is well past time to open a small portion, less than 
3 percent, of the Arctic National Wildlife Refuge to 
responsible energy production. Mr. Young of Alaska and I have 
introduced a bill that would do just that. ANWR is the single 
greatest opportunity for new energy production on Federal land, 
and it was specifically set aside for energy production by 
President Carter and Congress in 1980. This Committee has heard 
from a bipartisan group of community leaders and elected 
officials who all spoke about jobs and economic growth that 
ANWR production would provide.
    Finally, the PIONEER Act by Chairman Lamborn will allow for 
the increased production of our U.S. oil shale resources in the 
West. It is estimated that the U.S. has over 1.5 trillion 
barrels of shale oil in shale, six times Saudi Arabia's proven 
resources. We should develop that potential. These proposals to 
allow new offshore and onshore energy production will generate 
substantial revenues because these proposals open new areas 
that are currently closed to energy production.
    As this legislation moves through the regular legislative 
process, from hearing today, through markup and so forth, the 
exact CBO score will be known. One thing that is certain, doing 
nothing will not create any new jobs or generate any new 
revenue.
    During these difficult economic times, with soaring debts, 
soaring debts and deficits, and a highway trust fund that needs 
to be replenished, Congress should not pass up this opportunity 
to create jobs and generate billions of dollars in new revenue. 
The revenue from these projects will make significant 
contribution to help fund America's roads and bridges. That is 
why it makes sense to link these two issues of energy 
production and infrastructure. By increasing energy production, 
we create new American energy jobs and also generate revenue 
that will help create infrastructure jobs. In short, this 
creates jobs and provides important funding without having to 
raise taxes on American families and businesses.
    So I thank the Subcommittee Chairman Lamborn for holding 
this hearing and look forward to working with you as this 
process moves forward.
    [The prepared statement of Mr. Hastings follows:]

          Statement of The Honorable Doc Hastings, Chairman, 
                     Committee on Natural Resources

    Earlier this month, Speaker Boehner outlined plans for an energy 
and infrastructure jobs bill that would link expanded American energy 
production with initiatives to repair and improve infrastructure. This 
would promote long-term, private sector job growth and remove barriers 
that stand in the way of American energy production.
    The Natural Resources Committee is doing its part to advance this 
effort by moving forward with consideration of measures under our 
jurisdiction that will be included in the Speaker's bill.
    The bills before us today are not just energy bills, they are job 
bills. Increased American energy production is one of the best ways to 
help jumpstart our economy. It will create over a million energy jobs 
and thousands of indirect jobs in a variety of sectors in every state 
throughout the country.
    Increased American energy production is also one of the easiest 
ways to generate new federal revenue. Through lease sales, bonus bids 
and royalties, the federal government can raise billions in revenue by 
allowing new production on federal lands and in federal water.
    Given the tremendous economic benefits--not to mention the national 
security implications--there is no reason why we should not provide 
access to our own energy resources located here at home.
    In contrast to the actions taken by the Obama Administration with 
its new five year plan, the bill introduced by Rep. Stivers would open 
new offshore areas for energy production. These are areas with vast 
energy resources that are currently blocked from development. A 
majority of Americans support increased offshore drilling and the bill 
includes proposals that have already received bipartisan support in the 
House. We should move forward with a smart plan that allows new 
drilling to occur in areas with the greatest energy potential.
    And, it's also well past the time to open a small portion--less 
than 3 percent--of the Arctic National Wildlife Refuge to responsible 
energy production. Rep. Don Young and I have introduced a bill that 
would do just that. ANWR is the single greatest opportunity for new 
energy production on federal land and it was specifically set aside for 
energy production by President Carter and Congress in 1980. This 
Committee has heard from a bipartisan group of community leaders and 
elected officials who all spoke about the jobs and economic growth that 
ANWR production would provide.
    Finally, the PIONEER Act by Subcommittee Chairman Lamborn will 
allow for the increased production of our U.S. oil shale resources in 
the West. It is estimated that the U.S. has over 1.5 trillion barrels 
of oil in shale--six times Saudi Arabia's proven resources. We should 
develop that potential.
    These proposals to allow new offshore and onshore energy production 
will generate substantial revenues -because these proposals open new 
areas that are currently closed to energy production. As this 
legislation moves through the regular legislative process, from hearing 
to markup to the floor, the exact score from CBO will be known.
    One thing that's certain, doing nothing will not create any new 
jobs or generate any new revenue. During these difficult economic 
times, with soaring debts and deficits and a highway fund that needs to 
be replenished, Congress should not pass up an opportunity to create 
jobs and generate billions in new revenue.
    The revenue from these projects will make a significant 
contribution to help fund America's road and bridges.
    That's why it makes sense to link the two issues of energy 
production and infrastructure. By increasing energy production we 
create new American energy jobs and also generate revenue that can help 
create infrastructure jobs. In short, this creates jobs and provides 
important funding without having to raise taxes on American families 
and businesses.
    I thank Subcommittee Chairman Lamborn for holding this hearing and 
look forward to hearing from the witnesses.
                                 ______
                                 
    Mr. Lamborn. Thank you, Mr. Chairman.
    And I now recognize the author of the Coal Miner Protection 
Act, a member of this Subcommittee, Mr. Johnson of Ohio, for 
his opening statement.

    STATEMENT OF THE HON. BILL JOHNSON, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF OHIO

    Mr. Johnson. Thank you, Mr. Chairman.
    On Monday, I introduced H.R. 3409, the Coal Miner 
Employment and Domestic Energy Infrastructure Protection Act. 
As we all know, thousands of hard-working coal miners go to 
work every day to put food on their families' tables and keep 
millions of American families supplied with reliable, low-cost 
electricity. The Obama Administration has actively sought ways 
to put an end to the coal industry through onerous regulations 
and activist rulemaking.
    My legislation is short and simple. It would stop the 
Secretary of the Interior from issuing any proposed or final 
rule that does one of five of the following things: Adversely 
impact employment in coal mines in the United States, cause a 
reduction in revenue received by the Federal Government by 
reducing through regulation the amount of coal in the United 
States that is available for mining, reduce the amount of coal 
available for domestic consumption or for export, designate any 
area as unsuitable for surface coal mining and reclamation 
operations or expose the United States to liability for taking 
the value of privately owned coal through regulation.
    Now, I wish I didn't have to introduce this legislation, 
but it is necessary to stop one aspect of the Administration's 
continued war on coal. This legislation is in direct response 
to a rewrite of a 2008 rule that the Department of the 
Interior's Office of Surface Mining and Reclamation and 
Enforcement is currently undertaking.
    The rule, commonly referred to as the stream buffer zone 
rule, was finalized in 2008 after a 5-year process that 
included 40,000 public comments, 2 proposed rules, and 5,000 
pages of environmental analysis from 5 agencies. The final rule 
clarified and codified coal surface mining practices that had 
been in effect for over 30 years.
    However, on January 20, 2009, the Obama Administration 
decided to reopen the carefully crafted rule. This proposed 
sweeping regulatory action would radically alter the definition 
of a stream as well as how the agency measures material damage 
outside of the permit area.
    To date, the Administration has provided no written 
studies, data, or support to justify these radical changes. 
Additionally, several States have expressed serious concerns 
about the need and justification for the proposal. According to 
the Obama Administration's own independent analysis, the 
rewrite of the rule could eliminate up to 27,000 direct and 
indirect jobs associated with the coal industry, cut coal 
mining production by 50 percent, and increase the cost of 
electricity for families and small businesses.
    I look forward to the testimony of the gentlemen on the 
second panel who were involved in the current rulemaking 
process so that they can hopefully shed some light on this 
flawed process. I thank the Chairman for having this hearing 
today on this very important piece of legislation, and with 
that, I yield back the balance of my time.
    Mr. Lamborn. Thank you, Mr. Johnson.
    I ask unanimous consent that for today's hearing members of 
the Full Committee be allowed to sit at the dais and 
participate in the hearing.
    Hearing no objection, so ordered.
    I would like to now invite our witnesses forward, and the 
first panel will be Ms. Tara Sweeney, Senior Vice President For 
External Affairs, Arctic Slope Regional Corporation; Mr. Mark 
Helmericks, founder of Colville, Inc.; Mr. Peter Van Tuyn, 
Alaska Wilderness League; The Honorable Frank Wagner, Senator 
from the Virginia General Assembly; Mr. Erik Milito, Upstream 
Director, American Petroleum Institute; and Ms. Ryan Alexander, 
President of Taxpayers for Common Sense.
    Like all witnesses, your written testimony will appear in 
full in the hearing record, so I ask that you keep your oral 
statements to 5 minutes, as outlined in our invitation letter 
and under Committee rules. Our microphones are not automatic, 
so you have to push the button to start. The green light comes 
on at the beginning of your 5 minutes. A yellow light comes on 
after 4 minutes, and a red light when your 5 minutes are over.
    And Ms. Sweeney, you may begin.

 STATEMENT OF TARA SWEENEY, SENIOR VICE PRESIDENT FOR EXTERNAL 
           AFFAIRS, ARCTIC SLOPE REGIONAL CORPORATION

    Ms. Sweeney. [speaking Native American language.]
    Honorable Chairman Lamborn and distinguished members of the 
Subcommittee, my name is Tara Sweeney, I am an Inupiaq Eskimo 
from Barrow, Alaska. I grew up on the cusp of oil discovery and 
development in Alaska's Arctic. I remember what it was like to 
melt ice blocks just to take a bath because we didn't have 
running water. I was 16 years old when we finally had a flush 
toilet installed in our house.
    Advocating for responsible development of the Coastal Plain 
is a second-generation issue for my family. Today, I serve as 
the senior vice president of external affairs for Arctic Slope 
Regional Corporation or ASRC, owned by 11,000 Inupiaq 
shareholders.
    ASRC was formed pursuant to the Alaskan Native Claims 
Settlement Act of 1971 or ANCSA for the area that encompasses 
the entire North Slope of Alaska. ASRC and Kaktovik Inupiat 
Corporation, the native corporation for the village of 
Kaktovik, own more than 92,000 subsurface and surface acres 
respectively in the Coastal Plain. These lands hold significant 
potential for onshore oil and gas development. We remain 
committed to developing the resources from our land in a manner 
that respects our Inupiat subsistence values, protects our 
culture, and ensures proper care of the environment, habitat, 
and wildlife.
    However, as a result of Section 1003 of ANILCA, these 
important economic resources remain off limits until further 
act of Congress, which is why ASRC supports the Alaskan Energy 
for American Jobs Act.
    Development of natural resources within wildlife refuges is 
not uncommon. For example, the Kenai National Wildlife Refuge 
hosted one of Alaska's first oil and gas discoveries and 
fields, and exploration and development continues today. We 
question the differing standard applied to northern Alaska. 
This legislation is aligned with ASRC's mission to enhance 
Inupiaq economic opportunities while protecting our cultural 
and subsistence freedoms through responsible stewardship of our 
natural environment.
    The Arctic is an unforgiving climate, home to the Inupiat 
and the only village within the boundaries of ANWR, Kaktovik. 
Our people subsist off the land and the sea. We would not 
support development of the Coastal Plain if it meant or had an 
adverse impact on our ability to feed our families with the 
nourishment of caribou, fish, fowl, Dall sheep, moose, musk 
oxen or marine mammals. No one would suffer greater harm than 
our people in the event of mismanagement of our lands.
    Today it is possible to develop the Coastal Plain's oil and 
gas reserves and allow access to much-needed energy resources 
with minimal footprint in the refuge and without any 
significant disturbance to wildlife. There are several key 
provisions in this legislation that ASRC supports, and I would 
like to highlight them:
    First, the development and implementation of a competitive 
oil and gas leasing program within the Coastal Plain; second, 
the repeal of Section 1003 of ANILCA; third, finalizing the 
land selections for ASRC and KIC; and, finally, ASRC supports 
the provisions included in the legislation that address the 
recovery of legal expenses underneath the Equal Access to 
Justice Act. We are advocating for equitable accountability for 
all parties who choose to exercise litigious options to delay 
meaningful energy projects.
    It is incumbent upon Congress to take a leadership role in 
developing sound energy policy for our Nation. Responsible oil 
and gas development of the Coastal Plain could provide safe and 
secure sources of energy for the Nation, create important jobs 
for Alaskan natives and the country, and help ensure future 
flows through the Trans-Alaska pipeline, which is now operating 
at only one-third of its capacity. Now is the time for Congress 
to act in the best interests of Americans with respect to 
domestic energy supply. ASRC stands ready to be part of the 
domestic energy solution for Congress.
    As I close, let me be very clear: The Coastal Plain is the 
place that our people have called home for over 10,000 years. 
ASRC would not support development of the Coastal Plain if it 
had an adverse impact on our ability to subsist off of the 
land. Today, without development in our region, our communities 
simply will not survive. Thank you for your time.
    [The prepared statement of Ms. Sweeney follows:]

Statement of Tara M. Sweeney, Senior Vice President, External Affairs, 
                   Arctic Slope Regional Corporation

    Honorable Chairman Lamborn and distinguished members of the 
subcommittee, my name is Tara Sweeney and I am an Inupiaq Eskimo from 
Barrow, Alaska. I grew up on the cusp of oil discovery and development 
in Alaska's Arctic--I remember what it was like as a child to melt ice 
blocks just to take a bath because we didn't have running water. I was 
16 years old when we finally had a flush toilet installed in our house. 
Advocating for responsible development of the Coastal Plain of ANWR is 
a second-generation issue for my family.
    Today, I serve as the senior vice president of External Affairs for 
Arctic Slope Regional Corporation, or ASRC, and I am here representing 
the interests of over 11,000 Inupiaq shareholders of ASRC.
    ASRC is an Alaska Native corporation formed pursuant to the Alaska 
Native Claims Settlement Act of 1971 (ANCSA) for the area that 
encompasses the entire North Slope of Alaska. Shareholders of ASRC 
include nearly all residents of eight villages on the North Slope, 
Point Hope, Point Lay, Wainwright, Atqasuk, Barrow, Nuiqsut, Kaktovik 
and Anaktuvuk Pass.
    We are committed to increasing the economic and individual 
development opportunities within our region, and to preserving the 
Inupiat culture and traditions. By adhering to the traditional values 
of protecting the land, the environment, and the culture of the 
Inupiat, ASRC has successfully adapted and prospered in an extremely 
challenging economic climate.
    ASRC owns approximately five million acres of land on Alaska's 
North Slope, conveyed to the corporation under ANCSA, as a settlement 
of aboriginal land claims. Under the terms of both ANCSA and the Alaska 
National Interest Lands Conservation Act of 1980 (ANILCA), the unique 
character of these lands, founded in federal Indian law and the most 
significant Native claims settlement in U.S. history, must be 
recognized by Congress and the Federal government in making any land 
management decisions. ASRC lands are located in areas that either have 
known resources or are highly prospective for oil, gas, coal, and base 
minerals. We remain committed to developing these resources and 
bringing them to market in a manner that respects Inupiat subsistence 
values and ensures proper care of the environment, habitat and 
wildlife.
    ASRC and Kaktovik Inupiat Corporation (``KIC''), the Native 
Corporation for the Village of Kaktovik, own more than 92,000 
subsurface and surface acres, respectively, in the Coastal Plain of the 
Arctic National Wildlife Refuge, also commonly known as the 1002 Area. 
These lands hold significant potential for onshore oil and gas 
development. However, as a result of Section 1003 of ANILCA, these 
important economic resources remain off limits until further act of 
Congress, which is why ASRC supports the Alaskan Energy for American 
Jobs Act.
    This important piece of legislation asserts Congressional authority 
to open the Coastal Plain for responsible oil and gas exploration and 
development, while protecting our Arctic environment. Development of 
natural resources within wildlife refuges is not uncommon within the 
United States, even in Alaska.
    The Kenai National Wildlife Refuge hosted one of Alaska's first oil 
and gas discoveries and fields, the Swanson River oilfield, discovered 
in 1959 and produced in 1961. Since the Swanson River field 
development, there has been a continuous program of exploration and 
development within the Kenai National Wildlife Refuge. Most recently on 
November 12, 2011, NordAq Energy announced discovery of a huge gas 
field in the Kenai National Wildlife Refuge and plans for development 
are to begin in 2012. NordAq's exploration activities took place on 
leases from another Alaska Native corporation and occurred within the 
Kenai National Wildlife Refuge.
    Section 1110(b) of ANILCA allows for access to the subsurface in-
holdings of another Alaska Native corporation within the Kenai National 
Wildlife Refuge for exploration, testing and development of 
hydrocarbons. ASRC has been denied access to our subsurface in-holdings 
within the Coastal Plain of ANWR, and we desire parity. This 
legislation aims to afford those same opportunities to ASRC through the 
repeal of Section 1103 of ANILCA. Further, other national wildlife 
refuges around the country contain roads, power lines and other 
infrastructure. We question the differing standard applied to Northern 
Alaska.
    The Alaskan Energy for American Jobs Act is aligned with ASRC's 
mission to enhance Inupiaq economic opportunities while protecting our 
cultural and subsistence freedoms through responsible stewardship of 
our natural environment.
    The Arctic is an unforgiving climate, home to the Inupiat, and the 
only village within the boundaries of ANWR, Kaktovik. The people of 
Kaktovik, or Qaaktugvigmiut, and the broader North Slope Inupiat 
community subsist off the land and the sea. We would not support 
development of the Coastal Plain if it had an adverse impact on our 
ability to feed our families the nourishment of caribou, fish, fowl, 
Dall sheep, musk oxen, moose, or marine mammals.
    Some have suggested designating the Coastal Plain as 
``wilderness'', but Inupiat have called the Coastal Plain home for 
thousands of years, and we can hardly be considered a ``visitor'' 
there. As stated earlier, the area is clearly not one without human 
habitation. To say that our homelands, where we have lived and that 
have sustained us for thousands of years, are absent of permanent 
residents, as if we do not exist--is insulting.
    Responsible oil and gas development of the Coastal Plain of ANWR 
would provide a safe and secure source of energy to the nation, create 
important jobs for Alaska Natives and throughout the country, and help 
ensure future flows through the Trans-Alaska Pipeline System, which is 
now operating at only one-third of its original capacity. With advances 
in technology, it is possible to develop the Coastal Plain's oil and 
gas reserves and allow access to much-needed energy resources with 
minimal land disturbance in the Refuge and without any significant 
disturbance to wildlife. Technological advances have significantly 
reduced the ``footprint'' of oil and gas development. Generally 
speaking, caribou and other wildlife populations have shown themselves 
to be highly adaptive to, and have not been adversely affected by, 
people, machines, and appropriate development (including oil and gas 
development) in the Refuge or nearby areas.
    While we support the Alaskan Energy for American Jobs Act, there 
are several key provisions that ASRC would like to highlight. First, 
the development and implementation of a competitive oil and gas leasing 
program within the Coastal Plain. The federal government has taken a 
bipolar approach to responsible energy development in this country. 
Elsewhere on the North Slope in the NPR-A, for example, lands are 
leased for exploration and never permitted for development, held in 
limbo by regulatory agency delay. The implementation of a competitive 
oil and gas leasing program on the Coastal Plain of ANWR is a step 
closer to increasing domestic oil supply for the benefit of all 
Americans.
    Second, the repeal of Section 1003 ANILCA, which declares that oil 
and gas leasing program to be compatible with the purposes of ANWR. 
This is especially important because without this, both ASRC and KIC as 
private landholders are refugees on our own lands, with no opportunity 
to responsibly develop resources for the benefit of the North Slope, 
state of Alaska and the Nation.
    Third, we believe it is important under this legislation to 
maximize Federal revenues by removing any cloud on title and to clarify 
land ownership with respect to remaining conveyances to ASRC and KIC. 
It is equally important for ASRC and KIC finalize our lands selections 
as provided for under PLO 6969 and the 1983 Agreement between ASRC and 
the United States. We applaud this language to finally fulfill our land 
selections.
    ASRC supports the provisions included in the legislation that 
address recovery of legal expenses under the Equal Access to Justice 
Act. While the language targets energy legislation, we would support 
taking it a step further and support including this provision in any 
legislation regarding energy development, not just energy development 
in Alaska. Over the past several years we have participated, to various 
degrees, in efforts to advance exploration and development of energy 
resources in Alaska. Our experience is that energy development 
anywhere--not just limited to Alaska--is almost always hindered by the 
threat of litigation and the ability of third parties to challenge such 
projects--either administratively or in the courts--regardless of 
whether the challenges are merited. Unfortunately, in many of these 
cases third parties can actually recover their costs, including legal 
fees, even if the challenge is not ultimately successful.
    We are concerned that there does not appear to be any mechanism 
that currently exists to ensure that only legitimate challenges are 
prosecuted. As a consequence, significant damages can and do occur as a 
result of delays in the process, even when claims in litigation are 
ultimately rejected by a court. This currently happens all the time 
with respect to development in Alaska, and we expect that it will 
happen even more frequently as efforts continue to develop resources in 
ANWR, NPR-A, and on the Outer Continental Shelf (OCS).
    We urge Congress to consider adopting provisions to ensure that 
plaintiffs consider the merits of their arguments before they pursue an 
administrative or judicial challenge to an energy development project. 
Options could include requiring that such plaintiffs post a bond as 
part of a challenge to an energy development project, and that they 
forfeit the bond if their challenge is ultimately unsuccessful. Another 
option would be legislation that precludes third parties from 
recovering costs or legal fees--under the Equal Access to Justice Act 
or otherwise--that such third party incurs in bringing a judicial 
challenge to an energy development project. We are advocating for 
equitable accountability for all parties who choose to exercise 
litigious options to delay meaningful energy projects. Project delays 
of responsible oil and gas development in the Arctic have real-life 
implications for our people, like threatening the sustainability of 
providing running water and flush toilets in our communities, local 
education for our children, or health care facilities, and police and 
fire protection for our residents.
    Finally, in addition to the provisions we support in the Alaskan 
Energy for American Jobs Act, we would like to raise the issue of the 
necessity of acquiring new seismic data for Coastal Plain resources. 
Under the Act, future lease sales in the Coastal Plain would 
necessitate seismic exploration activity to identify areas most 
promising for recovery of hydrocarbons. While we advocate the opening 
of the Coastal Plain for leasing we also advocate keeping surface 
impacts to a minimum. We believe the interest in the hydrocarbon 
potential under the Coastal Plain could lead to multiple seismic 
programs in order for companies to collect current data using current 
technologies for evaluation. We would propose that single seismic be 
conducted prior to leasing in a manner that allows for community 
stewardship combined with equipment and procedures focused on 
assessment with minimal impact of such a program.
    It is important to remember that the Coastal Plain of ANWR is the 
very place that our people have called home since time immemorial, and 
it continues to provide the resources that support our survival. In 
addition to the substantial potential value that responsible 
development of the area's natural resources holds for our people, the 
land and its resources are essential to our subsistence way of life. It 
bears repeating that ASRC would not support development of the Coastal 
Plain if it had an adverse impact on our ability to subsist off the 
land.
    It is incumbent upon Congress to take a leadership role in 
developing sound energy policy for our nation. The federal government 
continues to send mixed messages about domestic energy production, and 
now is the time for Congress to act in the best interests of Americans 
with respect to domestic energy and energy supply. ASRC stands ready to 
be part of the domestic energy supply solution for Congress. Thank you 
for allowing ASRC to comment on this legislation.
                                 ______
                                 
    Mr. Lamborn. Thank you for your testimony, and I stand 
corrected on the pronunciation of your name, Tara.
    Next I would like to invite to speak Mr. Helmericks.

                 STATEMENT OF MARK HELMERICKS, 
          FOUNDER OF COLVILLE, INC., COLVILLE VILLAGE

    Mr. Helmericks. Chairman, Ranking Member Markey, members of 
the Committee, for the record my name is Mark Helmericks. I am 
a resident of the North Slope Borough of Alaska. I can't quite 
trace my roots back 10,000 years, but I can trace my roots back 
to 1947, when my father canoed down the Colville River and 
established a homestead on the edge of the Arctic Ocean.
    In my written testimony, I wrote that I was born, raised, 
home-schooled and worked my entire life there. I need to 
clarify that I was not quite born there, but almost. My parents 
were living in a snow-walled tent on the edge of the ocean when 
my mother went into labor. My father, being a bush pilot, put 
her in the airplane and started flying her south to the nearest 
hospital, but since that was 500 miles away and it was winter 
in May, when my mother was in labor, and it was springtime/
summer in Fairbanks, so my father, whose airplane was on skis, 
he had to not only load his pregnant wife in the airplane but 
also a change of landing gear. So he flew halfway to Fairbanks, 
landed on a glacier, took the skis off, put the wheels on, flew 
to Fairbanks, had the baby, spent about 10 days in Fairbanks. 
Meanwhile, spring arrived on the North Slope, the snow melted, 
so my father then had to take the wheels off, put the airplane 
on pontoons, and fly home, so in my father's log book for my 
birth, it records: 1,000 miles flown, three changes of landing 
gear, one baby delivered, mission accomplished.
    So I have been there for a long time, 53 years. I grew up 
eating caribou meat. I have spent a lot of time in ANWR. It is 
a gorgeous place. It is worthy of our serious and careful 
consideration. I climbed Mount Chamberlin for my 40th birthday. 
That is the highest peak in ANWR. And I consider Lake Schrader, 
that big hourglass lake in ANWR, my favorite place to go 
fishing.
    This bill is about American jobs and American energy, and I 
have worked many jobs in Alaska. I have been a subsistence 
hunter, a commercial fisherman, a logger, a truck driver, a 
bush pilot. I now own a solid waste and industrial supply 
company. That is the Colville that is before you right now. I 
could tell you that the jobs in the oil industry are by far the 
best. They pay over twice the average of Alaskan jobs. They are 
safe. They are long term. They are progressive.
    I have two children, a boy and a girl, and the oil industry 
is a career choice that I can recommend to my son, and it is 
also a career choice I can recommend to my daughter.
    Alaska has a world class oil infrastructure in place. We 
are fretting a little bit about losing our place in the 
competitive league, you know, in the world, and there is a few 
things where America still stands head and shoulders. And oil 
is one of them, and Alaska is one of the best of the best. It 
is not perfect, but we have really worked very hard to do it 
right. And I am proud of the record that we have established up 
there.
    But we are only running at one-third capacity. Right now we 
have a lot of unemployed people. We have this industry in 
Alaska that is only one-third utilized. If you take a look at 
Prudhoe Bay, it is a State enclave, and it is landlocked by 
Federal properties. If you go to the west, there is NPRA. If 
you go to the north, there is Outer Continental Shelf. If you 
go to the east, there is ANWR. So we really need a State-
Federal partnership to proceed from this point forward, and I 
think that is why we are respectfully here asking for your 
assistance.
    In short, to keep the industry from slowly dying on the 
vine from under capacity, we need Federal oil. And by giving 
the Alaskan industry access to Federal oil, we also create 
excellent jobs, really good, blue-collar jobs. We also create a 
good stream of money into the Federal Treasury, and taking a 
look at the Federal deficit, I think a little bit of positive 
cash flow into the Treasury would be welcome.
    I thank you for the opportunity to appear here today, and I 
welcome any questions that you might have.
    [The prepared statement of Mr. Helmericks follows:]

       Statement of Mark Helmericks, Founder of Colville, Inc., 
                        Colville Village, Alaska

    Dear Chairman Hastings, Ranking Member Markey, and Members of the 
Committee,
    For the record, my name is Mark Helmericks. I am a resident of the 
North Slope Borough of Alaska.
    Thank you for the invitation to appear before your Committee and 
offer testimony on H.R. 3470. Our country is experiencing a bit a 
slump, and with people needing good jobs, I am glad to assist in wise 
and effective actions that help bring work to our citizens. Making oil 
Federal oil reserves available for Alaska's petroleum industry is one 
of the best such actions I know of.
    First, a bit of background on myself. You will hear many 
statistics, studies, and positions from well qualified specialists and 
experts. I do not have these abilities. Today, I'm only going to speak 
of things I have seen with my own eyes, or done with my own hands. 
Politically speaking, I'm non-partisan and philosophically consider 
myself an environmentalist.
    I have been a resident of Alaska's North Slope for 53 years. In 
short, my entire life. I was born, raised, home schooled, and have 
worked nearly my whole career in this region. I grew up eating caribou 
meat. My family traces its roots back even farther, into the 1940's, 
when my father canoed down the Colville River and homesteaded land at 
the edge of the Arctic Ocean. I have spent many days in the Arctic 
National Wildlife Refuge. In fact, I climbed Mt Chamberlain, the 
highest peak, for my 40th birthday, and Lake Schrader remains my 
favorite place to go fishing. I have seen that care of the environment 
and oil production can, and do, co-exist.
    I have worked a number of different jobs, including being a 
subsistence hunter, a commercial fisherman, a logger, a truck driver, a 
bush pilot. I now own a solid waste and industrial supply company. The 
work in the oil industry has been the best, by far. It is well paid, at 
nearly twice the average wage in Alaska, stable, and safe. Staff is 
trained continuously throughout their career. It is progressive. As a 
father with twin children, it a place I can recommend as a career 
choice for my son. And for my daughter.
    Alaska has a world-class oil industry infrastructure. But it is 
only running a 1/3 capacity. We could literally ship another million 
barrels a day if there was access to the resource. Due to the 
circumstances of land ownership in Alaska, the overwhelming majority of 
new reserves are under Federal control. Nearly all the Arctic oil 
development to date has been with State reserves. But to keep the 
investment from dying from undercapacity, and bring benefits to America 
like well paying long term jobs, we are respectfully asking for access 
to Federal oil.
    I thank you for the honor of appearing before you today, and I 
welcome any questions you have.
                                 ______
                                 
    Mr. Lamborn. All right, thank you.
    Mr. Van Tuyn.

    STATEMENT OF PETER VAN TUYN, ALASKA CONSERVATIONIST AND 
          ENVIRONMENTAL ATTORNEY, BESSENYEY & VAN TUYN

    Mr. Van Tuyn. Mr. Chairman, thank you for inviting me to 
testify on H.R. 3407, the latest in a long line of bills to 
drill the Arctic National Wildlife Refuge.
    For over 50 years, the Arctic Refuge has embodied the heart 
of the public land legacy that leaders from both political 
parties have provided for present and future generations. These 
leaders recognized the importance of balancing the responsible 
development of public lands with the protection of places that 
are simply too special and sensitive to develop.
    H.R. 3407 would break this legacy. I oppose it and ask 
instead that you join the nearly 1 million people from every 
State in this union who just this past week expressed to our 
government that no oil drilling should take place in the Arctic 
Refuge and that, instead, it should be protected as designated 
wilderness.
    One of the most misleading claims made about previous 
Arctic Refuge drill bills was that impacts would be limited to 
2,000 acres of the Coastal Plain. This loophole-ridden 
provision did not mean much because it would have opened the 
entire 1.5 million acre Coastal Plain to leasing and 
exploration, and wells could have been drilled anywhere on that 
Coastal Plain.
    Twenty oil field developments and all their road and 
pipeline connections could be spread like a web across the 
entire area and still comply with the bills that included this 
provision.
    Nevertheless, the sponsors of those bills pointed to that 
provision to assert that they were at least somewhat sensitive 
to the impact of industrial sprawl on the land.
    H.R. 3407 gives up any pretense of such sensitivity. Like 
previous drill bills, it opens the entire Coastal Plain to oil 
activities. Doing away with the 2,000 acre provision, it would 
allow coverage of as much as 10,000 acres for every 100,000 
acres leased or 150,000 of the Coastal Plain's 1.5 million 
acres. The bill would thus allow for vast year-round industrial 
complexes on the refuge.
    The bill also contains numerous provisions that exempt or 
otherwise limit the application of environmental laws and the 
check on executive decisions provided by the judiciary. Taken 
as a whole, H.R. 3407 would subject our Nation's wildest refuge 
to the weakest program of drilling regulation on Federal lands 
in the United States.
    And what do the experts say about the impact that oil 
drilling would have on the refuge? Over 1,000 scientists wrote 
and said the Coastal Plain is uniquely sensitive to 
disturbance, making it virtually impossible to mitigate the 
effects of oil development. If oil development proceeds, much 
of the wildlife, water, and cultural resources for which the 
Arctic Refuge was established would be severely diminished or 
lost.
    And those impacts occur under the best of situations. This 
was the headline in the Anchorage Daily News 2 days ago, 
``Prosecutors Aim to Revoke BP Probation.'' In the article the 
prosecutors are quoted as saying that BP's choices have been 
reckless, and further violations of State and Federal law are 
the result.
    Unfortunately, we also take reckless actions as a 
government. Recently, Interior approved Shell's Beaufort Sea 
exploration plan, and appears poised to do so in the Chukchi. 
In its recent leasing program decision, Interior chose not to 
offer leases off the Atlantic, due in part to a lack of oil-
spill-response infrastructure there, a prudent decision given 
the BP spill in the heavily industrialized Gulf of Mexico. Yet 
the Arctic has an absolute desert of infrastructure compared to 
the Eastern seaboard, and we think it is OK to drill there 
without addressing that problem?
    H.R. 3407 would expand such recklessness to the Arctic 
Refuge, and for what benefit? Job claims for the Refuge are way 
overblown. Our current industry employs less than 17,000 people 
while drilling proponents claim 60,000 jobs from drilling the 
Refuge. The reality is that despite record profits and more 
development of oil and gas in the U.S. than at any other time 
in our history, the oil industry has discarded 12,000 workers 
in recent years.
    Benefits to the Treasury are also based on wildly 
speculative numbers, a fictional 33 percent tax rate, which in 
reality is under 16 percent, and assume a 50/50 split of 
revenue with the State of Alaska, something which Alaska 
politicians say should be 90/10 in favor of Alaska and which 
they would sue over.
    No, the real answer to our economic and energy challenges 
lies not in the past but in the future. Since we know oil will 
run out, why don't we seize the opportunity to think big and 
deliver even bigger? Think the Manhattan Project for 
alternative energy. The United States is an incredible country 
made up of inventive and intelligent people. Why are we so 
pessimistic that we cannot solve our energy challenges, put 
people to work, and benefit the economy at the same time? 
Rather than pass the buck to future generations, let us seize 
the day. And what better way to express optimism for this 
result than to lay aside this tired Refuge drilling debate and 
protect America's wildest refuge for generations to come.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Van Tuyn follows:]

