[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]




 
         H.R. 2231, OFFSHORE ENERGY AND JOBS ACT PART 1 AND 2

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

                          LEGISLATIVE HEARING

                               before the

                       SUBCOMMITTEE ON ENERGY AND
                           MINERAL RESOURCES

                                 of the

                     COMMITTEE ON NATURAL RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                    Thursday, June 6, 2013 (Part 1)
                    Tuesday, June 11, 2013 (Part 2)

                               __________

                           Serial No. 113-23

                               __________

       Printed for the use of the Committee on Natural Resources





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                     COMMITTEE ON NATURAL RESOURCES

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

Don Young, AK                        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 Holt, NJ
Paul C. Broun, GA                    Raul M. Grijalva, AZ
John Fleming, LA                     Madeleine Z. Bordallo, GU
Tom McClintock, CA                   Jim Costa, CA
Glenn Thompson, PA                   Gregorio Kilili Camacho Sablan, 
Cynthia M. Lummis, WY                    CNMI
Dan Benishek, MI                     Niki Tsongas, MA
Jeff Duncan, SC                      Pedro R. Pierluisi, PR
Scott R. Tipton, CO                  Colleen W. Hanabusa, HI
Paul A. Gosar, AZ                    Tony Cardenas, CA
Raul R. Labrador, ID                 Steven A. Horsford, NV
Steve Southerland, II, FL            Jared Huffman, CA
Bill Flores, TX                      Raul Ruiz, CA
Jon Runyan, NJ                       Carol Shea-Porter, NH
Mark E. Amodei, NV                   Alan S. Lowenthal, CA
Markwayne Mullin, OK                 Joe Garcia, FL
Chris Stewart, UT                    Matt Cartwright, PA
Steve Daines, MT
Kevin Cramer, ND
Doug LaMalfa, CA
Vacancy

                       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 HOLT, NJ, Ranking Democratic Member

Louie Gohmert, TX                    Steven A. Horsford, NV
Rob Bishop, UT                       Matt Cartwright, PA
Robert J. Wittman, VA                Jim Costa, CA
Paul C. Broun, GA                    Niki Tsongas, MA
John Fleming, LA                     Jared Huffman, CA
Glenn Thompson, PA                   Alan S. Lowenthal, CA
Cynthia M. Lummis, WY                Peter A. DeFazio, OR
Dan Benishek, MI                     Tony Cardenas, CA
Jeff Duncan, SC                      Raul M. Grijalva, AZ
Paul A. Gosar, AZ                    Colleen W. Hanabusa, HI
Bill Flores, TX                      Joe Garcia, FL
Mark E. Amodei, NV                   Vacancy
Steve Daines, MT                     Vacancy
Kevin Cramer, ND                     Edward J. Markey, MA, ex officio
Doc Hastings, WA, ex officio
                                 ------                                
















                                CONTENTS

                              ----------                              
                                                                   Page

Hearing held on Thursday, June 6, 2013...........................     1

Statement of Members:
    Hastings, Hon. Doc, a Representative in Congress from the 
      State of Washington........................................     6
        Prepared statement of....................................     7
    Holt, Hon. Rush, a Representative in Congress from the State 
      of New Jersey..............................................     4
        Prepared statement of....................................     5
    Lamborn, Hon. Doug, a Representative in Congress from the 
      State of Colorado..........................................     2
        Prepared statement of....................................     3

Statement of Witnesses:
    Conathan, Michael J., Director of Ocean Policy, Center for 
      American Progress Action Fund..............................    22
        Prepared statement of....................................    23
    Felmy, John, Ph.D., Chief Economist, American Petroleum 
      Institute..................................................     9
        Prepared statement of....................................    10
    Guith, Christopher, Vice President--Policy, Institute for 
      21st Century Energy, U.S. Chamber of Commerce..............    18
        Prepared statement of....................................    19
    Miller, Richie, President, Spectrum Geo Inc..................    12
        Prepared statement of....................................    13

Additional material submitted for the record:
    Markey, Hon. Edward J., a Representative in Congress from the 
      State of Massachusetts.....................................    50
    Walters, Thomas P., Letter Submitted for the Record by.......    40


                                CONTENTS

                              ----------                              
                                                                   Page

Hearing held on Tuesday, June 11, 2013...........................    53

Statement of Members:
    Hastings, Hon. Doc, a Representative in Congress from the 
      State of Washington........................................    53
        Prepared statement of....................................    54

Statement of Witnesses:
    Alexander, Ms. Ryan, President, Taxpayers for Common Sense...    80
        Prepared statement of....................................    82
    Boesch, Dr. Donald F., President of the University of 
      Maryland Center for Environmental Science, Former 
      Commissioner, National Commission on the BP Deepwater 
      Horizon Oil Spill and Offshore Drilling....................    54
        Prepared statement of....................................    56
    Dixon, Sean, Coastal Policy Attorney, Clean Ocean Action.....    72
        Prepared statement of....................................    74
     LeVine, Michael, Pacific Senior Counsel, Oceana.............    63
        Prepared statement of....................................    65

Additional material submitted for the record:
    Capps, Hon. Lois, Letter submitted for the record by.........    90
    Castor, Hon. Kathy, a Representative in Congress from the 
      State of Florida, Prepared Statement of....................    91
    Jackson, Senator Hannah-Beth, Letter Submitted for the Record 
      by.........................................................    92
    List of documents retained in the Committee's official files.    93
    Price, Hon. David E., a Representative in Congress from the 
      State of North Carolina, Prepared Statement of.............    92



LEGISLATIVE HEARING ON H.R. 2231, TO AMEND THE OUTER CONTINENTAL SHELF 
 LANDS ACT TO INCREASE ENERGY EXPLORATION AND PRODUCTION ON THE OUTER 
   CONTINENTAL SHELF, PROVIDE FOR EQUITABLE REVENUE SHARING FOR ALL 
 COASTAL STATES, IMPLEMENT THE REORGANIZATION OF THE FUNCTIONS OF THE 
FORMER MINERALS MANAGEMENT SERVICE INTO DISTINCT AND SEPARATE AGENCIES, 
    AND FOR OTHER PURPOSES. ``OFFSHORE ENERGY AND JOBS ACT'' PART 1

                              ----------                              


                         Thursday, June 6, 2013

                     U.S. House of Representatives

              Subcommittee on Energy and Mineral Resources

                     Committee on Natural Resources

                            Washington, D.C.

                              ----------                              

    The Subcommittee met, pursuant to notice, at 10:03 a.m., in 
room 1324, Longworth House Office Building, Hon. Doug Lamborn 
[Chairman of the Subcommittee] presiding.
    Present: Representatives Lamborn, Wittman, Fleming, Duncan, 
Cramer, Holt, Horsford, Lowenthal, DeFazio, and Garcia.
    Also Present: Representatives Hastings and Cassidy.
    Mr. Lamborn. The Committee will come to order. The Chairman 
notes the presence of 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 a legislative 
hearing on H.R. 2231 by Representative Hastings of Washington 
to amend the Outer Continental Shelf Lands Act to increase 
energy exploration and production on the Outer Continental 
Shelf, provide for equitable revenue sharing for all Coastal 
States, implement the reorganization of the functions of the 
former Minerals Management Service into distinct and separate 
agencies, and for other purposes, called ``The Offshore Energy 
and Jobs Act.''
    Under Committee rule 4(f) opening statements are limited to 
the Chairman and Ranking Members of the Subcommittee. However, 
I ask unanimous consent to include any other Members' opening 
statements on the hearing record, if submitted to the clerk by 
close of business today.
    [No response.]
    Mr. Lamborn. Hearing no objection?
    Dr. Holt. No objection.
    Mr. Lamborn. So ordered.
    I also ask unanimous consent that Representative Bill 
Cassidy of Louisiana be allowed to sit on the dais and 
participate in today's hearing.
    [No response.]
    Mr. Lamborn. Hearing no objection, so ordered.
    Dr. Holt. No objection.
    Mr. Lamborn. I now recognize myself for 5 minutes. And, by 
the way, we are going to get right into this and see how much 
we can get done before the votes are called at an early hour, 
maybe the next even----
    Dr. Holt. Five minutes.
    Mr. Lamborn [continuing]. Few minutes, that is right.