 Statement of Peter Van Tuyn on behalf of the Alaska Wilderness League

    Thank you for the opportunity to testify to the Subcommittee on 
Energy and Mineral Resources on H.R. 3407, the ``Alaskan Energy for 
American Jobs Act,'' which would open the Coastal Plain of the Arctic 
National Wildlife Refuge to oil and gas leasing and development. 
Drilling the Arctic Refuge is not a meaningful solution to economic or 
energy challenges facing the United States, and serves as a distraction 
to real solutions. Rather than revisit the failed efforts of the past, 
the subcommittee should reject this effort to drill the Arctic Refuge, 
and instead should pass legislation designating the Coastal Plain as 
formal Wilderness.
    The Arctic National Wildlife Refuge is our nation's wildest Refuge, 
and for over 50 years has embodied the heart of the public land legacy 
our forefathers have provided for this and future generations. The 
Arctic Refuge holds its iconic place atop our public lands for good 
reason. As the Interior Department states, the ``Arctic National 
Wildlife Refuge supports the greatest variety of plant and animal life 
of any Park or Refuge in the circumpolar arctic'' i and the 
Coastal Plain of the Arctic Refuge is the ``most biologically 
productive part of the Arctic Refuge for wildlife and is the center for 
wildlife activity.'' ii The Coastal Plain also has 
``outstanding wilderness qualities'' and important scientific values, 
especially in the age of global warming. iii
---------------------------------------------------------------------------
    \i\ FWS, Arctic Refuge, Wildlife And Habitats, http://www.fws.gov/
refuges/profiles/WildHabitat.cfm?ID=75600.
    \ii\ U.S. Department of the Interior, Arctic National Wildlife 
Refuge, Alaska, Coastal Plain Resource Assessment, Report and 
Recommendation to Congress and Final Legislative Environmental Impact 
Statement (1987) (FLEIS) at 46. This 1987 report came about due to 
Section 1002 of ANILCA, which mandated that the Interior Department 
conduct a ``comprehensive and continuing inventory and assessment of 
the fish and wildlife resources of the coastal plain of the Arctic 
National Wildlife Refuge.'' 16 U.S.C. 3142(a).
    \iii\ FLEIS at 46.
---------------------------------------------------------------------------
    For thousands of years the Inupiat Eskimo and Gwich'in Athabaskan 
people of the Arctic have relied for subsistence on resources from the 
Arctic Refuge, including caribou and other mammals and birds. 
iv Notably, the Gwich'in rely physically, culturally and 
spiritually on the Porcupine Caribou Herd, and consider the Coastal 
Plain of the Arctic Refuge--which serves as the calving ground for this 
herd--as ``the sacred place where life begins.'' v
---------------------------------------------------------------------------
    \iv\ Committee On Resources, U.S. House Of Representatives, H.R. 
39, Arctic Coastal Plain Domestic Energy Security Act Of 2003; And H.R. 
770, Morris K. Udall Arctic Wilderness Act, Legislative Field Hearing, 
Kaktovik, Alaska, Serial No. 108-13, 108th Congress, 1st Sess. (April 
5, 2003) (testimony of Robert Thompson).
    \v\ Gwich'in Steering Committee, et al., A Moral Choice for the 
United States; The Human Rights Implications for the Gwich'in of 
Drilling in the Arctic National Wildlife Refuge at iii (2005), http://
www.gwichinsteeringcommittee.org/GSChumanrightsreport.pdf; see also 
Arctic National Wildlife Refuge, Alaska: Hearings Before the Committee 
on Energy & Natural Resources of the United States Senate, 100th Cong. 
at 313 (1987) (Tanana Chiefs Conference, Inc., Resolution No. 87-65) 
(noting that Arctic Village, Venetie, and Old Crow ``are extremely 
dependent upon the population and distribution of the Porcupine Caribou 
herd as a matter of economics, nutrition, and cultural heritage[.]'')..
---------------------------------------------------------------------------
    Just three days ago, nearly one million people submitted comments 
to the U.S. Fish and Wildlife Service asking that the Coastal Plain be 
kept off-limits from oil and gas development. These included people 
from every State in the country, including in Alaska, nearly 75 Members 
of Congress from both chambers, faith communities, scientists, birders, 
and well over 1,000 businesses.
    Oil drilling on the Coastal Plain of the Arctic Refuge would 
irreparably damage the unparalleled wildlife values and wilderness 
character of the Refuge. vi The impacts of oil drilling may 
also deprive the Gwich'in people of their means of subsistence, 
resulting in economic, social, and cultural impacts in violation of 
fundamental human rights. The drilling program in H.R. 3407 proves no 
exception to this general point. And as is discussed below, H.R. 3407 
abandons the hollow ``environmentally sound'' drilling promise of prior 
Arctic Refuge drill bills. It opens the door to what could be direct 
development on tens if not hundreds of thousands of acres of the 
coastal plain, and does away with fundamental checks and balances so 
important in our system of government by exempting or severely limiting 
the application of environmental and judicial review laws.
---------------------------------------------------------------------------
    \vi\ See, e.g., Arctic Refuge Coastal Plain Terrestrial Wildlife 
Research Summaries, Biological Science Report, USGS/BRD/BSR -2002-0001 
(detailing impacts on wildlife); FLEIS at 46, 144.
---------------------------------------------------------------------------
    As is also detailed below, H.R. 3407's justification for drilling 
the Refuge--that the United States needs to drill the Refuge for the 
oil it may contain, the money it may bring in, and the jobs it may 
support--are not supported in fact. The United States would be better 
served by investing in alternative energy programs, which can address 
economic, jobs and energy issues, without sacrificing our public lands 
legacy.
    Again, the subcommittee should reject this bill, and instead 
support designated Wilderness for the Coastal Plain.
The Values of the Arctic Refuge
    Any discussion of the Arctic Refuge Coastal Plain must start with 
its incredible values. It is in the Arctic National Wildlife Refuge 
that the tallest peaks of the Brooks Range exist; rising from the 
Arctic Ocean across a 15 to 40 mile wide coastal plain to 9,000 feet. 
Snow melt that flows north down these mountains through the spring and 
summer feeds rivers that move from the mountains, across the coastal 
plain, to the Arctic Ocean's Beaufort Sea. vii The coastal 
plain itself is tundra, with communities of mosses, lichens, dwarf 
shrubs, berry plants and wildflowers.
---------------------------------------------------------------------------
    \vii\ See U.S. Fish and Wildlife Service, Arctic National Wildlife 
Refuge, http://www.fws.gov/refuges/profiles/index.cfm?id=75600; http://
arctic.fws.gov/.
---------------------------------------------------------------------------
    The Arctic Refuge hosts a huge range of wildlife species, including 
36 species of fish, 36 species of land mammals, nine species of marine 
mammals, and over 160 different species of birds. viii 
Perhaps the most celebrated coastal plain wildlife are the caribou of 
the Porcupine herd.
---------------------------------------------------------------------------
    \viii\ FWS, Arctic Refuge, Wildlife, http://arctic.fws.gov/
wildlife.htm.
---------------------------------------------------------------------------
    The Porcupine Caribou herd is named for the Porcupine River, which 
the herd crosses on its annual migration from wintering grounds in the 
United States and Canada south of the Brooks Range to its summer 
grounds on the coastal plain of the Arctic Refuge 400 miles away. 
ix Some individual caribou travel as much as 3,000 miles 
during this round-trip migration, thus making the largest migration of 
any land mammal in the world. This herd moves to the coastal plain for 
calving and post-calving habitat. Giving birth to tens of thousands of 
calves in a two week period--most within a few days--the herd uses the 
coastal plain for its nutritious protein-rich plants, and as insect-
relief habitat. x During calving on the coastal plain, 
``[a]dult females are at the lowest ebb of their physical condition'' 
and ``no alternative habitats are apparently available.'' xi 
Mid-summer Porcupine herd congregations on the coastal plain can total 
tens of thousands of individual animals. xii
---------------------------------------------------------------------------
    \ix\ State of Alaska Department of Fish and Game, http://
www.adfg.alaska.gov/index.cfm?adfg=caribou.main; http://www.taiga.net/
top/caribou.html; United States Geological Survey, http://
alaska.usgs.gov/BSR-2002/pdf/usgs-brd-bsr-2002-0001-sec03.pdf 
(including map of range of Porcupine Caribou Herd).
    \x\ USGS, http://alaska.usgs.gov/BSR-2002/pdf/usgs-brd-bsr-2002-
0001-sec03.pdf. In years when the Porcupine herd did not make it to the 
coastal plain to calve (prevented, for example, by high water river 
crossings or deep snows), they subsist on less nutritious plants. See 
id.; see also http://arctic.fws.gov/caribou.htm.
    \xi\ International Porcupine Caribou Management Board, Sensitive 
Habitats Of The Porcupine Caribou Herd 14 (January 1993).
    \xii\ FWS, Arctic Refuge, Caribou, http://arctic.fws.gov/
caribou.htm.
---------------------------------------------------------------------------
    Millions of birds from throughout the world also come to the 
coastal plain of the Arctic Refuge in the summer. Here they nest, rest, 
feed, or raise their young. Some of the remarkable bird species of the 
coastal plain are the golden plover, which migrates to the coastal 
plain from Hawaii, the Arctic tern, which coming to the arctic from 
Antarctica has the longest migration in the animal world, and literally 
dozens of waterfowl. xiii
---------------------------------------------------------------------------
    \xiii\ FWS, Arctic Refuge, birds, http://arctic.fws.gov/
birdlist.htm ; Audubon, From the Arctic to your backyard, http://
www.protectthearctic.com/history_migrate.html; Encyclopedia Britannica 
Online, golden plover, .htm http://www.britannica.com/eb/topic-237742/
golden-plover; About.com, Arctic Tern, http://birding.about.com/
library/weekly/aa020700a.htm.
---------------------------------------------------------------------------
    During the short but intense summer, wildlife is ever-present on 
the coastal plain, yet it is not devoid of wildlife in other seasons. 
For example, muskoxen spend time year-round on the coastal plain. 
xiv Muskoxen, once extinct in America's Arctic, were re-
introduced in the Arctic Refuge in 1969. Renowned for their prehistoric 
look and long, soft, fur called quivut, muskoxen also have a dramatic 
defense technique against predation; they form a tight circle with 
their sharp horns facing outward.
---------------------------------------------------------------------------
    \xiv\ FWS, Arctic Refuge, Musk Ox, http://arctic.fws.gov/
muskox.htm.
---------------------------------------------------------------------------
    Historically, the ``Arctic Refuge is the only national conservation 
area where polar bears regularly den and [it is] the most consistently 
used polar bear land denning area in Alaska.'' xv As such, 
the coastal strip of the Arctic Refuge is the most important land 
denning area for polar bears in Alaska. xvi And polar bears 
are also increasingly using the Refuge's coast in seasons other than 
winter. One recent survey found as many as 200 polar bears on land from 
Point Barrow to the Canadian border to the east, most within the Arctic 
Refuge, during the ice-free season. xvii
---------------------------------------------------------------------------
    \xv\ FWS, Arctic Refuge, Bears, http://arctic.fws.gov/bears.htm; 
Amstrup, S.C. 2002. Movements and population dynamics of polar bears. 
Pages 65-70 in D.C. Douglas, P.E. Reynolds, and E.B. Rhode, editors. 
Arctic Refuge coastal plain terrestrial wildlife research summaries. 
U.S. Geological Survey, Biological Resources Division, Biological 
Science Report USGS/BRD/BSR-2002-0001; see also FWS, Arctic Refuge, 
Polar Bear Denning (maps of denning sites), http://arctic.fws.gov/
pbdenning.htm.
    \xvi\ U.S. Fish and Wildlife Service, A Preliminary Review of the 
Arctic National Wildlife Refuge, Alaska Coastal Plain Resource 
Assessment: Report and Recommendation to the Congress of the United 
States and Final Legislative Environmental Impact Statement at 7 
(1995).
    \xvii\ Jim Carlton, Is Global Warming Killing the Polar Bears?, 
Wall Street Journal (December 14, 2005), http://
www.stopglobalwarming.org/news/is-global-warming-killing-the-polar-
bears/.
---------------------------------------------------------------------------
    All of this led the Interior Department to state that the ``Arctic 
National Wildlife Refuge supports the greatest variety of plant and 
animal life of any Park or Refuge in the circumpolar arctic'' 
xviii and the coastal plain of the Arctic Refuge is the 
``most biologically productive part of the Arctic Refuge for wildlife 
and is the center for wildlife activity.'' xix Stating the 
obvious, the Interior Department has also found that nearly the entire 
coastal plain area meets the wilderness criteria under the 1964 
Wilderness Act. xx
---------------------------------------------------------------------------
    \xviii\ FWS, Arctic Refuge, Wildlife And Habitats, http://
www.fws.gov/refuges/profiles/WildHabitat.cfm?ID=75600.
    \xix\ FLEIS at 46.
    \xx\ FLEIS at 46.
---------------------------------------------------------------------------
    Though primarily marine mammal hunters, the Inupiat people of the 
Arctic--especially those in Kaktovik which is on the northern border of 
the Refuge--also use resources from the Arctic Refuge, including 
caribou and other mammals and birds. xxi Living in villages 
along the migratory path of the Porcupine Caribou herd, the Gwich'in 
people of northeastern Alaska and northwestern Canada rely physically, 
culturally and spiritually on the Porcupine herd. xxii 
Because of their deep reliance on the Porcupine herd, the Gwich'in 
consider the coastal plain the ``Sacred Place Where Life Begins.''
---------------------------------------------------------------------------
    \xxi\ Committee On Resources, U.S. House Of Representatives, H.R. 
39, Arctic Coastal Plain Domestic Energy Security Act Of 2003; And H.R. 
770, Morris K. Udall Arctic Wilderness Act, Legislative Field Hearing, 
Kaktovik, Alaska, Serial No. 108-13, 108th Congress, 1st Sess. (April 
5, 2003) (testimony of Robert Thompson), http://bulk.resource.org/
gpo.gov/hearings/108h/86329.pdf.
    \xxii\ Gwich'in Steering Committee, et al., A Moral Choice for the 
United States; The Human Rights Implications for the Gwich'in of 
Drilling in the Arctic National Wildlife Refuge at iii (2005), http://
www.gwichinsteeringcommittee.org/GSChumanrightsreport.pdf; see also 
Arctic National Wildlife Refuge, Alaska: Hearings Before the Committee 
on Energy & Natural Resources of the United States Senate, 100th Cong. 
at 313 (1987) (Tanana Chiefs Conference, Inc., Resolution No. 87-65) 
(noting that Arctic Village, Venetie, and Old Crow ``are extremely 
dependent upon the population and distribution of the Porcupine Caribou 
herd as a matter of economics, nutrition, and cultural heritage[.]'')..
---------------------------------------------------------------------------
    The Arctic Refuge, encompassing as it does both arctic and sub-
arctic ecosystems, also offers an unparalleled opportunity for 
scientific research. This is an especially critical role, as oil and 
gas activities in other parts of America's Arctic impact that habitat, 
and as global warming causes changes throughout the arctic. As the 
experts state, without an environmental baseline such as that provided 
by the Arctic Refuge it is difficult to gauge the effects on the Arctic 
of various human or environmentally-caused changes. xxiii
---------------------------------------------------------------------------
    \xxiii\ Arctic Council Report, Impacts on Porcupine caribou herd 
graph (Graphset 3 at 4); U.S. Geological Survey, Arctic Refuge Coastal 
Plain, Terrestrial Wildlife Research Summaries, USGS/BRD/BSR-2002-0001 
at 11-15 (Reston, Virginia: 2002); International Porcupine Caribou 
Management Board, Sensitive Habitats of the Porcupine Caribou Herd at 
14 (January 1993).
---------------------------------------------------------------------------
H.R. 3407--A Drilling Disaster for the Arctic Refuge
    One of the most fundamental, and misleading, claims made about 
previous Arctic Refuge drill bills was that they would only allow oil 
and gas development on 2,000 acres of the Coastal Plain. This provision 
did not mean much because all the bills would have opened the entire 
1.5 million acre Coastal Plain to leasing and exploration, and 
exploration and production wells could be drilled anywhere on the 
Coastal Plain. xxiv For example, 20 Alpine-size developments 
and all their connections, spread across the coastal plain, could fit 
through the loopholes in that provision. Nevertheless, the sponsors of 
those bills pointed to that provision to assert that they were at least 
somewhat sensitive to the impact of industrial sprawl on the land.
---------------------------------------------------------------------------
    \xxiv\ See e.g., Section 7(a)(3), H.R. 5429 (109th Congress).
---------------------------------------------------------------------------
    H.R. 3407, on the other hand, gives up any pretense of such 
sensitivity. Like previous drill bills, it opens the entire Coastal 
Plain to leasing and exploration, and exploration and production wells 
could be drilled anywhere on the Coastal Plain. Section 4. Yet it does 
away with the 2,000 acre provision in favor of one that would allow 
coverage of as much as 150,000 acres of the Coastal Plain under the 
same loophole-ridden standard. Section 7(a)(3). To put this in context, 
the existing oil industry on the State lands of the North Slope 
consists of a web of development the size of Rhode Island that can be 
seen from space, and directly covered approximately 17,500 acres in 
2001. National Academy of Sciences North Slope Report (2003).
    And it does not stop there. Any bill that allows leasing and oil 
production on the Coastal Plain of the Arctic Refuge could potentially 
open over 92,000 acres of subsurface land within the Coastal Plain of 
Arctic Refuge to which Arctic Slope Regional Corporation (``ASRC'') 
obtained the subsurface rights. xxv While these lands are 
currently--and have always been--closed to oil and gas leasing and 
development, in the event that Congress passes an Arctic Refuge drill 
bill these lands will also be opened. ASRC acquired the rights to this 
subsurface estate in a controversial Watt-era land exchange, pursuant 
to which it traded its surface rights in Gates of the Arctic National 
Park for subsurface rights to 92,160 acres under the Arctic Refuge. 
This land trade occurred behind closed doors and flew in the face of 
the Alaska Native Claims Settlement Act's (``ANCSA'') intent to 
prohibit subsurface selection within National Wildlife Refuges. 
xxvi In 1989, the General Accounting Office found, after the 
fact, that this land exchange was not in the interest of the United 
States. The terms of this transfer specifically prohibited leasing and 
development of these lands for oil and gas unless the Federal 
government authorizes leasing or development in the Coastal Plain, on 
these lands, or both. xxvii Consequently, opening up the 
Coastal Plain to oil and gas leasing and development also allows 
leasing and development of nearly 100,000 acres of ASRC lands within 
the Coastal Plain. xxviii
---------------------------------------------------------------------------
    \xxv\ For more information about ASRC lands with the Arctic Refuge, 
see Pamela Baldwin, CRS Memorandum re: Arctic Slope Regional 
Corporation Lands and Interests within the Arctic National Wildlife 
Refuge (April 22, 2002).
    \xxvi\ See Pamela Baldwin, Legal Issues Related to Proposed 
Drilling for Oil and Gas in the Arctic National Wildlife Refuge (ANWR), 
CRS Report RL31115 at 15 (May 4, 2005).
    \xxvii\ Agreement between Arctic Slope Regional Corporation and the 
United States of America (Aug. 9, 1983), Appendix 2: Land Use 
Stipulations ASRC Lands, Kaktovik, Alaska at 6.
    \xxviii\ Chevron Texaco and BP currently hold lease agreements for 
these lands. See Arctic Slope Regional Corporation, Oil, http://
www.asrc.com/Lands/Pages/Oil.aspx.
---------------------------------------------------------------------------
    Therefore, H.R. 3407, if passed into law, would allow for vast 
industrial complexes along and within the borders of the Arctic Refuge, 
including production sites, airports, permanent gravel roads, and 
pipelines. These facilities operate year-round, with vehicle traffic, 
production plant noise, helicopter and airplane traffic, and air and 
water pollution.
    And, as we know, oil production is preceded by exploration. Seismic 
exploration activities are conducted using convoys of bulldozers and 
``thumper trucks'' that travel over extensive areas of the tundra. 
Newer 3-D seismic surveys on the North Slope deploy more vehicles than 
older 2-D seismic surveys, including heavy vehicles used for ``cat-
train'' camp hauling, and make a tighter grid profile than 2-D seismic 
surveys. xxix Exploratory oil drilling uses large drill 
rigs, convoys and aircraft. Not only are these activities intrusive, 
but surface exploration activities--which are employed year after year 
throughout the life of the oil field--can cause severe and long lasting 
damage to the land. xxx
---------------------------------------------------------------------------
    \xxix\ See U.S. Fish and Wildlife Service, Potential impacts of 
proposed oil and gas development on the Arctic Refuge's coastal plain: 
Historical overview and issues of concern (Jan. 17, 2001), available 
at: http://arctic.fws.gov/issues1.htm; Janet C. Jorgenson, J.M. Ver 
Hoef, and M.T. Jorgenson, Long-term recovery patterns of arctic tundra 
after winter seismic exploration, Ecological Applications, 20(1) at 
218, 219 (2010).
    \xxx\ See Janet C. Jorgenson, Long-term recovery patterns of arctic 
tundra after winter seismic exploration, Ecological Applications, at 
219-20 (discussing the still evident impacts from exploration 
activities that occurred in the Arctic Refuge the mid 1980's).
---------------------------------------------------------------------------
    Even if exploration activities are only conducted in the winter--
something not required by H.R. 3407 (see Section 6)--the activities 
still pose many threats. The Coastal Plain is the most important land 
denning area for U.S. populations of polar bears, which are now listed 
as a threatened species under the Endangered Species Act (``ESA''), 
xxxi and much of the Coastal Plain was recently designated 
as Critical Habitat under the ESA for this northern bruin. 
xxxii Winter exploration activities can disturb polar bears 
from their maternity dens, as was witnessed at the Alpine oil field in 
March of 2006 xxxiii and this spring at the Nikaitchuq 
field, xxxiv which may expose cubs to increased abandonment 
and mortality. xxxv These exploration activities can also 
impact other year-round Coastal Plain residents such as muskoxen.
---------------------------------------------------------------------------
    \xxxi\ 73 Fed. Reg. 28,212 (May 15, 2008).
    \xxxii\ 75 Fed. Reg. 76,086 (Dec. 8, 2010).
    \xxxiii\ Department of the Interior, Office of the Solicitor, 
Alaska Region, Notice of Violation issued to Conoco Phillips Alaska, 
Inc. (July 31, 2007).
    \xxxiv\ See Jackie Bartz, Denning Polar Bears Wake Up to New Oil 
Drilling Station, KTUU-TV, Channel 2 News (April 11, 2011).
    \xxxv\ See Rachel D'Oro, Polar Bear Cub Rescued at Alaska Oil 
Field, Fairbanks Daily News-Miner (April 29, 2011).
---------------------------------------------------------------------------
    These are the realities that led the National Academy of Sciences 
to conclude its 2003 review of existing data concerning the cumulative 
effects of oil and gas activities on Alaska's North Slope with a 
section titled ``The Essential Trade-Off.'' In that section the NAS 
addressed whether oil drilling and a pristine environment can co-exist, 
and concluded that the answer is no:
        The effects of North Slope industrial development on the 
        physical and biotic environments and on the human societies 
        that live there have accumulated, despite considerable efforts 
        by the petroleum industry and regulatory agencies to minimize 
        them. . .. Continued expansion is certain to exacerbate some 
        existing effects and to generate new ones. . .. 
        xxxvi
---------------------------------------------------------------------------
    \xxxvi\ NAS Report at 21.
---------------------------------------------------------------------------
All of these facts demonstrate that oil and gas activity on the Coastal 
Plain would cause significant impacts to wildlife and subsistence 
resources within the Arctic Refuge, and destroy the wilderness 
qualities of the Coastal Plain.
    And those impacts occur when all the laws are followed, which is 
not always the case. Two days ago Anchorage residents woke to the 
headline in the Daily News that ``Prosecutors aim to revoke BP 
probation.'' BP has been on probation for environmental crimes in 
Alaska's oil fields as a result of a massive 2006 oil spill there. The 
United States is seeking to revoke BP's probation because of another 
spill in 2009. Prosecutors stated that
        The 2009 spill vividly demonstrates that BP has not adequately 
        addressed the management and environmental compliance problems 
        that have plagued it for many years, and that continue to 
        result in operational, process safety, and equipment failures. 
        BP's choices have been reckless, and further violations of 
        state and federal laws are the result.
Lisa Demer, Anchorage Daily News (November 16, 2011) (emphasis added).
    Turning back to H.R. 3407, if passed it would establish a drilling 
program for the Coastal Plain of the Arctic Refuge with weaker 
standards for the protection of the wildlife and wilderness character 
of the Arctic National Wildlife Refuge than exist in laws that apply to 
federal lands elsewhere in the United States. In addition to opening 
the entire Coastal Plain to oil and gas activities and allowing massive 
placement of facilities on the Coastal Plain as described above, H.R. 
3407 would also do the following:
          use an economically-qualified and thus weak ``no 
        significant adverse effect'' environmental standard, compare 
        Section 3(a)(2) with 42 U.S.C. 6504(b) (agency must ``assure 
        the maximum protection of such surface values consistent with 
        the requirements of this Act for the exploration of the 
        reserve'') and Pamela Baldwin, Legal Issues Related to Proposed 
        Drilling for Oil and Gas in the Arctic National Wildlife 
        Refuge, CRS Report RL31115 at 8 (May 4, 2005) (providing other 
        examples of more stringent congressional standards). 
        xxxvii
---------------------------------------------------------------------------
    \xxxvii\ While the analysis in RL31115 focuses mostly on H.R. 6 as 
passed by the House (109th Cong.), H.R. 3407 is similar to this act.
---------------------------------------------------------------------------
          fail to mandate almost any specific environmental 
        protection for the Coastal Plain, relying instead on the 
        discretion of the Secretary of the Interior and the agreement 
        of an outside ``peer review'' process to impose such 
        protections, Sections 3(a), 3(g), 6(a), 7, see RL31115 at 11-12 
        (fact that ``no specific controls are enacted'' means that 
        ``the regulations will depend on the Secretary's 
        interpretation''); xxxviii
---------------------------------------------------------------------------
    \xxxviii\ H.R. 6 did not include the ``peer review'' process for 
regulations that is contained within H.R. 3407, and which further 
complicates the imposition of environmentally-protective requirements.
---------------------------------------------------------------------------
          eliminate the fundamental ``compatibility'' standard 
        that is at the heart of national wildlife refuge management, 
        under which activities that impair refuge purposes cannot be 
        allowed, Section 3(c)(1), see 16 U.S.C. Sec. 668dd(d)(3)(A)(i);
          limit the authority currently available under key 
        provisions of the Endangered Species Act and National Wildlife 
        Refuge System Administration Act to close areas in the Arctic 
        National Wildlife Refuge for the protection of wildlife and 
        habitat, Section 3(f), see RL31115 at 10;
          exempt a large part of the oil and gas leasing 
        program from the environmental review and public participation 
        provisions of the National Environmental Policy Act (NEPA)--our 
        nation's charter for environmental protection--and imposes 
        severe limitations on NEPA environmental review for the 
        remainder, Sections 3(c)(2), 3(c)(3);
          restrict judicial review of the Secretary of the 
        Interior's decisions to such a degree as to significantly limit 
        the traditional check placed on the executive branch by the 
        judiciary, Section 8, see e.g., RL31115 at 32 (``The 
        requirement of clear and convincing evidence in this context 
        differs from the usual standards for proof and may be 
        confusing, but appears to be intended to make overturning a 
        decision difficult'').
          grant authority over the leasing program to the 
        Bureau of Land Management (the mineral development experts) at 
        the expense of the U.S. Fish and Wildlife Service (the federal 
        government's wildlife experts who manage the Arctic Refuge 
        today), Section 3(a)(1); see CRS Report RL31115 at 7 (BLM 
        authority over the leasing program could ``divorce the mineral 
        development aspects from the biological/wildlife purposes and 
        the expertise of the FWS personnel, and may result in the 
        Coastal Plain receiving less protection than lands in other 
        refuges do under current law and regulations'').
          impose weaker restoration standards and financial 
        assurances than exist in other laws, Section 6(a)(5), see 
        RL31115 at 11, 14, U.S. General Accounting Office, 
        Congressional Requesters, Alaska's North Slope, Requirements 
        for Restoring Lands After Oil Production Ceases at 82-83 GAO-
        02-357 (Washington, D.C.: 1994) (addressing restoration 
        requirements in other states).
    Simply put, opening the Arctic Refuge to oil leasing, exploration 
and production, whatever the technological or environmental promises, 
unacceptably threatens the exceptional values of the Arctic Refuge.
The Claimed Benefits of Drilling the Refuge Are Illusory and More 
        Rational Alternatives Exist
    Drilling proponents claim that opening the Coastal Plain of the 
Arctic Refuge to oil activities will be a boon for the national 
treasury and economy. History and common sense show that this is not 
the case:
          oil estimates for the Refuge are based on unproven 
        reserves, and the top end oil numbers used have only a 5% 
        likelihood of being real. Recently, the United States 
        Geological Survey (USGS) revised its estimates for the National 
        Petroleum Reserve-Alaska (NPRA) downward from 10.6 billion 
        barrels to 896 million barrels--roughly 10 percent of its 2002 
        estimate, further emphasizing the risky nature of predicting 
        oil reserves.
          claimed federal treasury benefits of $150 to $296 
        billion are based on a 50/50 split of these already highly 
        speculative numbers, and the State of Alaska undoubtedly will 
        claim 90% of the revenue under the Mineral Leasing and Alaska 
        Statehood Acts. Such benefits are also based on a corporate tax 
        rate of 33%, while the oil industry has an effective tax rate 
        of only 15.7%. xxxix
---------------------------------------------------------------------------
    \xxxix\ See Corporate Taxpayers and Corporate Tax Dodgers 2008-
2011, A Joint Project of Citizens for Tax Justice & the Institute on 
Taxation and Economic Policy at page 7 (November 2011) http://
www.ctj.org/corporatetaxdodgers/CorporateTaxDodgersReport.pdf.
---------------------------------------------------------------------------
          industry job claims for Arctic Refuge drilling are 
        beyond the pale of reality. To assert that there would be 
        60,000 additional jobs within five years is to ignore the fact 
        that Alaska's oil industry employs only about 16,500 workers, 
        including support jobs.
    In the meantime, the five largest oil companies have brought in 
over $101 billion dollars in profits so far this year. Between 2005-
2010, BP, Shell, Exxon/Mobil, and Chevron made more than half a 
trillion dollars in profits, and in that time frame they also reduced 
their U.S. workforce by over 11,000 jobs.
    And at the same time, the oil industry currently is drilling more 
in the United States than anywhere else in the world, with over 2,000 
drill rigs operating here as opposed to roughly 1,700 in the rest of 
the world. Alaska will see its busiest exploration season in years this 
coming winter, and projections are that TAPS can and will continue to 
deliver substantial oil from the North Slope to Valdez for decades to 
come. Indeed, the United States currently is producing more oil and gas 
than at any other time in our history. xl
---------------------------------------------------------------------------
    \xl\ For more information on the state of drilling in the United 
States, oil industry profits and oil-related jobs in the United States 
see ThinkProgress (November 15, 2011) http://thinkprogress.org/green/
2011/11/15/369358/why-are-house-republicans-holding-hearing-20-about-
how-to-drill-more-despite-the-fact-that-we-are-drilling-like-crazy/.
---------------------------------------------------------------------------
    To be sure, as BP's Deepwater Horizon oil spill demonstrated, the 
United States is also taking great risks to get this oil and gas out of 
the ground. We even appear willing to drill in the Arctic Ocean, 
despite the fact that we know that we do not have the capacity to 
respond to an oil spill in those remote and icy waters. xli
---------------------------------------------------------------------------
    \xli\ A more detailed treatment of the TAPS throughput and other 
oil issues in America's Arctic is presented in my testimony to this 
committee on ``Domestic Oil and Natural Gas: Alaskan Resources, Access 
and Infrastructure'' (June 2, 2011).
---------------------------------------------------------------------------
    A far more rational approach to the economic and energy challenges 
we face in the United States is to invest in energy conservation 
measures and sufficiently fund programs to hasten the inevitable 
transition we need to make to renewable energy sources.
Conclusion
    The Coastal Plain of the Arctic National Wildlife Refuge represents 
the 5% of America's onshore Arctic that currently is not legally open 
to oil and gas activities. Drilling the Refuge thus does not represent 
a balanced approach to energy development and environmental protection, 
and would destroy the values that Republicans and Democrats alike have 
found worthy of celebration and protection. The Arctic Refuge is a 
treasure owned by current and future generations of Americans, and it 
should not be plundered based on myopic and false claims that drilling 
it for oil will meaningfully contribute to our nation's current 
challenges.
    Thank you for the opportunity to testify.
                                 ______
                                 
    Mr. Lamborn. OK, thank you.
    We are going to shift gears and hear testimony on another 
bill now.
    Senator Wagner.

              STATEMENT OF THE HON. FRANK WAGNER, 
            STATE SENATOR, COMMONWEALTH OF VIRGINIA

    Mr. Wagner. Thank you, Mr. Chairman, and members of the 
Subcommittee. I am here to talk about, in particular, Lease 
Sale 220 off the coast of Virginia, which had been included in 
the previous 5-year plan, but to kind of back up a little bit, 
I have been told that we import about $300 billion a year in 
energy outside the borders of this country, and the $300 
billion, I sit there and try to grasp that number. Down in 
Virginia, our entire budget might be $70 billion over 2 years, 
and so I kind of want a comparison. So I compare that I guess 
to the Act that you passed in 2009, the Recovery Act, that was 
some $800 billion, $850 billion, and so now I have a concept. 
And that was supposed to turn the economy around and put 
everybody back to work.
    So now I have a concept of what $300 billion is every year, 
and albeit a lot of that comes from Canada and Mexico, but a 
lot of it comes from a lot of countries that don't really hold 
America like we do right here, and that concerns me very much. 
And I wonder what would happen if that $300 billion was 
circulating in our own economy, employing Americans to produce 
American energy for American homeowners and American business. 
And I think that is the goal that has been driving Virginia for 
so long. That is what started it back in 2005, when we passed 
the first legislation that said, please, Washington, let 
Virginia go off our coast and try to develop our offshore 
natural resources. That bill wandered through, and with 
bipartisan support in both Houses of the General Assembly, made 
it to the Governor's desk, and then Governor Mark Warner, who 
is now Senator Mark Warner ultimately vetoed the bill, but when 
he vetoed it, he said, I really want to study this issue a 
little bit. It kind of came at me quick, and I want to study 
that.
    Now you fast forward to this year and both Senator Warner 
and Webb from Virginia in the Senate have filed legislation to 
push forward Virginia's offshore desires. It is a clear 
statement that we made. We were initially, because of the 
actions we took, we were initially included in a 5-year plan, 
the last 5-year plan that went through, and we survived cuts, 
we took into account military concerns, all of the things that 
went through, and we defined an area, we were literally a year 
away from moving forward with the lease sale when this current 
Administration canceled the lease sale.
    And now we find ourselves back at square one, and even 
worse, when the new 5-year plan has come out, Virginia is not 
included in the 5-year plan. And as we went through that 
process 5 years ago and as we went through the administrative 
processes, 79 percent of those respondents from Virginia were 
in favor of developing our offshore resources, 79 percent. I 
have never won an election by that much unless I was unopposed, 
and, you know, it is just an overwhelming support throughout 
Virginia.
    Our Governor has made it a clear statement on his mind that 
he wants to make Virginia the energy capital of the East Coast. 
He recognizes that Virginia is very, very dependent on 
government spending, and actually with our location, the 
proximity to Washington as well as a very large defense 
establishment we have in Virginia, we recognize what is going 
on in Washington. We recognize that we need to diversify our 
economy and need to diversify our economy in a rapid way if we 
are going to be able to continue to move Virginia forward.
    I know every legislator is here from all over the country, 
and, you know, I am just laying out Virginia's plan right now 
and our strategy. We want to move forward. We made the 
statement very, very clear.
    And so as we move forward, we look at this Lease Sale 220 
that has come along so far, and we are very, very encouraged by 
the actions that we have heard within the Subcommittee and 
indeed the entire House Natural Resource Committee that 
direction may come as a part of the bill as we move forward 
with it. I am struck by the testimony here from Peter next to 
me, the million folks from the Wilderness League. My concern is 
the tens of millions of Americans that are out of work or 
underemployed right now. What can we do to put these folks back 
to work? What kind of hope, what kind of positive message?
    To me there is nothing more basic that drives this economy 
than energy. Energy is the key component. We take it for 
granted. We shouldn't take it for granted because if we 
continue down the road we are going to do, we are going to find 
ourselves in a deeper morass, and I think if we lay out a 
comprehensive energy plan, which was a bill that the Virginia 
General Assembly passed a year later, which also included the 
need to go offshore but a comprehensive energy strategy to move 
forward, if you will, a blueprint of where we would like to 
take Virginia. But as we kind of move forward with that 
blueprint, what we find is we have our hands tied behind our 
back because of the decisions made inside this beltway right 
now. We are not being allowed to do what it is Virginia wants 
to do and what Virginia citizens have clearly indicated they 
want to do. So we are coming here today to appeal to the folks 
here within the halls of Congress to move forward and assist 
Virginia and all the rest of the States, indeed, to move 
forward with and do the kinds of things we want to do. As I 
look through, and we have talked about the Bakken reserves, the 
oil shale reserves up in the Upper Midwest, and I am struck by 
as you look at this kind of flaccid economy we have around 
here, the one place that is super vibrant where it is just 
boomer is right on top of that Bakken reserve, and so if you 
look at States in fiscal distress and those that are not, what 
you generally find is a lot of those are associated with the 
energy industry themselves, and so we want to move forward, we 
want to open that up and indeed give a blueprint that 
encourages all Americans and shows them, yes, we have a plan, 
yes, this is it, and we want you to move forward with it.
    So thank you very much, Mr. Chairman.
    [The prepared statement of Mr. Wagner follows:]

         Statement of The Honorable Frank W. Wagner, Senator, 
                    The General Assembly of Virginia

    Mr. Chairman and Members of the Sub Committee on Energy and Mineral 
Resources,
    I want to thank you for the opportunity to testify before your 
committee. Specifically I would like to talk to you about Lease Sale 
220, the proposed lease for oil and gas off the Eastern coast of 
Virginia.
    Virginia has long been concerned about the energy crisis that faces 
this nation and Virginia. We also recognize what a tremendous 
opportunity for our state and nation that a comprehensive energy policy 
would mean to our future.
    At a time of record budget deficits, unacceptable levels of 
unemployment, and a totally out of balance trade deficit, it is 
inexcusable that this nation has not developed a comprehensive energy 
policy that maximizes utilization of this nation's vast supply of 
natural resources.
    This nation imports in excess of 300 billion dollars a year in 
energy resources from outside the borders, while at the same time we 
put off-limits our own energy resources and this nation has no plans to 
fix this large deficit.
    I am struck that this number of 300 billion is nearly half the 
economic stimulus package passed by Congress in 2009.
    What if this 300 billion was spent recovering our own natural 
resources? That is 300 billion employing Americans to produce energy 
for American homeowners and American industry.
    I am told that the second largest source of revenues next to income 
taxes to the Federal government is Rents and Royalties collected from 
those companies recovering resources from Federal property both on and 
off shore.
    To a major extent our foreign policy and military deployments are 
driven by our need to secure our imported energy needs. Yet at the same 
time, we put off-limits this nation's natural resources.
    Mr. Chairman, this brings us to Lease Sale 220.
    As you may be aware, during the 2005 Session of The Virginia 
General Assembly, I submitted legislation that passed both the House 
and Senate and requested Congress to lift the moratorium. This 
legislation was vetoed by then Governor Mark Warner. In his veto 
message he stated, in part, that he wanted to further study the issue. 
It is interesting to note that now Senator Warner and Senator Webb have 
introduced legislation in the Senate to move Lease Sale 220 forward 
including revenue sharing. In a similar manner the issue of off-shore 
drilling has bi-partisan support in the General Assembly.
    Our current Governor, Bob McDonnell, has stated a goal of turning 
Virginia into the Energy Capital of the East Coast. He has worked 
tirelessly to achieve this goal; including getting Lease Sale 220 back 
on track.
    Because of the legislative actions during both the 2005 and 2006 
sessions of the General Assembly, the Department of Interior included 
Lease Sale 220 in their 5-year plan.
    Lease Sale 220 went through an exhaustive series of agency input, 
public hearings and written comments. Through their actions the 220 
block was paired back to accommodate concerns from the State of 
Virginia, Department of Defense, and other agencies. The Department of 
Interior was ready to precede with the final environmental impact 
studies when the sale was suspended by the current administration. 
Recently, the current Administration announced an out right 
cancellation of this sale and did not include any off-shore areas on 
the Atlantic coast.
    It is interesting to note that our neighbor to the north, Canada, 
is actively recovering resources in the Atlantic basin recovering both 
oil and natural gas.
    It is my sincere hope that this Congress will reinstate Lease Sale 
220 off of Virginia and respect the desire of our Democrat Senators, 
the majority of our Members of the House of Representatives, our 
Governor and the Virginia General Assembly.
    I would also hope that you not only look favorably on Lease Sale 
220, but indeed look carefully at all the restrictions and prohibitions 
placed on this Nation's energy and natural resources. The keys to 
making the United States energy self sufficient lie inside these halls 
of Congress and down Pennsylvania Avenue.
                                 ______
                                 
    Mr. Lamborn. Thank you.
    Mr. Milito.

STATEMENT OF ERIK MILITO, UPSTREAM DIRECTOR, AMERICAN PETROLEUM 
                           INSTITUTE

    Mr. Milito. Thank you, Chairman Lamborn, Ranking Member 
Markey, and distinguished members of the Subcommittee.
    Good morning, my name is Erik Milito, and I am the Director 
of the Upstream and Energy Operations at the American Petroleum 
Institute. API represents over 480 member companies involved in 
all aspects of the oil and natural gas industry, including the 
tremendous numbers of companies that are involved in exploring 
for and developing U.S. resources in the offshore and onshore 
as well as the companies throughout this Nation in States like 
Pennsylvania, New York, California, Illinois, who support the 
industry through steel manufacturing, manufacturing boots, 
helicopters, those types of things. We truly do impact the 
whole country.
    Thank you for the opportunity to testify. API is encouraged 
that the House of Representatives and this Committee are 
discussing ways to increase oil and natural gas development in 
the United States. More domestic oil and natural gas 
development is an indispensable component of a stronger energy 
and economic future. More development can deliver more jobs for 
Americans, more revenue for our government, and greater energy 
security, while providing a necessary and reliable source for 
the fuels consumers and businesses use in their homes, 
vehicles, and factories, and for the petrochemicals used in 
everything from our clothing to our iPads and to our computers 
and pharmaceuticals.
    Oil and natural gas currently provide most of our Nation's 
energy, while supporting more than 9 million U.S. jobs and 
delivering to our government more revenue, about $86 million a 
day, than any other industrial sector. And this debate is not a 
choice between traditional energy sources on one hand and 
renewable energy on the other. We will need it all to meet our 
Nation's growing energy demands in the future. If we can go to 
the first slide please.
    The Department of Energy's Energy Information 
Administration projects that the U.S. will require 20 percent 
more energy in 2035 than in 2009. I think when we have these 
types of discussions, we have to really look at the context and 
look at the practical reality we face in the future. And what 
this slide shows is that we will have significant increases in 
biomass and renewables, so we are going to go from about 5 
percent to about 10.7 percent of our energy coming from biomass 
and renewables, and that will continue to increase. It is going 
to increase by about 120 percent in that time frame. Yet even 
with the substantial increase, we will continue to rely on oil 
and natural gas for most of our energy needs. The blue portion 
on the very bottom shows about 33 percent coming from crude 
oil, and the green portion about 24 percent from natural gas, 
and while it is going to make up less of a percentage of our 
overall energy portfolio, we are actually going to need more of 
it.
    One thing I would like to note is that in terms of 
renewables, this industry provides one out of every five 
dollars investment in zero carbon technology, so this industry 
takes it very seriously, but our focus remains on oil and gas.
    Next slide, please.
    We also have to look at global energy demand. This 
information is from the Energy Information Administration from 
the 2011 Annual Energy Outlook. What we see on a global level 
is that energy demand is going to rise more than 50 percent 
between 2008 and 2035, and global demand for liquid fuels will 
go up by 30 percent, so we as a Nation are going to continue to 
compete with the rest of the world for oil resources.
    Next slide, please.
    We are all aware of this. This has been a part of a lot of 
the discussion, imports. This slide shows our reliance on 
imports to meet our demands for crude oil, and this shows that 
as of 2010, imports of crude oil accounted for about 62 percent 
of U.S. supplies. There is a lot of talk about how we are 
importing only 46 percent, but that gets into how you compute, 
but that is really a number for all the liquid fuels. When you 
are looking just at crude, the majority of our supplies do come 
from imports. But the good news is that through reasoned policy 
choices, we do have an opportunity to substantially impact this 
picture here such that, you know, this pie chart would show 
that U.S. demand for liquid fuels is met entirely from supplies 
from the U.S. and Canada. We can do this by providing access to 
U.S. resources that have been kept off limits and by approving 
pipelines to bring resources from Canada. By doing that, we 
believe we can meet our total demand in the U.S. for liquid 
fuels entirely from U.S. and Canadian supplies by 2026. These 
resources would help us meet the goals of energy security, job 
creation, and revenue generation. That is the last slide I am 
going to refer to.
    A recent study by Wood Mackenzie calculates that the full 
development of the offshore areas that have been left off 
limits by Interior's recent offshore proposal, including the 
Atlantic, the Pacific Coast, and most of the Eastern Gulf could 
provide hundreds of thousands of additional new jobs, more than 
$300 billion in cumulative additional revenue for the 
government, and nearly 4 million additional barrels of oil 
equivalent per day by 2030.
    The U.S. oil and natural gas industry provides a 
significant stimulus to our Nation's economy. Last year, it 
directly contributed an estimated $470 billion to the U.S. 
economy in spending, wages, and dividends, more than half of 
the Federal Government's 2009 stimulus program, which was just 
referenced by Honorable Frank Wagner. Our industry is one of 
the few industries creating jobs throughout the recession. The 
Bureau of Labor Statistics data shows that between 2007 and 
2009, the height of the recession, this industry created 
120,000 new jobs.
    There is more work to do for that to happen. We appreciate 
efforts now underway in Congress, including Representative 
Stivers' bill, H.R. 3410, to help move us in that direction. 
Thank you and look forward to any questions.
    [The prepared statement of Mr. Milito follows:]

    Statement of Erik Milito, Upstream Director, American Petroleum 
                               Institute

    Good morning. I am Erik Milito, director of upstream and industry 
operations at API. API represents over 480 member companies involved in 
all aspects of the oil and natural gas industry.
    Thank you for the opportunity to testify today. API is encouraged 
that the House of Representatives and this committee are discussing 
ways to increase oil and natural gas development in the United States. 
More domestic oil and natural gas development is an indispensable 
component of a stronger energy and economic future. More development 
can deliver more jobs for Americans, more revenue for our government, 
and greater energy security--while providing a reliable source for the 
fuels consumers and businesses use in their homes, vehicles and 
factories and for the petrochemicals used in everything from our 
clothing to our iPhones to our computers and pharmaceuticals.
    Unfortunately, U.S. energy policy today does not allow us to take 
full advantage of opportunities to develop here in the U.S. more of the 
energy we will need in the decades ahead. However, we appreciate the 
efforts of Chairman Hastings and this committee in passing legislation 
earlier this year, including H.R. 1229, 1230, and 1231, that showcase 
the benefits of increased oil and natural gas development.
    Oil and natural gas currently provide most of our nation's energy 
while supporting more than nine million U.S. jobs and delivering to our 
government more revenue--about $86 million a day--than any other 
industrial sector.
    And this debate is not a choice between traditional energy sources 
on one hand and renewable/alternatives on the other. We will need it 
all to meet our nation's growing energy demands in the future.
    The U.S will require 20 percent more energy in 2035 than in 2009, 
the Energy Information Administration projects, while world demand will 
increase by 53 percent. To meet this demand, we will need all forms of 
energy, including substantial amounts of oil and natural gas. In fact, 
even with significant increases in renewable energy use, efficiency and 
conservation, the EIA projects that we will need more oil and natural 
gas in 2035 than we are using today.
    The good news is that we have very ample resources in America that 
can be produced safely and economically, and the estimates of available 
resources are growing because continuous advances in technology both 
onshore and offshore are making previously unreachable resources 
accessible.
    A simple choice lies before us. We can choose to safely and 
responsibly produce at home more of the oil and natural gas we know we 
will be consuming, creating hundreds of thousands of jobs for Americans 
and much more revenue for our government--or we can stand still and 
watch as other countries produce the resources that we will then have 
to purchase, with the jobs and revenue going to those nations.
    Put another way: will we direct our own energy destiny and remain a 
world leader in resource development? Or will we let others set our 
course?
    Wood Mackenzie calculated the benefits of expanded domestic 
development earlier this year in a study it conducted for API. It 
concluded that by increasing onshore and offshore access to U.S oil and 
natural gas resources, avoiding unnecessary new regulations, returning 
the pace of permitting approvals in the Gulf to previous levels, and 
bringing in more Canadian energy, we could create as many as 1.4 
million jobs by 2030--with one million of those jobs ready in the next 
seven years. This pro-development path would also generate $800 billion 
in additional cumulative revenue, and substantially boost U.S. oil and 
natural gas production. When factoring in projected biofuels growth, 
following this path would allow us to meet all of our liquid fuel needs 
through U.S. and Canadian supplies in 15 years.
    Industry is willing to make the investments, but national energy 
policy is not currently synched to move forward along the path of 
increased domestic development. The Department of the Interior's 
recently released offshore leasing plan basically says to continue 
looking where we have already been looking for the past several 
decades. It would leave most of our coasts locked up, while also 
creating disincentives for leasing in the limited areas where that 
would be permitted.
    The Wood Mackenzie research calculates that full development of the 
offshore areas left off-limits by Interior's proposal--the Atlantic and 
Pacific coasts and most of the Eastern Gulf of Mexico--could provide 
hundreds of thousands of additional new jobs, more than $300 billion in 
cumulative additional revenue for government, and nearly 4 million 
addition barrels oil equivalent per day by 2030.
    The administration says that current policy is preparing us for our 
energy future and that oil and natural gas production is increasing. 
However, the current production increases are largely due to the 
development of shale oil and natural gas on private lands in North 
Dakota, Pennsylvania, Texas, Arkansas, Louisiana and elsewhere--and 
because of leasing and development on public lands and federal waters 
initiated many years ago.
    A robust national energy strategy must include the continued 
exploration and development of offshore areas and BLM-administered 
lands. These resources would help us meet the goals of energy security, 
job creation and revenue generation. Interior's offshore plan fails to 
take advantage of this opportunity. We are not doing the things 
necessary today to be able to meet tomorrow's energy needs with the 
greatest possible benefits for the American people.
    The U.S. oil and natural gas industry provides a significant 
stimulus to our nation's economy. Last year, it directly contributed an 
estimated $470 billion to the U.S. economy in spending, wages and 
dividends, more than half the federal government's 2009 stimulus 
program. And it is one of few industries creating jobs throughout the 
recession.
    We can create even more jobs and generate far more revenue if 
allowed to responsibly develop and produce here in the United States 
more of the oil and natural gas we need. But more development--
especially on public lands and federally controlled waters--requires 
that industry and government share a vision of the potential benefits 
and act as partners to fully realize them. There's more work to do for 
that to happen, and we appreciate efforts now underway in the Congress, 
including Rep. Stivers bill--H.R. 3410--to help move us in that 
direction.

[GRAPHIC] [TIFF OMITTED] T1539.001


[GRAPHIC] [TIFF OMITTED] T1539.002

[GRAPHIC] [TIFF OMITTED] T1539.003

                                 
    Mr. Lamborn. Thank you.
    We have one more witness on this panel, Ms. Alexander.

            STATEMENT OF RYAN ALEXANDER, PRESIDENT, 
                   TAXPAYERS FOR COMMON SENSE

    Ms. Alexander. Thank you, Chairman Lamborn, and thank you 
for the opportunity to testify today.
    At Taxpayers for Common Sense, our mission is to achieve a 
responsible Federal Government that spends taxpayer dollars and 
operates within its means, so, you know, we have some work 
ahead of us.
    Over the last 15 years, TCS has actively worked to ensure 
that taxpayers receive a fair return on resources extracted 
from Federal lands and waters. Royalties and fees collected 
from resource development represent a valuable source of income 
for the Federal Government and should be collected, managed, 
and accounted for in a fair and accurate manner. As the 
rightful owners, taxpayers have the right to fair market 
compensation for the resources extracted from our lands and 
waters, as would any private landowner.
    Unfortunately, over the years, taxpayers have lost billions 
on royalty-free oil and gas leases and royalty-free hard rock 
mineral operations on Federal lands. Taxpayers have also lost 
because of a corrupt and inadequate royalty collection system.
    In today's budget climate, we cannot afford to lose this 
valuable revenue. These revenue collection problems must be 
resolved as we move forward with additional mining and energy 
production on Federal lands and waters.
    Energy production on public lands and waters is certainly 
an important Federal revenue source, and today's hearing 
presents an important discussion, but making more Federal lands 
available or limiting regulations on resource extraction is not 
a solution to our Nation's debt crisis and could lead to 
greater taxpayer liabilities down the road.
    Taxpayers for Common Sense is opposed to any legislative 
measure that would alter the existing Federal-State revenue 
sharing provisions for royalty payments or direct any 
percentage of royalties collected on new leases in Federal 
waters or to the States as the American Made Energy and 
Infrastructure Jobs Act does.
    TCS does not oppose offshore drilling, provided fair market 
royalties are applied and appropriate taxpayer protections are 
in place. Indeed, with appropriate taxpayer safeguards, Federal 
resources can and must be used to meet our Nation's energy, 
transportation, and mineral needs. The calculation on whether 
it is in the national interest to drill should certainly 
include sufficiency of offshore resources but also potential 
long-term liabilities and risks of those liabilities.
    Revenue-sharing provisions like those in the American Made 
Energy and Jobs Infrastructure Act siphon billions of dollars 
in valuable revenue from the general treasury. Altering these 
shares toward the States would do nothing for the bottom line 
of the oil and gas, wind or other offshore developers. They 
would owe the same royalties, rents, and fees at the end of the 
day either to the States or the Federal Government. Altering 
existing revenue-sharing arrangements also does not alter the 
Federal taxpayers' responsibility for offshore drilling. Unlike 
onshore energy operations, offshore energy operations do not 
occur within a State, and the impact for operations beyond 
State waters has national implications. Federal taxpayers fund 
the agencies charged with royalty collection and lease 
regulations.
    Additionally, the U.S. Coast Guard, not the States, 
inspects and regulates the offshore drilling rigs as well as 
performs vessel regulations, search and rescue, security, and 
pollution response. Federal waters are administered, protected, 
and managed by the Federal, not State agencies at a cost to 
Federal taxpayers, and the revenue derived from the sale of 
these resources should be returned to the Federal treasury. The 
American Made Energy and Jobs Infrastructure Act suggests that 
revenues derived from the new leases be used for infrastructure 
and other purposes.
    This approach would be a significant departure from the 
user-pays principle for transportation spending that has 
operated for decades where the system's users or drivers pay 
for construction and maintenance of the system. Instead, it 
relies on speculative future resources derived from new 
offshore drilling leases. Paying for a couple of years of 
transportation funding with expected revenues from an increase 
in oil and gas drilling will likely take many years to get 
rolling. This is not a responsible budget approach. TCS 
believes Congress either needs to find more concrete offsets or 
revenue increases to pay for the Nation's transportation system 
or limit spending to what we can expect through gasoline tax 
increases.
    TCS also has concerns with the PIONEERS Act. Oil sale is in 
its very early stages of development, and the technology to 
retrieve it in a cost-competitive fashion does not currently 
exist. Therefore, it is extremely difficult to ensure taxpayers 
will receive a fair return for extracted shale. No country in 
the world has established a commercial and viable oil shale 
industry. Thousands of acres have already been conveyed for 
shale development but sit idle. This locks up valuable Federal 
land for other uses, including other oil and gas development, 
grazing, timber or other uses.
    Despite Federal law, the PIONEERS Act does not guarantee a 
fair return to taxpayers and allows the Secretary of the 
Interior to reduce royalties, fees, rentals, bonuses or other 
payments on oil shale to promote its development.
    The bottom line is that Federal lands and waters must be 
used responsibly, and taxpayers must receive appropriate 
financial assurances from those companies benefiting from 
resource extraction. Without proper assurances, any future 
financial liabilities will fall on the shoulders of taxpayers. 
Providing increased access without addressing future taxpayer 
cost is fiscally irresponsible and could cost taxpayers 
billions.
    The country is now facing a $15 trillion debt and an annual 
deficit of more than a trillion dollars. Many things need to be 
done to resolve the Nation's fiscal woes, not least of which is 
ensuring taxpayers get the revenue they deserve from the 
resources they own.
    [The prepared statement of Ms. Alexander follows:]

 Statement of Ms. Ryan Alexander, President, Taxpayers for Common Sense

    Good morning Chairman Lamborn, Ranking Member Holt, and 
distinguished members of the subcommittee. Thank you for the 
opportunity to testify today. My name is Ryan Alexander and I am 
President of Taxpayers for Common Sense (TCS), a national, non-partisan 
budget watchdog organization. Taxpayers for Common Sense's mission is 
to achieve a government that spends taxpayer dollars responsibly and 
operates within its means.
    Over the last fifteen years, TCS has actively worked to ensure that 
taxpayers receive a fair return on resources extracted from federal 
lands and waters. Royalties and fees collected from resource 
development represent a valuable source of income for the federal 
government and should be collected, managed and accounted for in a fair 
and accurate manner. As the rightful owners, taxpayers have the right 
to fair market compensation for the resources extracted from our lands 
and waters, as would any private landowner.
    Unfortunately, over the years taxpayers have lost billions on 
royalty-free oil and gas leases and royalty-free hard rock mineral 
operations on federal lands. Taxpayers have also lost because of a 
corrupt and inadequate royalty collection system. In today's budget 
climate, we cannot afford to lose this valuable revenue. These problems 
must be resolved as we move forward with additional mining and energy 
production on federal lands and waters.
    Today's hearing to examine legislation aimed at increasing energy 
production on public lands and waters is certainly an important 
discussion. But simply making more federal lands available or limiting 
regulations on resource extraction is not a solution to our nation's 
debt crisis and could lead to greater taxpayer liabilities down the 
road.
    This morning, I would like to raise two overall concerns with the 
suite of legislation offered today, followed by a more specific 
discussion on the revenue provisions in the American-Made Energy and 
Infrastructure Jobs Act and the royalty provisions in the Protecting 
Investment in Oil Shale the Next Generation of Environmental, Energy, 
and Resource Security Act, or PIONEERS Act.
Energy Legislation Must Ensure Fair and Accurate Collection of Revenues 
        for Extraction of our Federal Resources
    Natural resources derived from federal lands and waters can and do 
provide great benefit to the entire country. In addition to their end 
use and overall domestic economic benefit, as resource owners their 
extraction provides valuable revenue for the federal coffers.
    To this end, federal lands and waters must be mined, drilled or 
otherwise developed in a manner that protects taxpayers' interest. 
Appropriate fees, rents and royalties must be applied and collected and 
long-term liabilities such as potential clean-up or mitigation costs 
must be shouldered by the extractive industries.
    TCS believes in ``fix it first.'' While our federally owned natural 
resources currently provide around $10 billion to the Treasury, the 
amount collected falls dramatically short of what is rightfully owed to 
federal taxpayers. We must recoup what we are owed before moving 
forward. For example, taxpayers are currently losing billions of 
dollars on royalty free oil and gas leases in the Gulf of Mexico, as 
well as royalty-free leases for hard rock mineral extraction on federal 
lands.
    TCS believes there are many areas where reform is needed to ensure 
fair and accurate royalty collection. First, the federal government 
must have a clear, transparent collection system which has sufficient 
oversight and accountability. Through the many scandals that plagued 
the Minerals Management Service (MMS), the agency that for nearly three 
decades ran the government's royalty collection system, we are all 
aware how corrupted the system can become.
    The Government Accountability Office has said for years that the 
Department of Interior has not done enough to monitor and evaluate its 
royalty collection system. A report in 2008 found that the DOI had not 
re-examined how it was compensated for extracted oil and gas from 
public lands in over 25 years and had no system in place to evaluate 
whether or not such a reassessment was needed. Then a 2010 study found 
that DOI also had no way to determine if it was accurately measuring 
the amount of resources being taken from public lands, meaning 
taxpayers may very well not be receiving a fair market value for their 
goods. All of this on top of some the lowest royalty rates in the world 
means that the system in place to collect royalties on current or new 
leases just isn't up to speed.
    Although the MMS has been dismantled, the Department of Interior's 
new royalty management structure is still establishing itself. Until 
this new system demonstrates it can effectively manage our taxpayer 
resources and collect royalties from existing operations on federal 
lands, it would be premature to add to their portfolio with new leases.
    Additionally, federal taxpayers should not be asked to provide 
revenue from offshore leases in federal waters to the states. The 
GOMESA Act already directs a portion of revenue derived from new leases 
in federal waters in the Gulf of Mexico to the states rather than 
federal taxpayers. Other legislation like the American-Made Energy Act 
propose expanding state revenue shares for new leases in federal waters 
outside the Gulf of Mexico.
    Existing onshore oil and gas operations can also provide more 
revenue for taxpayers. In late 2010, the GAO found taxpayers could earn 
$23 million more in royalty revenue annually from additional natural 
gas obtained from federal lands, if companies were required to capture 
vented or flared natural gas in cases where it is economically 
feasible.
    Making more natural resources available, without ensuring 
recoupment of what we are already owed for current and past operations, 
is likely to only ensure inadequate collection of royalties on new 
leases and perpetuate the existing flawed system for even longer. 
Without legislation to address this existing problem, taxpayers will 
continue to lose valuable revenue--revenue that can be used to address 
our nation's federal deficit.
The American-Made Energy and Infrastructure Act
    Specifically on the legislation before us today I would like to 
first comment on Representative Stivers's bill, The American-Made 
Energy and Infrastructure Jobs Act. Taxpayers for Common Sense is 
opposed to any legislative measure that would alter the existing 
federal-state revenue sharing provisions for royalty payments or direct 
any percentage of royalties collected on new leases in federal waters 
to the states.
    TCS is not opposed to offshore drilling. We believe with proper 
taxpayer safeguards and the application of fair market royalties, 
federal resources can and must be used to meet our nation's energy, 
transportation, and mineral needs. The calculation on whether it is in 
the national interest to drill should certainly include sufficiency of 
offshore resources, but also potential long term liabilities and risks 
of those liabilities.
    Revenue-sharing provisions, like those provided in the Stivers 
bill, siphon billions of dollars in valuable revenue from the general 
treasury. Not only is this bad policy, in today's fiscal climate it is 
downright foolish. Altering these shares towards the states would do 
nothing for the bottom line of the oil and gas, wind, or other offshore 
developers--they would owe the same royalties, rents, and fees at the 
end of the day either to the states or to the federal government.
    Federal taxpayers are due any royalties derived from leases 
operating in federal waters. Federal waters are administered, 
protected, and managed by federal--not state--agencies at a cost to 
federal taxpayers, and the revenue derived from sale of these resources 
should be returned to the federal treasury. Unlike onshore energy 
operations, offshore energy operations do not occur in a state and the 
impact for operations beyond state waters reaches well beyond any one 
state and has national implications.
    Federal taxpayers fund the agencies charged with royalty collection 
and lease regulations. Additionally, the U.S. Coast Guard, not the 
states, inspects and regulates the offshore drilling rigs as well as 
performs vessel regulation, search and rescue, security, and pollution 
response.
    States do get the money from waters dedicated to the states under 
federal law and we believe this should continue in any new drilling in 
state waters. But all Americans should get the revenue from federal 
waters. These waters are more than six miles from the coast and nine 
miles in parts of the Gulf of Mexico. State waters are within three 
miles of their respective shoreline.
    The American Made Energy Act suggests the revenues derived from the 
new leases be used for infrastructure and other purposes. House 
leadership has also argued for the use of speculative revenues from 
increased oil and gas drilling to offset very real, concrete 
transportation and infrastructure costs. According to the Speaker's 
release, House Republicans ``favor an approach that combines an 
expansion of American-made energy production with initiatives to repair 
and improve infrastructure and reform the way infrastructure money is 
spent.''
    This is approach would be a fairly radical departure from the 
``user pays'' principle for transportation spending that has operated 
for decades--where the system's users (drivers) pay for construction 
and maintenance of the system. Instead it relies on speculative future 
revenues derived from new offshore drilling leases. Paying for a couple 
of years of transportation funding with expected revenues from an 
increase in oil and gas drilling that will likely take many years to 
get rolling is not a responsible budget approach. It's like buying the 
Ferrari tomorrow because you are sure a raise is coming sometime in the 
future. If you think this sounds like a similar story that got us into 
our current budgetary quagmire, you'd be right.
    Adding insult to injury, we've already discussed that revenues from 
the bill are going to be shared with the states--further constraining 
the actual amount the federal government will receive to pay for 
transportation and infrastructure needs.
    TCS believes Congress either needs to find more concrete offsets or 
revenue increases to pay for the nation's transportation system or 
limit spending to what we can expect through gasoline tax increases.
    In summary, royalties collected from offshore drilling in federal 
waters should be returned to the rightful resource owner, the federal 
taxpayer. States receive revenue from royalties collected within state 
waters and the transitional area between state and federal waters (3-6 
miles from shore). The federal government manages and secures 
operations off our coasts and the taxpayer bears the cost of these 
services. The impacts of drilling in federal waters have national 
implications. Costs and benefits should be carried out in the interest 
of all Americans, not a handful of coastal states. Additionally, 
relying on this money to pay for today's infrastructure needs is bad 
budget policy.
PIONEERS ACT
    TCS also has concerns with the PIONEERS Act. Oil shale is in its 
very early stages of development, and therefore it is extremely 
difficult to ensure taxpayers will receive a fair return for extracted 
shale. No country in the world has established a commercially viable 
oil shale industry.
    Retrieving oil from shale may be a way to produce more domestic 
energy, but the technology to retrieve it in a cost competitive fashion 
does not currently exist. Taxpayers should not bear the financial 
consequences of this risky prospect. Research and development on 
federal lands is already occurring, and fast-tracking to commercial 
leasing before a technology is developed is a high risk taxpayers 
cannot afford.
    Thousands of acres have already been leased for shale development, 
but sit idle. This locks up valuable federal land for other uses 
including other oil and gas development, grazing, timber, or other 
uses.
    Furthermore, the PIONEERS Act does not guarantee a fair return to 
taxpayers. Federal mineral leasing laws should provide a fair return 
for federal taxpayers and for oil shale development it is explicitly 
required under the Energy Policy Act of 2005. The PIONEERS Act allows 
the Secretary of the Interior to reduce royalties, fees, rentals, 
bonus, or other payments on oil shale to promote its development, but 
because shale developers are primarily big oil companies, this amounts 
to little more than another subsidy to the profitable oil and gas 
industry.
CONCLUSION
    All resources extracted from federal lands must provide federal 
taxpayers with fair market revenue. We believe it is imperative that 
energy legislation address these problems.
    From our perspective, the bottom line is that federal lands and 
waters must be used responsibly and taxpayers must receive appropriate 
financial assurances from those companies benefiting from resource 
extraction. Without proper assurances, any future financial liabilities 
will fall on the shoulders of taxpayers. Providing increased access 
without addressing future taxpayer costs is fiscally irresponsible and 
could cost taxpayers billions.
    The country is now facing a $14 trillion debt and an annual deficit 
of more than $1 trillion dollars. Many things need to be done to 
resolve the nation's fiscal woes, not the least of which is ensuring 
federal taxpayers get the revenue they deserve for the resources they 
own.
    Furthermore, relying on the speculative revenue of new leases is 
dangerous fiscal policy. Instead, Congress must take steps to fix our 
existing royalty and leasing problems and spend less time spending 
money that we do not have.
                                 ______
                                 
    Mr. Lamborn. Thank you.
    Before we ask our 5 minutes of questions each, I would like 
to recognize Representative Young of Alaska for his opening 
statement on one of the pieces of legislation for which he is 
the author.