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

    Mr. Lamborn. Late last June, the Obama Administration had 
the tremendous opportunity for the first time in more than a 
generation to open new areas of the OCS for oil and gas 
drilling. Available to them for the first time since 1982 was 
the opportunity to access billions of barrels of oil that had 
been held closed under lock and key for decades.
    Unfortunately, their proposed final 5-year offshore leasing 
plan for 2012 to 2017 to Congress closed off 85 percent of our 
OCS regions, allowed no new development in the OCS, and dashed 
the hopes and economic opportunity for the people of States 
like Virginia.
    Dr. Holt. I was off by 4 minutes.
    Mr. Lamborn. OK. The Obama plan put forward the lowest 
number of lease sales since the Carter Administration. The plan 
provided the American people of more of the same: drilling only 
in the Gulf of Mexico and areas off the coast of Alaska. 
However, the plan only dubbed these sales as potential sales, 
leaving some question as to whether or not the Administration 
would even follow through on that. And let's be honest. One 
thing this Administration knows how to do is cancel lease 
sales.
    Nearly 1 year later we are here today to once again attempt 
to change the course upon which this Administration has set our 
Nation and our energy future. Last week, the Energy Information 
Administration issued their report for energy production on 
Federal lands for fiscal year 2012. I have a copy of it right 
here. It is no surprise that the sale of crude on Federal lands 
decreased 5 percent in 2012, with an 8 percent decrease in 
Federal off-shore volumes.
    When we see oil and gas production declining in the Federal 
OCS, we must turn the corner to keep the United States 
competitive, especially as other countries begin to develop 
their own deepwater resources. The predominant way we can do 
this is by fostering energy development in new areas.
    Chairman Hastings bill, the Offshore Energy and Jobs Act, 
will move our Nation forward to open up access to new areas to 
create thousands of new jobs and more American energy. While 
some revenue-sharing bills have sought to provide Coastal 
States with a revenue-sharing scheme unequal to the four Gulf 
States, the Chairman's bill provides parity to all Coastal 
States, allowing them a share of the revenues equivalent to the 
37.5 percent that the 4 Gulf States currently enjoy. The bill 
also includes several much-needed reforms that this 
Administration has requested, including organic legislation to 
codify the reorganization of the former Minerals Management 
Service.
    While this Administration seems content with the status 
quo, the Chairman's legislation is about making the right 
choices now to foster new access and new energy in the future, 
not 5 years from now in drafting the next plan, not 10 years 
from now, but right now. We cannot keep ignoring the vast 
resources potential of the U.S. Outer Continental Shelf. The 
time to be bold is now, and I applaud the Chairman's 
legislation and look forward to hearing from our witnesses.
    [The prepared statement of Mr. Lamborn follows:]
      Prepared Statement of The Honorable Doug Lamborn, Chairman, 
              Subcommittee on Energy and Mineral Resources
    Late last June, the Obama Administration had the tremendous 
opportunity for the first time in more than a generation to open new 
areas of the OCS for oil and gas drilling. Available to them for the 
first time since 1982, was the opportunity to access billions of 
barrels of oil that had been held closed under lock and key for 
decades. Unfortunately, their proposed final 5 year offshore leasing 
plan for 2012-2017 to Congress closed off 85 percent of our OCS 
regions, allowed NO new development in the OCS and dashed the hopes and 
economic opportunity for the people of States like Virginia. The Obama 
plan put forward the lowest number of lease sales since the Carter 
Administration. The plan provided the American people with more of the 
same--drilling only in the Gulf of Mexico, and areas off the coast of 
Alaska, however the plan only dubbed these sales as ``potential sales'' 
. . . leaving some question as to whether or not the Administration 
would even follow through. And, let's be honest, one thing this 
Administration knows how to do is cancel lease sales.
    Nearly 1 year later, we are here today to once again attempt to 
change the course upon which this Administration has set our Nation and 
our energy future. Last week, the Energy Information Administration 
issued their report for energy production on Federal lands for fiscal 
year 2012--it is no surprise that the sale of crude on Federal lands 
decreased 5 percent in 2012--with an 8 percent decrease in Federal 
OFFSHORE volumes.
    When we see oil and gas production declining in the Federal OCS, we 
must turn the corner to keep the United States competitive, especially 
as other countries begin to develop their own deep water resources. The 
predominant way we can do this is by fostering energy development in 
new areas. Chairman Hastings bill, the Offshore Energy and Jobs Act, 
will move our Nation forward to open up access to new areas to 
thousands of new jobs and more American energy. While some revenue 
sharing bills have sought to provide Coastal States with a revenue 
sharing scheme unequal to the four Gulf States, the Chairman's bill 
provides parity to all Coastal States, allowing them a share of the 
revenues equivalent to the 37.5 percent that the four Gulf States 
currently enjoy. The bill also includes several much-needed reforms 
that this administration has requested, including organic legislation 
to codify the reorganization of the former Minerals Management Service.
    While this Administration seems content with the status quo, the 
Chairman's legislation is about making the right choices now to foster 
new access and new energy in the future--not 5 years from now in 
drafting the next plan, not 10 years from now, but right now. We cannot 
keep ignoring the vast resources potential of the U.S. Outer 
Continental Shelf. The time to be bold is now, and I applaud the 
Chairman's legislation and look forward to hearing from our witnesses. 
Thank you.
                                 ______
                                 
    Mr. Lamborn. I now recognize the Ranking Member, the 
gentleman from New Jersey, Mr. Holt, for his opening statement.

 STATEMENT OF THE HON. RUSH HOLT, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF NEW JERSEY

    Dr. Holt. Thank you, Mr. Chairman. I thank the witnesses 
for coming today. We all apologize for the voting schedule, 
which will subject you to some inconvenience, I am afraid.
    Americans have their own traditions when it comes to 
celebrating the arrival of summer: cookouts, vacation, swimming 
pools. Here, in the Natural Resources Committee, every summer 
the Republican Majority tries to move legislation to open our 
Nations' beaches and coastlines to oil drilling, even when 
there is work that should be done before that drilling 
commences.
    The bill before us today was introduced only 2 days ago, 
would allow the oil companies to put rigs off of our beaches in 
California and off every State on the east coast, from Maine to 
South Carolina, including my home State of New Jersey, where, I 
will note, that even our Republican Governor has come out in 
opposition to it. That is not meant as a campaign endorsement 
of our Governor.
    Mr. Lamborn. But he will take it.
    Dr. Holt. He will take anything. It would require drilling 
in important fisheries and sensitive environments like Bristol 
Bay in Alaska and the Arctic Ocean, all without enacting key 
drilling safety reforms, following one of the greatest 
environmental disasters in our history.
    Like most legislative proposals from the Majority, the bill 
was drafted without any attempt at bipartisan or bicameral 
cooperation. It is a mish-mash of provisions rejected by the 
other body in the last Congress and rejected in this Congress.
    Chairman Hastings has stated that somehow the legislative 
process here in the House requires this rejection of 
collaboration. And at some point we are going to have to stop 
the convenient excuse of a legislative strategy designed to 
produce political slogans, rather than public laws. I hope we 
can get back to the expectation that we will come to completion 
in legislation, rather than using bills for a message.
    This package ignores the reality of the spill in the gulf. 
It ignores the reality of our current domestic oil production. 
Our domestic oil production is at a 20-year high. Natural gas 
production is at an all-time high. We have more floating rigs 
than before the BP spill operating. My colleagues would like to 
make the claim that oil production is down on public lands. I 
have good news for them. The Energy Information Administration 
has a report on that very topic. And, according to this brand 
new report, we are producing more oil from public lands than at 
the end of the previous Administration. We are producing more 
oil from public lands offshore. We are producing 20 percent 
more oil from public lands onshore. And I would argue that, 
even with that, we need to show even more care, given our 
experience of recent years.
    Today's hearing ignores these facts, continues this 
troubling pattern of hastefully called hearings and recycled 
energy legislation.
    The Minority was informed at virtually the same time as the 
public that this legislative hearing would occur. It is not a 
good way to do business. The Administration was invited to 
testify less than a week before the hearing on an un-introduced 
bill, which, of course, prohibited the Interior Department from 
being able to send a witness to comment on something that they 
hadn't seen.
    So, we, on the Minority, will be exercising our rights 
under rule XI of the rules of the House to request a second day 
of hearing on this bill, so that we can hear from the 
Administration on this proposal, and hear from other witnesses 
who can provide the Committee with considered testimony and 
factual information about the current state of our domestic 
energy production and the needs for action to enact safe 
drilling reforms.
    And so, let me present to the Chairman this request under 
rule XI, and say I look forward to working with him in a 
bipartisan way, and all the members of the Committee in a 
bipartisan way, to have safe, assured energy production. Thank 
you.
    [The prepared statement of Dr. Holt follows:]
    Prepared Statement of The Honorable Rush Holt, Ranking Member, 
              Subcommittee on Energy and Mineral Resources
    Thank you.
    Americans have their own traditions when it comes to celebrating 
the arrival of summer; some have cookouts, some take vacation and some 
head to the nearest swimming pool.
    And here in the Natural Resources Committee, every summer the 
Republican Majority tries to move legislation to open our Nation's 
beaches and coastlines to unsafe oil drilling.
    The bill before us today, which was only introduced 2 days ago, 
would allow Big Oil to put drilling rigs off our beaches in California 
and every State on the east coast from Maine to South Carolina, 
including off the coast of my home State of New Jersey--a plan that 
even our Republican Governor has come out in opposition to.
    It would require drilling in important fisheries and sensitive 
environments like Bristol Bay in Alaska and the Arctic Ocean. All 
without enacting key drilling safety reforms following the BP Deepwater 
Horizon disaster.
    And like most legislative proposals from the Majority, this bill 
was drafted without any attempt at bipartisan or bicameral cooperation; 
the bill is a mishmash of provisions that were rejected by the Senate 
last Congress and will be rejected again in this Congress.
    Chairman Hastings has stated that somehow the legislative process 
here in the House requires this rejection of collaboration or 
cooperation with the Minority or the other body. But at some point, 
that becomes a convenient excuse for a legislative strategy designed to 
produce political slogans rather than public laws.
    Not only does this recycled Republican package ignore the reality 
of the BP spill, it also ignores the reality of our current, domestic 
energy production. Our domestic oil production is at a 20-year high and 
natural gas production is at an all-time high. I will repeat that: our 
domestic oil production is at a 20-year high and natural gas production 
is at an all-time high.
    And for my colleagues on the other side who like to make the 
inaccurate claim that oil production is down on public lands, I have 
some good news. The Energy Information Administration has just come out 
with a new report on that very topic.
    According to that brand new report, we are producing more oil from 
public lands than during the last year of the Bush Administration. We 
are producing more oil from public lands offshore. We are producing 
nearly 20 percent more oil from public lands onshore. And we are 
producing 200 percent more oil from Indian lands.
    That is thanks to the Interior Department and President Obama.
    Today's hearing ignores these facts and continues this troubling 
pattern of hastily-called hearings on recycled energy legislation, 
drafted in secret and dead on arrival. The lack of sufficient notice 
and time to review proposed legislation prevents witnesses, including 
those representing the Administration, from being able to prepare 
testimony in a timely fashion or participate in hearings. As a result, 
too many of the Subcommittee's meetings consist largely of industry-
friendly witnesses repeating well-worn, and long-discredited, talking 
points.
    The Minority was informed at virtually the same time as the public 
that this legislative hearing would occur. The Administration was 
invited to testify less than a week before today's hearing on an 
unintroduced bill, which prohibited the Interior Department from being 
able to send a witness.
    Therefore, the Minority will be exercising our rights under rule XI 
of the rules of the House to request a second day of hearings on this 
bill so that we can hear from the Administration on this proposal and 
from other witnesses who can provide the Members of this Committee with 
factual information about the current state of our domestic energy 
production and the need for Congress to enact drilling safety reforms.
    I yield back the balance of my time.
                                 ______
                                 