 STATEMENT OF THE HON. DON YOUNG, A REPRESENTATIVE IN CONGRESS 
                    FROM THE STATE OF ALASKA

    Mr. Young. I thank you, Mr. Chairman, and thank you for 
holding this hearing.
    This is really my legislation on energy for American jobs. 
Actually it is ANWR legislation. Tara, welcome. I was stuck in 
traffic burning up gas, you know, while we are doing this, you 
know.
    But this is long overdue, Mr. Chairman, members of the 
Committee. This is the 11th, 12th time we have attempted to 
open up ANWR for the benefit of this Nation, the benefit of the 
people of Alaska and Alaska natives. You are going to hear, and 
you just heard from one environmental group, and they are not 
the taxpayers group, and another environmental person, and I 
understand their beliefs, but they don't know what they are 
talking about. This is very crucial to this Nation. We talk 
about taxpayers, and we talk about the environment. We are 
destroying ourselves when we keep buying foreign oil. We are 
just transferring the garbage to some other country that has no 
safeguards like we do, and this is especially important to the 
native community and the coastal area where Barrow, Kaktovik, 
Nuiqsut, the rest of the areas are badly needed. To hear this 
same garbage from certain groups of people when we could have 
saved $4 trillion--$4 trillion that was sent overseas since we 
passed this and then got it vetoed by President Clinton, $4 
trillion. It could have helped balance the budget. But it has 
financed tremendous activity overseas against us and actually 
created 9/11.
    So, Mr. Chairman, I can say truthfully that this is long 
overdue. I will hear people, you will hear people, ``Oh, this 
is a little bit of oil, it won't change a thing because it 
takes 10 years to get it onboard.'' We could probably develop 
this in 3 years and deliver it to the pipeline and to this 
Nation. I say that with pretty much confidence because we built 
an 800-mile-long pipeline with all the infrastructure and all 
the docking facilities and the ships to deliver oil from 1973 
to 1976, we pumped the first barrel of oil. This is the thing 
that should be done, and I have been in that area, most of you 
have not been in that area other than Tara knows what is going 
on, and this is not the pristine area with wolves laying next 
to caribou or vice versa, that will be a cold day in Saudi 
Arabia whenever that happens, anybody that knows anything about 
this operation. The caribou have increased in Prudhoe Bay, only 
74 miles away, we have a viable wildlife refuge there really. 
And the people that live there support this. And I just keep 
getting very frustrated when I hear, like I say, the garbage 
that comes out of people's mouths about how this pristine area, 
365 million acres of land. This is one-third of a 19 million 
acre refuge, which I have been over most, and most people have 
not, even those that say they live on the coast. I have been 
over the lower part of it, which is the prettiest part, but it 
is nowhere near the oil. So this should be developed. It should 
be passed. The Senate should pass it. Let's get this country 
back on the road to recovery so we have a sound economy instead 
of sending our dollars overseas.
    And I yield back the balance of my time.
    Mr. Lamborn. All right.
    Thank you.
    And last, one more important piece of business before we 
start our questions. I would like to take this opportunity to 
welcome the newest member of our Subcommittee who is here this 
morning. From Nevada, we have Mr. Amodei.
    Welcome to the Subcommittee. Your district is one of the 
most mineral rich districts in the Nation, providing 80 percent 
of the Nation's gold production. We also find there copper, 
silver, molybdenum, lithium and other important metals and 
industrial minerals. Some people may not realize it, but one of 
the highest flowing oil wells in the country is also in your 
district in Railroad Valley. Finally your district is rich in 
geothermal energy. Welcome to the Committee, and we look to 
your knowledge and your expertise.
    Would you like to make a speech at this point?
    No. You don't have to.
    OK. We are going to start with our round of questions. Each 
Member will have 5 minutes total to ask all of the witnesses, 
which is a big task, because you all had important and 
interesting things to say.
    Senator Wagner, I would like to start my round by asking 
you my first question. How would you respond to individuals who 
say that providing Virginia or any other coastal State with a 
portion of revenues is some kind of waste of taxpayer dollars?
    Mr. Wagner. Mr. Chairman, I am kind of astounded by that 
statement. When you understand that Federal property in Nevada, 
Federal property in New Mexico, all of this Federal property 
that we hold, it is my understanding that 50 percent of the 
revenue generated on that Federal property goes directly back 
to the States and another 40 percent goes into a special fund, 
which ultimately ends up a lot of times back in that particular 
State also, and the Federal Government only derives 10 percent 
that I actually understand goes to the general fund. That is 50 
percent. Under the legislation that I have glanced at, it was 
talking about 35 percent.
    Now, citizens in Virginia or citizens in New Jersey or 
citizens in Massachusetts have just as much right to that 
Federal property in Nevada as the citizens of Nevada. And all 
we are asking for, not even the kind of equity that they get on 
Federal lands in those States, but are off our coast, 
immediately off our coast, a few--50, 75 miles off our coast, 
what we are asking for is a portion of that. Because as that 
infrastructure comes ashore, there are going to be associated 
things that we need that money for, transportation and other 
things that we do that. So we think it is only equitable. And 
we, quite frankly, don't understand the position of some of 
these in Congress that would say, oh, it is fine for our State, 
even though Virginians have just as much a right or North 
Carolinians or people from New Jersey, but it is not OK for 
you. And we don't understand that quite frankly in Virginia.
    Mr. Lamborn. OK. Thank you.
    Ms. Sweeney and Mr. Helmericks, can you elaborate on the 
difference in pay and benefits and stability between jobs 
provided by the energy industry, such as this bill would 
create, versus other non-energy types of jobs that are 
available in Alaska?
    Mr. Helmericks. Well, the big difference that I have seen 
is that the oil industry's jobs are very well paid. They are 
about the top of the scale. They are stable and they are one of 
the few jobs in Alaska where you can actually work year around 
and look at having a career.
    If you take fishing, fishing is seasonal. Logging is 
seasonal. Construction is seasonal. Tourism is seasonal. I am 
only speaking about Alaska now. That is the only place I am 
talking about. You have government jobs, you know, teaching 
school, being a fireman, things of this nature. You have small 
business owners, people with hair salons, things of this 
nature. Even bush flying is seasonal. But the oil industry runs 
24/7, 365 days a year. So if you are looking at entering an 
industry as a blue-collar worker--I am talking about if you 
want to drive a truck, operate a flow station, work in a camp 
for a catering company and you want to bring home a regular 
paycheck, have a 401(k) and be able to look for and invest in 
the future, the oil industry is your best choice in Alaska, and 
that is why I can so enthusiastically say, if you want to 
create good paying blue-collar jobs right now for people, I can 
give the oil industry my unequivocal endorsement.
    Mr. Lamborn. Ms. Sweeney.
    Ms. Sweeney. Thank you.
    I have family members who work up and down the Trans-Alaska 
Pipeline in Prudhoe Bay, in Valdez, and it provides significant 
benefits to Alaska natives in terms of the employment 
opportunities and training opportunities for our people. In 
addition to that, the schedules, whether it is 2 weeks on, 2 
weeks off, 6 on, 2 off, it enables and empowers our workers, 
our Alaska native workers to return home to engage in those 
very important subsistence activities that provide food for our 
families.
    In addition to that, the oil industry on the North Slope 
provides much needed revenue for our county form of government, 
the North Slope Borough. And the revenues derived from that tax 
base also provide revenues for local schools, for police and 
fire protection, running water and flush toilets. I talked 
about that in my testimony. And so there is significant benefit 
to not only our region, but to the entire State of Alaska.
    Mr. Lamborn. All right. Thank you.
    At this point, I would like to recognize Mr. Markey for 5 
minutes.
    Mr. Markey. Thank you, Mr. Chairman, very much.
    Ms. Alexander, we are hearing a big discussion here about 
where we can find revenues for our government, especially to 
put it into new roads in our country. And this morning, I woke 
up and the story was how high the price of gasoline has now 
skyrocketed across the country. And it occurred to me that the 
four largest oil companies in the United States made over $500 
billion in the last 5 years, but they laid off 10,000 people, 
which is unbelievable. Just, you know, they laid off 10,000 
Americans while they made $500 billion over the last 5 years, 
the these four oil companies, these biggest ones. It is just 
shocking to me what they do. Meanwhile solar now has 100,000 
employees; wind has 85,000 employees. So it is just really sad 
what the oil companies are doing in our country, laying people 
off. But that being said, it is clear that people are just 
going to be tipped upside down and have money shaken out of 
their pockets at the pumps as they drive to go visit their 
relatives over the Thanksgiving day weekend.
    So what I propose, what Mr. Holt has proposed, what the 
Democrats have proposed is that we look at the tax breaks that 
we give to the oil industry, to the mining industries from--as 
gifts, as gifts from the Federal taxpayers, even as they are 
recording the largest profits that any corporations in the 
history of the United States have ever recorded as they lay off 
people in our country.
    So I was just wondering, given the fact that all of the 
legislation which is being proposed by the Republicans would 
raise $5 billion, but the legislation which Mr. Holt and I and 
the Democrats have introduced would raise $18 billion to--and 
it would be used to pave over--to pave the roads of our 
country, to have more people put to work actually doing work 
and--on our highways in our country, don't you think that would 
be a better way for us to go, to look at all of these tax 
giveaways, Ms. Alexander, and to find a way to get that back, 
given the fact that they are likely to report even larger 
profits in this coming quarter, given the skyrocketing price at 
the pump that these oil companies are receiving?
    Ms. Alexander. You know, Taxpayers for Commonsense has 
opposed the oil and gas tax breaks for many years, for 16 
years, as long as we have been around. We continue to oppose 
them and think that there are real opportunities for deficit 
reduction for taking tax breaks off the books that have been on 
to encourage the development of the industry that is, as you 
said, well established.
    I think at the same time, we see that efforts to remedy the 
existing royalty collection system are also critical, so we 
will look at any proposal that we see. But we are on the record 
and have been on the record for a long time on those positions.
    Mr. Markey. In addition, in the legislation which the 
majority has introduced, they are actually going to increase 
the amount of revenue that comes off of Federal lands that are 
given to the States rather than keeping it in the Federal 
Treasury so we can reduce the deficit. We have a supercommittee 
that is meeting right now, and their proposals would actually 
take money away from the supercommittee, take money away from 
the Federal Treasury and just give to the States and make it 
more difficult for us to balance the budget, make it more 
necessary for us to cut our troops or to cut checks for 
Medicare for grandma. Does that make any sense to you that we 
would be, you know, changing that formula?
    Ms. Alexander. You know, as I said in my testimony, we 
oppose altering the existing revenue share, particularly for 
offshore, because we think that any of the potential problems 
which everybody, particularly the industry, doesn't want to see 
any problems with any new development, but any problems that 
would happen would have national implications. Nobody can 
guarantee that an accident--God forbid--an accident off of 
Virginia only affects people in Virginia and you just can't 
guarantee those things when we are talking about offshore 
development. So we think that that is appropriate to stay in 
the Federal Treasury.
    Mr. Markey. So I agree with you, Ms. Alexander. I just 
think that--and perhaps I care too much about, you know, 
ensuring that we balance the budget. I don't think we need a 
constitutional amendment. I just think we have to do it 
ourselves. And these giveaways to the oil industry, we should 
get them back and balance the budget with them. You know, these 
proposals to take the revenues that we would raise offshore and 
public lands and give to the States rather than keeping it to 
balance the budget so we can keep our defense strong, that just 
runs contrary to what our country should be doing at this time. 
So even as we debate a constitutional amendment to balance the 
budget out there on the Floor, we have here a Committee that is 
talking about actually potentially increasing the Federal 
deficit by changing the way in which we take the revenues from 
public lands and, instead of putting them in the Federal 
Treasury, just give them back to the States. I understand that 
if I could--if I came from one of those States, that maybe that 
makes some sense, but not while we are debating a Federal 
constitutional amendment to balance the budget, that it seems 
to me it should be our highest priority, so that we can send a 
signal to the American people that we really do care about 
balancing that budget. I know, I do. And I hope this Committee 
shares my deep commitment to that goal.
    I thank you, Mr. Chairman.
    Mr. Lamborn. Yeah. Thank you.
    I would like to remind everyone that a company like GE, 
which made $14 billion in profits, paid zero income taxes last 
year, Federal income taxes, when they had a lot of money coming 
in from wind production, solar, et cetera.
    Mr. Markey. Would the gentleman yield?
    Mr. Lamborn. And I should also remind the Ranking Member 
that when you buy a gallon of gas at the pump, you pay a lot 
more in taxes than the oil company made in profit on that oil--
that gallon of gasoline. So when it comes to greed and so on, 
we should look in the mirror.
    Mr. Markey. Would the gentleman yield?
    Mr. Lamborn. Yes.
    Mr. Markey. I thank the gentleman for yielding. Again, I am 
with you. OK. These large corporations are getting away with 
murder. They should be paying their taxes. OK? Whether it be 
General Electric or ExxonMobil, they are absolutely not paying 
their fair share of the dues to live in our society. And I 
share with you, we should do something on a bipartisan basis to 
make sure that General Electric and these other companies don't 
have----
    Mr. Lamborn. OK. Agreed upon, let us go on to our next 
questions.
    Mr. Flores.
    Mr. Flores. Thank you, Mr. Chairman. I find the last set of 
statements pretty interesting given that we don't--here we are 
talking about American jobs, American infrastructure, the 
American economy, fiscal responsibility, the 26 billion 
Americans that are either unemployed or underemployed. And look 
at how many folks we have from the other side of the aisle that 
are here that are interested in these key American issues 
today: One. So let the record reflect that.
    The second thing, we are talking about excessive profits. 
This iPad is worth about five barrels of oil, about $500 new. 
Now, who thinks that more profits are made on five barrels of 
oil or on one iPad? Any of you all care to guess? The profit 
margin on this iPad is over twice as high as on five barrels of 
oil. Let us keep that in perspective. So when we talk about 
companies paying their fair share, how many of you think--if we 
go to Apple and say, Apple, we want you to pay your fair share, 
we are going to double your tax rates, but we want you to 
produce more iPads at lower cost for Americans. How many of you 
think that is really going to happen? That defies the laws of 
economics. And the laws of economics are like the laws of 
gravity, the more you violate them, the harder the impact at 
the end.
    So with that said, let us go forward. Senator Wagner, 
yesterday the Secretary of the Interior testified that he 
suspended any leasing off the Pacific Coast because local and 
State jurisdictions opposed drilling. Now, you are telling me 
that Virginia supports drilling off its coast; is that correct?
    Mr. Wagner. Mr. Chairman, Congressman Flores, that is 
absolutely true. In repeated measures, legislation, the 
Governor has----
    Mr. Flores. One word is fine. I think we got the point 
across. I am not trying to be--we have a lot of questions.
    Second, he went on to testify that off the Atlantic Coast, 
that the reason he didn't allow drilling off the Atlantic Coast 
is because the Department of Defense felt like that would be a 
problem. Now, I think I heard your testimony say that you don't 
believe that is the case; is that right?
    Mr. Wagner. Mr. Chairman, Congressman Flores, as I went 
through the process, the Department of Defense weighed in very 
heavily. Remember, this is a 5-year ongoing study. The 
Department of Defense weighed in very heavily. As it was 
presented to me by the Department of Defense, within the lease 
sale 220, which we need to talk about at some point in time, is 
40,000 acres. The Department of Defense said it was OK and then 
they designated another perhaps 40,000 acres for subsea 
exploration, where it would not come up through the surface of 
the water.
    Mr. Flores. So the answer is the Department of Defense is 
willing to work with the Department of the Interior if we were 
to tell the truth in this Committee, it sounds like. Or if the 
Secretary of the Interior would tell the truth.
    Mr. Wagner. I am just telling you what I saw as a----
    Mr. Flores. That is what I thought. I would like to suggest 
to the Chairman that we invite somebody from the Department of 
Defense to come talk to us as well about this issue so we can 
clear up that misconception. There are a couple of approaches 
to fiscal responsibility.
    Let me ask you this, Mr. Milito, which approach do you 
think has the best impact on American jobs, the American 
economy, the Federal fiscal deficits that we face, and also 
revenues for infrastructure? Option A is, let's go ahead and 
raise the taxes and restrictions on oil companies. Option B is 
let's try to promote domestic drilling. Which one has the 
better impact?
    Mr. Milito. Option B.
    Mr. Flores. That is what I thought. OK. Which--let's see.
    Mr. Helmericks, let's see what my question is for you. What 
has been--you are a resident of Alaska today, correct?
    Mr. Helmericks. Yes.
    Mr. Flores. What has been the adverse impact of drilling 
and oil and gas operations as from your perspective? You live 
there.
    Mr. Helmericks. Yes, I have. In fact, I could see the 
Discovery well out my bedroom window. I actually watched the 
well being drilled, and I am only 7 miles from the Alpine 
Prospect.
    Mr. Flores. Allow Ms. Sweeney time, too. OK.
    Mr. Helmericks. The adverse impacts have been very small. 
Really, we have created something of a wildlife preserve around 
Prudhoe Bay because it is a no molestation and no hunting area. 
And, of course, it doesn't take the animals long to figure it 
out. So, honestly, if you want to see game right now, I would 
take you to Prudhoe Bay.
    Mr. Flores. Ms. Sweeney, do the benefits of increased oil 
and gas activity in your State outweigh the cost?
    Ms. Sweeney. Yes.
    Mr. Flores. Thank you.
    I yield back.
    Mr. Lamborn. OK. Thank you.
    Mr. Landry of the Cajun Caucus.
    Mr. Landry. Thank you, Mr. Chairman.
    Mr. Chairman, I would like to note that I, too, share the 
gentleman from Massachusetts' desire to balance the budget and 
hope that I could continue to serve here alongside with him to 
ensure that we get that budget balanced. And today I would like 
to use the same card slot as him, and we can both vote for a 
balanced budget amendment today.
    You know, there are some statistics I think that are 
important: There was a recent study that showed that if you--
that the average pay in the exploration and production side of 
the oil and gas industry, the average pay per employee is 
$2,000 per week. It is $104,000 a year by my math. If you are 
in refining, if you are downstream, the average pay is $1,750 
per week. That is $91,000 a year. If you are in the pipeline 
industry, the average pay is $1,500 per week, $78,000 a year. 
Now, if you are lucky enough to be in those industries and 
enjoy those jobs and enjoy those wages, that means that you are 
now in the top 25 percent of wage earners in this country. Now, 
isn't that what we are about? Isn't that what America is about? 
And yet this week, the President destroyed 20,000 of those 
pipeline jobs by not allowing the Keystone pipeline to move 
forward. Mr. Van Tuyn, do you live here in D.C.?
    Mr. Van Tuyn. Mr. Chairman, Representative Landry, I do 
not. I live in Alaska and have for quite a long time.
    Mr. Landry. Now, how long did it take you to get from 
Alaska to here?
    Mr. Van Tuyn. 10 and a half hours?
    Mr. Landry. On an electric plane?
    Mr. Van Tuyn. It was a plane, and I make the trip often.
    Mr. Landry. Well, I can tell you that I haven't been able 
to find one of those planes we can plug in yet or whether we 
can put those solar panels on those wings to fire up those 
turbine props that allow you the luxury to come down here and 
testify before us.
    Mr. Van Tuyn. Perhaps we have to work on that.
    Mr. Landry. So until you can get us to that point, I think 
that it is prudent of us in this country to allow us to use the 
resources that we have here. You know, the shame of it is that 
right now--I am so mad because right now, we are exporting our 
cheapest form of energy. We are becoming a net exporter of 
natural gas while we import the most expensive form of energy. 
Americans should be outraged.
    And, Senator, I apologize that Congress has allowed itself 
to just take certain States who don't want to drill--and I 
respect that if a State does not want to drill off their coast, 
I respect that. But if a State comes to Congress and says, this 
is our plan, and this is what we would like to do, Congress 
should weigh heavily on what that--on the decisions that that 
State makes. So I apologize to you for Congress not respecting 
the State of Virginia's plan to drill off its coast. I support 
it.
    And of course--I guess my question is actually to Mr. Van 
Tuyn. Do you know another industry that has an average pay of 
the numbers that I put before you earlier?
    Mr. Van Tuyn. I do, Mr. Chairman, Representative Landry. I 
think everyone on Wall Street.
    Mr. Landry. Everyone on Wall Street. OK. And let me ask 
you, how much--does Wall Street fuel your plane?
    Mr. Van Tuyn. Wall Street sure increases gas prices. I can 
tell you that.
    Mr. Landry. Wall Street increases gas prices. The last time 
I checked it is called supply and demand. It is a supply and 
demand curve. And look, if you feel that Wall Street is making 
too much money, then go over to the Financial Services 
Committee. OK? But you know what, Americans right now are 
paying through their wallets at the gas pump. Today, in 
November, when gas prices are supposed to be going down, what 
do you think the gas price is going to be in May? And, you 
know, if we just keeping this can down the road, the price is 
just going to go up and up and up, and the economy will 
continue to be smothered. So I suggest that you take a good 
hard look at your neighbor next to you who lived in Alaska all 
his life, like you did, and respect his position and respect 
the people who are making our energy, the people who allowed 
you to get in that plane and go from Alaska all the way to 
Washington, D.C.
    Thank you, Mr. Chairman.
    Mr. Lamborn. All right. Thank you.
    Next is Representative Johnson.
    Mr. Johnson. Mr. Chairman, I have no questions for this 
panel. So I would like to yield my time to Mr. Flores from 
Texas.
    Mr. Flores. Thank you, Mr. Johnson.
    Let us dive into the weeds here a little bit. This is for 
Mr. Wagner and Mr. Milito. H.R. 3410, to increase the levels of 
offshore drilling, have either of you all had the chance to 
review that legislation? It just came out. So I don't know if 
you have had a chance to review it.
    Mr. Wagner. Mr. Chairman, Congressman Flores, I have not 
had the opportunity.
    Mr. Milito. I have. I have had a chance to look at it.
    Mr. Flores. Do you have any specific recommendations that 
you would make before we have a markup on that bill later on 
this----
    Mr. Milito. You know, we just got it. We looked at it. We 
wanted to have an opportunity to really get back to the 
Subcommittee and to the Committee staff to weigh in on it a 
little bit.
    But generally, it is going in the direction this country 
needs to go in. We need to be leaders in developing our energy 
resources. It provides an opportunity this Administration is 
not providing by allowing us to go out there and develop 
offshore resources, and the ability to go in these areas off 
the Atlantic and Eastern Gulf and the Pacific, that is the step 
that we need to go in.
    Mr. Flores. OK. If you would, we will ask you to provide 
some written recommendations to the Committee if you would so 
that we can get those in. I am concerned--I am wondering if we 
put hard enough targets in there and if the targets are 
realistic, also. I am concerned about the fact that a lot of 
the information we use regarding undiscovered technical 
reserves may be way out of date and in most cases from what 
recent history has shown us is our recoveries tend to be much 
higher than those initial UTRs. So we need some feedback on 
what we can do to improve those numbers because if the 
Secretary is using 30-year-old data, that is going to drive us 
to a suboptimum outcome, and I would like to get to an outcome 
where we go to the areas that have the greatest potential 
first. One of the things in the legislation is it says you look 
at it by lease area, and I am wondering if you should just look 
at the entire offshore in the United States where do you go 
first instead of looking at lease areas.
    Mr. Milito. Those are actually two specific items that we 
have been looking at. But, you know, we want to make sure that 
we--a lot of it is legal language and how you interpret these 
clauses. But those are two concerns. We want to make sure it is 
maximizing and optimizing our opportunities.
    Mr. Flores. Right. Because, I mean, again, the goal here is 
to put Americans back to work, improve the American economy, to 
reduce the Federal fiscal deficit and to have the most amount 
of money available for U.S. infrastructure. I think that is the 
common objective. So if you can help us achieve those 
objectives, that would be great.
    Yes, sir. Senator Wagner.
    Mr. Wagner. Mr. Chairman, Congressman Flores, one point I 
would like to add. Again, I have not read the legislation. So I 
apologize for that. But one of the issues that has come up that 
has been a big issue in Virginia is the computer models the 
Department of the Interior uses to actually designate what 
States have what purview over there. And what happens is States 
that have concave coastlines are very much penalized because it 
uses--I have been told by Interior--international treaty and it 
has a thing. If you just went straight east-west, as it should, 
from the border, straight east-west out to the end of the 
Continental Shelf, obviously Lease Sale 220 would be much 
larger. But more importantly, vast areas would be open well 
outside of the Navy op areas. So there would be no concerns 
from DOD on that. So I would hope that as that legislation 
moves forward--I talked to Congressman Wittman about it--that 
those kind of things--direction is given to Interior about how 
they go ahead and designate these things both on the East and 
West Coast.
    Mr. Flores. OK. That makes sense to me because we ought to 
be looking at the offshore in the aggregate and not in pieces 
of pie or partials. Another somewhat rhetorical question for 
many of you on the panel, and it is which opportunity provides 
the greatest impact on American jobs, the American economy, 
improving the Federal deficit situation and providing the most 
revenues to the Federal Government for infrastructure, is it 
drilling overseas or drilling in the United States of America? 
Let us start with Ms. Alexander.
    Ms. Alexander. In the United States, of course.
    Mr. Flores. Mr. Milito.
    Mr. Milito. The U.S.
    Mr. Lamborn. Senator Wagner.
    Mr. Wagner. The United States.
    Mr. Van Tuyn. In the United States. We are reducing our 
imports every year and have since 2008.
    Mr. Flores. Mr. Helmericks.
    Mr. Helmericks. Chairman, Congressman, of course in the 
United States.
    Mr. Flores. Ms. Sweeney?
    Ms. Sweeney. In the United States.
    Mr. Flores. OK. We have 100 percent agreement. Now, if we--
the next question is, if we decide to raise taxes on oil 
companies domestically, is that going to increase the amount of 
drilling and investment in this country? Senator Wagner?
    Mr. Wagner. Mr. Chairman, obviously not. I mean, it would 
take money away from----
    Mr. Flores. OK. Mr. Milito.
    Mr. Milito. That would serve the opposite goal and mission. 
It would go the other way.
    Mr. Flores. Mr. Helmericks.
    Mr. Helmericks. Yes, it would decrease it, Congressman.
    Mr. Flores. Ms. Sweeney.
    Ms. Sweeney. It would decrease it.
    Mr. Flores. Thank you.
    I yield back.
    Mr. Lamborn. The next person on our list to ask questions 
is Representative Thompson.
    Mr. Thompson. Thank you, Chairman.
    Mr. Helmericks, you mentioned in your testimony that you 
have, quote, respectfully are asking for access to Federal oil. 
I certainly support that with all humility and pun intended, I 
want to drill down on your response a little bit. Just 
specifically, you talk about Federal oil, well, I think this is 
elementary, but who owns those resources, such as the oil and 
gas, on Federal lands?
    Mr. Helmericks. The citizens of the United States.
    Mr. Thompson. Absolutely. The United States taxpayers and 
the citizens here. I appreciate that.
    To all of the panelists, what is the overall expected 
economic impact of opening the small portion of ANWR that we 
are talking about within this legislation?
    Ms. Sweeney, any thoughts?
    Ms. Sweeney. Through the Chair, Congressman Thompson, there 
are significant economic benefits to developing the coastal 
plain of ANWR and we are looking at jobs for Americans and 
revenues for the Federal Treasury in addition to the benefits 
felt by Alaskans.
    Mr. Thompson. Any other panelists have any other thoughts 
on economic impacts on opening up just a small portion of ANWR 
that this legislation is addressing?
    Mr. Milito. We understand that the USGS estimates that 
between 5 and 16 billion barrels of oil. That is more than 
twice the proven reserves in Texas. We also understand the 
production could get up to 1 million barrels of oil per day, 
which closes in on what we are doing in the Gulf. So this would 
certainly enhance our economic and energy security.
    Mr. Thompson. Thank you.
    Mr. Van Tuyn, you had made some comments about since 2008, 
we have reduced our imports. Today we also have unemployment 
that equals the size of the population of Pennsylvania, 14 
million Americans. I would argue that if there has been any 
need to reduce imports, it is unfortunately because people are 
sitting at home and not having a job to be able to drive to.
    Within the testimony, there were comments about the Equal 
Access to Justice Act and the payments that this fund provides 
to litigants. Mr. Van Tuyn, do you believe that lawyers and 
environmental groups need to draw from this or need this 
payment?
    Mr. Van Tuyn. As much as API does. I think API gets a lot 
more money under the equal act--the Justice Act than 
environmental groups like--if not, it is--you know--under these 
fee-shifting provisions, API gets money, too. And that is true 
for the National Rifle Association and others. And it is simply 
a matter of fairness and access to the courts.
    Mr. Thompson. Well, in my congressional district, where we 
have lost significant jobs because of what I consider to be 
frivolous lawsuits, it has been the environmental groups that 
have been killing jobs and tying things up.
    How specifically would you--any suggestions on how you 
would suggest fixing--and I open this up to all of the panel 
actually, suggesting fixing the Equal Access to Justice Act? 
Any thoughts or comments, Ms. Sweeney?
    Ms. Sweeney. Through the Chair, Congressman Thompson, yes. 
On the North Slope, we have seen meaningful energy projects 
delayed by lawsuits that have very little or no merit, and we 
are supportive of reform of the Equal Access to Justice Act for 
challenges that have no merit. And what we would like to see is 
those that are interested in challenging meaningful energy 
projects in this country, that they also have skin in the game 
and are accountable in this process. And so our suggestion 
would be have them post a bond for the value of the project.
    Mr. Wagner. One other concept, probably outside the realm 
of anybody in this room to carry: Loser Pays. It is certainly 
one of those actions that the alternative of that is if a 
frivolous lawsuit causes unnecessary damages, have Congress 
create a cause of action, where the damaged party because of a 
frivolous lawsuit, they may seek a cause of action and come 
back and sue the person doing that and create a cause of 
action. That will have an effect of having people not file 
frivolous lawsuits. If there is a legitimate concern, go ahead 
and file a lawsuit. So I think much more achievable within this 
Congress would be to have a cause of action for the damaged 
party because of a frivolous lawsuit.
    Mr. Van Tuyn. Mr. Chairman, Representative Thompson, there 
is already those rules in place. It is called Rule 11. If I 
file a frivolous lawsuit, I am subject to losing my license to 
practice law. It exists today, and I would say anybody who 
thinks the lawsuit that has been filed on Arctic oil and gas or 
any other issue has an absolute remedy in court to deal with 
that now.
    Mr. Thompson. That is interesting information. I will be 
glad to take that back and why it seems that Rule 11 is being 
ignored, at least in my congressional district.
    Thank you, Chairman.
    Mr. Lamborn. Thank you.
    Representative Duncan.
    Mr. Duncan. I learn something every day, Mr. Chairman. I 
really didn't know that Wall Street had complete control over 
the gasoline and oil prices. And I swear that I learned growing 
up--since I was a little boy until now--that supply and demand 
is the driver. And that OPEC can turn open that spigot or close 
that spigot just like they did in the 1970s when they had gas 
lines. Because the supply was cut off, gas prices went up, 
supply and demand. But I learned something today. Wall Street 
dictates all of that.
    You know, I guess I am the slow zebra on the Committee. I 
guess I am like the average American that wonders why in the 
world America isn't harvesting its own resources to meet its 
own energy needs, lessen our dependence on Middle Eastern oil, 
people who don't like us very much. The average guy out there 
is going, ``we have got the gas, we have got the oil, why are 
we exporting natural gas?''--as the gentleman from Louisiana 
just said, and importing the most expensive product? Why are we 
stopping bringing oil from one of our most favored nations, our 
neighbor, our largest trading partner in Canada, why aren't we 
allowing that oil to flow to American refineries and be refined 
into products that benefit both America and Canada? To things 
that have happened in the last couple of weeks and in this 
Congress with regard to and under this presidency, regarding 
energy production and American energy independence baffles me 
and baffles the American--average American out there. I will 
stop my rant.
    And I want to thank Senator Wagner for being here because 
he and I first met in Louisiana when I went offshore to look at 
offshore drilling and the Devil's Tower Platform. And I want to 
thank him for his work because Virginia is one of the only 
States that has a comprehensive energy plan. And this man 
helped draft that comprehensive energy plan. Virginia set 
itself up to be very successful in the future. Let me remind 
the Committee that the second largest economic strength of the 
United States of America, second only to income taxes is the 
money we receive from revenues, the royalties from oil and 
natural gas production of American resources. The second 
largest income stream of the country. Virginia was poised to 
take advantage of offshore drilling. Senator Wagner encouraged 
me to be involved in South Carolina and pursue natural gas, 
drilling off the coast of the State. He came to South Carolina 
and testified as to why that was important. South Carolina and 
Virginia and other States ought to be like Louisiana and Texas 
and Mississippi and share in the oil revenues of energy sources 
that are produced off our coast and within our State. So, 
Senator Wagner, I just want to ask you to expound on--you have 
an energy plan for Virginia. You all were set up to drill, you 
were set up to harvest those resources, to benefit from the 
manufacturing, from all of the industry that supports offshore 
drilling, the royalties. What do you do now?
    Mr. Wagner. Come up here and beg you all to please put us 
back in the plan, Mr. Chairman. I mean, that is why I am here. 
It just floored us. It astounded us; after all of the hard work 
that had gone through so much, after all the taxpayers' dollars 
we expended to get Virginia into the position it is in, to find 
out it has been wiped out, and so we are back up here saying 
please, please reconsider. Nothing has changed in Virginia 
except for we are very, very concerned about our economic 
outlook, as I know each of you are for your own States and 
congressional districts. This is a very, very scary time. And 
when you mention, you know, get our oil, I need our oil, and 
you forgot to mention the third part of that and that is, I 
need my job, I need a job. And there's jobs waiting to happen 
right there. There are jobs that need to happen here in 
Virginia, your State in South Carolina, all across this 
country. And this is a solution to me. This is a spark that 
starts things going, that you can build off of, the spillover 
effect to move forward and ultimately end up with some lower 
cost energy which makes this country more competitive across 
the board, be it agricultural products. So much of natural gas 
is used in making fertilizer, as well as lower overhead across 
our Nation with a sound energy policy, which makes all of our 
exports much more competitive. That is where we need to be. We 
have the future. We have the natural resources. I hope Congress 
can get the message out, and we can start turning this country 
around.
    Mr. Duncan. We stand with Virginia.
    I am going to yield the balance of my time.
    Mr. Flores.
    Mr. Flores. Mr. Van Tuyn, Rule 11, interesting. What 
percentage of the time do judges grant Rule 11 sanctions?
    Mr. Van Tuyn. I do not know.
    Mr. Flores. Let me put it to you this way. In percentage 
terms, it is lower than the percentage profit margin on a 
gallon of gasoline.
    Mr. Van Tuyn. Mr. Chairman----
    Mr. Flores. Let the record reflect that right now, we don't 
have anybody from the other side of the aisle that is paying 
attention to American jobs, the American economy, the Federal 
deficit, American energy security or national security.
    I yield back the balance of my time.
    Mr. Lamborn. Thank you.
    The next person to ask questions is Representative Rivera 
of Florida.
    Mr. Rivera. Thank you very much, Mr. Chairman.
    One often untold story of energy consumption is in the 
United States, our military is one of the largest consumers of 
fossil fuels. The mission of our Nation's armed forces is of 
the utmost importance and the skyrocketing cost of energy takes 
money in their budget away from other areas where they could be 
investing it on our troops. I am wondering if API has done any 
studies on how increasing domestic energy production can also 
be a national security issue. And perhaps Senator Wagner may 
have some thoughts on this, too, given the significant presence 
of the military in Virginia.
    Mr. Milito. Well, most of our efforts have focused on just 
the general ability of this country to increase its energy 
security by getting to the point where we become dependent upon 
ourselves and our neighbor to the north, Canada. You know, I 
was in the Army for 5 years, and we had a slogan, KISS, keep it 
simple, stupid. And I showed the slide which showed that we 
need all this energy as we move forward. We need oil and gas, 
and we should be leading it. We shouldn't be promoting 
Brazilian offshore oil and gas. We should be doing it here and 
leading that effort.
    And what we have shown is that by providing the access to 
these offshore resources, providing access to the pipelines to 
bring the resources down to Canada, we can depend on two 
countries, the U.S. and Canada, which would provide the 
security for this Nation and for our folks in the armed 
services. That is the focus we have been taking and the 
revenues and jobs come along with it. So it is a win-win-win.
    Mr. Rivera. Senator Wagner, any thoughts?
    Mr. Wagner. Mr. Chairman, Congressman Rivera, it is my 
understanding that the Department of Defense is the largest 
purchaser of energy in this nation. Obviously, with our Air 
Force, Navy, all of our armed forces heavily dependent on 
fuels, as well as a variety of electricity, a big demand within 
our DOD.
    As we are sitting here grappling with defense budgets in 
the supercommittee, and it has obviously got Virginia very, 
very concerned about defense cuts--we know they are coming. We 
hope they are minimized. But when you start looking at the 
defense budget, one of the major expenses, certainly not as 
high as the personnel expenses and health care expenses, is 
their procurement of energy. Anything that we can do to drive 
down the cost of energy is going to reduce our Department of 
Defense's cost of energy and allow those dollars to be freed up 
for training, for operations and for maintenance, to make sure 
our armed forces maintain ourselves as the number one in the 
world like we are today.
    Mr. Rivera. Thank you very much.
    Mr. Chairman, with your permission, can I yield the rest of 
my time to Mr. Landry of Louisiana?
    Mr. Lamborn. Certainly.
    Mr. Landry. Thank you very much, Mr. Rivera. I appreciate 
it, Mr. Chairman. Ms. Alexander, do you support removing the 
tax credits that oil and gas companies receive, as the 
gentleman from Massachusetts----
    Ms. Alexander. Yes. We do support that.
    Mr. Landry. OK. I am just curious. Do you know the 
percentage of major oil and gas companies in all of the deep-
water drilling in the Gulf Coast? Do you know the percentage of 
projects that major oil and gas companies make up?
    Ms. Alexander. I don't.
    Mr. Landry. You don't. Would you think it is 80 percent?
    Ms. Alexander. I am guessing you do know and you can tell 
me.
    Mr. Landry. I do know, but I am trying to understand if you 
have any concept when you talk about big oil.
    Ms. Alexander. I should clarify a couple of things. First 
of all, our organization, we take a position that we should 
reform corporate taxes across the board to eliminate breaks, 
lower rates and simplify the code.
    Mr. Landry. OK. Let me just say this: 36 percent of the 
projects are done by the majors. That means that the 
independents, the moms and pops out there, the people that 
started on land, worked on the shelf, just built their 
companies up, that is the majority of who drills offshore. That 
is who drills here, Americans, small American companies. Why is 
it that you believe that if we drill off the coast of a State 
that that State is not entitled to revenue sharing? Are you 
opposed--would you oppose the royalty payments that go to the 
land States, the States like Wyoming or Montana? Do you believe 
that the 50 percent of Federal royalties that they receive 
should be taken away from them as well?
    Ms. Alexander. You know, our position on onshore 
development is they are within the States, we think that is 
different. But also we--I mean, think that for onshore 
development, for mineral development, they need to be paying 
more royalties. Many of the hydro mineral developers now don't 
pay royalties to the United States off Federal lands. So I am 
happy to defend our organization's consistency. It is not a 
priority to change the current revenue-sharing arrangements. We 
don't want to see them changed. We don't want to see an 
increase in revenues going to the States of offshore 
development because we don't think that is relevant for the 
industry, and we don't think it is good for the Federal 
Treasury. I understand----
    Mr. Landry. Do you think that the Federal Government uses 
your tax dollars wisely?
    Ms. Alexander. Not all the time.
    Mr. Landry. Why would you want to give them more money?
    Ms. Alexander. I don't think my State--well, I live in the 
District, but I have lived in other States. But I don't always 
think my State does the right thing with my tax dollars either. 
I think that the Federal taxpayer owns those resources and the 
Federal taxpayer should get those revenues. I absolutely 
understand that you disagree on this.
    Mr. Landry. Mr. Chairman, I yield back.
    Mr. Lamborn. Now we will hear questions from the other 
member of the Cajun Caucus, Mr. Southerland.
    Mr. Southerland. I am a proud honorary member of that 
caucus, as are you, Mr. Chairman. So thank you very much. I 
would like to thank all of the witnesses.
    Mr. Milito, this past week you described the Obama 
Administration's 5-year plan as simply maintaining the status 
quo. And I believe your organization sent a letter to the 
President calling it a missed opportunity. I appreciate that 
you also took on the Administration's recent boasts that U.S. 
energy production is at an all-time high, when in truth, the IA 
chart showed that energy development on Federal lands is at its 
lowest in 10 years. So the Obama Administration is literally 
taking credit for increased energy production on State and 
private lands where they have no jurisdiction.
    I would say this also--this is also status quo for this 
particular Administration. Do you think that H.R. 3410 helps 
the government break beyond the status quo to take bold moves 
toward getting more domestic energy production on line in new 
areas?
    Mr. Milito. Definitely. We have been kind of isolated and 
restricted to the Central and Western Gulf for decades. And it 
is a very mature field. And this industry has shown the ability 
to use technological advances to get out there and make huge 
discoveries and continue to develop that to the benefit of the 
Gulf Coast States and the whole country. But we need to expand 
our opportunities and make sure that we are not missing 
anything. We don't even have the ability to get out in the 
Atlantic and run seismic work because the EIS work that was 
started in January of 2009 has been delayed. We are coming up 
on 3 years now. We want an ability to get a permit to do 
seismic work. And now they take the Atlantic off, what 
incentive does this industry have to go find the seismic?
    And then it is a Catch-22 because the Administration is 
saying we don't have the information to move forward with those 
lease sales off the coast of Virginia, which are supported. So 
we are in a bit of a quagmire, and we are stuck in the Western 
and Central Gulf. And in Alaska, it has been 5 years where 
these leases have been issued, $4 billion spent and haven't 
been able to get the permits to go out there and do the work. 
So we are kind of stuck in a corner, and we need more 
opportunities.
    Mr. Southerland. Very good. And because I just arrived, I 
guess--is it Van Tuyn?
    Mr. Van Tuyn. Yes, it is.
    Mr. Southerland. OK. I apologize if I messed that up. Let 
me ask you a question because I hear this often times and we 
talk about some things in this Committee. Is profit a bad 
thing?
    Mr. Van Tuyn. No, it is not.
    Mr. Southerland. Is it wrong for oil companies who invest 
billions of dollars to have a profit?
    Mr. Van Tuyn. No.
    Mr. Southerland. Then why do we have to hear the opposite 
of that ad nauseam in this Committee room as well as on the 
Floor and by groups who claim that profit is bad?
    Mr. Van Tuyn. These are the most profitable corporations in 
the world.
    Mr. Southerland. How do you define profit?
    Mr. Van Tuyn. Mr. Chairman, above your cost. The money you 
bring in above your cost.
    Mr. Southerland. But I am a business owner. Our family has 
been in business for many, many years, many generations. I have 
asked this question before, and I don't know if you are a 
business owner, because I don't know your past. What is an 
acceptable rate of return on an investment? I mean, is it 20 
percent, 30 percent, 10 percent, 5 percent? What is acceptable? 
I am a small-business owner. But I think it is relative.
    Mr. Van Tuyn. You know, I don't have a strong opinion on 
that. I think that the oil industry has shown that it is 
historically the most profitable----
    Mr. Southerland. I asked you about profit percentage.
    Mr. Van Tuyn. I think it changes by industry and volume.
    Mr. Southerland. Well, let me tell you as a small business 
owner and as one who has a degree in business and the 
experience of a long history of family--of multiple businesses, 
10 percent is always, in business, 10 percent is, you know, 
something that you say, hey, we can invest and have 10 percent, 
then it is worth our while. OK? It is worth hard work. It is 
worth putting an investment in. I am sitting here and hearing 
people say billions and billions and billions of dollars. That 
is wonderful and great. It is sensational, and it is a bit 
disingenuous. Because if an organization has a billion dollars 
in profit, to totally ignore the $15 billion that they had to 
invest is a bit disingenuous, wouldn't you agree?
    Mr. Van Tuyn. I guess, Mr. Chairman, Congressman 
Southerland, I think it is not fair in the United States to 
have a tax rate on the books of 33 percent and pay less than 16 
percent of your taxes. If you want to pay 16 percent, then----
    Mr. Southerland. First of all, you are probably of the 
opinion that higher taxes leads to a greater economy.
    Mr. Van Tuyn. I would not express that opinion. That is far 
outside my expertise.
    Mr. Southerland. So my point being with my remaining 
seconds left, my point being that last year with Chevron, 
Exxon, and BP all being in the 5, 6, 7 and 8 percent profit 
margin, that is acceptable, based on the billions upon billions 
of dollars that are invested and that the American Treasury 
receives from their investment. And it just infuriates me, 
really, as a business owner to--everybody wants to use the word 
billions, but they never want to use the proper terminology 
that business owners understand and it is profit margins based 
on percentage.
    So with that established, I yield back.
    Mr. Lamborn. All right.
    Thank you. I want to thank the witnesses for be being here 
today. Members of the Committee may have additional questions 
for the record and I would ask that you respond to these in 
writing. Thank you for being here.
    And I would like to now call to the desk the second panel 
of witnesses. The Subcommittee will take a brief recess and 
reconvene in 5 minutes at 11:25.
    [Recess.]
    Mr. Lamborn. The Subcommittee will come back to order. I 
would now like to introduce the 5 members of our second and 
last panel. Mr. Todd Dana, Chairman and CEO of Uintah Partners 
LLC; Mr. Bill Eikenberry, rancher and Former Associate Wyoming 
State Director of BLM; Mr. Steven Gardner, President and CEO of 
ESCI, LLC; and Mr. Joe Zaluski, executive vice president also 
of ESCI, LLC; and Mr. Patrick McGinley, Professor of Law at 
West Virginia University College of Law.
    And like all of our witnesses, your written testimony will 
appear in full. So we ask that you keep your oral statements to 
5 minutes. And you saw allow the lights work: They are green 
until the last minute, when they turn yellow, and red after 5 
minutes. So we will go ahead and start in with our first 
witness.
    Mr. Dana, you may begin.

                    STATEMENT OF TODD DANA, 
             CHAIRMAN AND CEO, UINTAH PARTNERS, LLC

    Mr. Dana. Thank you, Mr. Chairman and members of the 
Subcommittee.
    My name is Todd Dana. I am Chairman and CEO of Uintah 
Partners. I am pleased to talk with you today regarding H.R. 
3408, Protecting Investment in Oil Shale, The Next Generation 
of Environmental Energy and Resource Securities Act.
    Mr. Chairman, as an oil shale industry entrepreneur, I 
welcome the opportunity to provide my perspective on the re-
emerging United States oil shale industry. My goal is to 
provide the Committee with the guidance and support it needs to 
push for the development of what I believe to be one of this 
country's greatest assets, over 1 trillion barrels of very 
premium crude oil from oil shale in Utah, Colorado and Wyoming.
    After researching the global energy demand and technologies 
of the future for liquid energy about 10 years ago, I 
determined that the development of unconventional oil shale 
would by necessity come to fruition in the United Sates in my 
lifetime. Each day I go to work in the oil shale industry, I am 
more and more confident that my efforts will develop--to 
develop responsible environmental and economically viable 
technology for this industry will play a major role in bringing 
much needed jobs to our country and thus benefit our national 
security.
    The fact is that we now have the technology to tap into 
this enormous resource, a resource that the U.S. Department of 
Energy has estimated at more than 800 billion barrels of 
recoverable oil from shale. We simply need to harness the 
combination of our business acumen and community resources so 
guide us down the path of responsible planning and 
environmental sound development of these rich reserves.
    For almost 100 years, scientist, engineers and corporations 
have attempted to extract oil from shale on an economic scale. 
Despite having produced millions of barrels of oil from shale 
decades ago, the price of oil on the global market could not 
sustain the industry.
    The industry has not flourished for many reasons. Some are 
economic and some are technical. Most people familiar with oil 
shale in the Rocky Mountain region understand that it is 
actually quite easy to produce oil shale from oil shale rocks 
using the well known process of pyrolysis. The problem has been 
that the capital and the operating costs relative to mining, 
building and operating retorts, and the building and operating 
of hydrotreaters or upgraders has been too expensive relative 
to the price of crude oil.
    But while the economics have failed, the resource remains a 
viable, very world-class asset. For the past 6 years, oil 
prices have averaged above $85 per barrel. At that price, the 
oil shale industry could have been operating profitably for the 
past 6 years. The price of oil driven by supply and demand as 
well as geopolitical constraints and with nationalism on the 
ride from China, is rising. Just a few weeks ago at the oil 
shale symposium in Golden, Colorado, at least half a dozen 
companies set forth timelines indicating the commencement of 
commercial operations between 2016 and 2020.
    The new price of crude oil combined with new technology and 
the anticipated higher volume production and lower operating 
costs will be the primary drivers of the industry, provided of 
course if the Federal Government will allow it to move forward 
with development through commercial leases.
    For many years, horizontal kilns and vertical retorts have 
been limited to approximately 5,000 barrels per day. For 
example, the ATP Process, the Paraho Process and Petrosix 
Process and even the processes developed by the Estonians have 
been stuck at this certain ceiling of volume. I am aware of at 
least three surface retorts now with technologies that have the 
ability to provide shale oil delivering over 25,000 barrels per 
day on an economic and environmentally sound basis.
    I am pleased to report to the Committee that there are now 
full commercial projects in development, including with tens of 
millions of dollars in mine planning, engineering and 
development that will put the industry in play by 2016 to 2017.
    But again, this will only be possible with your support and 
that of the responsible Federal agencies. Because the Federal 
Government controls the vast majority of this vital resource, 
the most important thing we could do now is to have government 
establish clear rules, lift the overreach of regulation and 
establish a dedicated entity to coordinate with all the key 
regulators. The development of oil shale in Utah, Colorado, and 
Wyoming, will provide millions of jobs over decades to come, 
thereby reducing our dependence on foreign oil and our 
substantial trade deficit.
    All of this can be done responsible in a manner that 
protects water, wildlife and the environment, while providing 
liquid transportation energy that we need for our national and 
economic security.
    Thank you for the opportunity to appear today. And I will 
be happy to respond to questions later.
    [The prepared statement of Mr. Dana follows:]

     Statement of Todd Dana, Chairman & CEO, Uintah Resources, Inc.

    I thank the Committee on Natural Resources and Chairman Lamborn for 
the opportunity to provide perspective and comments on the reemerging 
United States Oil Shale Industry--from the perspective of an industry 
entrepreneur. I hope my comments will be helpful in guiding reasonable 
and bipartisan support for what I believe is America's best asset, over 
1 trillion barrels of very premium crude oil from oil shale in Utah, 
Colorado and Wyoming.
    For almost 100 years many scientists, engineers and corporations 
have attempted to extract oil from shale on an economic basis. Despite 
having produced millions of barrels of oil from oil shale rocks decades 
ago in the United States, the price of crude oil in global markets was 
not supportive of this industry. The industry has not flourished for 
economic reasons and some technical reasons. Most people familiar with 
oil shale in the Rocky Mountain region understand that it is actually 
quite easy to produce oil from oil shale rocks using the well known 
process of pyrolysis which is heat in an oxygen free environment. The 
problem has been that the capital and operating costs relative to 
mining, building and operating retorts to extract the oil, and building 
and operating hydrotreaters to upgrade have been to expensive relative 
to price of crude oil. But while the economics have failed the resource 
remains a viable world class asset.
    What is now changing is price of crude oil. Over the past six years 
the price of WTI NYMEX crude oil prices has stabilized above $85.00 
average price per barrel. The price of oil is driven by supply and 
demand as well as geopolitical constraints. With nationalism on the 
rise, competition form China and growth in Asia and emerging economies 
demand is expected to rise and drive prices upward. With an average 
NYMEX WTI crude oil price of $85.00 per barrel, the oil shale industry 
will emerge by the end of 2016 and into 2017 with first production. 
Just a few weeks ago at the Oil Shale Symposium at Golden, Colorado at 
least a half dozen companies set forth timelines in presentations 
showing commercial operations starting between 2016 and 2020. The new 
price support in the global crude oil market combined with new 
technology based on much higher volume production and much lower 
operating costs is the driving new forces that will open this industry. 
When people ask ``What is different now about oil shale?'' the answer 
is simply two main reasons. First, global crude prices have risen to an 
average of $85 dollars per barrel, and second, new, outstanding, high 
volume technology is being developed in a responsible manner that 
lowers the operating costs from 75 dollars per barrel to about 35 
dollars per barrel. It is really that simple.
    To the credit of the environmental community, with the rise of the 
Green Energy movement earlier this past decade, inspiration and 
guidance was provided to many of us in the oil shale industry who set 
out to open the industry responsibly. For example, after researching 
the global energy demand and technologies of the future for liquid 
energy about ten years ago, I determined that unconventional oil shale 
would by necessity come to fruition in the United States in my life 
time. I also determined that the limitations of solar and wind to 
actually replace petroleum were wishful thinking and that liquid 
petroleum is an entirely different industry. Since my decision 8 years 
ago to participate in the oil shale industry, I have not regretted this 
decision once. Not only do we now see the failures of economics in 
solar, wind and ethanol as I predicted 8 years ago, but we now see that 
America has fallen into a rut of fighting wars in the Middle East over 
oil. Each day I go to work in the oil shale industry, I feel my efforts 
to develop responsible environmental technology and economic technology 
will be a part of not only displacing future emissions but also 
displacing the need for wars over oil that cost the health and lives of 
soldiers and their families. Let me say that to all opposing 
environmental activists willing to fight against the oil shale 
industry, I implore you, in the name of our military families to cease 
with unnecessary and frivolous opposition to the industry that 
otherwise causes these many wars for oil in the Middle East. The anti-
oil agenda is futile and green energy cannot and will not replace our 
need for liquid fuels. I know many environmentalists share an 
opposition to wars and especially wars over oil and that has been a key 
driver in promoting an anti oil agenda. We are now in era where 
environmentalism and regulation is actually causing these wars and 
green energy cannot offer us a realistic solution to liquid fuels. Its 
time to do the best we can with the resources and technology we have 
and that, speaking from my research and point of view has morally lead 
me to engage in responsible oil shale development. I encourage you and 
all good Americans to consider your activism and weight it in this 
context.
    The fact is that oil shale industry can help us develop responsibly 
and inhibit the United States from fighting for oil elsewhere. Tens of 
thousands of soldiers have been maimed, millions of people have been 
killed and the United States is on the verge of financial collapse due 
to spending on these oil wars. We can do better. We have the 
technology. We simply need the moral judgement and the community 
working together attitude of beneficial development through responsible 
planning.
    After 8 years in the oil shale technology development business I 
have a few easy solutions to the environmental concerns that I would 
like to discuss. The most often cited challenges are relative to
        1.  Water
        2.  Emissions
        3.  Reclamation
        4.  Wildlife
    In regards to water, many environmental alarmists would have 
America believe there is no water for the oil shale industry. This is 
patently false. Over the past years I have spent in this industry I 
have found it humorous to read newspaper article after newspaper 
article about how much water oil shale will use. There has never been a 
shortage of conflict-inducing journalists looking to regurgitate this 
worn out story with arguments on both sides. Seldom however is the real 
issue of supply and source of water dealt with. Even government 
sanctioned reports of the industry such as that as from the Rand 
Corporation have been completely misguided when it comes to water use 
in oil shale and availability and process volumes. The truth is that 
water is widely available in the State of Utah for purchase. Anyone 
worried about the water availability can simply buy the water. For 
example, my company negotiated a large contract recently that now 
provides us all of the water rights we need into the foreseeable future 
for our own process water for oil shale. The water is available and it 
is in abundance currently in use for corn and alfalfa farming. If the 
price of oil can support buying that water from farms, it can be used 
on an industrial basis in the oil shale industry--its that simple. On a 
macro level of planning for water consumption in the arid West (for 
example population growth), for those that are naive to believe that 
this is the way we plan the world, there's not much I can say to 
dissuade someone on water. But even on a macro scale argument of water, 
it is also true that water can and will be piped to the region from 
long distance if necessary widely available from Utah Lake, The Great 
Salt Lake and even as far distant as the ocean itself. Water is not a 
problem for oil shale. Every comment to the contrary is just 
environmental activism without the economic understanding of importing 
the water. Water is not only available now it will be far into the 
future for the U.S. oil shale industry.
    In regards to air emissions I have already mentioned the benefits 
of using clean burning natural gas to heat up the oil shale in 
retorting processes. Many of the projects I am familiar with now 
seeking air permits are actually coming forward as minor source 
emitters. In other words, the oil shale processes they employ are so 
low in emissions due to burning natural gas (instead of buring the rock 
itself as in the old days) that they are not even major sources under 
the Clean Air Act. Natural gas in abundance will continue as an ideal 
input for retorting oil shale. America is currently discovering 
enormous amounts of natural gas from shale formations from the Rockies 
all the way to New York and beyond. Unlike the Solar and Wind 
industries which cannot compete with electrical generation from natural 
gas without subsidies, the U.S. oil shale industry actually benefits 
from natural gas at low prices and without subsidies. Because oil shale 
retorting is driven by natural gas, each barrel of oil shale becomes 
that much cheaper to produce. Further, after production of shale oil 
from the rocks in the pyrolysis step, oil shale requires the semi-
refining step known as hydrotreating or upgrading. The oil is processed 
at high temperature and high pressure and combined with 2,300 standard 
cubic feet of hydrogen per barrel. The hydrogen comes from natural gas 
and therefore the lower cost of natural gas lowers the price of oil 
shale as well. It should be understood by your committee that this 
downward pressure on natural gas is forseeable for the next two or 
three decades. This is excellent news for oil shale inputs on energy 
and upgrading relative to hydrogen production.
    Further to the discussion of emissions is the overall emissions 
profile of each barrel of crude oil. While environmentalists have 
recently attempting to label Canada's oil sands as a ``dirty oil'' the 
same cannot be said of U.S. oil shale. Not only does the step of 
burning clean natural gas for the pyrolysis emit very little emissions 
but the reality is that oil shale once hydrotreated yields nearly 75% 
of the barrel as Ultra Low Sulfur Diesel (ULSD). This is not diesel as 
we have once known this is diesel known as Green Diesel, the same Green 
Diesel that most of the European automakers have highlighted as highly 
fuel efficient. I will refer the committee to the Super Bowl TV 
commercial from Audi from two years ago known as the ``Green Police 
Commercial''. The Green Police where depicted policing ridiculous 
notions of green living including a police barricade on the highway. 
When the Green Diesel Audi approached the Green Police at the traffic 
stop, the Green Police noticed the Ultra Low Sulfur Diesel automobile 
from Audi and allowed it through. Americas Green Police 
environmentalists need to get the memo and join the Ultra Low Sulfur/
Green Diesel movement. The Europeans have gone to this fuel for mileage 
efficiency and its time we do so here in the United States. In fact, 
there are several green diesel automobiles that actually get better gas 
mileage than gas-electric hybrids--most people are not aware of that. I 
am hoping to see Al Gore drive up to the Sundance Film Festival in Utah 
in a Green Diesel vehicle from Germany and not just a Prius each year. 
When the true story of the potential of oil shale is told relative to 
Green Diesel, the emission profile looks quite normal to regular crude 
oil production already refined around our country. This is good news 
for American families looking to be employed by the oil shale industry 
and simultaneously provide a secure energy future for our children.
    In regards to mining and surface disturbance in the U.S. oil shale 
industry many environmentalists argue that oil shale lands cannot be 
reclaimed and that desert land do not grow back. This is also patently 
false. I wish to direct the committee to look into all of the gas well 
pads that have been drilled on oil shale surfaces for decades now in 
Utah and Colorado. All across the Piceance Plateau and in the Uintah 
Basin thousands of natural gas well pads have been cleared by dozers to 
flatten a site suitable for drilling rigs to set up and drill for 
natural gas. It is quite typical that these pads are directly on the 
outcrop of oil shale and the oil shale is pushed up in large piles 
around a flat surface. There are now hundreds of well sites that are 
now reclaimed where once drilling has taken place. The oil shale lands 
(high desert lands) are now so well reclaimed that it takes a very keen 
and trained eye to even notice that a well even once been there. There 
are other examples as well. For instance, in the case of the old 
Geokinetics oil shale production site in Utah that produced over 
100,000 barrels of shale oil, the land that was once disturbed can best 
be noticed today by looking for wild life. The deer and elk in the area 
actually prefer to live and graze on these reclaimed oil shale lands 
which support far better foliage than the undisturbed and unreclaimed 
lands. This brings me to a few comments about wildlife from an industry 
perspective.
    Its amazing to me that we have grown into a society that protects 
sage grouse more than American soldiers. I think environmentalism and 
the green energy movement is falling apart these days not only due to 
the failure of President Obama to negotiate with the Chinese in regards 
to the Kyoto Protocol and relative to a global carbon trading platform, 
but also because the American people view with disgust the fact that we 
are blocking our hydrocarbon resource development domestically actually 
causing our soldiers oversees to fight wars for oil as a result. Each 
day I work on oil shale technology and project development I am 
inspired by American soldiers who sacrifice for our country. I am 
committed to reducing the impact on wildlife such as sage grouse that 
environmentalists cite as needing protection relative to our industry. 
What I believe the American people are seeing clearly now is that 
perhaps it is our fellow countrymen and countrywomen serving us in the 
armed forces that are rare, precious and endangered. Blown off limbs, 
destroyed familes to death, disability and loss bring a whole new 
meaning to an ``Endangered Species Act''. The good news is that reason 
is on our side and environmentalists everywhere are recognizing 
overregulation, unnecessary alarmism and unwelcome damage to our 
society and our economy by blocking resource extraction. Let me be 
clear, we welcome reasonable environmental planning to the table of 
planning the oil shale industry, but I think more emphasis going 
forward will be placed on American lives, American jobs and stopping 
our wars overseas for oil. It should already be common knowledge that 
human beings are far more valuable to this earth than wildlife 
activism.
    In closing, let me say that the key to the industry is volume 
production. For many years horizontal kilns and vertical retorts have 
been limited to approximately 5,000 barrels per day. For example, the 
ATP Process, the Parahoe Process, the PetroSix Process and even the 
processes developed in Estonia have been stuck at this ceiling of 
volume. I am aware of at least 3 surface retorting technologies that 
have the ability to produce shale oil delivering over 25,000 bpd on an 
economic and environmentally sound basis. I am pleased to report to the 
committee that there are now full commercial projects in development, 
including with tens of millions of dollars in mine planning, 
engineering and development that will put the industry in play by 2016 
to 2017. The projects I speak of have nothing to do with federal lands 
or the Research and Development programs administered by the BLM. My 
recommendation is that the BLM and the federal government pass laws 
that keep the bureaucracy of Washington out of the industry and make 
all federal lands available to the private sector. Since the Energy 
Policy Act of 2005 was enacted the Department of Interior has leased 
approximately 30,000 acres of the 1.9 million acres of oil shale. This 
is pathetic performance--less than 1% of 1%. The federal government has 
no skill in managing the lands containing oil shale let alone 
determining what the technology should and shouldn't be. Just as with 
Solyndra the federal government isn't going to pick a winner in the oil 
shale industry. The best technologies I am aware of have nothing to do 
with federal programs.
    The fact is that there is a thriving oil shale industry emerging in 
oil shale in Utah, Colorado and Wyoming. Dozens of the highly respected 
private equity and hedge funds have invested into start up companies 
working on technology in this space. For example, in 2006, I authored 
patents and invented an oil shale process known as the EcoShale In 
Capsule Process for low cost, high volume production of shale oil. 
Since that time, my technology has garnered more than $100 million 
dollars in supportive investments. Without any subsidies from the 
federal government, and set in a time and era where trillions have been 
spent on reviving the economy and fighting wars for oil--virtually no 
money has been spent or provided to the oil shale industry for 
assistance. This is a shame on so many levels as this industry holds 
the key for economic and national security--and industry that directly 
offsets the hundreds of billions in trade deficit for imported crude 
oil.
    I am hoping to help be a driver of change influencing better 
technology and also convincing my environmental friends that the time 
has come to stop catalyzing wars for oil overseas by blocking domestic 
hydrocarbons. Our war is an economic and creative war here at home. If 
we win it we can be stewards for the environment and protect the 
unnecessary loss of life of American soldiers fighting wars for oil. 
Perhaps the most interesting thing I have learned in development over 
the past decades is that the very same technology of pyrolysis for oil 
shale is the same technology for creating biochar. Intellectuals in the 
Carbon Trading world of Kyoto know and promote the pyrolysis of biomass 
to create biochar--a carbon capture and sequestration method that is 
superior to other approved Clean Development Mechanisms--I have 
attended many of these seminars and have studied Biochar. As the oil 
shale industry unfolds and new technology in this space emerges, 
biomass pyrolysis will excel as well as a result. Isn't it interesting 
that oil shale pyrolysis--a legitimate potential solution to our 
problems of wars for oil, trade deficit, jobs, energy security could 
simultaneously emerge as the same technology for even carbon capture 
and sequestration. I find that absolutely fascinating, Mr. Chairman. I 
believe many in the U.S. Congress will find that fascinating as well. 
Thank you, very much to the committee for this opportunity.
    I am available for questions.
                                 ______
                                 
    Mr. Lamborn. Thank you, Mr. Dana. That was perfect timing.
    Mr. Eikenberry.

    STATEMENT OF BILL EIKENBERRY, RANCHER, FORMER ASSOCIATE 
      DIRECTOR OF THE BUREAU OF LAND MANAGEMENT IN WYOMING

    Mr. Eikenberry. Thank you, Chairman Lamborn and Ranking 
Member Holt, for the opportunity to testify today on the 
PIONEERS Act and the important question of the feasibility and 
wisdom of developing oil shale deposits in Colorado, Utah and 
Wyoming. I am a former land manager, served 30 years at the 
Department of the Interior and most recently served as 
Associate State Director of BLM in Wyoming. I also taught for 
approximately 5 years in environmental natural resources at the 
University of Wyoming.
    I am a third-generation Wyoming rancher, so I pay close 
attention to energy development issues in the West and how 
these activities affect the rural communities and our ranching 
way of life. And I have been deeply involved in environmental 
issues with the Department of the Interior over a long period 
of time.
    I urge the Committee to oppose this legislation. Oil shale 
is a failed resource that will create zero energy, zero jobs 
and certainly no revenues for transportation. If oil shale is 
supposed to fund our crumbling infrastructure, it is simply not 
going to happen.
    As you may know, we are seeing record levels of oil and gas 
development right now in the United States. In fact, drill 
activity is higher today than it has been in the past 24 years. 
That means production of oil and gas under the Obama 
Administration is higher today than when President Bush left 
office.
    Still, as a Westerner and a former land manager, I 
understand the challenges of this Committee when it comes to 
producing energy, creating jobs, growing revenue and so on. 
That is why I believe to achieve this goal, Congress should 
ensure that the oil and gas companies develop something like 22 
million acres of public lands that have already been leased but 
are simply not being developed.
    And these are proven reserves on these public lands. 
Industry should also seek to develop--we have something like 
7,000 applications to permit to drill that are laying in these 
States. Something like 3,500 APDs are laying in Wyoming and 
another 3,500 that are spread out through New Mexico, Utah, and 
Montana. But there are simply acreages out there that have been 
leased that big oil is simply not developing.
    I believe the Markey bill, which would create an annual 
production incentive fee to ensure that industry uses these 
resources it already has in hand, would do just that. And I 
certainly would support that.
    And another way to fund our crumbling transportation sector 
would be to end the $15 billion a year in special tax breaks 
for oil and gas companies, which they receive every year. And 
that is something that we have talked about here today, in 
terms of royalties and the subsidies, of course, that is going 
to big oil.
    Instead of attacking commonsense safeguards for clean 
water, clean air, protections which benefit people like myself 
in farming and ranching, make the companies use what they have 
first, and that includes oil shale. Companies such as Chevron, 
Shell, Exxon Mobil have upwards of 200,000 acres leased for oil 
shale speculation. Let the free market work in those lands 
already leased before we dive into more taxpayer-funded 
subsidies and Western land giveaways, such as the Lamborn 
legislation proposes.
    The bill today that offers up oil shale as an answer to our 
current economic woes does not really pass the real test, much 
less achieve any of the stated goals of this Subcommittee. The 
only thing blocking oil shale development is the thing that has 
blocked it for a hundred years: the rock itself. It is low-
quality resource oil shale rock and the very physics that make 
up that rock. It simply is not viable.
    Oil shale is not a viable resource in the West. It is 
simply a Wall Street speculation on our public lands. We have 
been waiting for a hundred years to see a technological 
breakthrough in oil shale development. It is simply not viable.
    Once again, there are zero jobs, zero energy, and zero 
revenues in oil shale speculation. Shell, for example, already 
has rights to more than $1 trillion of Federal oil shale 
resources, except those resources aren't worth a dime because 
they don't have the technology to extract it in an economically 
viable way. Even Shell admits that it will be anywhere between 
10 to 20 years before we even know whether the latest 
technologies will be economically viable.
    Oil shale speculation is a dangerous gamble. Are we 
actually willing to start taking away water rights from farmers 
and ranchers like myself and wastewater from the Colorado River 
to conduct speculation on a failed technology----
    Mr. Lamborn. Mr. Eikenberry, are you about to wrap up?
    Mr. Eikenberry. I am, real quick here----like oil shale in 
the public lands.
    The legislation introduced by Congressman Lamborn won't 
solve any of our energy or jobs issues out West. It will just 
invite throwing more taxpayer-funded subsidies at a failed 
resource. It would shift the cost of oil shale research on to 
the backs of already struggling local communities. It would put 
critical water sources at risk.
    And, in summary, Mr. Chairman, again, I urge the Committee 
members to unequivocally oppose the PIONEERS Act.
    [The prepared statement of Mr. Eikenberry follows:]

               Statement of Bill Eikenberry, Rancher and 
 former Associate Director of the Bureau of Land Management in Wyoming

    Thank you Chairman Lamborn and Ranking Member Holt for the 
opportunity to testify today on the PIONEERS Act and the important 
question of the feasibility and wisdom of developing oil shale deposits 
in Colorado, Utah and Wyoming.
Opening remarks
    I am a former land manager who served over 30 years with the U.S. 
Department of the Interior and most recently served as the associate 
state director of the U.S. Bureau of Land Management in Wyoming. I was 
also an adjunct professor of natural resources at the University of 
Wyoming. Today, I tend to my ranch in south eastern Wyoming and pay 
keen attention to the energy development issues in the West and how 
those activities would affect rural communities and the agricultural 
sector.
    As you may know, we are seeing record levels of oil and gas 
development in the United States. In fact, drill rig activity is higher 
today than at any point in the last 24 years. Also, both production of 
oil and gas are higher today than when President Bush left office.
    Still, I can appreciate the concern the members of this committee 
have when it comes to producing energy, creating jobs, and growing 
revenue. I believe that to achieve this goal, Congress should ensure 
that oil and gas companies ``use it or lose it'' and develop the 22 
million acres of public lands already leased for development. Industry 
should also seek to develop the 7,000 drilling permits where they have 
a green light to drill--over half of which are in my home state of 
Wyoming.
    Unfortunately, oil shale will fail to achieve any of the goals 
aimed at by this committee. The only thing blocking oil shale 
development is the same thing that has blocked it for 100 years. It is 
the low-quality resource of the rock and physics.
    Oil shale is just an opportunity to fuel Wall Street-style 
speculation on our public lands. Without the breakthrough in technology 
for commercial oil shale development--which industry says is at least a 
decade or more away--there are no jobs, there is no energy, and there 
is no revenue in oil shale.
    In fact, the legislation introduced by Congressman Lamborn would 
actually invite throwing more taxpayer-funded subsidies at a failed 
resource, shift the cost oil shale research onto local government, and 
communities, put water resources at risk, gamble away 2 million of 
acres of public lands for speculation, and risk losing real jobs in the 
agricultural, tourism, and outdoor recreation sectors.
    I urge the committee members to unequivocally oppose the PIONEER 
Act and vote no on this legislation.
No Jobs, No Energy, No Revenues
    Regardless of whether you support, oppose, or like most people are 
uncertain about oil shale development, the fact remains that the 
fundamental problem with oil shale is the rock itself. This bill will 
do nothing to change that fact. Oil shale is not feasible because 
industry leaders such as Shell Oil, ExxonMobil, and Chevron have not 
been able to solve the many technical, economic and environmental 
hurdles, despite decades and hundreds of millions of dollars of testing 
and researching various technologies.
    What Congress, through this legislation, is looking to do is step 
in front of the Department of the Interior, circumvent a process 
underway that has strong local input from stakeholders across the West, 
and force bad land use and economic decisions that would directly hurt 
local communities and economies. It is because of those concerns--
concerns I have about the fundamental goals of the PIONEERS Act--that I 
am here today.
    As industry continues its decades-long research and tests 
technologies with the goal of developing commercially-viable business 
models, we have time to make sure that we ask and answer the correct 
questions. The PIONEERS Act presents oil shale as a viable jobs and 
energy program. If Congress is looking at oil shale to spur economic 
growth, we as a country are in a mess of trouble.
    For more than 100 years, boosters have promised that pulling oil 
out of rock-solid kerogen formations in the West would be easy, and the 
region would be awash in jobs, fortunes and eternal economic prosperity 
if we only tapped it. That's the central trust of the PIONEERS Act. The 
reality though is that such overly optimistic promises of oil shale 
have throughout history shown to be pure hype. In the 1910s and 1920s, 
people were lured West by oil shale boosters' promises of jobs and easy 
money. But that hype busted in the mid-1920s when oil reserves were 
found in Oklahoma, Texas and California--shattering the livelihoods of 
thousands of people in Wyoming and Colorado's Western slope.
    The same dynamic played out in the 1940s and again the late 1970s 
into the 1980s. I lived through those turbulent times in the 1980s and 
can tell you that lofty promise by industry and government hurt people.
    In 1980, Exxon announced at a meeting in western Colorado that they 
would be developing 8 million barrels per days by 2010. In 1981, the 
Reagan administration approved a $1.2 billion loan guarantee for 
Exxon's Colony oil shale project. One year later, in May 1982, Exxon 
pulled the plug on its Colony oil shale project and more than 2,000 
local workers lost their jobs over night.
    Twenty-eight years later, not a single barrel of oil from shale has 
made its way into the nation's commercial oil supply. It's not for a 
lack of trying--and it not a result of any particular federal policy. 
Industry heavyweights like Shell and ExxonMobil have hundreds of 
thousands of acres of private oil shale lands on which to test their 
technologies. They've also invested hundreds of millions of dollars. 
They still cannot produce oil from oil shale.
    The current research program the Bush Administration initiated in 
2007 is progressing but is yielding few results. Shell Oil recently 
announced that it was shifting gears and is now looking to develop 
deeper deposits. Enefit USA (formerly OSEC) told the BLM in a July 2011 
report that they were taking a step back and reviewing their entire 
approach to research. Chevron, in their quarterly reports to the BLM, 
has likewise shown little progress.
    Why is this background important? The bill states oil shale is 
``one of the best resources available for advancing American technology 
and creating American jobs.'' Aside from the fact that the leading 
companies are not American--they are Dutch, French, and Estonian--until 
there are technologies, there are no jobs, there is no energy, and 
there is no revenue. What there is, is hope and hype, and that's it.
Shifting the Cost of Doing Business on to Local Governments and Giving 
        the More Taxpayer Handouts to Big Oil
    While it is not the intent of the PIONEERS Act to hurt local 
communities, one of the unintended consequences of this legislation is 
that the very local communities that would be responsible for 
supporting development could be severely negatively impacted by 
development.
    Local governments, as the host communities, would be charged with 
developing the infrastructure necessary to support commercial 
development. That means our communities would need to provide schools, 
housing units, hospitals, police and fire departments, social services, 
road improvements, and the like. The way governments pay for these 
improvements is through royalty payments. Under current law, 49% of 
royalties go the states and local governments to bear the financial 
costs of supporting local governments.
    As Democrat Keith Lambert and Republican Ken Parsons, two local 
elected officials from western Colorado stated in an August 2011 
editorial in the Grand Junction Daily Sentinel, ``Cutting the royalty 
rate by more than half, as rules set in place by the previous 
administration provide, effectively removes millions of dollars 
intended to help our communities provide the increased services and 
infrastructure necessary to accommodate the industry.'' Congress, in a 
rush to ``accelerate'' oil shale, has yet to discuss in any serious way 
the potential impact development would have on local governments. To 
conclude, as the PIONEERS Act does, that Congress should force the BLM 
to levy low royalties at the expense of taxpayers without first 
examining the fiscal impacts on local governments is extremely 
troubling.
    At Congressman Lamborn's oil shale hearing in Grand Junction in 
August 2011, Jim Spehar, the former Mayor of Grand Junction, Colorado, 
raised this very issue. As Spehar stated in written testimony:
        ``Whether you oppose or support oil shale development, it's 
        irresponsible not to be planning now for potential development 
        and the possible impacts. That examination of impacts demands 
        more than just a science project. But current research is 
        focused primarily on technology, not the broad range of social, 
        economic, environmental and other community impacts that will 
        result if the technical research is ultimately successful. Just 
        as the industry desires certainty in what's required of it, so 
        do communities deserve that same degree of certainty as to what 
        the expectations of will be of their local governments, non-
        profits and other agencies, schools, hospitals, for 
        infrastructure and services associated with the development of 
        this industry.''
    Instead of following this sage advice and examining the impacts of 
foisting an unproven industry on local governments with incredible 
unknowns, Congress instead is now trying to subsidize industry and tear 
down the BLM all for a gamble on oil shale--one that has been a losing 
bet for 100 years. Lost in this shuffle are the real impacts on local 
governments, rural agriculture, and communities.
    The reviews that the BLM is undertaking--the reviews this Act seeks 
to upend--are critical to understanding these and other impacts. It is 
reprehensible for Congress to subsidize large, highly profitable 
corporations at the expense of local communities, while also attempting 
to undermine two extremely important reviews that the BLM is 
undertaking. Companies such as ExxonMobil, Chevron, and Shell can 
afford to pay the costs of their own research.
Gambling on Oil Shale at the Expense of Real Jobs and Western Economies
    Just as local governments would feel the impacts of potential 
development, so too would our ranchers, farmers, water districts and 
others whose livelihoods rely on access to clean air and water.
    The PIONEERS Act, by working recklessly to ``accelerate'' potential 
oil shale development, might be asking western communities to trade 
real jobs we have right now in the agricultural, tourism, and outdoor 
recreation industries for the promised, but never delivered, employment 
from oil shale.
    In 2008, the BLM determined that large-scale development of oil 
shale--the goal of the PIONEERS Act--would fundamentally change the 
face of western Colorado. Currently, our communities and economies are 
agriculture based, but also benefit from diverse income sources such as 
recreation, hunting, fishing, retirement, colleges, tourism, and real 
oil and gas energy production. The BLM forecasts that if large-scale 
industrial oil shale development were ever to become possible, it would 
dry up our farms and ranches, diverting scarce water supplies to 
industrial uses, thereby changing the economic and social fabric of our 
communities.
    In fact, major corporations already have extensive water rights 
that they could use for oil shale speculation. As Congressman Lamborn 
knows, using large quantities of water for oil shale, as the BLM, GAO, 
Rand Corporation and Colorado water users have concluded would be 
needed, would have profound impacts on the state and on economies. Utah 
would face similar challenges. As a rancher I have huge concerns with 
the potential impacts to agriculture oil shale development would bring. 
When coupled with existing massive oil and gas production, the 
cumulative impacts could be staggering.
    It is for these that Ken Neubecker, the executive director of the 
Western Rivers Institute and a past president of Colorado Trout 
Unlimited, offered this sage advice in written testimony to the House 
Natural Resources Committee:
        ``Taken in isolation the water needed for full oil shale 
        development is legally and physically available. However, as 
        Wayne Aspinall noted `In the West, when you touch water you 
        touch everything.' Water in the West is no longer a resource to 
        be developed; it is a fully developed resource. Simply put, the 
        water needed for oil shale development will come from someone 
        else's current or planned use. It will have water supply 
        implications far beyond the boundaries of the open spaces of 
        northwest Colorado, eastern Utah and southwest Wyoming.''
    Hunting and fishing is also central to our region. Not only are 
these activities part of who we are as a people, but they are also a 
central part of our economies. Already oil and gas development in the 
Piceance Basin is impacting herds. Rushing potential large-scale oil 
shale development on top of this existing energy framework, as the 
PIONEERS Act seeks to do, could be devastating to this important 
industry.
    One final issue this committee should examine is the energy demands 
and associated impacts on our air and water. Independent studies by Dr. 
Adam Brandt at Stanford and Dr, Cutler Cleveland have concluded that it 
might actually take more energy to develop oil shale than the amount of 
energy that can be recovered from oil shale. The reason is the huge 
energy demands associated with production. The BLM estimated that 
producing just 100,000 barrels of oil per day from oil shale would 
require 1.2 MW plant with enough capacity to power 1.2 million homes 
each year. Those power plants do not yet exist, and that is a 
significant hurdle for development. If companies use natural gas to 
power production, the demands would likewise be astounding. To produce 
2,400 MW, a very efficient combined cycle gas power plant would require 
approximately 135 BILLION cubic feet of natural gas,\1\ or about 10% of 
Colorado's gas production. The fuel bill would be about $600 million 
per year.
---------------------------------------------------------------------------
    \1\ There is roughly 1000 Btu per cubic foot of gas. A 2400 MW 
combined cycle power plant would generate about 18 million MWh per year 
at an 85% capacity factor. The heat rate might be 7.5 MMBtu/MWh, 
implying 135 billion cubic feet of gas per year.
---------------------------------------------------------------------------
    Industrializing the local landscape brings massive amounts of air 
pollution. Communities in Wyoming, Colorado and Utah are already 
experiencing worse air from natural gas development than Los Angeles. 
The cumulative impacts of oil shale and oil and gas development must be 
understood, as poor air would not only compromise public health but 
would also seriously impact other sectors of the tourism and outdoor 
recreation industry.
Closing
    I support Interior Secretary Ken Salazar commitment to take a fresh 
look at two key decisions that were rushed to at the end of 2008 
regarding oil shale. As a rancher I too am concerned about what we are 
getting into with oil shale and the amount of water that commercial 
development might require. Ensuring oil shale doesn't steal or pollute 
my water or that of my neighbors requires moving carefully, and I 
support Secretary Salazar's caution. I also support the strong work by 
the BLM to ensure that stakeholders from across the West have a seat at 
the table in this decision. Understanding the impacts before proceeding 
with oil shale commercial development is just common sense--but it is 
common sense that this legislation seeks to undermine.
    In summary, I would again like to thank the committee for the 
opportunity to testify today.
    I sincerely urge the committee to consider the dangers in rushing 
ahead with oil shale speculation and the serious cost that it could 
bring to western rural communities and local economies.
    I urge the committee to vote ``no'' on the PIONEERS Act and allow 
the current BLM stakeholder process to move forward so that everyone 
has a voice in this incredibly important decision.
                                 ______
                                 
    Mr. Lamborn. OK. Thanks for your testimony.
    We will now shift gears and hear testimony on our fourth 
bill that we are considering today.
    And Mr. Gardner?

             STATEMENT OF J. STEVEN GARDNER, P.E., 
                  PRESIDENT AND CEO, ECSI, LLC

    Mr. Gardner. Thank you, Mr. Chairman.
    My name is Steve Gardner. A little background: I grew up on 
a tobacco farm in the Appalachian region of Kentucky. I went to 
the University of Kentucky and got a degree in agricultural 
engineering, but by some fluke turn of life I ended up working 
in the coal industry, doing primarily reclamation and 
environmental work in the Appalachian region. I went back to 
school, then got a degree in mining engineering and 
environmental systems. I now work as a consultant, have been 
working in and around the mining industry for about 36 years 
now.
    Our firm, ECSI, was a subcontractor on the Polu Kai 
Services team as part of the EIS for the stream protection rule 
proposed by OSM. Approximately 2 years ago, I received a call 
from OSM, who asked if ECSI would be interested in being 
involved in the EIS. The stated reason was ECSI's reputation, 
both in the regulatory and the regulated community.
    OSM intended the process to be a minority small-business 
set-aside contract so they could issue it quickly, and OSM was 
recommending subcontractors for the team. That was to include 
ECSI; Morgan Worldwide, who is recognized for their work in the 
environmental community; and a national geotechnical firm. It 
was our understanding that OSM had a preferred minority 
business contractor for the project.
    In due course, we received a call from PKS. They planned to 
retain MACTEC, a large national consulting group, for the 
geotechnical and some of the environmental aspects of the 
project; Morgan Worldwide; Plexus Scientific for their NEPA 
experience; and then our firm.
    In June of 2010, there was a kickoff meeting here in D.C. 
with OSM. We learned that OSM had assembled internal teams for 
the rule writing and for the EIS. An immediate issue that came 
up was the short time frame for the project. Many of the OSM 
team members were concerned about that, as well, and they 
advised us that they thought it was likely that time extensions 
would be granted, and additional budget increases, to 
adequately prepare the EIS. Also at that time, we were given a 
copy of the proposed rule, dated May 25, 2010.
    There were two other key issues that were brought up at 
that time. OSM, at that point, did not believe that public 
meetings were necessary. The NEPA experts on the team said it 
was absolutely required. And after long debate, Director 
Pizarchik was called in, and the decision was made to conduct 
additional scoping. That essentially delayed the process 4 
months right off the bat.
    It was also unclear to the PKS team if the proposed rule 
applied to underground coal mining methods. That question was 
repeatedly posed to OSM over the weeks. It was not until 
several months in to the project that OSM finally told us that 
the proposed rule would be applied to underground mining. This 
took the team by surprise and also many of the OSM personnel 
present at that meeting by surprise.
    The team felt that that last-minute inclusion of 
underground mining impacts was a major change of scope and 
budget and requested additional time and money. OSM denied that 
request and then insisted that the underground mining had been 
part of the original scope all along. That disagreement is well 
documented in the record.
    After the 4-month delay for scoping, OSM began to embed its 
own engineering and science personnel into the various 
contractor working groups, ostensibly to speed up the process. 
One subgroup was formed to perform the production impact 
analysis based on the alternatives. That subgroup included 
members of our firm, Morgan Worldwide, PKS, and OSM personnel.
    As an additional validation of that process, it was 
proposed that selected coal companies from across the country 
be surveyed to get their input on what the production impacts 
would be. OSM originally approved that approach, but then 
hours, literally hours, before us sending that survey out, OSM 
withdrew its approval.
    The coal production impacts that were forecast under each 
alternative were then distributed to the rest of the PKS team, 
including those members performing the economic analysis. Those 
production impact numbers were then used to predict the job 
impacts nationwide. After that information was leaked, then at 
a team meeting here in D.C. OSM suggested that the PKS members 
revisit the production impacts and associated job loss numbers 
with different assumptions. That, obviously, would then lead to 
a lesser impact.
    The team was concerned about a very specific instruction 
from OSM to make the assumption that the 2008 stream buffer 
zone rule was in effect and being enforced across the U.S. At 
that time, which was, of course, not true. The PKS team 
unanimously refused to use a fabricated baseline scenario to 
soften the production loss numbers.
    Thank you for this opportunity to present a different side 
of this story.
    [The prepared statement of Mr. Gardner follows:]

    Statement of J. Steven Gardner, PE, President and CEO, ECSI, LLC

    My name is Steve Gardner. I am President and CEO of ECSI, LLC, an 
engineering consulting group based in Lexington, Kentucky. ECSI's core 
business is mining, in particular coal mining in the United States. 
ECSI was subcontracted by Polu Kai Services (PKS) as subject matter 
experts to assist with the EIS for the Stream Protection Rule.
    Approximately 2 years ago, I received a call from someone at OSM 
who asked if ECSI would be interested in being involved in drafting the 
Stream Protection Rule EIS that was going to be contracted. He stated 
that the reason ECSI was being approached as a recommended 
subcontractor was our reputation with both regulatory and regulated 
community. OSM intended the process to be a minority/small business set 
aside contract so that they could issue quickly. OSM was recommending 
subcontractor teams to be ECSI, a national geotechnical firm, and 
Morgan Worldwide (recognized for their work in the environmental 
community).
    In conversations with OSM personnel, it was our understanding that 
OSM had a preferred, minority business contractor who would contact 
ECSI. In due course, we received a call from PKS who was responding to 
an RFP issued by OSM to perform an Environmental Impact Statement on 
the Proposed Stream Protection Rule. PKS advised us that they were 
assembling a team of consultants to perform this complicated, 
nationwide programmatic EIS and that they were looking at our firm to 
be the mining experts on the team. They were also retaining MACTEC, a 
large national consulting group to perform geotechnical and 
environmental aspects, Morgan Worldwide to contribute their mining and 
environmental expertise to complement and balance our involvement, and 
Plexus Scientific for their NEPA experience, project management, 
logistics and final EIS drafting. ECSI assisted PKS in preparing the 
proposal and budget, and eventually a contract was issued to PKS. We 
assembled a team of experts in mining. These included nationally 
recognized academic experts in mining, hydrology, and reclamation (some 
of whom are experts that OSM has utilized on a routine basis).
    The EIS project kicked off in June 2010 with a meeting in DC 
between PKS, the subcontractors and OSM's team. During that meeting, we 
learned that OSM had two teams assembled. One was a rule writing team 
and the other an EIS team. An immediate issue that came up was the 
short timeframe within which OSM wanted the EIS prepared. PKS and the 
subcontractors voiced their collective concern that the accelerated 
timeframe was overly ambitious. OSM team members agreed and advised 
that there would likely be time extensions granted and budget increases 
to adequately prepare an EIS of this magnitude. The original date for 
delivery of the Draft EIS was February 2, 2011. The assignments were 
allocated and ECSI was charged with reviewing the concepts of the 
proposed rule and predict production impacts nationwide. A copy of the 
draft rule dated May 25, 2010 was provided to the PKS team at that 
time.
    There were two key issues that the PKS team brought to OSM's 
attention during that kickoff meeting, pertinent to the EIS and NEPA 
process:
          OSM did not believe that public meetings were 
        necessary, and that the Notice of Intent (NOI) and request for 
        public input within the NOI, as published in the Federal 
        Register, was adequate. Virtually everyone on the PKS team 
        agreed that the NEPA process called for public meetings to be 
        held so that affected communities could comment. The PKS team 
        convinced OSM of the necessity of public meetings, which added 
        approximately 4 months to the process. Public meetings (termed 
        ``open houses'') were held across the country. These meetings 
        were poster sessions where the various alternatives for the 
        rule were outlined and the public was given the opportunity to 
        submit written comments or oral statements.
          It was unclear to the PKS team if the proposed rule 
        applied to underground coal mining methods. That question was 
        repeatedly posed to OSM, and several months into the project at 
        a team meeting in Atlanta, the PKS team was informed that the 
        decision had been made that the proposed rule would be applied 
        to underground mining. This took both the PKS team and many of 
        the OSM personnel present by surprise. The PKS team received a 
        letter dated October 7, 2010 from OSM stating that it was 
        disingenuous to suggest that the rule did not apply to 
        underground mining. The PKS team felt that the last minute 
        inclusion of underground mining impacts was a major change in 
        scope and schedule to the EIS, and requested additional time 
        and budget to properly evaluate the impacts. OSM denied this 
        request and insisted that underground mining had been part of 
        the original scope of work all along and that the contractors 
        were well aware of this. This disagreement is well documented 
        in the record.
    After this initial 4 month delay for scoping meetings, OSM began to 
embed its own engineering and science personnel in the various 
contractor EIS working groups, ostensibly to speed up the process.
    To determine impacts on coal production under the various 
Alternatives, including the proposed rule (termed the ``Preferred 
Alternative''), ECSI planned an analysis of production impacts 
utilizing ``typical mine'' models of all mining methods from each coal 
producing region, and applying Alternatives to those mines to determine 
production impacts. However, that effort proved to be impossible within 
the prescribed schedule and budget. As an alternative to the ``typical 
mine'' analysis, an Expert Elicitation methodology was proposed and 
approved by OSM. That methodology and the major assumptions are 
described in detail within the Draft EIS at Section 4.0.6.1, as 
submitted by PKS on February 23, 2011. A subgroup was formed to perform 
the expert elicitation production impact analysis, which included 
members of ECSI, Morgan Worldwide, PKS, and OSM personnel. As an 
additional validation of the elicitation process, ECSI proposed that 
selected coal companies from each coal region be surveyed on what they 
believed the production impacts would be under each Alternative. OSM 
originally approved of this approach, but hours prior to sending the 
survey out, OSM withdrew its approval.
    Coal production impacts under each Alternative were forecast and 
the results were distributed to the rest of the PKS team, including the 
team members performing economic analyses. The production impact 
numbers were then utilized to predict job impacts nationwide.
    A joint PKS and OSM team meeting was held in February in OSM's 
offices in DC. During this meeting, OSM ``suggested'' that the PKS team 
revisit the production impacts and associated job loss numbers, and 
with different assumptions that would then change the final outcome to 
show less of an impact. The EIS team unanimously told OSM that it was 
not appropriate to change assumptions just to get a different answer. 
The team was also very concerned with the specific instruction from OSM 
to make the assumption that the 2008 Stream Buffer Zone (SBZ) Rule was 
in effect and being enforced across the U.S., which was not true. No 
state with an approved SMCRA program had promulgated the 2008 SBZ Rule, 
especially since the rule itself was subject to the litigation which 
brought about the SPR. If the PKS team assumed that the 2008 SBZ was in 
effect as part of the baseline existing environment, the nexus from the 
SBZ to the SPR would show less production, and therefore less job loss 
impact. The PKS team unanimously refused to use a ``fabricated'' 
baseline scenario to soften the production loss numbers.
    In order to meet the revised February 23, 2011, deadline for 
submission of a Preliminary Draft EIS, the PKS team inserted 
``placeholders'' in the narrative of the document and a general 
disclaimer into the document to succinctly describe the situation with 
respect to OSM's change in instructions to the PKS team, assumptions 
and baseline data:
    ``[NOTE--As a direct result of recent instructions from OSM, the 
production impact analysis with a baseline thermal energy balance 
adjustment using the 2008 EIA production figures will be changed to a 
production/benefits analysis using the 2010 EIA dynamic production 
forecast as the baseline without a static thermal balance component. 
Section 4.06, Methodology, will be revised to reflect the new OSM-
approved methodology. In addition, OSM has indicated that:
          the SPR implementation timeline should be shortened 
        from the previously approved 12 years to 8\1/2\ years;
          that Chapter 2 may be further modified (Alternative 5 
        as previously approved may not reflect the current rule 
        provisions and other Alternatives may have to be modified to 
        reflect these changes); and
          that the production impacts/benefits should be tested 
        by applying the alternative analysis to typical mines for each 
        Region.
    These new instructions will likely require substantial changes to 
Chapter 4, as well as changes to Chapter 2.]''
    It is important to note that Chapter 2 of the EIS is the 
description of all Alternatives, including the ``Preferred 
Alternative,'' upon which the entire EIS impacts analysis is based.
    Shortly after the February meeting with OSM in DC, the PKS team 
received a notice that the contract with PKS was not going to be 
renewed.
    I had the opportunity to review the testimony of Joseph G. 
Pizarchik, Director of OSM during the November 4, 2011, Subcommittee on 
Energy and Mineral Resources Hearing and would like to address comments 
made during the hearing:
        1.  Mr. Pizarchik made the statement that the job loss numbers 
        were ``placeholders'' and were ``fabricated.'' As I have 
        previously stated, the EIS team, which included OSM personnel, 
        performed the analysis to the best of its ability given the 
        deadline and budget. When OSM did not like the result of the 
        analysis, OSM asked that the team change the baseline 
        conditions and use alternative assumptions to alter the coal 
        production and job loss numbers.
        2.  Plagiarism was alleged against the PKS team in drafting the 
        EIS. Under NEPA, it is preferred that the drafters of an EIS 
        utilize as much existing information as possible and not 
        ``reinvent the wheel.'' While I cannot speak for the entire PKS 
        team, ECSI utilized text from previous EIS documents, as 
        directed by OSM, where appropriate and cited those documents in 
        its references. In fact, ECSI posed the question to OSM 
        personnel of whether we should simply cite previous EIS 
        documents or if we should put the actual text in the SPR EIS. 
        ECSI was directed by OSM to put the text in the SPR EIS rather 
        than merely cite to another document for ease of the reader.
        3.  Despite Mr. Pizarchik's claim that OSM was at ``arms 
        length'' during the process, OSM personnel were intimately 
        involved in the EIS throughout.
    Thank you for the opportunity to appear before the Committee today 
to testify about our involvement with the Stream Protection Rule EIS.
                                 ______
                                 
    Mr. Lamborn. All right. Thank you.
    Mr. Zaluski?