    Mr. Lamborn. OK, thank you. And also, we will now hear from 
the Chairman and Ranking Member of the Full Committee, we 
always do so when they are here.
    Chairman Hastings of Washington.

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

    Mr. Hastings. Thank you very much, Mr. Chairman, and thanks 
for the courtesy of allowing me to be here.
    Mr. Chairman, it is a fact. The United States is producing 
more oil and natural gas than ever before. On State and private 
lands throughout our country, increased energy production is 
creating new, good-paying jobs. It is revitalizing and 
strengthening our economy, and making the United States a new 
player in the world energy market.
    Some may look at this increase and think that means we 
don't need further production on our Federal lands and waters. 
This viewpoint is not only wrong, but it is incredibly short-
sighted. In reality, the increase in production on State and 
private lands only further highlights the missed opportunities 
on Federal lands. Jobs, revenue, and economic security are all 
being forfeited because this Administration continues to block 
energy production on a majority of our offshore areas.
    Nearly 5 years ago, Congress and President Bush took action 
to lift the drilling moratorium and open new areas for 
drilling. Unfortunately, when President Obama assumed office he 
tossed out that plan to develop these areas. He canceled lease 
sales, and then imposed a new plan that keeps 85 percent of our 
offshore areas off limits. President Obama's current plan 
doesn't open one new area for leasing and energy production. 
That is why it is not surprising that the House, in a 
bipartisan vote last Congress, soundly rejected the President's 
offshore drilling plan.
    The bill before us today, H.R. 2231, the Offshore Energy 
and Jobs Act, once again clearly states that the President's 
plan is unacceptable and it requires him to put a new offshore 
leasing plan in place by 2015. In contrast to the President's 
no-new-energy plan, this is a drill-smart plan that focuses on 
energy production in specific areas containing the greatest-
known oil and natural gas resources. What a novel idea. It 
would safely open up new areas that were previously under 
moratoria, such as the Mid-Atlantic, the Southern Pacific, and 
the Arctic.
    The bill also will require the Secretary to conduct 
specific oil and natural gas lease sales, including offshore 
Virginia, which was delayed and then canceled by the 
Administration. This lease sale was originally scheduled to 
take place in 2011, 2 years ago. But President Obama has 
ensured that Virginians won't be able to produce energy or 
enjoy economic benefits while he is in office, since the 
earliest this lease sale could happen is 2017, under his plan, 
unless Congress takes action.
    The bill also establishes fair and equitable revenue 
sharing for Coastal States. As was pointed out in Committee 
hearings last Congress, it is important to recognize that 
revenue-sharing will increase American energy production by 
creating new incentives for opening new offshore areas for 
drilling. More energy production will mean more jobs, a 
stronger economy, and, obviously, more revenue to the 
Government.
    Finally, the bill would reorganize the Interior 
Department's offshore energy agencies. While the Department has 
already moved forward in this process, there has been 
bipartisan recognition, including from this Administration, of 
a need for organic legislation to codify these changes into 
law. Reforms must increase accountability, improve efficiency, 
promote safety, and ensure the highest ethical standards of 
employees.
    Much like the Administration has also done, this bill would 
officially abolish the Mineral Management Service, or MMS, and 
create three separate agencies, each with very clearly defined 
missions. It would also establish an Under Secretary of Energy, 
Land, and Minerals, which would be appointed by the President 
in order to elevate the role of American energy production 
within the Department.
    The bill also includes a number of reforms to promote 
safety and high ethical standards.
    The majority of the proposals in this bill passed the House 
in the last Congress, and it did so with bipartisan support. 
Our Nation deserves better than the President's current 
offshore energy plan. While State and private lands in the 
United States are undergoing an energy revolution, there is no 
good, credible reason why our offshore areas should be 
relegated to the sidelines. Our Federal lands and waters can be 
part of America's great energy story, and help contribute to 
job creation and economic growth, if we only remove the 
government barriers that keep them off-limits.
    Once again, Mr. Chairman, thank you for the courtesy, and I 
yield back my time.
    [The prepared statement of Mr. Hastings follows:]
 Prepared Statement of The Honorable Doc Hastings, Chairman, Committee 
                          on Natural Resources
    Fact: The United States is producing more oil and natural gas than 
ever before. On State and private lands throughout the country, 
increased energy production is creating new, good-paying jobs; 
revitalizing and strengthening our economy; and making the United 
States a new player in the world energy market.
    Some may look at this increase and think that means we don't need 
any further production on our Federal lands and waters. This viewpoint 
is not only wrong, but incredibly shortsighted. In reality, the 
increase in production on State and private lands only further 
highlights the missed opportunities on Federal lands. Jobs, revenue and 
economic security are all being forfeited because the Obama 
Administration continues to block energy production in the majority of 
our offshore areas.
    Nearly 5 years ago, Congress and President Bush took action to lift 
the drilling moratorium and open new areas for drilling. Unfortunately, 
when President Obama assumed office, he tossed out a plan to develop 
these areas, canceled lease sales and then imposed a new plan that 
keeps 85 percent of our offshore areas off-limits. President Obama's 
current plan doesn't open one new area for leasing and energy 
production. That's why it's not surprising that the House, in a 
bipartisan vote last Congress, soundly rejected the President's 
offshore drilling plan.
    The bill before us today, H.R. 2231, the Offshore Energy and Jobs 
Act, once again clearly states that the President's plan is 
unacceptable and it requires him to put a new offshore leasing plan in 
place by 2015. In contrast to the President's no-new energy plan, this 
is a drill-smart plan that focuses energy production in specific areas 
containing the greatest known oil and natural gas resources. It would 
safely open up new areas that were previously under moratoria--such as 
the Mid-Atlantic, Southern Pacific and Arctic. This would create over a 
million new American jobs and generate hundreds of millions of dollars 
in new revenue to the Federal treasury.
    The bill would also require the Secretary to conduct specific oil 
and natural gas leases sales, including offshore Virginia which was 
delayed and then canceled by this Administration. This lease sale was 
originally scheduled to take place in 2011. But President Obama has 
ensured Virginians won't be able to produce energy, or enjoy the 
economic benefits, while he's in office since the earliest this lease 
sale could happen is 2017, unless Congress takes action.
    The bill also establishes fair and equitable revenue sharing for 
Coastal States. As was pointed out in Committee hearings last Congress, 
it's important to recognize that revenue sharing will increase American 
energy production by creating new incentives for opening new offshore 
areas to drilling. More energy production will means more jobs, a 
stronger economy, and more revenue.
    Finally, the bill would reorganize the Interior Department's 
offshore energy agencies. While the Department has already moved 
forward in this process, there has been bipartisan recognition, 
including from the Administration, of the need for organic legislation 
to codify these changes into law. Reforms must increase accountability, 
improve efficiency, promote safety and ensure the highest ethical 
standards of employees.
    Much like the Administration has also done, this bill would 
officially abolish the Minerals Management Service (MMS) and create 
three separate agencies--each with very clearly defined missions. It 
would also establish an Under Secretary of Energy, Land and Minerals, 
which would be appointed by the President, in order to elevate the role 
of American Energy production within the Department. The bill also 
includes a number of reforms to promote safety and high ethical 
standards.
    The majority of the proposals in this bill passed the House last 
Congress with strong bipartisan support.
    Our Nation deserves better than the President's current offshore 
energy plan. While State and private lands in the United States are 
undergoing an energy revolution--there is no good, credible reason why 
our offshore areas should be regulated to the sidelines. Our Federal 
lands and waters can be part of America's great energy story--and help 
contribute to job creation and economic growth--if we can only remove 
the government barriers that keep them off-limits.
                                 ______
                                 
    Mr. Lamborn. Thank you for that statement, Mr. Chairman. We 
now have to break for votes. We will reconvene immediately 
after the votes. It will be the only interruption of the 
hearing today. I am going to estimate it is going to be about 
45 minutes or so.
    The Subcommittee will be in recess.
    [Recess.]
    Mr. Lamborn. The Committee will reconvene. We shouldn't 
have any more interruptions, so we can get to the next order of 
business, hearing from a distinguished panel of witnesses.
    The panel consists of Mr. John Felmy, Chief Economist for 
the American Petroleum Institute; Mr. Richie Miller, President 
of Spectrum Geo, Inc.; Mr. Christopher Guith, Vice President 
for Policy, the Policy Institute for 21st Century Energy of the 
U.S. Chamber of Commerce; and a guest of the Minority, Mr. 
Michael Conathan, Director of Ocean Policy for the Center for 
American Progress Action Fund.
    So, I want to thank you all for being here. Like all of our 
witnesses, your written testimony will appear in full in the 
record. So I would ask that you keep your oral statements to 5 
minutes. The microphones are not automatic, so you have to push 
the button. When you do push the button, it is a green light at 
first. Then, after 4 minutes, it becomes yellow, and after 5 
minutes it turns red.
    So, we would launch right in. I think Members will be 
coming and going. It is a little hard to predict, because some 
are heading to the airport, frankly. But I am happy to have you 
all as guests, and I look forward to your testimony.
    And, Mr. Felmy, you may begin.

   STATEMENT OF JOHN FELMY, PH.D, CHIEF ECONOMIST, AMERICAN 
                      PETROLEUM INSTITUTE

    Mr. Felmy. Chairman Lamborn, Ranking Member Holt, good 
morning. I am John Felmy, Chief Economist at the American 
Petroleum Institute. API represents over 500 member companies 
involved in all aspects of oil and natural gas industry. Thank 
you for the opportunity to testify today.
    API is encouraged that Congress is discussing ways to 
increase offshore oil and natural gas development in the United 
States. Putting these American resources to work will enhance 
our energy security and transform the United States into a 
dominant job-creator and energy powerhouse. It would provide a 
major boost to domestic energy production, State and local 
economies, and Government revenue.
    The U.S. Outer Continental Shelf is estimated to contain 
vast, undiscovered oil and natural gas resources, much of it 
locked away in federally controlled offshore areas that are off 
limits to energy exploration and development. No other 
developed Nation in the world keeps so much of its offshore 
energy resources out of reach.
    The Bureau of Ocean Exploration and Management currently 
estimates that 88.6 billion barrels of oil and 398.4 trillion 
cubic feet of natural gas have yet to be discovered on our 
Outer Continental Shelf. While these estimates are large, they 
are also incredibly out of date, because a large share of the 
estimates are based on seismic surveys that were conducted 30 
years ago.
    Consider this. In 1987 the Minerals Management Service 
estimated only 9.57 billion barrels of oil in the Gulf of 
Mexico. Thanks to advances in collecting and processing seismic 
surveying data and continued exploration, that estimate rose in 
2011 to 48.4 billion barrels of oil, a 400 percent increase.
    Under current Administration policy, collecting much-needed 
seismic data in Atlantic OCS may not happen. Why? Because 
without a lease sale scheduled in the Atlantic for the 
foreseeable future, there is very little prospect for the 
companies that collect these data to sell it. It is important 
to send positive signals on leasing in order to spur companies 
to invest in collecting new data, so that they can be assured 
that there will be a market for these data.
    Moving forward with leasing in the Atlantic, as proposed in 
this legislation, would be a step in the right direction. If 
offshore energy production were extended to new areas, it could 
generate a bounty of job creation and new revenues to the 
Government, while improving America's energy security.
    Earlier this year, a single lease sale in the Gulf of 
Mexico generated $1.2 billion in revenue for the Federal 
Government. As wells were drilled and the leases begin to 
produce, the revenue impact will only grow, along with the 
prospects for employment in the region and around the country.
    Especially along the Atlantic coast, developing energy 
resources safely and responsibly could bring new high-paying 
jobs to States where our industry has not historically had a 
major offshore presence. And if Congress enacts revenue-sharing 
legislation, offshore energy development could also generate 
substantial revenue for State and Federal Governments.
    According to a recent study by Wood MacKenzie, policies 
that promote domestic development of oil and natural gas 
resources, including access to the vast Federal offshore areas 
that have been off limits, could create more than 1 million new 
jobs and generate $127 billion in Government revenue in under a 
decade. And these jobs are a great potential for communities 
not traditionally associated with oil and natural gas.
    According to a study to IHS Global Insight, 166,000 of the 
new oil and natural gas jobs created by 2020 could be expected 
to be held by African American and Latino workers.
    Delivering this energy to the American people is safer than 
ever, as a result of industry's leadership and continuous 
investments in safety, as evident in API's robust slate of 
offshore standards and the work being done by the Center for 
Offshore Safety.
    There are three critical aspects to this network of safety 
for offshore operations: one, prevention accomplished through 
development of robust industry standards, and through the 
promotion of robust safety and environmental management 
systems, which is embodied in the Center for Offshore Safety; 
two, new, innovative well containment and intervention 
capabilities; and, three, improved planning and resources for 
oil spill response.
    We should also recognize that the significant changes in 
the regulatory system to further enhance and codify equipment 
technologies, operational standards, and management systems in 
each of these three areas.
    There is broad, bipartisan and growing support among 
policymakers at the State and Federal level for unlocking the 
energy opportunity off our coast. We urge policymakers at every 
level to work together to take advantage of the valuable 
opportunity presented by expanding access to offshore energy 
production. The benefits for American families and businesses 
are too great to let this opportunity slip away. Thank you.
    [The prepared statement of Mr. Felmy follows:]
  Prepared Statement of John Felmy, Ph.D., Chief Economist, American 
                          Petroleum Institute
    Good morning. I am John Felmy, Chief Economist at the American 
Petroleum Institute. API represents over 500 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 Congress is discussing ways to increase offshore oil and natural 
gas development in the United States. Putting these American resources 
to work will enhance our energy security and transform the United 
States into a dominant job creator and energy powerhouse. It would 
provide a major boost to domestic energy production, State and local 
economies, and Government revenue.
    Offshore oil and natural gas production is a long-term effort that 
requires long-term planning. Before the first well can be drilled and 
any of these benefits realized, the Federal Government must schedule 
lease sales and permit modern seismic surveys, which are essential for 
locating undersea energy resources.
    The U.S. Outer Continental Shelf is estimated to contain vast 
undiscovered oil and natural gas resources, much of it locked away in 
the 87 percent of federally-controlled offshore areas that are off-
limits to energy exploration and development. No other developed nation 
in the world keeps so much of its offshore energy resources out of 
reach.
    The Bureau of Ocean Exploration and Management currently estimates 
that 88.6 billion barrels of oil and 398.4 trillion cubic feet of gas 
have yet to be discovered on our Outer Continental Shelf. While these 
estimates are large, they are also incredibly out-of-date because a 
large share of the estimates are based on seismic surveys that were 
conducted 30 years ago.
    Today, seismic surveys using modern technology produce sub-surface 
images which are much clearer than those from decades ago and allow for 
a better understanding of the potential resources available.
    Consider this. In 1987, the Minerals Management Service estimated 
only 9.57 billion barrels of oil in the Gulf of Mexico. Thanks to 
advances in collecting and processing seismic surveying data and 
continued exploration, that estimate rose in 2011 to 48.4 billion 
barrels of oil--a 400 percent increase.
    It is only through exploratory drilling that we can find potential 
domestic resources, but the use of seismic surveys is critical for 
determining the best prospects for drilling. Seismic surveys have been 
used safely for decades--with little impact on marine life--to assess 
the location and size of potential oil and natural gas deposits, which 
often lay several miles beneath the ocean floor.
    Under current administration policy, collecting much needed seismic 
data in the Atlantic OCS may not happen. Why? Because without a lease 
sale scheduled in the Atlantic for the foreseeable future, there is 
very little prospect for the companies that collect these data to sell 
it. It is important to send positive signals on leasing in order to 
spur companies to invest in collecting new data, so that they can be 
assured that there will be a market for these data. Moving forward with 
leasing in the Atlantic as proposed in this legislation would be a step 
in the right direction.
    If offshore energy production were extended to new areas, it could 
generate a bounty of job creation and new revenues to the Government 
while improving America's energy security. Earlier this year, a single 
lease sale in the Gulf of Mexico generated $1.2 billion in revenue for 
the Federal Government. As wells are drilled and the leases begin to 
produce, the revenue impact will only grow, along with the prospects 
for employment in the region and around the country.
    Especially along the Atlantic coast, developing energy resources 
safely and responsibly could bring new well-paying jobs to States where 
our industry has not historically had a major offshore presence. And if 
Congress enacts revenue sharing legislation, offshore energy 
development could also generate substantial revenue for the State and 
Federal Governments. According to a study by Wood Mackenzie, policies 
that promote domestic development of oil and natural gas resources--
including access to vast Federal offshore areas that have been kept 
off-limits--could create more than 1 million new jobs and generate $127 
billion in Government revenue in under a decade. And these jobs are a 
great potential for communities not traditionally associated with oil 
and natural gas production. According to a study by IHS Global Insight, 
166,000 of the new oil and natural gas jobs created by 2020 could be 
expected to be held by African American and Latino workers.
    We can also break out the numbers specifically for the eastern Gulf 
of Mexico and the Atlantic and Pacific Outer Continental Shelf. If 
these areas were opened for energy development, the United States could 
see an increase of 4.2 million barrels of oil equivalent per day in 
domestic oil and natural gas production in less than 20 years. These 
activities could support 420,000 total jobs, about 30 percent being 
direct jobs in the industry. And the cumulative government revenue over 
that period could total $313 billion, with the annual take for the 
Government at $44 billion and growing at the end of the period.
    Delivering this energy to the American people is safer than ever as 
a result of industry's leadership and continuous investments in safety, 
as evident in API's robust slate of offshore standards and the work 
being done by the Center for Offshore Safety. There are 3 critical 
aspects to this network of safety for offshore operations:

    (1) Prevention, accomplished through the development of robust 
industry standards, and through the promotion of robust safety and 
environmental management systems, which is embodied in the Center for 
Offshore Safety;
    (2) New innovative well containment and intervention capabilities; 
and
    (3) Improved planning and resources for oil spill response.

    We should also recognize the significant changes in the regulatory 
system to further enhance and codify equipment technologies, 
operational standards, and management systems in each of these three 
areas.
    There is broad, bipartisan and growing support among policymakers 
at the State and Federal level for unlocking the energy opportunity off 
our coasts. We urge policymakers at every level to work together to 
take advantage of the valuable opportunity presented by expanding 
access to offshore energy production. The benefits for American 
families and businesses are too great to let this opportunity slip 
away.
                                 ______
                                 
    Dr. Wittman [presiding]. Thank you very much. We will go to 
the next witness.

    STATEMENT OF RICHIE MILLER, PRESIDENT, SPECTRUM GEO INC.

    Mr. Miller. Chairman Lamborn, Ranking Member Holt, members 
of the Subcommittee, good morning. I appreciate the opportunity 
to be here today to discuss the Offshore Energy and Jobs Act, 
and the need for America to access offshore oil and gas 
resources. I am President of Spectrum Geo Inc., a company 
engaged in acquiring non-exclusive seismic data, processing it, 
and licensing these products to the oil and gas companies. We 
are pleased that Congress is considering legislation like the 
Offshore Energy and Jobs Act to make new areas of the Federal 
OCS available for oil and gas exploration, and we encourage its 
passage.
    The United States has safely been exploring and developing 
its offshore oil and gas resources since 1947. While the 
deepwater plays in the western and central Gulf of Mexico 
continue to be productive, the United States needs to begin 
exploring new areas in order to continue to fuel our vital 
economy, and ensure we have energy security. It takes years for 
oil and gas exploration to result in new production. Seismic 
data acquired today might result in actual energy to market in 
10 to 20 years. This is due to the many steps that need to take 
place.
    Modern seismic imaging provides the lens through which 
scientists can better understand what lies beneath the surface 
of the earth. It is an amazing useful scientific tool that 
allows us to accurately image the earth's crust down to depths 
in excess of 40,000 feet. Over the past few decades, advances 
in modern seismic imaging and interpretation have been 
tremendous. Today, seismic acquisition and processing are able 
to produce subsurface images that are much clearer and more 
accurate than those from decades ago, or even 5 years ago.
    Modern seismic imaging reduces risk, both economic and 
environmental. It provides the early understanding of the 
geological structures that have the potential to produce oil 
and gas, their location, and the size of the resources. It 
increases the likelihood that exploratory wells will 
successfully tap hydrocarbons, and helps us avoid drilling for 
oil and gas in areas where we won't likely be successful. It 
also reduces the number of wells that need to be drilled in a 
given area, thus reducing the overall footprint for 
exploration.
    To better understand the resource potential in other areas 
like the Atlantic OCS, we need to acquire modern seismic data. 
The last surveys of the Atlantic OCS were conducted over 30 
years ago. Older, low-tech data that exists does not image the 
medium-to-deep plays, and does not image the basin's 
architecture, which is imperative to understanding the Atlantic 
margin play.
    Existing resource estimates for the Atlantic OCS are 3.3 
billion barrels of oil and over 31 trillion cubic feet of 
natural gas. While these are impressive estimates, it is widely 
believed that modern seismic imaging, using the latest 
technology, will show much greater resources. It will also be 
able to pinpoint where the most abundant resources are likely 
located.
    There are reasons why geologists and geophysicists believe 
that the Atlantic OCS could have much more abundant oil and gas 
resources than we previously believed. Data from around the 
Atlantic margin indicate energy productive geologic structures 
likely exist along the east coast.
    BOEM is in the process of producing a programmatic 
environmental impact statement for geophysical activity on the 
Atlantic OCS. We are hopeful that the BOEM will push for a 
timely issuance of a positive record of decision, so that we 
can begin to understand what kind of resource may exist in the 
Atlantic.
    The best decisions are generally made when we have the 
facts and the best data. This is true of our Nation's oil and 
gas resources. It only makes sense for us to understand what 
the resource base and what resource value is. By pursuing 
seismic data in the southern and Mid-Atlantic, we can 
understand what resources exist in that area, as well. 
Americans deserve public policy decisions that are made based 
on the best information possible. Modern seismic surveys 
provide that information.
    Let's allow science to help us understand what resources we 
have. We owe it to ourselves. Thank you for the opportunity to 
testify before this Subcommittee.
    [The prepared statement of Mr. Miller follows:]
   Prepared Statement of Richie Miller, President, Spectrum Geo Inc.
    Chairman Lamborn, Ranking Member Holt, Members of the Committee: 
Good morning. I appreciate the opportunity to be here today to discuss 
the Offshore Energy and Jobs Act and the need for America to access 
offshore oil and gas resources.
    I am President of Spectrum Geo Inc., a company engaged in acquiring 
non-exclusive seismic data, processing it and licensing these products 
to oil and gas companies. The Spectrum Group is built on the company's 
reputation as a reliable seismic service provider and serves a global 
clientele. The Group provides innovative non-exclusive Services and 
high quality seismic imaging from regional offices in the United 
States, the UK, Norway, Singapore and Australia. Spectrum is also a 
member of the International Association of Geophysical Contractors, a 
global trade association representing our industry.
    We are pleased that Congress is considering legislation, like the 
Offshore Energy and Jobs Act, to make new areas of the Federal OCS 
available for oil and gas exploration, and we encourage its passage. 
The United States has remained successful in producing its oil and gas 
resources because we have historically been willing to explore in new 
areas. And the United States has safely been exploring and developing 
its offshore oil and gas resources since 1947. For decades, the U.S. 
Gulf of Mexico has provided significant oil and natural gas resources 
for American consumers, currently supplying approximately 27 percent of 
domestic oil production and 15 percent of domestic natural gas 
production. The Gulf of Mexico, one of the world's premier petroleum 
provinces, has proved to be resilient. Over the years producers have 
explored and produced at greater depths and in plays far below the 
ocean floor to find some of the world's most remote and abundant 
hydrocarbons.
    While the deep water plays in the western and central Gulf of 
Mexico continue to be productive, the United States needs to begin 
exploring new areas in order to continue to fuel our vital economy and 
ensure we have energy security. In 2011, the U.S. Bureau of Ocean 
Energy Management (BOEM) estimated that the Federal OCS is home to a 
mean of 88.6 billion barrels of undiscovered technically recoverable 
reserves (UTRR) of oil and 398.4 trillion cubic feet of UTRR of natural 
gas.\1\ As the BOEM image below demonstrates, significant reserves of 
oil and natural gas are believed to exist under areas outside the 
western and central Gulf of Mexico.
---------------------------------------------------------------------------
    \1\ U.S. Department of the Interior, Bureau of Ocean Energy 
Management, ``Resource Evaluation Program.'' http://www.boem.gov/Oil-
and-Gas-Energy-Program/Resource-Evaluation/Resource-Assessment/2011-RA-
Assessments.aspx.