                   STATEMENT OF JOE ZALUSKI, 
              EXECUTIVE VICE PRESIDENT, ECSI, LLC

    Mr. Zaluski. My name is Joe Zaluski. I am the Executive 
Vice President of ECSI.
    And Steve has gone through quite a bit of what we did as a 
subcontractor to Polu Kai. We were the subject-matter experts; 
we were not the NEPA experts or the EIS experts. And in 
preparing for today, I listened to Director Pizarchik's 
testimony here before this same Committee and take sharp issue 
with him in regard to five areas at least.
    He challenged the qualifications of the subcontractors, and 
Steve has already addressed some of that, ECSI's expertise as 
well as Morgan Worldwide. Personally, I retired from the 
practice of law in 2009, but for 35 years all I did was SMCRA 
work. It is kind of an old country song: I did SMCRA before 
there was a SMCRA. I was up here with Mo Udall, actually, when 
SMCRA was being drafted, and helped in that regard, and my good 
friend to my left, as well. So all I have done for 35 years is 
SMCRA work, and I think I know the subject.
    I take issue with Director Pizarchik's testimony in regard 
to our qualifications, as I said. He seemed to intimate that 
the methodology used by the team to predict coal production 
shifts and job loss was some sort of hands-off with OSM. It is 
not true; OSM was intimately involved. And, Mr. Chairman, we 
supplied you and the Committee with rather lengthy materials, 
and everything that Steve and I will testify to is supported by 
emails or conversations with OSM.
    The Director implied, I think in response to Congressman 
Johnson's question, that OSM didn't give us any assumptions on 
which to base production shifts and job losses. That is not the 
case. We were given very specific assumptions; I will be glad 
to talk about those if we have the time. And that ties directly 
to the placeholder comment made by the Director, somehow 
implying that the team did sloppy work, ran out of time, and 
stuck something in as a placeholder.
    In the documents tendered to OSM at the very beginning, 
there is a footnote that says, these are placeholders because 
OSM at the last minute, as Steve mentioned, changed the 
assumptions. They changed the assumptions so markedly that 
there was no time to go back and rerun the numbers. And, in 
fact, as Steve said, one of the assumptions they wished to 
change the surface mining experts refused to accept.
    There was an email early on in the process--as Steve said, 
we were asked to send out our thoughts and our mapping and 
production shift impacts to selected members of the industry. I 
believe we were required to do that by contract. At the last 
minute, literally at the last minute, we checked with OSM and 
said, OK, here is the package we are going to send out, here is 
what we are going to say, and here is who it is going to. I 
received an email back in red--and I didn't know you could send 
emails in red, to be quite honest--and it said under no 
circumstance are we to do that, and then an email relaying a 
conversation with the Director by an OSM senior person who said 
that the Director's position is non-negotiable on this and 
violations would have extreme consequences. Not exactly a great 
working relationship.
    As Steve said, I think contrary to what the Director 
indicated, OSM was heavily involved in this process. They 
embedded dozens of their people into the team, so much so that 
we started in June and by October we had participated in so 
many extra conference calls, meetings, whatever, with OSM 
personnel--because I think the folks working on this were as 
confused as we were--that we were running out of budget. We 
were going to ask for more money to get our project done 
because we had spent hours and hours and days in meetings that 
were not scheduled.
    I personally believe, having been involved in SMCRA since 
the beginning of time, that this was about a 3-year process 
that they were trying to get done in 15 minutes. It just didn't 
work.
    I would conclude to say that the initial OSM regulations, 
SMCRA regs, and the permanent program took years to accomplish, 
with lots of input from State agencies and sister agencies. Mr. 
Chairman, I think in support of the legislation that is pending 
here today, we need to take that time to better think out what 
needs to go forward here and not just run and try to get it 
done in a very short period of time. I think the experts 
involved asked very hard questions of OSM that they simply 
could not answer.
    I thank you for your time.
    [The prepared statement of Mr. Zaluski follows:]

     Statement of Joseph J. Zaluski, Executive Vice-President, ECSI

    My name is Joe Zaluski, I am Executive Vice-President of ECSI, LLC, 
an engineering consulting group based in Lexington, Kentucky. ECSI was 
subcontracted by Polu Kai Services (``PKS'') as a subject matter 
experts to assist with the EIS for the Stream Protection Rule.
    In preparation for addressing you today, I watched the entirety of 
recent testimony by Director Pizarchik before this Committee. I would 
like to comment on several statements made by the Director.
    We have submitted materials to the Committee for your review and 
those materials are rather voluminous. I do not know if they were also 
supplied to you by the Office of Surface Mining. They have been 
supplied to you today as a result of this Congressional Inquiry.
    First, as to the credentials of the subject matter experts, I 
respectfully disagree with any implication that the team was not well 
qualified. If you wish to elaborate upon that during the question and 
answer period, I will be glad to do so. However, as to ECSI, I can tell 
you that the President of the company, Steve Gardner, has spent nearly 
30 years in the mining consulting business in virtually every aspect. 
He is a Professional Engineer and has been involved in various state 
and national legislative efforts concerning mining, as well as the 
every day permitting and operational aspects of all types of mining 
operations. He is extraordinarily active in national organizations and 
has been recognized by them for his achievements.
    Without taking up too much time, I can advise that I became 
involved in SMCRA before there was a SMCRA. As an attorney, I first 
worked for the Commonwealth of Kentucky while SMCRA was being lobbied 
in Congress. I began my career involvement with the regulation of 
surface and underground mining at that time and have continued, 
literally, ever since. I helped draft part of SMCRA, I served on the 
first regulation drafting committee with Walter Heine who became the 
first Director of OSM in 1978; and participated in the adoption and 
drafting of the first SMCRA based regulations. I helped in the drafting 
of Kentucky's program, both at the regulatory and statutory level. I 
have been involved with mining in virtually every aspect, not just with 
rule making, but from the permitting, problem solving and litigation 
perspective. I have been involved at the local and national levels and 
believe that I am well respected by counsel and other professionals on 
virtually every side of the mining issues that have arisen over the 
years. I served as one of the first chairmen of the Natural Resources 
Section of the Kentucky Bar Association; and have served as President 
of the Energy and Mineral Law Foundation, a nationwide nonprofit 
academic and continued education organization celebrating its 30th year 
in existence. I have published in this area and know the subject matter 
very well. I hope that is why I was asked to participate in this 
process.
    Contrary to the Director's intimation that the subcontractors were 
inept, I believe that the train wreck of an attempt at an EIS was 
caused by OSM's constant change in direction, instructions, assumptions 
and restrictions. All that is well documented in the materials we have 
supplied to the Committee. In fact, an email that will give you some 
idea as to the relationship between OSM and the contractors is dated 
December 15, 2010.
    We were developing impacts to various types of mining across the 
nation and believed that our contract specifically required us to 
solicit industry input on the impact of various alternatives on various 
types of mining operations across the country. We had packaged up 
material and had lined up several companies to review our work. At the 
last moment before sending the material out, we contacted OSM to advise 
them that we were about to undertake that step. We received an email 
back through Polu Kai that was written in red and stated ``under no 
circumstance is the internal workings of this team and/or the rule team 
to be released to outside parties. See suggestions below.'' The actual 
email from OSM to Polu Kai stated as follows:
    As per my meeting with OSM Director Joe Pizarchik, no part of the 
SPR rule text or EIS are to be sent to any parties for the purposes of 
the EIS preparation at any time. He indicated that this direction is 
non-negotiable, and that violations would have extreme consequences.
    His alternative suggestions for how to proceed are two-fold:
        1.  Contractor team members working with OSM staff should 
        develop our ``best estimates'' based on sound science and 
        engineering, and provide those as a part of the draft EIS. He 
        and I chatted about the possibility of error, but agreed that 
        the comment period for the draft EIS will give the opportunity 
        for all sides to provide us with additional information. 
        Additionally, he indicated that we should be able to explain 
        exactly how the numbers and assumptions for impacts to coal 
        production were derived, including being able to explicitly 
        list all factors used by the consultants to generate their 
        estimates.
        2.  The Director suggested that we develop an internal team of 
        mining engineers and other appropriate experts from OSM and 
        other federal agencies to ``peer review'' the methodology used 
        by the consultants. His suggestion was to include mining 
        engineers in OSM regional and field offices, USGS, BLM and 
        other DOI and non-DOI federal agencies.
    My suggestion is that we have a call tomorrow to strategize on how 
best to proceed.
    I think that email really sums up the relationship between OSM and 
the EIS team. The contractors were threatened with ``extreme 
consequences;'' and in the alternative suggestions from the Director 
makes it very clear that OSM understood that ``best estimates'' would 
be used; and, in the second paragraph, that there was a very close 
working relationship between OSM and the EIS team. This was certainly 
not the impression that the Director left when he testified before you.
    Having been involved in the SMCRA at the national level and the 
rulemaking at that level, as well as at the state level, I and others 
stated to OSM at the kickoff meeting for the EIS that the schedule for 
accomplishing this task was absurdly short. A reasonable schedule for 
this process, which should have involved all regulatory authorities, 
state and national, should easily have been set for three years.
    Contrary to what the Director stated, OSM was intimately involved 
throughout this process with not only regularly scheduled face-to-face 
meetings and telephone conferences, but constant phone calls and 
emails--most with conflicting instructions. As you will see from the 
documents supplied to the Committee, OSM embedded dozens of its 
employees into the EIS Team. We met with them constantly. They approved 
methodologies, especially with regard to production shifts. They 
supplied the team with assumptions for financial models. Examples of 
the assumptions would include which production numbers to use 
nationwide and requirement that as we determined production shifts that 
we maintain a national thermal balance. These instructions came 
directly from OSM.
    The assumptions that we were directed to take by OSM, contrary to 
the Director's testimony, are set forth in the exhibits to the February 
15, 2011, letter tendered to the Committee. In addition to the February 
15, letter I just referred to, there is a second letter dated February 
23, 2010, to the OSM contracting officer responsible for the 
implementation of the consulting contract with PKS and subsequently 
ECSI, LLC. I direct your attention in particular to the tab entitled 
``PKS Detailed Response to OSM Cure Notice,'' pages 1-20. Every 
statement made in that section is well documented by emails, letters 
and other exhibits attached to that same letter.
    I would direct attention to the following:
    Attachment 1--OSM, in December 20, 2010, confirms the methodology 
proposed by the contractors for determining production shifts, if any.
    Attachment 2--as late as February 6, 2011 the consultants are still 
attempting to resolve with OSM the baseline for calculating production 
shifts. This was approximately 2 days before OSM issued its Cure 
Notice.
    Attachment 4--is also worth noting that OSM at this time had 
reversed its position that the national thermal balance had to be 
maintained during implementation. These changes were very significant 
as far as their impact on the work of the EIS team.
    Attachment 5--Bill Winters of OSM on February 18, 2011, changed the 
implementation timeline from 8 \1/2\ years to 12 years. This would be 
another significant change that would likely affect production shift 
and job loss.
    Let me conclude my remarks by again reflecting back on the 
development the initial SMCRA regulations and what is known as the 
permanent program. The process took years to accomplish with the input 
from states that had mining within their borders. A great deal of time 
and expertise went into that effort. The Stream Protection Rule, 
although it may have a fairly innocent and noble name, seeks to rewrite 
the very heart of the entire program. To try to accomplish this in 
short order was a mistake, a big mistake. The experts involved asked 
very pointed questions of OSM that simply could not be answered.
    Thank you for this opportunity.
                                 ______
                                 
    Mr. Lamborn. All right. Thank all four of you for being 
here today--excuse me, we have another witness.
    Professor McGinley, please share your testimony. Then we 
will launch into our questions.

   STATEMENT OF PATRICK C. McGINLEY, PROFESSOR OF LAW, WEST 
               VIRGINIA UNIVERSITY COLLEGE OF LAW

    Mr. McGinley. Thank you, Mr. Chairman. Thank you for 
inviting me to testify today.
    Mr. Chairman, Congressman Johnson, the proposed bill, the 
Coal Miner Employment and Domestic Energy Act, laudably seeks 
to address the plight of coal field communities. The lack of 
jobs and opportunities there is heart-wrenching and 
unacceptable. For more than a century, an economic boom-bust 
cycle has resulted in chronic unemployment, poverty, and lack 
of opportunity in many of the communities that provide the coal 
that generates 50 percent of our Nation's electricity.
    Part of my written testimony offers a view of this 
historical context, and I will not repeat that this morning. 
Let me turn first to some important facts.
    Since the enactment of the Federal Surface Mining Control 
and Reclamation Act of 1977, coal production in the United 
States has increased significantly, while the number of coal 
mining jobs has dropped precipitously. The loss of jobs in the 
coal fields is not related to regulation. It is related 
directly to the mechanization of coal mining.
    Interestingly, there was a stream buffer zone rule that was 
in effect beginning in 1982, imposed by Secretary Watt's OSM in 
the Reagan Administration, and it remained in effect until 
2008. There was a time when there were no complaints about the 
stream buffer zone rule, but when much larger equipment moved 
into central Appalachia to remove more and more of Appalachian 
Ridge tops, what happened was that the buffer zone rule was 
simply not enforced, and OSM and the State regulatory agencies 
looked the other way while the violation of law continued.
    Interestingly, today, after long downward trends, coal 
mining jobs in West Virginia and other central Appalachian 
States are on the upswing. The Mine Safety and Health 
Administration released information only last week showing that 
the number of mining jobs have reached the highest level in 
central Appalachia in a decade, and East Coast coal exports are 
nearing the capacity point.
    That said, more jobs and better protection of the 
environment in coal field communities is imperative. In my 
view, the proposed bill, with all due respect, will deliver 
neither.
    Notwithstanding its praiseworthy goal, the language of the 
five subsections of the bill contain terms that are 
extraordinarily vague and, therefore, unenforceable. The bill 
provides no definitions by which to measure the loss of jobs or 
coal production. The geographical and temporal limits of the 
bill's prohibitions are undefined.
    This bill, if enacted, would trigger the law of unexpected 
consequences, I would submit. Enactment of the bill has the 
potential to make regulation less predictable for a coal 
industry crying out for predictability.
    One need not look far to find ways to use existing law that 
could have the impact of producing jobs. SMCRA moneys in the 
AML Reclamation Fund should be released. Billions of dollars of 
reclamation from prior pre-SMCRA mining remains to be done, and 
these jobs are shovel-ready.
    Section 515(c)(3) of SMCRA requires that, in order to 
obtain a permit for mountaintop removal mining, a cooperator 
must propose to the regulatory agency either an industrial, 
commercial, agricultural, residential, or public facility as a 
post-mining land use. The law requires an MTR permit applicant 
to present specific plans for proposed post-mining land use and 
assurances that it will be obtainable according to expected 
need and market, that public facility investment is ensured, 
and that there is private financing to complete the proposed 
use.
    In short, SMCRA says no post-mining development, no jobs, 
no MTR mines. But one can search the tens of thousands of acres 
mined by MTR methods and find only scant evidence of the 
required industrial, residential, commercial, and other post-
mining economic development there. Rather than a field of 
economic dreams fulfilled, one finds fields of weeds and few 
jobs.
    Thirty-five years after SMCRA was enacted, one should ask 
the coal industry and regulators, where is the post-mining 
development on these mine sites? Where are the jobs? Why has 
this explicit mandate of post-mining economic development of 
SMCRA been ignored?
    Our coal mines are safer today because of mine safety 
regulation, but they are still not safe enough. Enforcement of 
SMCRA and the Clean Water Act has reduced pollution in coal 
mining externalities, but not enough. Regulations that save 
lives and protect communities are not an enemy of job creation; 
they are a necessary companion of economic development.
    I would be glad to answer any questions and provide any 
additional information that may be helpful to the Committee.
    [The prepared statement of Mr. McGinley follows:]

          Statement of Patrick C. McGinley, Professor of Law, 
                West Virginia University College of Law

    Chairman Lamborn, Representative Holt and members of the Committee, 
thank you for inviting me to testify today on the proposed ``Coal Miner 
Employment and Domestic Energy Act.''
    Since 1975, I have been a member of the West Virginia University 
College of Law faculty where I am presently the Judge Charles H. Haden 
II Professor of Law. Prior to this, I served as a Special Assistant 
Attorney General with Pennsylvania's Environmental Strike Force where I 
enforced laws regulating coal mining and mine safety prior to enactment 
of SMCRA.
    I grew up in the Western Pennsylvania coalfields as the grandson of 
a coal miner who worked in West Virginia, Ohio and Alabama coal mines a 
century ago. My mother was born in Piper, a coal company town in the 
Cahaba coalfield of Bibb County, Alabama. From the time I joined the 
WVU faculty until the present, I have represented coalfield families 
and organizations in matters relating to SMCRA. I was honored to have 
served on then-Governor Manchin's Independent Investigation teams that 
reported on the Sago and Upper Big Branch mine disasters.
    As far as the proposed Bill--it's sponsor clearly understands the 
plight of coalfield communities--the lack of jobs and opportunities in 
these communities is be heart-wrenching. I know because I have friends 
and family who live and work in the coalfields. However, the lack of 
employment is not new to the coalfields. For more than a century a 
economic boom-bust cycle has visited the best of times and the worst of 
times upon those communities that provide fuel that generates fifty 
percent of our nation's electricity.
    It should be noted, however, the since SMCRA was enacted in 1977, 
coal production has increased dramatically. The loss of jobs in the 
coalfields is related directly to mechanization--the ingenuity of 
mining engineers--who have brought giant drag-line shovels to strip 
coal from mountain ridges and longwall mining that gouges two mile long 
swaths of a coal seam--a mile wide--from below the earth's surface. The 
mechanized mines of the 21st century are not labor intensive--but they 
produce far more coal per miner than would have been though possible 
when SMCRA was enacted. Interestingly, today, after a long downward 
trend of coal mining jobs is on the upswing. There is evidence that 
strictly regulated coal mining is producing more jobs while protecting 
the environment. That said, more jobs and better protection of the 
environment and coalfield communities is needed.
    However, the proposed bill will, in my review, deliver neither, 
notwithstanding it's praiseworthy goal. The language of the 5 
subsections of the bill contain terms that are extraordinarily vague 
and, therefore unenforceable. The bill provides no definitions by which 
to measure the loss of jobs or coal production. The geographical limits 
of the bill's prohibitions are undefined.
    Such legislation, if enacted, would trigger the law of unintended 
consequences. Enactment of the bill has the potential to make 
regulation less predictable for a coal industry crying out for 
predictability in regulation.
    The prohibition of agency power to initiate regulatory action could 
jeopardize the property, health and lived of coalfield families. 
Subsection 4, though vague, could prohibit coalfield communities from 
petitioning to have areas declared unsuitable for coal mining when such 
mining places community water supplies, homes and coalfield 
environments at risk.
    Subsection 5 places upon the Department of the Interior an 
impossible task of determining what regulatory actions might result in 
a court declaring that an unconstitutional ``taking'' of private 
property has occurred. As Justice Brennan once remarked--determining 
what is a regulatory taking is ``the equivalent to the physicist's 
search for the quark.'' Subsection 5 is simply unenforceable by any 
legal standard and also raises serious constitutional separation of 
powers concerns.
    As the goal of the proposed bill is to promote jobs and economic 
development in coalfield communities, I submit that it is important to 
understand the context in which SMCRA was enacted and has been 
administered and enforced since 1977. I examined this context in a law 
review article I wrote. I want to share this context with the Committee 
and urge it to consider the broader context before proceeding on the 
proposed bill.
    As the 1960s began, a combination of coal industry consolidation, a 
poor coal market, population exodus from coalfield communities, and the 
attendant collapse of mining employment ``made for a severe and chronic 
economic predicament'' for West Virginia's coalfield communities. West 
Virginia's unemployment rate was the nation's highest, more than triple 
that of the rest of the nation. As the coal-based economy continued to 
collapse, tens of thousands left the coalfields in search of work in 
the industrial plants of the Northeast and the nonunion textile and 
manufacturing plants of the Sunbelt.

The Coal Bust of the 1960s: New Relationships Between Coalfield 
        Communities and the Companies
    Unwilling to be stuck with camp houses, commissaries, and other 
facilities that the newly contracted industry did not need, some camp 
owners altered the relationship between themselves and the miners 
living in the company houses. This relationship continued in many 
instances for decades; even today there are former coal camps where the 
successors in interest to the first coal company masters collect rents 
from descendants of early miner occupants.
    The rent in most cases was and is consistent with the quality of 
the premises involved. For example, a 1987 Charleston (W.Va.) Gazette 
(``the Gazette'') article related that coal camp houses were being 
rented then for $15 per month. While the rental amount seems incredibly 
low, one must consider that the amount reflects what is said to be the 
first rule of real estate valuation: location, location, location. 
Associated Press reporter Jules Loh described the location of the old 
coal camp in Eureka Hollow:
        The springs from Eureka Hollow flow into Elkhorn Creek. The 
        village on its trash-strewn banks at the mouth of the hollow is 
        Eckman. You won't find it on a road map. Eckman consists of a 
        grocery store, filling station and a one-room post office. 
        Wooden planks thrown over a ditch at the uphill edge of town 
        mark the start of the road up Eureka Hollow.

        Woebegone wooden houses, many of them falling down, dot the 
        hillsides along the road. Tree limbs, like crutches, prop up 
        porches. Abandoned houses crumble alongside inhabited mobile 
        homes. Coal dust trodden into black gum replaces grass. Red 
        dog, a rust-colored mine waste turned into coarse gravel, paves 
        driveways. Automobile carcasses rot beneath clotheslines 
        burdened with patched jeans and faded shirts.

        Roosters peck around lopsided sheds, providing a staccato 
        music. Homemade pinwheels stuck in bare yards offer snatches of 
        joy.
    After closure of the mines connected to a company town, the 
landlord-tenant relationship was most frequently a ``month to month'' 
agreement. These month to month tenancies in many instances were 
honored by the coal camp owners for decades. However, as explained 
below, in the last ten years encroachment of large-scale mountaintop 
removal and longwall mining operations has often resulted in abrupt 
termination of these long relationships. With little notice, families 
whose history in an old coal camp extends back for many decades have 
been unceremoniously forced to move to make way for mining operations. 
In some instances, a whole community has been evicted. Within weeks of 
notice, homes were torched and bulldozed, leaving only empty lots where 
community and family roots had been planted and nurtured for the better 
part of a century.
    Renting coal camp houses was not the only way owners of coal camps 
sought profit. In the 1950s many coal companies chose to sell the camp 
houses to their occupants. Harry Caudill describes the sales 
``technique'' used to persuade coal camp occupants to buy the houses in 
which they lived:
        The first step in their program to ``free'' the camps lay in 
        the making of blandly optimistic statements to their employees 
        and to the general public. They gave the impression that the 
        company anticipated twenty or thirty years of uninterrupted 
        mining with their employees drawing high wages. No mention was 
        made of mechanization or of reduced payrolls. While no specific 
        promises were made, the miner and his wife were led to believe 
        the inhabitants of the camps could expect continued employment 
        at union-scale wages.
    The next step in the operators' disposition of coal camp houses was 
the announcement that they were getting out of the real estate business 
so their executives could concentrate on mining. Writing with razor-
sharp sarcasm, Caudill describes the ``con'':
        Besides, said the benevolent bosses, they wanted the miners and 
        their families to enjoy the feeling of independence and self-
        assurance that comes from home ownership. It was undemocratic, 
        the Big Bosses now declared, for the company to dominate the 
        affairs of the community. A new generation of stockholders and 
        officials wanted the people to live proudly in their own homes 
        and to govern their communities in conformity with the Great 
        American Dream. The company owners opened up offices for the 
        purpose of facilitating the sale of camp houses. Prices were 
        not exorbitant and occupants were given purchasing priority. 
        Buyers could pay through monthly deductions from their wages.
    The timing of these sales programs was excellent--for the company 
owners. Most sales occurred as the winds of mechanization began to blow 
through the industry. The timing was not so good for a miner who might 
find ``himself jobless before his home was cleared of debt, though most 
purchasers pridefully held a deed `free and clear of encumbrances' 
before the discharge notices were slipped into their pay envelopes.''
    Although nearby underground mines closed and production from the 
remaining deep mining operations continued to decline, if the new home 
owners could find work in other mines they tried to maintain and 
improve what they had purchased. Moreover, a critical distinction 
existed between coal camp rental properties, whose residents had no 
incentive to spend their often meager income on property that they were 
merely renting and houses purchased by camp residents from company 
owners. Families in the latter category generally invested in the 
maintenance, repair, rehabilitation, and remodeling of their homes to 
the extent that their income would enable them to do so. Attorney 
Gerald Stern described how families worked to improve the camp houses 
they bought from the company and the investment they made to transform 
a camp house to a home of their own:
        The miners took great pride in turning them into real homes, 
        helping each other, or even paying someone to do the work once 
        they saved enough money. An indoor bathroom, maybe new 
        electrical wiring, electrical baseboard heating, new floors, a 
        new roof, new siding to keep out the cold, maybe a new porch or 
        even a new room. Roland [Staten] and his wife Gladys spent 
        seven years remodeling House No. 20--adding a cesspool, 
        paneling, insulation, siding, a new roof and furnace, and even 
        a garage. This was no coal-camp house anymore. In those 
        communities where mining jobs could still be found, miners 
        receiving respectable middle-class wages often built modest new 
        homes so that they could continue to live near relatives in 
        what had been their homeplace for many decades.
    Of course, when a camp house was purchased and the family 
breadwinner lost his mining job and could not find another that paid a 
living wage, purchasing food and fuel for heating and cooking took 
precedence over home maintenance and repair. During the 1960s bust, and 
again in the last decade and a half of the twentieth century, many 
residents of the former coal camps found it increasingly difficult to 
maintain their homes as more and more mines closed and mining jobs 
evaporated.
    Thus, to the vicious cycle of coal industry boom and bust--long the 
dominant impediment to sustained coalfield economic development--was 
added the albatross of home ownership. Miners who purchased a coal camp 
house and abruptly found themselves on the unemployment dole without 
promise of finding work faced the horns of a dilemma. To provide for 
their families, they would be forced to migrate to another region of 
the country leaving behind their relatives, lifelong friends, and 
ancestral homeplace. And, if they decided to leave, it would be 
difficult to sell their home. If they could find a seller at all, they 
were likely to sell at a significant loss. If they stayed, there were 
no jobs and only the largess of government relief programs was 
available to sustain them.
    Faced with such a choice, many unemployed miners chose to seek work 
in other states, abandoning their homes and the life savings they often 
represented. Some who left could not establish themselves in other 
places and returned to their homeplace. Others chose to hang on, hoping 
against hope that another coal boom would begin and ``the mines'' would 
start hiring again. In the interim, unemployed miners would do whatever 
it took to survive. Roger Luster, of Eureka Hollow explained the 
quandary he and thousands of other coal camp families faced as coal 
mining jobs evaporated:
        ``It's rough, buddy. . .. This is home. This is where we were 
        both born and raised. We like it here. Until I can find work, 
        we stay. If the program I'm on runs out, well, then I guess 
        we'll have to think about moving on. Where to? Where can a man 
        with a family go with no place to set out for and no money to 
        get there? Hard as it is, we want to stay here. This hollow is 
        home.''
    Unfortunately, new underground and strip mining technology and 
other political and economic factors dashed dreams of a new boom and 
``the mines,'' as 1960s coal camp residents knew them, ceased to exist. 
Professor John Alexander Williams places the hopes of coalfield 
residents and four decades of reality into perspective:
        One measure of the social change induced by these trends was 
        the number of miners in West Virginia: more than 150,000 in 
        1945, but just over 17,000 in 1999, by which time there were 
        fewer miners in the state than there were nurses or telephone 
        solicitors. WalMart now has more employees in West Virginia 
        than any coal company, although coal industry apologists still 
        insist that ``five thousand people working at WalMarts in this 
        state don't equal 400 coal jobs.'' Michael Harrington's widely 
        acclaimed book, The Other America, captured the plight of the 
        urban and rural poor at the beginning of the 1960s. The book 
        was a phenomenon, revealing for the first time to a broad 
        national audience that the nation's post-World War II economic 
        prosperity had not reached many Americans. Harrington observed, 
        ``The millions who are poor in the United States tend to become 
        increasingly invisible. Here is a great mass of people, yet it 
        takes an effort of the intellect and will even to see them.''
    The dire circumstances of many who lived in the coal camps of 
central Appalachia was not invisible to those who took the time to 
look. But, as Harrington explained, ``looking'' took some effort:
        Poverty is often off the beaten track. It always has been. The 
        ordinary tourist never left the main highway, and today he 
        rides interstate turnpikes. He does not go into the valleys of 
        Pennsylvania where the towns look like movie sets of Wales in 
        the thirties. He does not see the company houses in rows, the 
        rutted roads (the poor always have bad roads whether they live 
        in the city, in towns, or on farms), and everything is black 
        and dirty. And even if he were to pass through such place by 
        accident, the tourist would not meet the unemployed men in the 
        bar or the women coming home from a runaway sweatshop.
    Two years before The Other America was published, one important 
observer did take the time to visit West Virginia's coal camps. Then-
Senator John F. Kennedy was shocked by what he saw and learned there 
during the state's 1960 presidential primary. That primary campaign was 
crucial to Senator Kennedy's quest for the Democratic Party's 
nomination and his later election to the presidency. As one West 
Virginia newspaper observed:
        It was important to Kennedy. . .. He won the primary, showing 
        that a Catholic could win in a predominantly Protestant state, 
        a key victory in his drive to the nomination and the 
        presidency. It was important as well because of what he saw, 
        and what the reporters and TV cameramen with him saw, at the 
        home of Burley Luster. Luster was a disabled coal miner with a 
        sickly wife and eight hungry children living in a four-room 
        shanty. Kennedy talked with them for 45 minutes and then, 
        shaken, stood on the Luster's sagging front steps and promised, 
        if elected, to press Congress for federal help in Appalachia.
    Kennedy's message from Eureka Hollow alerted America to the paradox 
of wretched poverty in an area teeming with rich resources. Professor 
John Alexander Williams relates that ``Kennedy and his entourage. . 
.traveled through West Virginia by bus and car in the early spring, 
when nature had not yet hidden the abuse of the land by mining. . .. 
The politicians and reporters following the campaign were less 
impressed by the state's scenic beauty than by its environmental scars 
and miserable roads.'' Despite the relief efforts at the federal level, 
life was as bleak as ever in the coalfields of Appalachia as the 1960s 
drew to a close.

The 1970s Coal Boom
    As the decade of the 1970s began, John Denver's song Take Me Home, 
Country Roads portrayed West Virginia as ``almost heaven.'' Denver's 
song put West Virginia residents in an upbeat mood, coming along ``at 
just about the right time'' as ``it reflected a growing feeling of 
satisfaction shared by many, if not most, citizens, a feeling that one 
of the worst chapters in West Virginia's history was closing at last.''
    The coalfield economy perked up again at the beginning of the 1970s 
as the United States attempted to come to grips with an ``energy 
crisis'' triggered by price fixing of petroleum supplies by a Middle-
Eastern cartel. The cost per barrel of petroleum soared during the 
1970s as the Organization of Petroleum Exporting Countries (OPEC) 
ratcheted up prices in response to the Yom Kippur War and the closing 
of the Iranian oil fields after the Shah of Iran was overthrown in a 
1978 Islamist coup. The U.S. economy reeled in the 1970s from the 
impact of the abrupt skyrocketing of energy prices. The nation's gross 
domestic product fell by 6% and unemployment doubled to 9%.
    In the former company towns of southern West Virginia and other 
Appalachian states, significant numbers of job postings for coal mines 
appeared for the first time in decades as electric energy producers 
shifted from petroleum to a more reliable and less costly product. In 
West Virginia alone, more than 17,000 new miners were placed on 
payrolls during the period between 1973 and 1978.
    Freelance journalist Rudy Abramson capsulized life in the 
Appalachian coalfields during the short-lived boom:
        During those fabulous days in the mid-seventies, thousands of 
        men who had left the mountains came home from distant cities to 
        dig coal. In West Virginia, Virginia, Kentucky, and Tennessee, 
        small truck mines that had been abandoned for years were 
        reopened. Nearly anybody who had or could borrow money to buy a 
        dump truck and a road grader could become a strip mine 
        operator. Bootleggers mined without permits and got good money 
        for gray mixtures of coal, slate, and rock. Spot market prices 
        soared to nearly $100 a ton and suddenly-rich independent 
        operators lived in opulence, bought luxury cars for their 
        wives, and concluded business deals on the golf course. Two and 
        a half decades after the boom, Abramson interviewed people who 
        had lived in or near the Boone County, West Virginia, town of 
        Whitesville. They described life there during the boom: 
        Saturday nights in Whitesville were reminiscent of the good old 
        days after World War II when it was hard to get through the 
        crowds on the sidewalks. Miners' families from communities up 
        and down the Big Coal River--Seth, Comfort, Sylvester, and 
        Sundial--and up from Marfork, High Coal, and Seng Creek Hollows 
        came to shop, take in a movie, and catch up on the news. You 
        could forget finding a parking place in the middle of town. The 
        good times did not last.

Coalfield Communities: 1980 to Present
    The boom of the 1970s was short. As oil prices increased in the 
1980s, and midwestern utility companies turned to cheaper western coal 
in the 1990s, the economy of the Appalachian coalfields cycled again 
into a bust phase. Another factor responsible for this shift was the 
continuing loss of mining jobs in Appalachian underground mines 
resulting from even further mechanization. In 1980, coal jobs had 
dropped by 7,000 from the boom high of almost 63,000 in 1978; five 
years later only 35,813 miners were working in West Virginia. Ten years 
later, in 1990, coal mine employment had dipped further to less than 
29,000. By 2002 less than 15,000 miners worked in the state. Today,--
ten years later--and notwithstanding SMCRA, NEPA and Clean Water Act 
requirements more than 20,000 coal miners are at work in West Virginia. 
Similar patterns of the natural resources boom bust cycle occur in most 
coalfield communities.
    The recession of the early 1980s further weakened West Virginia's 
economy. By 1984, West Virginia had the nation's highest unemployment 
rate and ``economic indicators pointed to continuing difficulties, with 
recovery trailing far behind that of the other states.''
    Another important factor in the economic plight of West Virginia 
from the 1980s to the present has been the coal industry's continuing 
political domination of state government. In 1985, the West Virginia 
Legislature enacted the ``super tax credit,'' a law supposedly intended 
to expand economic development in the state. In 1986, the legislature 
extended the super tax credits, provided that existing state companies 
increased hiring and modernized their operations. Given the grip of 
Coal industry interests on the state, it is not surprising that coal 
companies received nearly ninety percent of the total amount of these 
credits.
    This coal lobbyist-generated windfall for industry harmed the state 
economy rather than promoting economic development. One observer has 
suggested that:
        [I]n their long-range effect, they may have actually compounded 
        the very problem they were supposed to alleviate. The study of 
        the super tax credits in 1990 revealed that the number of jobs 
        in coal mining had fallen by 1,300 in spite of an increase of 
        13.3 percent in coal production. The adverse effects of the 
        super tax credits on state revenues and on the general economy 
        led in 1990 to *45 legislation to prevent coal companies from 
        using the super tax credits to avoid payments of severance 
        taxes. . .. [T]ax officials estimated that about 20% of the 
        coal mined in the state was produced free of any business 
        taxes.
    During 1985-1989, under the guise of stimulating new coal 
development, the state's Workers' Compensation Fund (WCF) slashed 
premiums paid by coal companies by thirty percent and awarded generous 
refunds to companies. By the beginning of the 1990s, the WCF faced a 
deficit of $1.2 billion.
    While West Virginia ended the 1970s in better economic shape than 
it had been in for decades, state government corruption in the 1980s 
eliminated the economic gains. Journalist Rudy Abramson interviewed 
Randy Sprouse who had lived Whitesville, West Virginia during the 1970s 
boom. Sprouse remembered the prosperity of the moment: ``You had two or 
three clothing stores, shoe stores, furniture stores, a whole bunch of 
restaurants, taverns, a movie theater, and a bowling alley. . .. 
Anything you wanted, you could get right there in Whitesville. You 
didn't have to leave Whitesville for anything.'' Whitesville today is 
depressingly different:
        Most of [what Randy Sprouse described] has been gone for years. 
        The sidewalks of Whitesville are usually empty. Vacant stores 
        dot the town's main drag and windows are covered with dust from 
        coal trucks that rumble through night and day. Traffic lights 
        work intermittently. Parking meters were removed long ago.
    The economic plight of coalfield communities in the 1980s continued 
throughout the next decade as new mining technologies replaced more 
labor-intensive methods. While Appalachian coal production approached 
record levels in 2003, the number of coal miners declined to its lowest 
level since the nineteenth century. The coalfield economy continues to 
stagnate with high levels of unemployment in those areas which lead in 
coal production.
    Unable to rely on state government for economic and environmental 
protection, the communities looked to Washington for assistance. The 
federal assistance that John F. Kennedy had promised from the front 
porch of Burley Luster's Eureka Hollow home in 1960 materialized in a 
plethora of federal programs such as food stamps and Medicaid, which 
continue to this day to sustain many who remain in the old camps of 
central Appalachia. One new federal program, the Surface Mining Control 
and Reclamation Act of 1977, held out the promise of protecting 
coalfield communities and their citizens from the environmental, 
economic, and social harm that unregulated coal mining had caused. The 
following discussion examines how that promise was effectuated.

Regulation of the Adverse Impacts of Coal Mining
    When historian John Williams completed West Virginia: A History, he 
made predictions about the future of coalfield communities:
        In terms of short-run market considerations, strip mining is 
        the swiftest and cheapest way to expand coal production. . .. 
        Stripping is the most costly method of producing coal, however, 
        if social and environmental factors are calculated. . .. The 
        future of tourism and recreation depends to a significant 
        extent on what is done about surface mining and other 
        environmental issues. . .. Yet the political impact of 
        recreation industries is diffuse, and the aesthetic and human 
        values that environmental degradation subverts are difficult to 
        measure. By contrast, the coal industry retains much of its 
        old-time political power. . .and can readily deploy it to 
        defend immediate and specific economic concerns. It appears 
        that Professor Williams was especially prescient when he 
        predicted that ``environmental controversies promise to 
        generate the most lively and probably the most crucial debates 
        that West Virginia faces in the last quarter of the twentieth 
        century.''
    Professor Williams's prediction that environmental controversies 
would come to the fore as the twentieth century came to a close was not 
based on gut instinct or crystal-ball gazing. Rather, as a historian, 
Williams based his predictions on an appreciation of the policies, 
politics, and players that had shaped West Virginia's past and his 
recognition of the old and new forces that were then in motion vying 
for control of the extraction of Appalachia's vast coal wealth.
    As students of history are aware, most of the enterprises of the 
Industrial Age created significant adverse externalities. For example, 
effluent from steel and chemical manufacturing poisoned thousands of 
miles of the nation's streams and air pollution from the same plants 
clouded urban skies. For the better part of a century, the nation's 
polluting industries were given a free pass by Americans who agreed 
with industry's plea--``where there's smoke there's jobs.''
    It was not until the mid-1960s that people in the United States 
began to appreciate the extent to which industrialization had 
externalized costs to their own communities. Citizens' demand for 
pollution cleanup and regulation of the adverse effects of industrial 
activities spurred Congress to enact the National Environmental Policy 
Act of 1969 and reached its apogee in 1977 with passage of the federal 
Surface Mining Control and Reclamation Act. No other federal 
environmental regulatory statute contains as many opportunities for 
citizen involvement nor grants to citizens such a broad array of 
statutory rights that may be used to influence the law's administration 
and enforcement than does SMCRA.
    To understand the current struggle of the people of the coalfields 
for economic and environmental justice, one must understand how SMCRA 
came to be law and the way in which its strict mandate has been 
administered and enforced. The following discussion begins with an 
examination of SMCRA's origins in the oppressed and poverty stricken 
Appalachian coal camps in the 1960s. SMCRA's history is then traced 
from enactment through criticism of state and federal enforcement to 
the current extraordinary controversy over enforcement of SMCRA's so-
called ``mountaintop removal'' regulatory regime.