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    Source: http://www.boem.gov/uploadedFiles/BOEM/
Oil_and_Gas_Energy_Pro
gram/Resource_Evaluation/Resource_Assessment/
2011_National_Assessment_Map
---------------------------------------------------------------------------
.pdf

    Even though nearly half of the estimated OCS resources exist 
outside the western and central Gulf of Mexico, abundant resources in 
the Atlantic, Pacific, Alaska, and eastern Gulf of Mexico are not 
available for new leasing.
    It takes years for oil and gas exploration to result in new 
production. Seismic data acquired today might result in actual energy 
to market in 10 to 20 years. This is due to the many steps that need to 
take place. Modern seismic imaging provides the lens through which 
scientists can better understand what lies beneath the surface of the 
Earth. It is an amazingly useful scientific tool that allows us to 
accurately image the earth's crust down to depths in excess of 40,000 
feet below the mud line (more than 8 miles down). Over the past few 
decades, advances in modern seismic imaging and interpretation have 
been tremendous. Today, seismic surveys that use modern data 
acquisition techniques and then process that data by applying the 
massive computing power that is now affordable are able to produce sub-
surface images which are much clearer and more accurate than those from 
decades ago, or even 5 years ago. This ability serves many needs beyond 
oil and gas exploration. For the energy industry, modern seismic 
imaging reduces risk--both economic risk of exploration and production, 
but also the associated safety and environmental risks. It provides the 
early understanding of the geological structures that have the 
potential to produce oil and gas, where those hydrocarbons are trapped 
and how much likely exists. Modern seismic imaging provides greater 
certainty for explorers. It increases the likelihood that exploratory 
wells will successfully tap hydrocarbons and helps us avoid drilling 
for oil and gas in areas where we won't likely be successful. It also 
reduces the number of wells that need to be drilled in a given area, 
thus reducing the overall footprint for exploration.
    As mentioned earlier, our company is engaged in acquiring non-
exclusive seismic data, processing it and licensing these products to 
oil and gas companies. That means we do the work (and take the 
financial risks) needed to deliver oil and gas companies the ability to 
use modern seismic imaging to explore an area new to them (or new to 
the entire industry). They also use our products to develop reserves 
they discover in the process. We repeatedly license the seismic data to 
oil and gas companies for a fee, but retain the underlying ownership. 
By acquiring the data once and making it available to any oil and gas 
company, our industry avoids duplicating these surveys, and thus avoids 
unnecessary duplication of temporary disturbance caused by our surveys. 
We also provide the same products to BOEM for their use in evaluating 
the OCS resource base, in ensuring they receive fair market value when 
they lease OCS lands, and in making the many conservation decisions 
required of them as they administer their obligations under the OCS 
Lands Act.
    Modern seismic imaging can dramatically improve our understanding 
of how much resources exist. Exploration and development activities 
generally lead to increased resource estimates. For example, in 1987 
the Minerals Management Service estimated only 9.57 billion barrels of 
oil in the Gulf of Mexico. With more recent seismic data acquisition 
and additional exploratory drilling, that estimate rose in 2011 to 48.4 
billion barrels of oil--a 500 percent increase!
    To better understand how much resources exist in other areas like 
the Atlantic Outer Continental Shelf (OCS) we need to obtain modern 
seismic data. The last surveys of the Atlantic OCS were conducted 30 
years ago. Due to technological advances, existing estimates of the 
available energy are out-of-date.
    Existing resource estimates for the Atlantic OCS are 3.3 billion 
barrels of oil and 31.3 trillion cubic feet of natural gas. While these 
are impressive estimates, it is widely believed that modern seismic 
imaging using the latest technology will show much greater resources. 
It will also be able to pinpoint where the most abundant resources are 
likely located.
    There are reasons why geologists and geophysicists believe that the 
Atlantic OCS could have much more abundant oil and gas resources than 
we previously believed. For one, the Atlantic Margin is proving to be 
quite productive in hydrocarbon production in areas like West Africa, 
Brazil and Nova Scotia.
    Between 200 to 300 million years ago there was one supercontinent 
that we refer to as Pangea. It began to break apart 200 million years 
ago. At the time the U.S. and Canadian east coast, West Africa and 
Brazil were connected as a single land mass. The energy productive 
geologic structures in West Africa and Brazil have been correlated and 
determined to be the same age and structure with those that exist along 
the U.S. east coast. Further investigation will likely show that they 
are similar in their hydrocarbon-bearing geologic structures.

                                 Pangea


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



Understanding the Atlantic Resource
    The best decisions are generally made when we have the facts and 
the best data. This is true of our Nation's oil and gas resources. It 
only makes sense for us to understand what the resource base and 
resource value is.
    For the Atlantic OCS, we need to update our understanding of the 
resource, and modern seismic imaging is needed to make this evaluation. 
Older, low tech data that exists does not image medium to deep plays, 
and does not image the basin's architecture, which is imperative to 
understanding the Atlantic Margin play. We now have an array of new 
tools in the toolbox, reflection, gravity, magnetics, electromagnetic, 
which can better help us understand the potential resource. By 
utilizing these tools and by applying increasingly accurate and 
effective interpretation practices, we can be better locate and dissect 
prospective areas, identify the types of plays we are locating, and 
help us evaluate the potential resource base. All of these factors 
demonstrate how modern seismic imaging creates a better understanding 
of what lies below the surface of the Earth before a single well is 
drilled. It is the least intrusive and most cost-effective way to 
understand where recoverable oil and gas resources likely exist in the 
Southern- and Mid-Atlantic.
    Because acquiring and interpreting modern seismic data provides a 
greater understanding of where oil and gas reserves exist and how much 
are likely in place, having modern seismic data prior to a lease sale 
will allow industry to make more informed bids. This will likely result 
in more bids and higher bids since industry is reluctant to bid on 
blocks where there is little or no seismic data. Modern seismic imaging 
consistently brings more players to bid on offshore leases, creating 
more competition and driving the cost of leases higher. This is a 
phenomenon we are seeing globally as occurred recently in Uruguay with 
the government receiving $1.2 billion lease bids and in Brazil where 
with $2.0 billion in lease bids were received. Lebanon, Cyprus and 
Somalia are holding lease sales later this year that are expected to 
bring in significant revenues for the host countries. Oil and gas 
producers have the capital to explore frontier areas and are always 
looking for new opportunities.
    As mentioned, having modern seismic data available also creates 
greater efficiency for the Government as it allows the BOEM to better 
evaluate the blocks it is offering and the bids that it receives. With 
higher quality data about the resource, BOEM will have a great 
understanding of the resource value. This will ensure that the taxpayer 
get a greater return from Federal OCS acreage.
Ongoing Programmatic Environmental Impact Statement
    BOEM is in the process of producing a Programmatic Environmental 
Impact Statement (PEIS) to evaluate ``potential significant 
environmental impacts of multiple geological and geophysical activities 
on the Atlantic Outer Continental Shelf''. A draft PEIS was published 
in the Federal Register on March 30, 2012 and underwent a 94-day 
comment period.


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    A record of decision (ROD) was initially posted to be released 
in October 2013, however, we now understand that the ROD is being 
pushed to March 2014. We are concerned about potential delays in the 
issuance of an ROD as these delays create difficulties in scheduling 
for permits and vessels. New procedures and processes will likely be 
introduced after ROD which will inevitably result in more delays in the 
permitting process. We hope that BOEM will issue these procedures and 
processes as they are determined so that industry can start working on 
permit applications. We are hopeful that BOEM will push for a timely 
issuance of a positive record of decision so that we can begin to 
understand what kind of resource may exist in the Atlantic.
Conclusion
    Our offshore oil and gas resources can provide us with enormous 
energy resources if we choose to pursue them. Recent history shows us 
that the more we explore the more we find. In the decades we have 
developed the Gulf of Mexico we have moved from the shelf, to the deep 
water, to the deep water Oligocene play, to the shelf deep gas play. 
The basin keeps giving as we learn more and seismic imaging plays a big 
part of this success. The same evolution is occurring in other regions 
like the North Sea, Middle East and even here at home. A mere 5 years 
ago, the Eagle Ford play in South Texas was virtually unknown. Now it 
is one of the world's most prolific plays and we are targeting two more 
horizons in the play and resource estimates continue to rise. This 
would have never happened if industry had been denied the use of modern 
seismic imaging tools.
    By pursuing seismic data in the Southern- and Mid-Atlantic we can 
understand what resources exist in that area as well. If given the 
chance, our industry can safely and efficiently determine if and where 
hydrocarbon resources exist in the Atlantic. We can do it in a way that 
reduces the need for exploration drilling and increases the likelihood 
that future drilling will be successful. As it stands today our 
understanding of this potential resource base depends on data that is 
30 years old or older. Interpreting it is analogous to a blind person 
trying to judge a beauty contest. Americans deserve public policy 
decisions that are made based on the best information possible. Modern 
seismic surveys provide that information. Let's allow science to help 
us understand what resources we have. We owe it to ourselves.
    Thank you for the opportunity to testify before the Subcommittee.
                                 ______
                                 
    Dr. Wittman. Thank you, Mr. Miller. And we will now go to 
Mr. Guith.

  STATEMENT OF CHRISTOPHER GUITH, VICE PRESIDENT FOR POLICY, 
  INSTITUTE FOR 21ST CENTURY ENERGY, U.S. CHAMBER OF COMMERCE

    Mr. Guith. Thank you, Congressman Wittman. I am Christopher 
Guith, Vice President for Policy at the Institute for 21st 
Century Energy, an affiliate of the U.S. Chamber of Commerce, 
the world's largest business federation representing the 
interests of more than 3 million businesses of all sizes, 
sectors, and regions, as well as State and local chambers and 
industry associations around the country.
    I appreciate this opportunity to discuss the Offshore 
Energy and Jobs Act. Offshore energy development has been 
unnecessarily constrained for several decades across multiple 
administrations from both parties. I commend Chairman Hastings 
for continuing to push Congress to reconsider America's 
offshore energy policy, and frankly, America's energy policy in 
toto.
    While many in this country, and most inside the beltway, 
are just waking up to the reality that the core assumption 
underlying our energy policy is no longer valid, to the extent 
it ever was, our energy policy is decades behind. The United 
States has the largest fossil fuel resource base in the world, 
yet our energy policy is based on the assumption that we are an 
energy-poor Nation that is subject to the whims of the world's 
energy exporters. Our energy policy must reflect the present 
and future reality, and the Offshore Energy and Jobs Act would 
help put us on a path toward that goal.
    The United States is blessed with an extremely large oil 
and gas resource base. The Federal Government estimates that 
the United States holds about 1.4 trillion barrels of oil and 
2.7 quadrillion cubic feet of natural gas that are technically 
recoverable. At current consumption rates, that is enough oil 
to last over 200 years, and natural gas to last 115 years. 
Moreover, this is a larger amount of oil than the world has 
consumed since commercial production began in the mid-19th 
century.
    Today, due to administrative withdrawal or legislative 
prohibition, more than 86 percent of the United States' Outer 
Continental Shelf is off limits to any oil and natural gas 
production. And, more importantly, exploration. The Bureau of 
Ocean Energy Management estimates are based on exploratory work 
done in the 1970s and 1980s, and many generations of technology 
ago.
    As has been stated, modern seismic graphing will invariably 
demonstrate much greater reserves in the OCS, using modern 
technology and economic conditions. This is precisely why the 
Offshore Energy and Jobs Act is vital to securing America's 
energy future. By increasing access to the OCS and establishing 
long-term production targets for the Department of the Interior 
to plan around when formulating oil and gas leasing programs, 
the country can begin to systematically increase its energy 
security and reap the economic benefits that entails.
    The oil and natural gas industry is a tremendous economic 
growth engine that has represented one of the only positive 
growth industries over the Great Recession. One of the primary 
reasons for this is that the industry is labor-intensive, 
relative to most other sectors of the economy. Additionally, 
the supply chain that supports this industry is quite long, 
stretching across the entire country, to include States that do 
not even produce oil and natural gas. These characteristics are 
especially true in the offshore exploration and production 
segment of the industry.
    Offshore development supports about 240,000 direct and 
indirect jobs across the country. But nowhere is this more 
evident than the gulf coast economy. IHS Global Insight 
estimated in 2009 that the offshore oil and natural gas 
industry represented about 9.3 percent of total employment, and 
12 percent of the entire gulf coast economy, and generated 
almost $6 billion in State and local taxes and over $13 billion 
in Federal revenue. While the gulf coast knows full well how 
bad Federal policy like the 2010 moratorium can create 
devastating economic consequences, we also know that sound 
policy that allows greater production of our immense resources 
presents tremendous beneficial impacts on the Nation's economy.
    Oil production from Federal waters accounted for more than 
20 percent of all U.S. production in 2012. More than 95 percent 
of that came from the Gulf of Mexico. However, with limited 
exception, those Coastal States receive less than 5 percent of 
the revenues the Federal Government receives from offshore 
development adjacent to those States. However, States hosting 
oil and natural gas development on Federal lands within their 
borders receive 50 percent of all royalties collected. While 
splitting the royalties onshore represents good policy, 
providing almost no share to adjacent Coastal States is quite 
the opposite.
    Current law allows for limited revenue sharing in the 
eastern gulf, and this model should be expanded to all areas of 
Federal offshore production, which is one of the reasons we 
support the revenue-sharing section of the Offshore Energy and 
Jobs Act.
    The United States is in the midst of an unprecedented oil 
boom. In 2013 we are on track to exceed 7.5 million barrels of 
oil per day in production, if we haven't already, a level that 
we have not seen in 24 years. The United States has witnessed 
more than a 40 percent increase in domestic oil production 
since 2008, alone. While we are on a path to greater self-
reliance, we still have a long way to go. At some point this 
year, the United States is expected to see its domestic 
production outstrip imported oil for the first time in decades. 
That we are only 50 percent dependent on imported oil after 
such massive increases in domestic production is illustrative 
of why we also need to increase offshore production.
    The Offshore Energy and Jobs Act goes a long way toward 
securing America's energy future, and we strongly support its 
passage and enactment. Thank you.
    [The prepared statement of Mr. Guith follows:]
   Prepared Statement of Christopher Guith, Vice President--Policy, 
      Institute for 21st Century Energy, U.S. Chamber of Commerce
    Thank you, Chairman Lamborn, Ranking Member Holt, and members of 
the Committee. I am Christopher Guith, Vice President for Policy at the 
Institute for 21st Century Energy (Institute), an affiliate of the U.S. 
Chamber of Commerce, the world's largest business federation 
representing the interests of more than 3 million businesses of all 
sizes, sectors, and regions, as well as State and local chambers and 
industry associations, and dedicated to promoting, protecting, and 
defending America's free enterprise system.
    The mission of the Institute is to unify policymakers, regulators, 
business leaders, and the American public behind common sense energy 
strategy to help keep America secure, prosperous, and clean. In that 
regard we hope to be of service to this Committee, this Congress as a 
whole, and the administration.
    I appreciate this opportunity to discuss the draft version of the 
Offshore Energy and Jobs Act. Offshore energy development has been 
unnecessarily constrained for several decades and across multiple 
administrations from both parties. I commend Chairman Hastings for 
continuing to push Congress to reconsider America's offshore energy 
policy, and frankly America's energy policy in toto.
    While many in this country, and most inside the Beltway, are just 
waking up to the reality that the core assumption underlying our energy 
policy is no longer valid, to the extent it ever was, our energy policy 
is decades behind. The United States has the largest fossil fuel 
resource base in the world. Yet, our energy policy is based on the 
assumption that we are an energy poor nation that is subject to the 
whims of the world's energy exporters. Our energy policy must reflect 
the present and future reality, and the Offshore Energy and Jobs Act 
would help put us on the path towards that goal.
RESOURCE BASE
    The United States is blessed with an extremely large oil and 
natural gas resource base. The Federal Government estimates the United 
States holds about 1.4 trillion barrels of oil and 2.7 quadrillion 
cubic feet of natural gas that are technically recoverable. At current 
consumption rates, that's enough oil to last over 200 years and natural 
gas to last 115 years. Moreover, that is a larger amount of oil than 
the world has consumed since commercial production began in the mid-
19th century.
    Like statistics in general, reserve estimates can be misconstrued 
or misused and require proper context. For example, as of 2010, the 
U.S. proved oil reserves were estimated at 23 billion barrels which 
amounts to roughly 3 percent of the world's proved reserves and would 
last less than 5 years at current consumption rates. So which is it? Do 
we have more than 200 years of oil or 5? Actually, the real answer 
based on current assessments is we have 535 years worth of oil but not 
all of it is recoverable given current technology, oil prices, and 
access policy.
    Proved reserves have a very specific definition, largely governed 
by Securities and Exchange Commission reporting requirements for energy 
companies. They include resources that have been discovered and can be 
recovered economically with a significant level of certainty. Proved 
reserves are a dynamic measure that fluctuate with the price of the 
resource and the availability and cost of technology with which it can 
be recovered.
    In 1950, the U.S. proved oil reserves were 25.3 billion barrels of 
oil. Yet, between 1950 and 2012 the U.S. produced over 167 billion 
barrels of oil, or 660 percent more than the proved reserve of 1950.
    The Bureau of Ocean Energy Management (BOEM) estimates that the 
U.S. Outer Continental Shelf (OCS) contains 90 billion barrels of oil 
and nearly 400 trillion cubic feet of natural gas that is undiscovered 
technically recoverable resources. These numbers are impressive or 
unimpressive depending upon the context. Not only do reserve estimates 
fluctuate based on financial conditions, but the availability and cost 
of improved technology alter the reserve estimates considerably.
    Today, due to administrative withdrawal or legislative prohibition, 
more than 86 percent of the U.S. OCS is off-limits to any oil and 
natural gas production and, more importantly, exploration. The BOEM 
estimates are based on exploratory work done in the 1970s and 1980s, 
many generations of technology ago. Modern 3-D seismic graphing will 
invariably demonstrate much greater reserves in the OCS using modern 
technology and economic conditions.
    This is precisely why the Offshore Energy and Jobs Act is vital to 
securing America's energy future. By increasing access to the OCS and 
establishing long-term production targets for the Department of the 
Interior to plan around when formulating oil and gas leasing programs, 
the country can begin to systematically increase its energy security 
and reap the economic benefits that entails.
ECONOMIC IMPACT
    The oil and natural gas industry is a tremendous economic growth 
engine that has represented one of the only positive growth industries 
over the Great Recession. One of the primary reasons is that this 
industry is labor intensive relative to most sectors of the economy. 
Additionally, the supply chain that supports this industry is quite 
long, stretching across the country to include States that do not even 
produce oil or natural gas. These characteristics are especially true 
in the offshore exploration and production segment of the industry.
    Offshore development supports over 240,000 direct and indirect jobs 
across the country, but nowhere is this more evident than the gulf 
coast economy. IHS Global Insight estimated that in 2009 the offshore 
oil and natural gas industry represented 9.3 percent of total 
employment and 12 percent of the economy, and generated almost $6 
billion in State and local taxes and over $13 billion in Federal 
revenue.
    Offshore development is the lifeblood of the gulf region directly 
and indirectly supporting thousands of small businesses that would not 
exist without it. We saw just how closely the gulf economy is tied to 
offshore development when in 2010 the Department of Interior 
effectively ceased offshore activities for over 1 year after the 
Macondo oil spill and by many measures has yet to reach a pre-spill 
rate of processing leasing programs and applications for permits to 
drill.
    Precipitously shutting down 12 percent of the gulf's economy has 
severe immediate impacts, many of which will continue to be felt for 
years to come. Dr. Joseph Mason at Louisiana State University initially 
estimated that just a 6-month moratorium could result in a loss of more 
than $2.1 billion to the gulf economy and more than 8,100 jobs.
    While the gulf coast knows full well how bad Federal policy can 
create devastating economic consequences, we also know that sound 
policy that allows greater production of our immense resources in a 
safe and environmentally safe manner can have tremendously beneficial 
impacts on the Nation's economy.
REVENUE SHARING
    Oil production from Federal waters accounted from more than 20 
percent of all U.S. production in 2012. More than 95 percent of that 
offshore production comes from the Gulf of Mexico. However, with 
limited exception, those Coastal States receive less than 5 percent of 
the royalties the Federal Government receives from offshore development 
adjacent to those States.
    However, States hosting oil and natural gas development on Federal 
lands within their borders receive 50 percent of all royalties 
collected. While splitting the royalties onshore represents good 
policy, providing almost no share to adjacent Coastal States is quite 
the opposite. The Gulf of Mexico Energy Security Act (GOMESA), which 
became law in 2006, created a new model for the sharing of Federal 
royalties from offshore development with adjacent States in a very 
limited geographic area. This model should be expanded to all areas of 
Federal offshore production, which is why we support the revenue 
sharing section of the Offshore Energy and Jobs Act.
    This legislation follows the 37.5 percent allocation already 
established in GOMESA and would ensure the States who shoulder the 
largest burden of offshore oil and gas development receive an equitable 
share of Federal revenues just like States that host onshore 
development on Federal lands. The country owes a debt of gratitude to 
these offshore producing States for the economic and energy security 
benefits the entire country realizes and they should receive an 
equitable share of the Federal revenue derived from those activities.
ENERGY SECURITY
    The United States is in the midst of an unprecedented oil boom. In 
2013 we are on track to exceed 7.5 million barrels per day of 
production, a level not seen in 24 years. The United States has 
witnessed more than a 40 percent increase in oil production since 2008 
alone. While we are on a path to a more secure energy future where we 
are much more self-reliant, we still have a long way to go. At some 
point later this year, the United States is expected to see its 
domestic production outstrip imported oil. Each additional barrel of 
oil we produce is one less barrel that needs to be imported, and 
ensures nearly all of the money paid for that barrel of oil stays in 
the United States, as opposed to less than 5 percent as is the case of 
imports from some countries.
    That we are only 50 percent dependent on imported oil after such 
massive increases in domestic production is illustrative of why we also 
need to increase offshore production. While onshore production has 
increased exponentially, and net U.S. production continues to increase, 
offshore production has declined. Offshore production on Federal lands 
in 2012 was about 10 percent lower than it was in 2009. The OCS 
represents a tremendous resource base which could fuel production much 
greater than current rates. However, more than 86 percent of the OCS is 
not available for lease. The Offshore Energy and Jobs Act would allow 
greater access to this resource by expanding access to areas that have 
been off limits for decades, including its explicit inclusion of Lease 
Sale 220 adjacent to Virginia.
    Onshore production is quickly moving the country towards greater 
energy security, but we still have a long way to go. Responsibly 
increasing offshore production is the next important step towards less 
imported oil and less energy security risk.
                                 ______
                                 