Historical Overview of the Pre-SMCRA Period
    Prior to the enactment of SMCRA in 1977, unregulated surface and 
underground coal mining created enormous environmental harm throughout 
the Appalachian coalfields. These externalities created disincentives 
for local economic development as well as other adverse social and 
economic consequences. Generally, local people experiencing these costs 
of mining also enjoyed the benefits of jobs created by mining. The 
adverse environmental impacts of mining received scant notice in the 
Appalachian coal camp struggle for survival during the first half of 
the twentieth century. Like the pervasive pollution that accompanied 
steel mills and chemical plants, coal mining's adverse impacts were 
seen as part and parcel of the industrialization.
    The most visible adverse impacts of coal strip mining were the 
scars gashed in Appalachian mountainsides. Surface mining strips away 
forest vegetation, causing erosion and attendant stream sedimentation 
and siltation, accompanied by negative impacts on aquatic life and 
drinking water supplies. In some coalfield regions, iron-laden 
sulphuric acid mine drainage pollution from underground mining produces 
red-orange stained stream beds and renders some watercourses 
ecologically sterile. Underground and strip mining contaminated or 
depleted underground aquifers that provide domestic and farm water 
supplies to many coalfield families. Loud noise and dust from blasting 
and earth-moving activities disturb nearby communities and wildlife. 
During mining, dust and debris often fill the air as soil and 
underlying rock strata are blasted apart, earth is moved, and coal 
extracted. Landslides caused by indiscriminate dumping of mine spoil 
downslope on steep Appalachian mountainsides buried cars, homes, and 
sometimes killed people.
    From the beginning of these efforts to regulate strip mining, the 
coal industry cooperated with local and state politicians to oppose 
meaningful state regulation. Economic competition between coalfield 
states for jobs and tax revenues fueled this opposition. Instead of 
placing limits on the worst of strip mining abuses, legislators chose 
to protect their own domestic industry. Obviously, they reasoned, a 
state choosing to pass laws to reduce the adverse consequences of coal 
mining would impose increased costs on its own coal industry. Those 
costs would not be incurred by coal operators in other states that 
chose to give carte blanche to their own coal operators. State 
politicians recognized that the price of coal produced in a state 
forbearing regulation would be cheaper and thus more competitive in the 
market than coal produced in a state that imposed environmental 
regulatory costs on its operators.
    By the end of the 1960s, public concern over the adverse impacts of 
coal mining had grown to a crescendo of opposition. It was generally 
recognized that the states could not and would not impose meaningful 
regulation on coal companies operating within their own borders. 
Coalfield citizens and other critics of strip mining realized that only 
a statute passed by Congress could end the states' ``race to the 
bottom.'' A federal law imposing uniform national regulatory standards 
would nullify the strongest argument raised against regulation--in-
state coal operators' competitive position vis-a-vis operators in other 
states. Operators in every state would be required to play by the same 
federal rules. The race to the bottom pressures would be eliminated by 
instituting a uniformly applicable federal regulatory program.
    Years of national media attention and unrelenting pressure from 
coalfield residents made it impossible for Congress to ignore coal 
stripping. Proponents of federal regulation accumulated massive 
documentation of the enormous costs coal mining had externalized onto 
coalfield communities. Furthermore, Congress faced a national outcry 
against irresponsible coal mining when the totally avoidable collapse 
of a huge coal waste impoundment at Buffalo Creek, West Virginia killed 
more than one hundred people, injured thousands more, and wiped out 
whole communities.
    Twice Congress passed legislation, and twice the coal industry and 
its state political allies succeeded in persuading President Gerald 
Ford to exercise his veto power. But with the transition to the Carter 
Administration came cooperation from the executive branch, and Congress 
once again passed legislation regulating surface mining. On August 3, 
1977, President Jimmy Carter signed the Surface Mining Control and 
Reclamation Act of 1977. Finally, federal regulation was being imposed 
on the coal industry in an effort to minimize the adverse impacts of 
underground and strip mining.

SMCRA's Cooperative Federalism Approach to Regulation
    Paralleling other federal environmental regulatory laws, Congress 
designed SMCRA as a ``cooperative federalism'' statute. Congress found 
that ``the cooperative effort established by this chapter is necessary 
to prevent or mitigate adverse environmental effects of present and 
future surface coal mining operations.''
    SMCRA's cooperative federalism scheme instituted an extensive and 
permanent federal regulatory presence to deal with problems previously 
within the sole domain of the states. Congress created a new Office of 
Surface Mining (OSM) to oversee implementation, administration, and 
enforcement of SMCRA. Congress intended that states have the option to 
assume ``exclusive jurisdiction'' to administer and enforce SMCRA, 
subject to compliance with minimum statutory standards and compliance 
with OSM's implementing regulations. Moreover, state assumption of 
``exclusive jurisdiction over the regulation of surface coal mining and 
reclamation operations'' was made specifically subject to OSM's 
oversight and enforcement power. If an OSM-approved state fails to 
implement, enforce, or maintain its program in accordance with SMCRA, 
OSM must enforce part or all of such program or assume exclusive 
federal jurisdiction over all mining operations within the state.
    Problems immediately arose pertaining to OSM's administration of 
SMCRA's phased implementation. OSM's effort to promulgate permanent 
program rules produced one of the most extensive rulemaking proceedings 
in the history of administrative law. Two drafts were submitted for 
public comment; 57 public meetings and 25 days of public hearings were 
held; 589 public comments were received by OSM; 22 different task 
forces, composed of over 100 technical experts from more than 20 
agencies, evaluated and revised the draft rules into their final form.
    In the quarter century since enactment of SMCRA, the environmental 
degradation and attendant adverse social and economic impacts on 
coalfield communities continue, albeit not at the catastrophic levels 
that existed in the pre-SMCRA years when coal mining was essentially 
unregulated. One of the best examples of such continuing regulatory 
failure can be seen in the failures of state and federal enforcement of 
SMCRA's requirements pertaining to huge mountaintop removal strip mines 
that have proliferated in the southern West Virginia coalfields. It is 
there, in close proximity to coalfield communities that a specific 
SMCRA promise of environmental protection and local economic 
development was broken by coal operators and compliant federal and 
state regulators.

Mountaintop Removal Strip Mining
    A decade and a half after enactment of SMCRA, some believed the 
statute was reducing abuses of coalfield lands and people caused by 
conventional strip and underground mining. Notwithstanding a 
significant measure of success, some coalfield communities continued to 
feel the effects of inadequately regulated mining that had plagued them 
decades earlier. Many of these post-SMCRA impacts were produced by new 
surface and deep mining techniques that had gained favor with the 
nation's biggest coal producers.
    A major transformation of the coal industry triggered this post-
SMCRA departure from conventional mining methods. Corporate mergers, 
consolidations, and bankruptcies accompanied intense competition 
between eastern and western coal mining operations. A combination of 
all of these events foreshadowed the growth of ``mountaintop 
removal''--a strip mining technique that existed only on a small scale 
before SMCRA. One commentator observed:
        Because of [competition with] cheap western coal, mountaintop 
        removal suddenly boomed in central Appalachia in the 1990s. 
        Trucks and power shovels have grown to gargantuan sizes, and 
        drag lines swing shovels holding up to 100 cubic yards of rock. 
        Mountaintop mines that reduce ridges and peaks by hundreds of 
        feet now sprawl across more than 2,000 acres. An estimated 400 
        square miles of southern West Virginia mountains and ridges 
        have been leveled and 1,000 miles of streams buried beneath 
        debris blasted, shoved, and dumped into narrow valleys. The 
        move to the use of large-scale mountaintop removal operations 
        would make mining in Appalachia more efficient, productive, 
        and--most importantly for coal operators--much less labor-
        intensive. Mechanization and concomitant massive job losses 
        attendant stripping operators' embrace of mountaintop removal 
        were paralleled by the underground operators' adoption of new 
        deep mining technology.
    The coal industry's competition-driven movement to new mining 
methods in central Appalachia adversely impacted coalfield communities 
both above and below the earth's surface. On both fronts, coal 
production and man-hour efficiency in Appalachian mines increased 
dramatically. However, as mountain ridges were blasted apart and more 
miles of headwater streams were buried under huge valley fills, mine 
jobs continued to hemorrhage. Promises that mountaintop removal mining 
would spur job-creating commercial, industrial, and residential 
development have gone unfulfilled.

Mountaintop Removal Mining Methods
    SMCRA regulations define mountaintop removal as ``surface mining 
activities, where the mining operation removes an entire coal seam or 
seams running through the upper fraction of a mountain, ridge, or hill. 
. .by removing substantially all of the overburden off the bench and 
creating a level plateau or gently rolling contour, with no highwalls 
remaining.'' As traditional contour and area mining rapidly declined 
during the 1980s and 1990s, growing numbers of mountaintop removal 
mines began clear-cutting the steep-sloped hardwood forests and 
chopping off mountaintops in eastern Kentucky and southern West 
Virginia. The underlying coal seams there lie sandwiched in layers of 
rock and soil hundreds of feet thick. In mountaintop removal 
operations, each layer of the rock above a coal seam is blasted and 
removed, the coal is extracted, and then the next layer is removed 
until the removal of rock and coal layers is no longer cost-effective.
    Operators put some of the removed rock back on the flattened 
mountaintop. Because rock blasted from its natural state ``swells,'' 
coal operators assert there is usually inadequate room available on the 
flattened mountaintop to place this ``swell'' or ``excess spoil.'' The 
spoil is dumped in adjacent valleys, often creating huge ``valley 
fills.'' A single valley fill may be as much as 1,000 feet wide and 
extend several miles at the upper reaches of Appalachian headwater 
streams.
    Over the course of more than two decades, the West Virginia 
Department of Environmental Protection (DEP) and its predecessors 
authorized the coal companies to bury at least 786 miles of West 
Virginia streams under valley fills. Thousands of acres of hardwood 
forests were leveled. The United States Fish and Wildlife Service found 
that ```the loss of these streams and their associated forests may have 
ecosystem-wide implications.''' Beginning in the late 1980s, the size 
and number of mountaintop removal mines and their associated valley 
fills increased, especially in southern West Virginia, which has 
enormous reserves of high-energy, low-sulfur coal coveted by electric 
utilities.

The 95th Congress Placed Strict Limits on Mountaintop Removal Mining 
        Under SMCRA
    Ordinarily, when a state grants a permit to conduct strip mining 
operations, a coal operator is required to restore mined land to its 
approximate original contour (AOC). When Congress was debating SMCRA, 
central Appalachian coal operators and coal-state congressional 
representatives sought an exemption from the AOC requirement for 
mountaintop removal mining. Mountaintop removal mining, they argued, 
could produce flat land for development--a commodity in very short 
supply in the mountainous coalfields of West Virginia, Kentucky, 
Virginia, and Tennessee. Congress accommodated these requests, but 
placed severe limitations on those situations where mountaintop removal 
would be allowed under a variance from the generally applicable AOC 
reclamation requirement.
    In order to qualify for a variance from the AOC requirement, SMCRA 
requires that a mountaintop removal permit applicant propose a 
postmining land use that falls in one of five specific categories: 
industrial, commercial, agricultural, residential, or public facility 
(which includes recreational facilities). In addition, the permit 
applicant must also prove that the *59 proposed postmining use 
constitutes an equal or better economic or public use of the affected 
land as compared to the premining land use. An applicant seeking an AOC 
variance must also provide specific plans for its proposed postmining 
land use and accompanying assurances. Finally, SMCRA requires that the 
applicant demonstrate that the proposed use would be consistent with 
adjacent land uses, existing state and local land-use plans and 
programs, and that all other requirements of SMCRA will be met. In 
granting a mountaintop removal permit with an AOC variance, a state 
must impose certain specific public safety and environmental protection 
requirements on the permittee.

Where is the Promised Economic Development? Where are the Post-Mining 
        Jobs SMCRA Promised as the Trade-off For Allowing Mountaintop 
        Removal?
    In a 1997 interview, longtime West Virginia coal industry lobbyist 
Ben Green told Business Week, ``With mountaintop removal, you get 100% 
mineral recovery, you can't mine again, and you get better land use 
than you ever had in its natural state.'' If by ``better land'' Greene 
meant ``flatter'' land then his statement was true. Mountaintop removal 
had created tens of thousands of acres of flat land. Greene's claims 
echoed the arguments that persuaded Congress to allow the practice only 
if the resulting flattened mountaintop was to be used as part of a coal 
operator proposed development that would create jobs for coalfield 
communities and promote local economies.
    Ben Greene was not alone in trumpeting the value of flat land. As 
they have from SMCRA's inception, coal industry and government 
officials continue to tout flattening mountain ridges as a panacea for 
economic development. There was, and is, one problem with the 
scenario--mountaintop removal has played a significant role in the 
precipitous decline in coal mine employment, and has flattened and 
deforested mountaintops that now lay barren, generating weeds rather 
than jobs. As explained below, a quarter century after enactment, 
SMCRA's promise to coalfield communities of shopping centers, 
industrial plants, and new affordable housing--all located on flattened 
mountaintops--has been broken.
    In August 1997, Penny Loeb, a Senior Editor at U.S. News & World 
Report, broke the story of mountaintop removal's adverse impacts on 
coalfield residents. Her article, ``Shear Madness,'' exposed to a 
national audience the social and environmental injustice attendant the 
large-scale expansion of mountaintop removal in the coalfields. Loeb 
wrote:
        [C]oal companies and some state officials note that strip 
        mining provides high-paying jobs--weekly pay averages $922. And 
        some contend that West Virginians are better off with their 
        mountains flattened--several dozen buildings, including four 
        schools and three jails, have been built on them so far.

        . . .But the costs are indisputable, and the damage to the 
        landscape is startling to those who have never seen a mountain 
        destroyed. Topographic and landscaping changes leave some 
        regions more vulnerable to floods. . .. And state employment 
        records suggest the jobs argument is not very compelling. 
        Mountaintop removal accounts for only 4,317 workers in the 
        state--less than 1 percent of its job force. Overall, mining 
        employment in the state has fallen from 130,000 in the 1940s 
        and 1950s to just 22,000 last year. Loeb catalogued multiple 
        impacts on coalfield communities caused by the proliferation of 
        mountaintop removal mines:

        Thirty floods have occurred in the past two years in areas 
        where watersheds were bared and redesigned, and several people 
        have lost their lives in such floods. Whatever the role of 
        mining in the state's overall economy, its impact on nearby 
        communities is devastating. Dynamite blasts needed to splinter 
        rock strata are so strong they crack the foundations and walls 
        of houses: Homeowners filed 287 blasting complaints with the 
        state in the past year. Trucks full of coal rumble past some 
        people's front porches at the rate of 20 an hour, 24 hours a 
        day. Mining dries up an average of 100 wells a year and 
        contaminates water in others.
    The claims that mountaintop removal would bring economic 
development and prosperity to coalfield communities are not supported 
by the facts.
        Thirty floods have occurred in the past two years in areas 
        where watersheds were bared and redesigned, and several people 
        have lost their lives in such floods. Whatever the role of 
        mining in the state's overall economy, its impact on nearby 
        communities is devastating. Dynamite blasts needed to splinter 
        rock strata are so strong they crack the foundations and walls 
        of houses: Homeowners filed 287 blasting complaints with the 
        state in the past year. Trucks full of coal rumble past some 
        people's front porches at the rate of 20 an hour, 24 hours a 
        day. Mining dries up an average of 100 wells a year and 
        contaminates water in others.
    Loeb's report was followed by a comprehensive series of 
investigative newspaper articles in the Charleston Gazette, beginning 
in 1998, which examined mountaintop removal mining and its impacts on 
the economy and people of the coalfields. The series, ``Mining the 
Mountains,'' exposed the myth promoted for two decades by coal industry 
advocates. The claims of industry lobbyists, politicians, and 
regulators that mountaintop removal would bring economic development 
and prosperity to coalfield communities were shown to be demonstrably 
false.

State Mountaintop Removal Permitting Receives Scrutiny
    The first article in the series described a DEP hearing on the 
application for the largest strip mine ever proposed in West Virginia. 
The hearing was held in the gymnasium of an aging Logan County 
elementary school; more than 125 people jammed the narrow bleachers. 
Ward described the scene as follows:
        Just over the ridge from the school, Arch Coal Inc. had 
        stripped 2,500 acres of the Logan County hills around Blair 
        Mountain. The company has applied for a permit to mine 3,200 
        more.

        If state regulators approve the new permit, giant shovels and 
        bulldozers will eventually lop off the mountaintops of an area 
        as big as 4,500 football fields.

        Residents of the tiny communities along W.Va. 17 complained 
        Arch Coal's existing mine already makes their lives miserable. 
        Why, they asked regulators at the hearing, should the company 
        get a permit to mine more?

        Melvin Cook of Blair was the first to walk across the gym floor 
        to a microphone and speak up. He complained about the 
        blasting.... ``You can't bear it,'' Cook said. ``It has torn my 
        house all to pieces.''

        Residents of nearby communities were not the only people who 
        attended the public hearing.
    A solid block of the gym's bleachers was filled with miners and 
their families who said that ``they wanted jobs at the new mine. But 
they agreed the company should make sure mining doesn't disturb area 
residents.''
    The Gazette series told of giant machines that ``towered over old-
time shovels and bulldozers'' used in earlier coal stripping. Those 
monster machines ``can literally move mountains,'' the newspaper 
related; only a few skilled equipment operators stood at the controls. 
Gazette readers also learned that in twenty years nearly 500 square 
miles of the state had been strip mined; from 1994 to 1998, the average 
size of the new mines had doubled each year; and, in 1997, DEP had 
issued new permits totaling 31 square miles, an area larger than 
Charleston, West Virginia. Today, the areas and coalfield communities 
impacted have grown substantially, while coal production continues to 
produce high revenues for coal companies--but few of the jobs or 
economic development promised by SMCRA.
State Mountaintop Removal Permitting Decisions Questioned by 
        Environmental Protection Agency
    The Gazette also closely examined specific mountaintop removal 
permitting decisions by state and federal agencies. The series noted 
that Arch Coal, Inc.'s subsidiaries had been seeking agency approval to 
permit larger and larger mines which would bury long segments of 
mountain headwater streams.

Coal Industry's Initial Response to Media Investigations of Mountaintop 
        Removal
    At the beginning of the ``Mining The Mountains'' series, Ken Ward 
Jr. explained the initial response of coal industry officials and state 
and federal regulators: ``Coal operators say all of this attention is 
unwarranted. Some have hauled out standard jobs-vs.-the-environment 
arguments. Others insisted the fight over stopping strip mining ended 
decades ago--and that they won.''
    A coal mine manager told Ward, ```I want everybody to understand 
that we have been trying to work with the community[.]. . .It's not as 
one-sided as everybody tries to make it appear.''' An official of the 
DEP Office of Mining and Reclamation said, ```We think we're doing a 
daggone good job, but we could always do better.''' An environmental 
engineer in EPA's Region III told Ward: ```We are definitely evaluating 
the overall issue[.]. . .But at this point, we're just talking among 
ourselves[.]. . .It's a little early to say what EPA will do right 
now.'''

Regulators Ignore SMCRA's ``Approximate Original Contours'' Mandate
    As discussed above, SMCRA requires most strip mines to be reclaimed 
to their approximate original contours (AOC). SMCRA, however, allows 
the AOC requirement to be waived for mountaintop removal mining 
operations in certain narrowly circumscribed situations. In order to 
qualify for an AOC waiver, a permit applicant is required by SMCRA to 
propose commercial, industrial, residential, agricultural, and/or 
public uses for the land after it has been stripped, leveled, and 
reclaimed. The obvious goal of waiving the AOC restoration mandate was 
economic development that would bring new jobs and prime the pump for 
coalfield community economies.
    A Charleston (W. Va.) Gazette investigation raised serious 
questions about state and federal agency oversight of state decisions 
to waive AOC restoration requirements for mountaintop removal mines. 
The Gazette described a visit to DEP's Logan County office and his 
discussions there with officials in charge of permitting mountaintop 
removal mines:
        Ken Stollings points to the maps and charts on his office wall 
        to show how Hobet Mining will turn the rugged peaks and valleys 
        around Blair Mountain into flat plains and a few rolling hills.

        Stollings, a Division of Environmental Protection engineer, 
        shows the changes to his boss, agency permit supervisor Larry 
        Alt. Asked if this proposal meets the legal mandate that mined 
        land be reclaimed to its ``approximate original contour,'' Alt 
        and Stollings just laugh.

        ``We just can't stack it as high as God did,'' Alt says with a 
        shrug.
    Approximate original contour, or AOC, is the heart of the federal 
strip mining law. But among many West Virginia regulators, it's 
becoming a joke. The Gazette reported that the AOC waiver rules were 
``routinely skirted by dozens of huge mountaintop-removal strip 
mines.'' After coal companies blasted and ripped apart mountain 
ridgetops to reach multiple coal seams, state regulators allowed them 
to avoid the expense of restoring the land to AOC. Instead, DEP 
permitted coal operators to take the cheapest path: shoving and dumping 
the remains of mountains--millions of cubic yards of rock and dirt--on 
top of headwater streams in nearby valleys.
    Information contained in DEP's own files revealed a systemic 
failure on the part of state regulators to apply SMCRA's AOC 
requirements to mountaintop removal mines. An The investigation found 
that in 1997 alone, DEP had authorized twenty permits for mountaintop 
removal mines to level twenty square miles. That study showed that the 
companies obtaining these permits rarely ask for or received 
approximate original contour exemptions for mountaintop removal.'' A 
West Virginia Freedom of Information Act request revealed that only 
one-quarter of active mountaintop removal mines had obtained the AOC 
exemption. Thus, 75% of active mountaintop removal mines in West 
Virginia were being operated in violation of state and federal law.
    A freedom of information Act request led an investigative reporter 
to a memorandum written in the early 1990s by OSM officials that, for 
the first time, resembled an agency AOC policy. Because the policy 
contained no guidance for permit reviewers on how to define AOC, it 
served as the basis for state officials' later defense that they had no 
idea what AOC meant when it came to mountaintop removal mines. The 
upshot of this bureaucratic sleight of hand was that operators could 
lop hundreds of feet off mountaintops, dump ``excess spoil'' into 
valleys, and level off thousands of acres--all under the guise of 
meeting SMCRA's AOC requirement.
    By definition a mountaintop removal mine is one that removes entire 
coal seams running beneath a mountaintop. Many of the mines permitted 
without AOC variances reduced the elevation of mountain ridges by 
hundreds of feet. A mountaintop removal mine that reclaims mined land 
to its approximate original contours is obviously an oxymoron--but an 
oxymoron that regulators were willing to embrace so that coal operators 
could avoid SMCRA's strict economic development requirements applicable 
to mountaintop removal mining. The most egregious impact of DEP's 
failure to enforce the AOC requirement was the denial of jobs and 
permanent economic development that should have accompanied mountaintop 
removal mining operations.

The Response of Industry and Regulators to the Revelation that AOC 
        Requirements Had Been Ignored for Two Decades
    Upon learning the results a newspaper's investigation of DEP's 
systemic violation of AOC permitting requirements, coal lobbyists at 
first admitted that problems might exist. However, they insisted that 
only technical matters were involved. The president of the West 
Virginia Coal Association told the Gazette: ```It sounds like to me 
[like DEP] needs to take a look to see if they meet all the 
requirements[.]. . .Apparently, there are some issues to be addressed, 
but they have little [to] do with environmental compliance.'''
    An A.T. Massey public relations officer asserted, ```Massey Coal 
companies have complied with the reclamation regulations[.]. . .On any 
permit that does not include an AOC variance, the plans for reclaiming 
the mine site meet state guidelines for AOC standards.''' David Todd, 
then an Arch Coal executive asserted, ```We have been applying for 
mining permits and they have been reviewed by and granted by DEP, with 
oversight by OSM[.]. . .That's got to be pretty fair evidence that 
[mountaintop removal mines] are being approved and operated according 
to and in compliance with the law.'''
    A supervisor of the OSM Charleston field office was questioned at a 
press conference where he appeared with the visiting OSM Director. OSM 
maintained that DEP was not issuing mountaintop removal permits without 
AOC variances. When later confronted with a list of such permits, the 
federal officials promised OSM would look into the allegations. 
```Maybe we should put the burden on the state to come up with some 
criteria,''' an OSM offical said. ```It's something we might want to 
tighten down on. I don't think the state has paid enough attention to 
AOC and postmining land uses and configurations.'''
A Promise Broken: Systemic Waiver of Mountaintop Removal Requirements 
        Negate SMCRA's Economic Development Goal
    A Charleston Gazette investigation during the summer of 1998 
examined long-standing claims of coal industry advocates and government 
regulators, who championed mountaintop removal as an economic 
development engine. The Gazette published a devastating article 
documenting how SMCRA's promise of economic development had been 
ignored by the West Virginia coal industry with the acquiescence of 
state and federal regulators.
    The Gazette found that for more than two decades, SMCRA's 
mountaintop removal requirements had been consistently ignored by 
regulators and coal operators. Coal companies had been allowed to 
flatten mountains and dump hundreds of millions of cubic yards of 
``excess spoil'' in valleys obliterating hundreds of miles of headwater 
streams.
    The Gazette investigation found that over two decades, DEP had 
permitted more than fifty square miles for mountaintop removal mines; 
the plans for ``economic development'' at those mines were limited 
exclusively to pastures, hayfields, forests, or range lands On the 
contrary, the Gazette's investigation showed that the most popular land 
use proposed for mountaintop removal sites was ``fish and wildlife 
habitat.'' Incredibly, while ``fish and wildlife habitat'' was not a 
post-mining land use recognized by SMCRA, it accounted for almost one 
third of the total mountaintop removal acreage permitted by DEP. In the 
last decade however there has, thankfully been at least some effort to 
create post-mining development on MTR mine sites. That effort has been 
meager, to say the least. The full potential of SMCRA's post-mining 
economic development mandate has been ignored.

The Response of Industry and Regulators to the Lack of Economic 
        Development
    When confronted with the results of the Gazette's postmining land-
use investigation, industry lobbyists agreed there had not been much 
development, but claimed it was not the fault of coal operators. ```Are 
you going to have a Toyota plant at Wharncliffe, West Virginia?''' one 
asked. Answering his own question, he said, ```Probably not. But I 
don't think the law obligates the mining industry to put up bricks and 
mortar. Our responsibility is to make sure the opportunity is there.'''
    The former President of the West Virginia Mining and Reclamation 
Association said SMCRA's requirements were outdated and ```too 
stringent for today's large mountaintop removal mines.''' An official 
with DEP's Office of Mining and Reclamation said that all the involved 
parties needed to look at postmining uses: ```There's not a lot of pre-
planning done in terms of development[.]. . .There is a need for some 
long-term land use planning considerations. It's hard for us to say 
what's going to be out there and who is going to develop what and what 
the future holds.'''

Conclusion
    It has been more than a decade since these questions were raised 
about the failure of state and OSM officials to require coal operators 
engaged in MTR mining to provide the SMCRA mandated industrial, 
commercial, and residential economic development--the long-term 
economic development sorely needed in the Appalachian coalfields.
    It is laudable that members of this Committee and the author of the 
Bill under consideration seek ways to bring much needed jobs to 
coalfield communities. There is no disagreement that unnecessary 
regulations can impede economic development and deprive our nation of 
much-needed jobs at a time of nationwide concern about our economic 
future.
    Make no mistake however jobs and environmental protection that 
protects coal field communities and their land and water and economic 
development--are not mutually exclusive. While the proposed bill is no 
doubt well intended, it does not hold out a serious promise for the 
creation of jobs in America's coalfields. Removing virtually all power 
of the Department of the Interior to take regulatory action to protect 
coalfield communities is neither wise policy nor will this Bill impose 
legally enforceable standards that could possibly create the employment 
opportunities that in the sponsor's goal.
    With all due respect, this Committee can take the initiative to 
investigate the failure of state and federal regulators to honor 
SMCRA's promise of post-mining industrial, commercial and residential 
development on lands permitted for MTR mining.
    When Congress enacted SMCRA in 1977 it recognized a trade-off--
flattened mountain ridges would be replaced by long term economic 
development creating jobs in coal regions where the boom-bust economic 
cycle had resulted in high unemployment and few opportunities. For 
those who desire jobs in the coalfields one must ask--why has SMCRA's 
mandate been almost totally ignored.
    This is not to say, however, that jobs are more important than the 
homes, water supplies, and the environment of coalfield communities. 
Recent studies have raised serious quations about the possible 
relationship of large scale coal mining operations and adverse health 
impacts on those who live near mines. Moreover, peer-reviewed studies 
by scientists indicate very serious concerns about the impact of some 
coal mining on water quality of entire watersheds in Central 
Appalalachia.
    This Committee and this Congress should heed these warnings and 
thoroughly examine coal mining's externalities before deciding that 
regulation by the Department of the Interior is unnecessary, kills jobs 
and inhibits the spirit of creativity and ingenuity that have long 
characterized American industry and business.
    The lessons of the past provide important messages for the policy 
makers of today. Those lessons--of the Buffalo Creek disaster, of the 
Farmington No. 9 mine, and more recently of the Massey Energy Upper Big 
Branch Mine explosion speak to us today. Black lung disease is on the 
rise among coal miners, our coal mines are still not safe enough and 
enforcement of SMCRA and the Clean Water Act still does not adequately 
protect coalfield communities.
    I would be glad to answer any questions and to provide any 
additional information that may be helpful to the Committee. Thank you.
                                 ______
                                 
    Mr. Lamborn. OK. Thank all five of you for your testimony. 
I appreciate that.
    And we will start our first round of questions with myself.
    Mr. Dana, as I am sure you are aware, in February the 
Administration settled a lawsuit and announced they would be 
re-reviewing the current rules for commercial oil shale leasing 
and amendments made to the resource management plans.
    Can you tell the Committee what this review will do to the 
progress of oil shale development in the West?
    Mr. Dana. Mr. Chairman, in my opinion, the uncertainty that 
is being sown by certain groups that would oppose the industry 
has been very effective. Since the Energy Policy Act of 2005, 
which instructed Interior to take steps forward to significant 
oil shale development, that hasn't occurred. And that, I 
believe, more than anything, is slowing down industry.
    It has been said, with respect to water and environment, 
that these resource management plans have to be reviewed over 
and over again. What I believe now is happening is just--it is 
never going to end. It is really just a tactic of anti-oil to 
stop oil shale development in the U.S.
    Mr. Lamborn. And my next question: In 2007, six 160-acre 
tracts of land were leased to 3 companies for R&D and 
demonstration projects, with the potential to expand each of 
those to as much as 5,120 acres. However, in the second round 
of leases, the expansion potential was decreased to only 480 
acres and, as a result--and I am talking about under the 
current Administration--and, as a result, received little 
industry interest.
    Do you feel that this decision made by the Administration 
benefited or injured oil shale development? And are you aware 
of the reasons behind this decision by the Obama 
Administration?
    Mr. Dana. Well, Mr. Chairman, I am not aware of all the 
reasons. I can speak from experience.
    My small company that I was involved with in Utah, which 
has now raised over $100 million for excellent technology, did 
not participate in those leases, for the purpose of--the leases 
are just not big enough.
    It also creates an enormous amount of expense that small 
companies like ourselves cannot innovate because of the cost of 
NEPA and the EA work that is involved. So what you have is 
America's best and brightest trying to develop technologies 
that can address water use, lower emissions, and expand our 
national security through energy, but we have no ability to 
come forward through the gauntlet that is being put forth by 
the current Administration to get through the BLM in a 
reasonable manner that small companies can innovate.
    There is a real need for small-company innovation in this 
space, because the major oil companies often weigh their 
projects, including oil shale, against their best economic 
projects globally. They determine things on a basis of internal 
rate of return, and so, as they look at their overall projects 
globally, oil shale moves down to the lower end of the internal 
rate of return, despite the fact that for the last 6 years oil 
has averaged $85 per barrel.
    At $85 per barrel, the industry should have been in 
operation for the last 6 years. At $50 oil, everybody breaks 
even. At $60 oil, you start to do OK. At $70 oil, you do very 
well. At $80 oil, you do very, very well, and so forth. This is 
similar to the Canadian Alberta tar sands experience. It will 
be the same in the United States as we go forward.
    Mr. Lamborn. Something I have noticed, and many people have 
as well, and that is that most of the innovative energy 
production in this country in recent years, since the Obama 
Administration came into office, has been on private lands. You 
look at the Marcellus gas shale in Pennsylvania, you look at 
the Bakken oil shale, the conventional oil from shale deposits 
in North Dakota.
    And is this also happening with oil shale in the West, in 
your experience?
    Mr. Dana. Mr. Chairman, absolutely. The private lands and 
also the lands under the School and Institutional Trust Lands 
of Utah are really America's best hope to open up lands, 
whereas the BLM lands have not been allowed.
    In the Energy Policy Act of 2005 and in these resource 
management plans, they make clear that there are 1.9 million 
acres of oil shale lands. Less than 1 percent of 1 percent 
since EPACT 2005 has been leased to the private sector to 
develop. So not only are companies like ours limited to private 
lands and SITLA lands, but now we see major oil companies who 
have excellent technology, such as Royal Dutch Shell, have gone 
to the Hashemite Kingdom of Jordan, completely out of the 
United States, looking for other lands, not only private but 
away from our regulatory burden.
    Mr. Lamborn. Well, I am glad that those private lands are 
available out there, but it is a sad state of affairs when the 
2-1/2-billion-acre Federal estate in this country, including 
offshore areas, is not open for energy production. And we see 
hurdle after hurdle thrown in the way of companies that would 
be willing to invest their private dollars at no cost to the 
taxpayer. And it is just a sad state of affairs.
    I turn over the questioning now to Representative Johnson.
    Mr. Johnson. Thank you very much, Mr. Chairman.
    Mr. Gardner, I had no idea that you were a tobacco farm 
boy. I bet you there is not more than you and myself in here 
that know what sand lugs are. We will have to talk about some 
of those stories another time.
    Mr. Gardner. Yeah, I have the honor of being involved in 
the two most politically incorrect industries in the country.
    Mr. Johnson. Yeah.
    Well, gentlemen, on a more serious note, I can tell you 
that I am both shocked and alarmed at your verbal testimony and 
your written testimony that has been entered into the record 
and some of the clarification that you have provided that 
points to some pretty shocking inconsistencies with information 
that we have received from OSM and Director Pizarchik in the 
past.
    On November 4th, the Director testified at that very table 
where you are sitting and was specifically asked if any 
official at OSM had asked the contractor, and therefore the 
subcontractor, to change the assumptions for its economic 
analysis, and he replied, and I quote, ``As regarding any 
official, anybody in the management level, I don't believe that 
occurred.''
    However, in your statement, you said that there was a 
meeting in February of this year where OSM management demanded 
that you revisit the production impacts and, therefore, the 
associated job loss numbers and make different assumptions to 
show less of an impact.
    In your view, does this not contradict the Director's 
answer in his previous testimony?
    Mr. Gardner. Yes, I felt it did.
    Mr. Johnson. Mr. Zaluski?
    Mr. Zaluski. Yes, sir.
    Mr. Johnson. In fact, was not the main purpose of the 
February meeting to figure out a way for the agency and, by 
extension, you and the other subcontractors to lower the impact 
numbers?
    Mr. Gardner. Well, that is what it appeared to us.
    Mr. Johnson. Furthermore, was the February meeting between 
OSM and the contractors tape recorded or transcribed?
    Mr. Zaluski. It was our understanding that, under the 
contract between OSM and PKS, the prime contractor, that they 
were required to tape or record every meeting, yes, sir.
    Mr. Johnson. OK. Were the tape recordings sequentially 
numbered?
    Mr. Zaluski. I believe so.
    Mr. Johnson. Do you have complete copies of all of these? 
And, if so, will you provide all of these sequentially numbered 
recordings and transcripts to the Committee?
    Mr. Zaluski. We don't have those.
    Mr. Johnson. You don't have them. Can you tell us who can 
provide those to the Committee?
    Mr. Zaluski. I would assume PKS. I would assume OSM. I 
can't say much more than that, sir.
    Mr. Johnson. OK.
    Mr. Chairman, as a matter of record, we need to get those 
recordings.
    Mr. Lamborn. So noted.
    Mr. Johnson. This, to me, is, frankly, as I said, shocking 
and alarming, that the Administration asked you to make false 
assumptions. Some people would call that lying. You know, as a 
two-wheeled-wagon-rut, mule-farming farm boy, tobacco-farming 
kid, I can tell you that is what it means to me.
    And the meeting that you attended in which this happened 
could be on tape somewhere. I am looking forward to getting 
those tapes. It is imperative to me that the Administration 
turn these over to the Committee immediately so that we can 
verify and further clarify what we have heard here today.
    Mr. Gardner, you said that after the job loss numbers came 
back that OSM asked your company, ECSI, to make the assumption 
that the 2008 stream buffer zone rule was in effect and being 
enforced across the United States, which was not true.
    Why was one of the changed assumptions that OSM asked you 
to make was that the use of the 2008 stream buffer zone rule--
can you edify that, please?
    Mr. Gardner. Well, it was in that February 1 meeting. And, 
again, I used the word ``strongly suggested'' that we change 
our assumptions to change the end results. That 2008 stream 
buffer zone rule proposal would have changed production. There 
would have been impacts from that. And it was predicted, and 
OSM also agreed, that that would have reduced production across 
the country. Therefore, they wanted us to start with that as a 
baseline, and that, obviously, would have led to a lower 
production impact and then, consequently, plugged into the 
economic model, lessen job losses.
    Mr. Johnson. OK.
    Mr. Chairman, I want to continue with this line of 
questioning. I am out of time this time. I am hoping we are 
going to have another round.
    Mr. Lamborn. OK, our next questioner is Mr. Landry.
    Mr. Landry. Mr. Chairman, I would like to yield my time to 
the gentleman from Ohio.
    Mr. Johnson. I thank the gentleman for yielding.
    So, by implementation of the 2008 stream buffer zone rule, 
production would have been decreased, and, therefore, the job 
loss numbers under the new proposed rule would not reflect 
nearly as badly as they did. Is that what I just heard?
    Mr. Gardner. Yes, sir.
    Mr. Johnson. OK. So is it safe to say that, contrary to 
what Director Pizarchik told members of this Committee 2 weeks 
ago about the 2008 stream buffer zone rule being a rollback, 
that is false? Because, in fact, the 2000 rule added 
significant environmental protections that would have increased 
costs and reduced the amount of coal available for production 
across the board, had it been implemented by OSM. Is that 
correct?
    Mr. Gardner. That was everybody's belief.
    Mr. Johnson. OK.
    Were the economic impact numbers just a placeholder? You 
talked about that a little bit before. Were the economic impact 
numbers just placeholder, numbers that have no basis in fact, 
as stated by Director Pizarchik? Either one of you that wants 
to answer.
    Mr. Zaluski. We took great offense at that, Congressman. 
The numbers that the Director refers to as placeholders became 
placeholders because OSM changed the assumptions that were used 
to create those numbers. Not only was the 2008 stream buffer 
zone one of those assumptions, we were told to maintain the 
national thermal balance--if coal was lost in one area, how 
much coal someplace else would have to be picked up. We were 
told to use the 2008 EIA production numbers and then suggested 
maybe 2010 numbers might be better. We were told to use a 
static model and then, later on, a dynamic model.
    And it is like statistics; you can make this say anything 
you want it to say, which I think was the driver here. But the 
dynamic model would be--the result of that would be, there may 
be jobs lost, but they are being lost because of the recession 
or decreased demand for coal. Anybody else is responsible--or 
greenhouse gas legislation or implementation. So they were 
trying to put the job loss, in my opinion, off on anybody else 
but OSM's SPR.
    Mr. Johnson. OK.
    So if Director Pizarchik claims that those numbers were 
meaningless placeholders, as he has indicated before this 
Committee, and that they had no basis in fact, why would they 
need to have an all-day meeting to discuss how to change the 
assumption in order to lower the numbers?
    Mr. Gardner. Good question.
    Mr. Zaluski. Lots of things happened that day, Congressman. 
It was a contentious meeting.
    Mr. Johnson. OK. But was this change in assumption--first 
of all, OSM gave you the assumptions, right?
    Mr. Zaluski. Yes, sir.
    Mr. Johnson. OK. I want to make sure that that is in the 
record.
    So was this change in assumptions noticed in the draft EIS 
as a placeholder?
    Mr. Zaluski. There is a footnote at the beginning of 
chapter 4 explaining that these are placeholders because----
    Mr. Johnson. Because of the change in assumptions.
    Mr. Zaluski. Yes, sir.
    Mr. Johnson. OK.
    Speaking of the draft EIS, how did Director Pizarchik's 
original decision not to include scoping, which would have been 
a violation of NEPA, affect the contractor's work on the rule?
    Mr. Gardner. That put us behind approximately 4 months 
right off the bat.
    Mr. Johnson. Were you given any additional time on the end 
to do the real tough, heavy-lifting work?
    Mr. Gardner. I would have to go back and look at the 
schedule. I believe there was a bit of time added, for several 
reasons, but not enough time to adequately address what we felt 
needed to be done.
    Mr. Johnson. OK. So you mean to tell me that, in a process 
that the United States and others have said is moving at 
breakneck speed, you lost 4 months of that process because of 
Director Pizarchik and the Administration's oversight of doing 
scoping first? Is that accurate?
    Mr. Gardner. Yes, sir.
    Mr. Johnson. It seems to me that there is just a pattern of 
mismanagement on this rulemaking by OSM.
    Mr. Gardner, you have testified that OSM staff were 
embedded with you and the other subcontractors, and they were 
intimately involved in working on the EIS. Do you believe that 
this rule should be considered economically significant? And 
did OSM staff agree that the rule was economically significant 
and that it would result in job losses?
    Mr. Gardner. I believe they did, yes.
    Mr. Johnson. OK.
    Mr. Chairman, I am down to seconds, so I am going to yield 
back the 5 seconds, but hopefully we will get another round 
because I am not done.
    Mr. Lamborn. Well, we will start our second round here.
    Mr. Eikenberry, you said a number of things I disagreed 
with, but let me just focus on a couple. And then I will have 
Mr. Dana, sort of, give a rebuttal or his version of the 
answer.
    You said that extracting usable petroleum products from oil 
shale is a failed technology. Are you aware that there is not 
really any one settled technology, that there is still research 
and development and experimentation? And, to me, it is 
premature to say that we have a, quote/unquote, ``failed 
technology'' when there are companies out there willing and 
eager to invest their moneys and try different things.
    Mr. Eikenberry. Yeah, I am very much aware of that, and 
that is one of the reasons why no one has the technology to 
make this oil shale industry viable. It is simply not there. It 
won't be. I have been involved in this thing for 40 years----
    Mr. Lamborn. OK. Well, then, that leads to my next 
question. You said you thought there would be a gamble or a 
risk to the taxpayer. I don't see that. If a company thinks 
that they have a possibility of getting a good rate of return 
and they are willing to invest their own private dollars, 
number one, I don't see that that puts the taxpayers on the 
hook for anything, and, number two, maybe they will come up 
with something and have a breakthrough.
    I mean, look at hydraulic fracturing. That has only really 
come on--we knew about hydraulic fracturing for a long time, 
but only when you married that up--if I understand correctly 
the sequence, you know, it is only when you married that up 
with horizontal drilling that you could really unleash the 
potential of shale gas. And that has just been a few years ago.
    So how can you--you don't have a crystal ball that says it 
is never going to work. And besides, if they are willing to 
invest their own money, why should you or I really care if they 
want to throw their money away?
    Mr. Eikenberry. Well, as long as they have the resources--
like, Shell has roughly a trillion dollars, supposedly, of oil 
shale resources that they are not moving forward with in any 
way, shape, or form. If they thought they had a technology and 
they thought that this was viable, they would be pushing this. 
They are not. They are backing off.
    There are just simply too many headwinds associated with 
oil shale, not the least of which, any which one, and not the 
least of which is just the technology.
    Mr. Lamborn. OK, then if, in your opinion, it is never 
going to work, why do you care if we let them go out and prove 
that?
    Mr. Eikenberry. I simply don't care, but don't get the 
communities out there in these small--in these areas excited 
about a big oil shale industry, because it is simply not going 
to happen. And if it does happen, let the big oil, let the 
companies provide that infrastructure to these companies when 
and if it happens. But don't keep pushing this thing. That is 
what I am saying.
    Mr. Lamborn. OK.
    Mr. Dana, you have heard our interchange. What is your 
commentary? And then, also, if you could address the issue, on 
top of that, of water, because he expressed earlier a concern 
that this would use a lot of water.
    Mr. Dana. Thank you, Mr. Chairman.
    And with respect to you, Mr. Eikenberry, I completely 
disagree. And I think I would just put forth and refer you to 
look at what is happening globally right now. In China, the 
Fushun Mining Corporation has tens of thousands of barrels of 
retorting going on right now. They just recently installed 
about a $400 million technology from ThyssenKrupp, the ATP 
process. This is all new brand-new technology that is producing 
tens of thousands of barrels of oil. In Australia, very large 
projects down there proceeding forward with QER backed by very 
big people with excellent technology.
    I would also refer you to look in Jordan and the progress 
that they are making in Jordan. I would refer you to look in 
Brazil, where the Petrosix Process has been managed very well 
for the last 20 years, and Petrobras has now come to Utah 
looking for technology. I would also let you know that Mitsui 
and others have been in Utah, including the Estonian Government 
just recently bringing their technology from Estonia, which 
just recently has been expanded in Estonia with wonderful 
technology.
    So it is a global resource. It is very real. Unlike the 
comments that you made about water--water is abundant. I, 
myself, am a very big water owner in Uintah County through our 
company. That water was readily available. There is an enormous 
amount of water under----
    Mr. Lamborn. But does your process that your company is 
particularly concentrating on, does it use water at all?
    Mr. Dana. I actually innovated a technology, along with Dr. 
Jim Patten, for Red Leaf Resources that does not use water. And 
so it is very effective. I assigned that to Red Leaf Resources.
    So there are people working on environmental solutions. The 
water can be mitigated. The emissions, by not going into 
burning the rock but using indirect heating, which is through 
clean-burning natural gas, is a new innovation.
    And I would just say, look back to the efforts made in 
Canada. For 40, 50, 60 years, they struggled with the Canadian 
Alberta tar sands. What they did is they stuck to it with clear 
and defined regulation from the Alberta province that allowed 
them to move forward with the Canadian tar sands. In the last 
10 years, they have had $100 billion of capital investment. 
They are now the number-one supplier of crude oil to the United 
States.
    The substantial amount of that imported oil is truck and 
shovel mining, two tons to make a barrel. It is the same with 
oil shale. The difference is that when you pyrolize oil shale, 
the resulting crude that you get is actually very premium to--
--
    Mr. Lamborn. And, last, what about the impact on taxpayers?
    Mr. Dana. Well, the impact on taxpayers is only positive 
for oil shale. If you look at 2-1/2 million barrels per day, 
which is likely over the next 25 years, you are looking at half 
a trillion dollars, based on the taxable income from upgraders, 
the taxable income on retorting, and the royalty rate at a flat 
8 percent average. We are talking--we have looked at this. It 
is very doable.
    There has been 4 million barrels produced in the United 
States. It was tested for JP-8 fuel back in the first go-
around. This is a wonderful asset. It will create millions of 
jobs. It is real. And we need to get rid of the regulation that 
is stopping it.
    Mr. Lamborn. OK. Thank you.
    I am sorry I have gone over my time. Mr. Johnson and then 
Mr. Amodei.
    Mr. Johnson. Thank you, Mr. Chairman.
    Now, in the last round of questioning that I had, we 
established that both you, Mr. Gardner and Mr. Zaluski, both 
you and your colleagues, as well as the OSM staff, agreed that 
the rule was economically significant and that it would result 
in job losses, correct?
    Mr. Gardner. Yes.
    Mr. Johnson. Then if OSM staff thought it was economically 
significant and would lead to job losses, why in the world did 
Director Pizarchik testify 2 weeks ago that the rewrite of the 
rule would actually create jobs?
    Mr. Gardner. You would have to ask him that.
    Mr. Johnson. OK. Well, I intend to. Thank you.
    Furthermore, based on your understanding and expertise in 
the coal industry, do you think that the economic analysis firm 
was correct to say that the number of direct jobs lost would be 
about 7,000?
    Mr. Gardner. Frankly--and this is my personal opinion--I 
was surprised it was that low.
    Mr. Johnson. OK. All right.
    Did the firm that did the economic analysis, did they have 
any coal experience background, that did this?
    Mr. Gardner. I am not sure of their exact experience. I 
know they were Ph.D.-level economists, and I am not sure if 
they had coal experience or not. They were economic modelers.
    Mr. Johnson. OK.
    Obviously, once OSM used its influence over Polu Kai to 
come to a, quote/unquote, ``mutual decision'' to end the 
contract, your contract with Polu Kai and OSM also came to an 
end. Since that time, has OSM hired another contractor to 
finish the EIS?
    Mr. Gardner. Yes. I saw a press release that indicated that 
they had hired another contractor, I believe back in June.
    Mr. Johnson. OK.
    Do you know if there is a balanced approach with industry 
and environmentalists on the team working on the EIS now, like 
there was when you folks were involved?
    Mr. Gardner. I don't know the exact makeup of the team or 
the experience. I believe I saw in the press release that 
Morgan Worldwide was still working on the revised contract, 
along with another company, Energy Ventures Analysis.
    Mr. Johnson. OK.
    Finally, and just to clarify, the rewrite of the rule would 
significantly affect underground mining, correct?
    Mr. Gardner. Yes. That was our belief, yes.
    Mr. Johnson. OK.
    Now, I have also heard that Polu Kai, itself, did not have 
the experience and the qualifications to do this job, and, 
therefore, that is why OSM basically handpicked and came to you 
guys as the subcontractors. Is that an accurate statement?
    Mr. Gardner. That was my impression. We were approached 
many months in advance of the contract and an RFP that was 
issued, and we thought a very good team of experts put together 
to work under the PKS contract. And they contributed to the 
work. They hired several people, themselves, and they were the 
contract administrators and logistical support and contributed 
to the NEPA aspects of the project.
    Mr. Johnson. But you and your colleagues, you were the 
subject-matter experts that were doing the heavy-lifting work?
    Mr. Gardner. In the mining, that was our role, was to be 
the mining experts on the team.
    Mr. Johnson. OK. And if I understood your testimony here 
today, as well as Mr. Pizarchik's testimony previous, he has 
questioned your qualifications, correct?
    Mr. Gardner. That was the impression I got.
    Mr. Johnson. OK. Well, but you were handpicked by OSM, 
right?
    Mr. Gardner. Yes, sir.
    Mr. Johnson. OK. All right.
    OK. Well, I want to thank you both for your testimony. I 
also want to commend both of you for your integrity in standing 
up to the Administration when they asked you to use false 
assumptions to give them the answers that they wanted. A lot of 
folks in your shoes would have taken a different course, 
perhaps, to make a quick buck, but you stood up, did the right 
thing, and it shows that you and your company and you gentlemen 
are men of honor. And I thank you again for being here today.
    Mr. Chairman, today some very troubling information has 
come to light and makes my legislation all the more important. 
I hope that we will begin to receive the answers from the 
Administration as to how political appointees are overriding 
the judgment of career OSM employees and the very contractors 
that OSM selects to do these important jobs.
    In my opinion, it is necessary for at least Director 
Pizarchik, if not Secretary Salazar, to come back to this 
Committee to testify on these new developments. I will not rest 
until we have all the answers on this rulemaking process, until 
my legislation becomes law, because thousands of jobs in my 
district are on the line. The American people demand 
accountability in the Federal Government. And I think we have 
some very serious concerns here. I want to get to the bottom of 
it.
    And, with that, I yield back the balance of my time.
    Mr. Lamborn. OK, thank you.
    Representative Amodei?
    Mr. Amodei. Thank you, Mr. Chairman.
    Following the lead of the preceding speaker, I will yield 
back the balance of my time and----
    Mr. Lamborn. OK, if I could reclaim----
    Mr. Amodei. Absolutely.
    Mr. Lamborn.--the remainder of your time?
    And I will just have a couple of wrap-up questions for the 
witnesses who talked on the coal issue. This is such an 
important issue. And Representative Johnson has done a great 
job of drilling down into a very specific sequence of events 
that help understand what was really happening, but I would 
like to just stand back and ask a couple of general questions.
    Are you aware that the stream buffer zone rule--and we got 
this in the testimony, and both of us were there, as well as 
Representative Shelley Moore Capito, in Charleston, West 
Virginia, about a month and a half ago. And we heard testimony 
that underground longwall mining will be severely affected and 
curtailed by the stream buffer zone rule, not just so-called 
mountaintop mining.
    Is that something that you both are aware of?
    Mr. Gardner. Yes, sir. And that was our analysis in the 
production impacts. And, as I said earlier, we had repeatedly 
asked if the proposed rule would apply to underground mining 
and did not receive that answer until well into the project. 
And then that changed the whole scope and the analysis. And we 
received conflicting instructions throughout the process on 
exactly what OSM personnel thought those impacts would be.
    Mr. Zaluski. I would concur, Chairman. The instructions, 
the directions changed constantly. The answer to your question 
directly is, yes, it will impact underground mining, longwall 
mining, for very different reasons, perhaps--the waste 
disposal.
    At one point--again, I think the fact that they had 
knowledgeable people as contractors is what presented OSM with 
a problem here, perhaps. But I asked if, in fact, a longwall 
permit with less than 400 feet of cover--kind of a technical 
term--would even be issued. Originally, the answer was, no, we 
will not issue that permit. Well, that sterilizes a lot of 
coal. Again, a direct answer to your question. That answer was 
reversed a few months later, that, yeah, we will answer that, 
we will issue that permit.
    So we don't know, because we have been out of the loop now 
for a few months, what the final rule is going to look like. 
But that is a very important issue. It does apply to 
underground mining. It does apply to longwall mining. And they 
are all tied to--another issue in the SPR was the definition of 
stream. And we talked to the Congressman's staff about this.
    One of our assignments was to define a stream. And I know 
you have been on this Committee for a while. That is a gigantic 
chore. And, again, we are given a few months to do that, but it 
impacts everything: where you can mine, where you can't mine. 
It also impacts underground mining.
    So the answer is ``yes'' for several reasons.
    Mr. Lamborn. OK. When I see this Administration time after 
time--I mean, the latest, delaying the Keystone XL pipeline 
decision--shutting down energy source after energy source. If 
it was just one or two isolated things, I wouldn't say there is 
a pattern, but I just see a pattern day after day of doing 
this.
    Do you think there are some in OSM or higher up who have an 
agenda of, not just by unintended consequence of bureaucratic 
regulation that can't take everything into account, which 
happens every day around here, but actively trying to shut down 
underground mining and not just the so-called mountaintop 
mining?
    Mr. Gardner. Let me respond first by saying, I have many 
friends that work for OSM. They are professionals, they are 
engineers and scientists, they are mining engineers and other 
professionals that I feel have great knowledge.
    Now, there are some issues. And we were very surprised by a 
lot of the instructions that we got and the changing of 
instructions. So, to answer your question, I was concerned.
    Mr. Lamborn. Mr. Zaluski?
    Mr. Zaluski. Thank you for pronouncing that correctly, Mr. 
Chairman.
    Mr. Lamborn. It took me two times.
    Mr. Zaluski. It gets pronounced several ways. When I was a 
prosecutor, I was called ``Scruski'' one time.
    In any event, I agree with Steve. It is hard to understand 
the motivation. It doesn't seem logical, so therefore it must 
be something else. That is my, kind of, analysis.
    And, again, I am talking about the way it was administered. 
It just didn't make sense. I have done this a long time and 
been involved in lots of SMCRA programs at the State level and 
Federal, and some of this was baffling. And asking simple 
questions, like, again, does this apply to underground mining, 
that is a yes-no, and it took 4 months to get an answer, and it 
really skewed our work significantly.
    So I don't know the motivation. It just does not seem 
logical.
    Mr. Lamborn. Well, I am very concerned, as is 
Representative Johnson. I mean, severely affecting and limiting 
above-ground mining is one thing. I mean, that alone would be 
potentially devastating to the production of coal and 
electricity as well as jobs in that area. And I know we have to 
keep track of the environmental issues, I understand that, but 
we have to balance it with what the impact is. But to include 
underground mining in that equation is doubly devastating.
    Last, I will just finish with this: Are you in a position 
to comment on whether there was adequate notice for comments 
given to the States out there? Because some of them complained 
bitterly that they were not given enough notice, and it was 
almost ridiculous how little time they had to wade through 
these huge requests for comments.
    Mr. Zaluski. I would love to comment on that.
    I think that Director Pizarchik read letters or whatever 
from other States that were upset with the quality of the work, 
the placeholders and so forth.
    In my humble opinion, this was a massive rewrite of the 
entirety of SMCRA. This was the guts of SMCRA they were trying 
to do. You know, in 2008, it was called the stream buffer zone 
rule. Now it is the stream protection rule. They changed the 
name, and they really broadened the scope. This was a major 
rewrite. The States should have been given plenty of time. The 
sister agencies--Fish and Wildlife, EPA, all the alphabet 
soup--should have been given plenty of time.
    And to give somebody our work--and when I say ``our,'' the 
team's work--and say, ``You have until Friday to give us your 
comments,'' was absurd. You don't get meaningful comments. And 
I think the States--we talked to some of those people. We were 
in Wyoming recently, and Montana, for other reasons but talked 
to some regulators, and they were still smarting from being put 
in that position. You know, if you don't comment, we think you 
agree; let's go on. And it was unfair to the States, it was 
unfair to the sister agencies.
    This, again, was a major rewrite. The schedule should have 
been about 3 years. And we were hired in June, as the 
Congressman pointed out; we were delayed 4 months, and the 
deliverable was February. So we had a very short period of 
time. And, by the way, within which, we had three OSM team 
leaders in that short period of time, and you would have to ask 
the Director why.
    But to do something at this level and to affect this many 
people and the Nation's energy, you don't do it by Friday. It 
just doesn't work.
    Mr. Lamborn. OK. Thank you.
    That concludes our questioning. Will the two of you be 
available as the rule is possibly handed down at some point in 
the future to help us understand the impacts of it?
    Mr. Zaluski. Well, we make our living in this area, so I 
assume we will read it and be glad to give any advice we can, 
sir.
    Mr. Lamborn. OK. Thank you.
    I want to thank all five of you for being here.
    Members of the Committee may have additional questions for 
you in writing. I would ask that you respond to those if you 
are given those.
    Mr. Lamborn. If there is no further business, the 
Committee, without objection, will be adjourned.
    [The prepared statement of the U.S. Department of the 
Interior follows:]

    Statement for the Record by the U.S. Department of the Interior

    Thank you for providing the Department of the Interior the 
opportunity to submit this Statement for the Record on several pieces 
of recently-introduced legislation, including H.R. 3407, the ``Alaskan 
Energy for American Jobs Act;'' H.R. 3408, the ``Protecting Investment 
in Oil Shale and Next Generation of Environmental, Energy, and Resource 
Security Act;'' H.R. 3409, the ``Coal Miner Employment and Domestic 
Energy Infrastructure Protection Act;'' and H.R. 3410, the ``American-
Made Energy and Infrastructure Jobs Act.''
    For the reasons discussed below, the Department opposes the 
legislation.

Introduction
    In his appearance before this Committee on Wednesday, Secretary 
Salazar discussed the Administration's commitment to promoting safe and 
responsible domestic oil and gas production as part of a broad energy 
strategy that will reduce our dependence on foreign oil. Outlined in 
the Blueprint for a Secure Energy Future, the strategy will result in 
producing more of our oil and natural gas here at home, using cleaner, 
alternative fuels, and improving our energy efficiency.
    Secretary Salazar has set goals for the Department's energy 
programs that will ensure that energy development on our public lands 
and oceans is done in the right way, in the right places and with the 
right protections for the environment and the safety of workers.
    Recognizing that America's oil supplies are limited, we must 
develop our domestic resources safely, responsibly, and efficiently, 
while at the same time taking steps that will ultimately lessen our 
reliance on oil. We are making significant progress toward these ends. 
Total U.S. crude oil production was higher in 2010 than in any year 
since 2003. Oil production from the federal OCS increased by a third 
from 2008 to 2011; from onshore public lands increased 5 percent from 
2009 to 2010. U.S. natural gas production is up 7 percent from 2008, 
and is at its highest level in more than 30 years.
    We are working hard to build on this success. In 2010, the Bureau 
of Land Management (BLM) held 33 oil and gas lease sales covering 3.2 
million acres and in 2011, BLM scheduled an additional 32 lease sales 
and has held 28 to date. The BLM has scheduled an additional 33 lease 
sales for 2012. In 2010, the Department offered 37 million offshore 
acres in the Gulf of Mexico for oil and gas exploration and production. 
And the 2012-2017 Outer Continental Shelf (OCS) Oil and Gas Leasing 
Proposed Program, discussed in more detail below, makes more than 75 
percent of the estimated undiscovered technically recoverable oil and 
gas on the OCS available for development.

Alaskan Energy for American Jobs Act
    The Alaskan Energy for American Jobs Act, H.R. 3407, is similar to 
legislation introduced earlier this year in the House of 
Representatives. Among other things, it directs the Secretary of the 
Interior to establish an oil and gas leasing program on the coastal 
plain; limits environmental review of the program and related 
activities; and limits judicial review of the program.
    The National Wildlife Refuge System, managed by the U.S. Fish and 
Wildlife Service, is the world's premier system of public lands and 
waters set aside to conserve America's fish, wildlife, and plants. The 
mission of the system is to manage a national network of lands and 
waters for the conservation, management, and where appropriate, 
restoration of fish, wildlife, and plant resources and their habitat 
for the benefit of the public. Nearly 46 million people visit national 
wildlife refuges each year, and visitation generates almost $1.7 
billion in sales for regional economies and results in the employment 
of tens of thousands of people.
    Last year's Deepwater Horizon explosion and oil spill in the Gulf 
of Mexico has served to highlight the importance of careful scrutiny of 
oil and gas development issues and the need to develop these resources 
safely and responsibly. We have been clear that there are some places 
where oil and gas development is appropriate and some places where it 
is not. The Arctic National Wildlife Refuge, because of its unique 
conservation values and importance as wildlife habitat, is a place 
where development is not appropriate.
    The Arctic Refuge itself is America's finest example of an intact, 
naturally functioning community of arctic and subarctic ecosystems. 
Such a broad spectrum of diverse habitats occurring within a single 
protected unit is unparalleled in North America, and perhaps in the 
entire circumpolar north. When the Eisenhower Administration 
established the original Arctic Range in 1960, then-Secretary of the 
Interior Seaton described it as:
        [O]ne of the world's great wildlife areas. The great diversity 
        of vegetation and topography in this compact area, together 
        with its relatively undisturbed condition, led to its selection 
        as...one of our remaining wildlife and wilderness frontiers.
    The original ``Arctic National Wildlife Range'' was created in 1960 
by Public Land Order 2214 ``[f]or the purpose of preserving unique 
wildlife, wilderness and recreational values....'' In 1980, the Alaska 
National Interest Lands Conservation Act (ANILCA) enlarged the area, 
designated much of the original Range as wilderness under the 1964 
Wilderness Act, renamed the whole area the Arctic National Wildlife 
Refuge and added four additional purposes: to conserve caribou herds, 
polar bears, grizzly bears, muskox, dall sheep, wolves, snow geese, 
peregrine falcons, other migratory birds, dolly varden, and grayling; 
to fulfill international treaty obligations; to provide opportunities 
for continued subsistence uses; and to ensure necessary water quality 
and quantity.
    And just last December, President Obama recognized the 50th 
Anniversary of the creation of the Refuge with a Proclamation stating 
that:
        [i]n the decades since its establishment, the Arctic National 
        Wildlife Refuge has continued to be one of our Nation's most 
        pristine and cherished areas. In the decades to come, it should 
        remain a place where wildlife populations, from roaming herds 
        of caribou to grizzly bears and wolf packs, continue to thrive.
    The Presidential Proclamation also reiterated the Administration's 
commitment to making responsible choices and ensuring the continued 
conservation of these wild lands.
    The Arctic Refuge's coastal plain is critically important to the 
ecological integrity of the whole Arctic Refuge, providing essential 
habitats for numerous internationally important species such as the 
Porcupine Caribou herd and polar bears. The compactness and proximity 
of a number of arctic and subarctic ecological zones in the Arctic 
Refuge provides for greater plant and animal diversity than in any 
other similar sized land area on Alaska's North Slope, and it is an 
important part of a larger, international network of protected arctic 
and subarctic areas.
    In the spring of 2010, the Fish and Wildlife Service initiated 
public discussions about the issues surrounding stewardship of the 
Arctic Refuge and future goals for that management. These discussions 
served as the foundation for development of a draft Comprehensive 
Conservation Plan and Environmental Impact Statement that outlines a 
15-year management plan for the refuge. These conservation plans are 
revised periodically for every refuge around the country, as a matter 
of course.
    The draft plan contains six alternatives for long-term management, 
ranging from the continuation of current practices to the 
recommendation of up to three geographic areas (including the Arctic 
Refuge coastal plain) for potential inclusion within the National 
Wilderness Preservation System, and the recommendation of four 
additional Wild and Scenic Rivers in the refuge. The draft plan does 
not identify a preferred alternative and, similar to the current 
management plan, will not include any decisions regarding oil 
development on the Arctic Refuge. The involvement of the public has 
been and will continue to be a critical part of the multi-year 
development process. The Service anticipates the release of a revised 
CCP and final EIS in the summer of 2012 and a final decision by the end 
of 2012.
    The Administration is working hard to promote the safe and 
responsible development of domestic oil and gas, and Alaska is an 
important component of these efforts. But the unique conservation 
values contained in the Arctic National Wildlife Refuge make it a world 
class natural area and the preeminent remaining American wilderness. As 
such, the Administration strongly opposes any industrial development 
within the Arctic Refuge.

The PIONEERS Act
    H.R. 3408, the ``Protecting Investment in Oil Shale the Next 
Generation of Environmental, Energy, and Resource Security Act,'' is 
similar to legislation introduced earlier this year in the House of 
Representatives. It would deem final regulations relating to oil shale 
management that were published by the Bureau of Land Management on 
November 18, 2008, and the November 17, 2008, BLM Resource Management 
Plan amendments and record of decision to satisfy all legal and 
procedural requirements under any law and require the Secretary to 
implement those actions without any further administrative action. The 
bill would also: require the Secretary to hold, within 180 days of 
enactment, a lease sale for additional parcels for oil shale research, 
development, and demonstration leases and, no later than January 1, 
2016, no less than 5 commercial lease sales in areas with the most 
potential for oil shale development; and authorize the Secretary to 
reduce royalties, fees, and other payments on leases to incentivize the 
development and production of oil shale.
    The BLM testified before the Committee's Energy and Minerals 
Subcommittee several months ago on the current status of the 
Department's oil shale program. At that time, the BLM stated that its 
goal was to provide an opportunity for companies to develop a new 
generation of oil shale technologies by establishing an orderly and 
environmentally responsible program that provides a fair return for 
taxpayers.
    In 2010, it was explained, the BLM advanced three nominations for a 
second round of Research, Development, and Demonstration leases. 
Analysis under the National Environmental Policy Act is underway to 
examine how the proposed technologies will affect the environment, and 
issuance of those leases will depend largely on the results of the NEPA 
analyses and other factors as the nominees refine their individual 
processes for developing oil shale.
    BLM also noted that it had begun a new planning process this year 
to take a fresh look at what public lands are best suited for oil shale 
and tar sands development, and anticipated taking a fresh look at the 
regulations governing oil shale development to ensure they reflect a 
sound management approach. It was also noted that the planning process 
would not disturb RD&D activities already under way, and that 
information developed from these activities could help inform this 
process.
    Also discussed at that hearing were issues that need to be 
addressed before a successful commercial oil shale program could be 
economically viable, including whether the technologies currently being 
developed can become viable on a commercial scale; the need for a 
better understanding of the potential impacts of commercial oil shale 
development on Western lands, wildlife, and, particularly in the arid 
West, watersheds; and the need to understand the energy demands of 
viable commercial production.
    BLM concluded that, in light of the many fundamental questions 
about oil shale that need to be answered, it is vital that the BLM 
administer a balanced, carefully planned RD&D program. The review of 
the regulations governing oil shale development will ensure that the 
regulations reflect the latest information about water and other 
potential environmental considerations, and will allow BLM to uphold 
its responsibility to deliver taxpayers a fair return on the 
development of this resource.
    H.R. 3408 disregards the fact that there are currently no known 
economically viable and environmentally sound ways in the United States 
to extract liquid fuel or suitable refinery feedstock from oil shale at 
a commercial level. Moreover, the legislation would pre-empt BLM's 
careful review of the regulations and analysis through a programmatic 
environmental impact statement, being carried out, in part, because of 
additional information that has come to light since the original work 
was done. This includes a Government Accountability Office report 
published in October 2010 finding that oil shale development could have 
significant negative impacts on the quality and quantity of water 
resources. Because the legislation disrupts this careful and important 
process, the Department opposes H.R. 3408.

Coal Miner Employment and Domestic Energy Infrastructure Protection Act
    H.R. 3409, the Coal Miner Employment and Domestic Infrastructure 
Protection Act, would prohibit the Secretary from issuing or approving 
any proposed or final regulations under the Surface Mining Control and 
Reclamation Act of 1977 (SMCRA) that would adversely impact domestic 
coal mine employment; would reduce revenue received from coal by 
reducing the amount of coal available for mining; reduce the amount of 
coal available for domestic consumption or export; designate any area 
as unsuitable for surface mining and reclamation operations; or expose 
the United States to liability taking the value of privately owned coal 
through regulation.
    At a recent hearing before the Committee's Energy and Minerals 
Subcommittee, Office of Surface Mining Director Joseph Pizarchik 
testified about the importance of domestic coal production to the 
economy and to our energy supply. Coal mining provides well-paying 
jobs, and produces about half of the Nation's electricity and will 
remain an important part of our energy mix for decades to come.
    Also discussed at that hearing were the statutory purposes that 
Congress specified within SMCRA, including to assure that American coal 
mines operate in a manner that protects people and the environment and 
that the land is restored to beneficial use following mining; to assure 
that the coal supply essential to the Nation's energy requirements is 
provided; and to strike a balance between protection of the environment 
and agricultural productivity and the Nation's need for coal. SMCRA 
requires that surface coal mining and reclamation operations be 
conducted to minimize disturbances to fish, wildlife, and related 
environmental values ``to the extent possible using the best technology 
currently available.''
    The Department must carry out the mandates in SMCRA and must do so 
using the best available science and technology.
    It is with this in mind that revision of the 2008 Stream Buffer 
Zone Rule is being considered. In his statement, Director Pizarchik 
discussed the many benefits to updating the Rule, that the agency would 
make informed regulatory decisions supported by the Draft EIS analysis, 
and that additional ample opportunity for public input on both the rule 
and its Draft EIS would be carried out.
    H.R. 3409 interferes with the Department's ability to meet these 
important statutory purposes and requirements and preempts the 
Department's ongoing regulatory process, thus preventing regulatory 
improvements that will more fully carry out the bureau's mission, make 
use of the best available science and technology, better protect 
streams nationwide, and provide greater clarity and certainty to the 
mining industry and the affected communities.

American-Made Energy and Infrastructure Jobs Act
    A number of provisions similar to those contained in H.R. 3410, the 
American-Made Energy and Infrastructure Jobs Act, have appeared in 
other legislation introduced in the House of Representatives and the 
Administration has expressed concern about a number of these issues in 
past statements. Generally, H.R. 3410 would require the Department to 
open new areas on the Outer Continental Shelf (OCS) to leasing and 
would require the inclusion in 5-year oil and gas leasing programs of 
oil and gas production goals; would mandate that the Secretary conduct 
specified offshore oil and gas lease sales; would repeal the moratorium 
on development in the Eastern Gulf of Mexico; would authorize leasing 
offshore of the territories of the United States; and would put in 
place a new disposition program for revenue received from offshore 
energy leases.
    In mandating the opening of new areas on the OCS, H.R. 3410 would 
provide no discretion to the Secretary to determine which areas are 
appropriate and safe for such exploration and development. Moreover, 
while it calls for making specific percentages of resources within 
different regions available, we would note that the Department of the 
Interior's recently released 5-Year Program makes 75% undiscovered 
technically recoverable oil and gas resources estimated in federal 
offshore areas available for exploration and development.
    Secretary Salazar discussed the recently released Proposed 5-year 
Program for 2012-2017 before the Committee on Wednesday, noting that 
the Department has put in place rigorous standards for safety and 
responsibility for the development of oil and gas resources on the 
Outer Continental Shelf. These reforms to offshore oil and gas 
regulation and oversight are the most extensive in U.S. history, and 
strengthen requirements for everything from well design and workplace 
safety to corporate accountability. They are helping to ensure that the 
United States can safely and responsibly expand development of its 
energy resources consistent with our stewardship responsibilities.
    The Proposed Program will advance safe and responsible domestic 
energy exploration and production by making available for development 
more than three-quarters of undiscovered oil and gas resources 
estimated on the OCS, and includes substantial acreage for lease in 
regions with known potential for oil and gas development. This Proposed 
Program promotes responsible development and is informed by lessons 
learned from the Deepwater Horizon tragedy and the reforms that we have 
implemented to make offshore drilling safer and more environmentally 
responsible.
    A key part of safe and responsible development of our oil and gas 
resources is recognizing that different environments and communities 
require different approaches and technologies. The Proposed Program 
reflects this recognition, and accounts for issues such as current 
knowledge of resource potential, adequacy of infrastructure including 
oil spill response capabilities, Department of Defense priorities, and 
the need for a balanced approach to our use of natural resources. The 
majority of lease sales are scheduled for areas in the Gulf of Mexico, 
where resource potential and interest is greatest and where 
infrastructure is most mature. But it also includes frontier areas, 
such as the Arctic, where we must proceed cautiously, safely, and based 
on the best science available.
    Moreover, the bill would hastily open areas of the Gulf of Mexico 
to leasing, including requiring the Department of the Interior (DOI) to 
hold two lease sales in the Gulf of Mexico using outdated NEPA analysis 
that was conducted before the Deepwater Horizon oil spill. The 
Administration has strengthened NEPA analysis in light of lessons 
learned from the spill. DOI intends to hold a Central Gulf of Mexico 
lease sale in mid-2012 that would include both of the sale areas 
referenced in this bill. Notably, DOI is on track to hold that sale 
before the deadline that the bill would mandate for Lease Sale 222.
    As we have noted in response to similar legislation, the 
Administration is committed to promoting safe and responsible domestic 
oil and gas production as part of a broad energy strategy that will 
protect consumers and reduce our dependence on foreign oil. H.R. 3410 
undermines and circumvents the transparent public process for 
determining which new areas are appropriate to lease. For this reason, 
the Department opposes the legislation.

Conclusion
    For the reasons discussed in this statement, the Department opposes 
H.R. 3407, H.R. 3408, H.R. 3409, and H.R. 3410.
                                 ______
                                 
    [Whereupon, at 12:34 p.m., the Subcommittee was adjourned.]

    [Additional material submitted for the record follows:]

      Statement of Rikki Hrenko, CEO, Enefit American Oil Company

    Mr. Chairman, Enefit American Oil Company (``Enefit'') appreciates 
the Subcommittee's consideration of and supports H.R. 3408, the 
Protecting Investment in Oil Shale the Next Generation of 
Environmental, Energy, and Resource Security Act or ``PIONEERS Act''. 
This legislation is critical to energy investment, job creation, and 
energy security for the United States. Enefit supports passage of this 
legislation which will promote further investment and development of 
the vast oil shale resource this nation possesses. Enefit submits this 
statement for inclusion in the official record.
    Mr. Chairman, Enefit submitted a statement for the record in 
conjunction with the hearing held on August 24, 2011 in Grand Junction, 
Colorado and incorporates those comments herein. Enefit continues to 
support the Subcommittee's efforts to promote the development of oil 
shale in the United States and believes passage of the PIONEERS Act is 
a vital step toward regulatory certainty, access to federal oil shale 
resources, and attracting large scale investment in development and 
production of this nation's greatest energy resource.

ENEFIT, PROVEN PRODUCTION AND WORLD-WIDE DEVELOPMENT
    Enefit, known as Eesti Energia in Estonia, was founded in 1939 and 
processes more oil shale than any other company worldwide. Our mines 
produce approximately 17 million tons of oil shale per year. We operate 
the world's largest oil shale fired power plants with a total output of 
2,380 MW. Enefit also owns and operates what we believe to be the 
world's most advanced shale oil production technology. In total we have 
mined 1 billion tons of oil shale, produced 550 TWh of power and 
produced 200 million barrels of oil. Enefit has operations in Estonia, 
Latvia, Lithuania, Finland, Jordan, and now the United States, in 
eastern Utah. We currently employ over 7,500 people worldwide.
    In 2012 Enefit is scheduled to place in service a new shale oil 
plant in Estonia using second generation technology which is even more 
efficient and is based on our current proven technology. The new 
Enefit280 plant will double our current shale oil production capacity, 
will consume 2.26 million tons of oil shale per year, will produce over 
2,000,000 barrels of shale oil per year, and 75 million m\3\ of high 
calorific retort gas per year. The plant will also co-produce 35 MWh 
(net) of electricity per year, after covering all of its own electrical 
needs, selling this electricity back to the grid. Our new technology 
will meet all current European Union environmental standards and our 
process to extract oil from shale requires no water.
    Enefit American Oil will bring the Enefit280 technology to the 
United States and is currently in the process of developing our 
resources located in eastern Utah on private, state, and federal lands 
which are encompassed in our project. These resources total 
approximately 2.6 billion barrels of shale oil in place. Decades of 
experience in the mining and development of oil shale resources in 
Estonia provide us with the knowledge, technology, and expertise to 
responsibly develop oil shale resources in the United States and will 
meet all current U.S. environmental standards. Our current plan is to 
build the project in two phases with the first phase producing 25,000 
barrels per day by 2020 and full production of 50,000 barrels per day 
by 2024. We anticipate this project will provide approximately 2,000 
direct jobs that will be high-paying, stable and long-term.

ACCESS TO FEDERAL RESOURCES AND REGULATORY CERTAINTY
    In order to responsibly develop the oil shale resources of the 
United States, estimated at 1.5 trillion barrels of oil, the 
Administration and Congress must provide a stable set of rules and 
regulations that will attract the billions of dollars that are required 
to develop these resources. The 2005 Energy Policy Act set the stage 
for this process but full implementation has not been allowed. While 
many characterize oil shale development as interesting science 
projects, the truth is that shale oil has been produced for decades on 
a commercial scale in other countries. In the United States, however, 
production is not occurring because a stable U.S. regulatory framework 
is what is missing, not proven and capable technology.
    Enefit will develop a large scale industrial project in Utah which 
requires large scale investment. We are comfortable moving forward 
because we are able to develop and operate largely on private lands. We 
are in a rare position to have better regulatory certainty on our 
Federal RD&D lease owing to the rules set in the 2005 Energy Policy 
Act, which are an integral part of our lease. Yet the Enefit project 
alone is insufficient for the development of a full scale oil shale 
industry in the U.S. The Federal Government controls approximately 80% 
of the oil shale resources in the western U.S. and there are 
insufficient private and state lands to develop these resources on a 
scale that will allow the U.S. to achieve true energy independence. 
Regional infrastructure needed to support development will only be 
built through the development of additional oil shale projects which 
will further incentivize investment in the industry. Growth in the oil 
shale industry will result in the creation of thousands of high-paying, 
long-term, stable jobs that can provide sustained growth in the U.S. 
economy. All of this requires responsible, planned development on 
federal lands through a competitive commercial leasing program. The 
PIONEERS Act will allow for this to occur as previously contemplated in 
2005 by Congress and the President.
    The PIONEERS Act recognizes the thorough and lengthy public process 
that was completed during the initial implementation of the 2005 Energy 
Policy Act which resulted in a regulatory framework that began 
attracting companies and interest in the development of oil shale 
resources on federal lands. However, lawsuits have led to regulatory 
uncertainty, resulting in curtailed investment in the industry and 
prevention of broad development and investment in oil shale in the U.S. 
As a result, companies are investing significant sums in oil shale 
development outside of the US.
    Upon complete implementation of the 2005 Act, oil shale resources 
will be developed pursuant to all U.S. environmental laws and 
regulations, will return a fair royalty to the Federal Government, and 
will generate thousands of American jobs. The PIONEERS Act would allow 
for the full implementation of the 2005 Act provisions which will once 
again attract investment in oil shale in America.
    Technologies, such as the Enefit technology, are proven and 
producing shale oil in commercial quantities today.. Oil shale deposits 
in the U.S. can be developed on an industrial level if the Federal 
government will simply provide reasonable access to sufficient 
resources for industrial size development as the 2005 Energy Policy Act 
and the resulting regulations intended to facilitate. The PIONEERS Act 
would mandate Federal lands be available for commercial leasing and 
allow the responsible development and production of this vital energy 
resource to proceed for the benefit of American workers, energy 
independence, and revenue for states and the Federal Government.

CONCLUSION
    Enefit American Oil is committed to producing high quality liquid 
transportation fuels from oil shale in eastern Utah. This commitment 
involves billions in capital investment, thousands of high-paying long-
term jobs, tax revenues for federal, state and local governments and 
will make the United States a little less dependent on foreign oil 
resources. However, one successful project is not enough to establish 
an oil shale industry in the United States. The PIONEERS Act will 
provide the required access to 80% of America's best oil shale and 
allow the U.S. to build a responsible industry. Enefit supports passage 
of the PIONEERS Act.

                                 
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