    Mr. Lamborn [presiding]. All right, thank you. Mr. 
Conathan?

  STATEMENT OF MICHAEL J. CONATHAN, DIRECTOR OF OCEAN POLICY, 
            CENTER FOR AMERICAN PROGRESS ACTION FUND

    Mr. Conathan. Chairman Lamborn, Ranking Member Holt, 
members of the Committee, thank you for the opportunity to 
testify today on the Offshore Energy and Jobs Act. The issues 
this legislation addresses are vital to the well-being of our 
Nation. Yet its approach fails to reflect the reality of 
current activity in the oceans and our coasts or the economic 
and environmental risks posed by massive increases in offshore 
oil and gas production.
    Our oceans and coasts are fundamental economic drivers. 
According to the National Ocean Economics Program, in 2011 the 
ocean economy accounted for 2.7 million jobs and contributed 
more than $250 billion to our GDP. Nearly 2 million of those 
jobs occur in fisheries, tourism, and recreation: all 
industries that would be put at tremendous risk by expanded 
offshore drilling activity. Meanwhile, offshore minerals 
production supported approximately 143,000 workers. In other 
words, jobs that depend on healthy, unpolluted, undeveloped 
ocean space outnumber oil and gas jobs 15 to 1.
    Although safe well-regulated oil and gas production is a 
necessary part of today's economy, its expansion into protected 
places puts other parts of the ocean economy at tremendous 
risk. The Gulf of Mexico is still recovering from the 2010 BP 
Deepwater Horizon disaster, and the full extent of the damage 
may not be known for decades.
    In March of 2011, the National Commission on the BP 
Deepwater Horizon oil spill released its final recommendations 
to improve management of offshore drilling. They painted a 
bleak picture of failed congressional oversight. The 
commissioners found that Congress had developed a ``false sense 
of security''--this is a quote--``about the risks of offshore 
drilling and gas development. Congress showed its support for 
offshore drilling in a number of ways, but did not take any 
steps to mitigate the increased perils that accompany drilling 
in ever-deeper water.''
    Fast-forward 2 years, and just last month the Wall Street 
Journal reported that the offshore oil and gas industry in the 
Gulf of Mexico is booming. But Congress has yet to pass a 
single piece of legislation to address the failure of 
oversight. Instead, some members of this Committee would like 
to advance legislation that would force the opening of massive 
new areas, exposing them to the same dangers that led to the 
Deepwater Horizon disaster.
    Perhaps the most glaring example of congressional inaction 
is that the liability cap for offshore oil spills remains at a 
pathetically low $75 million, while damages from Deepwater 
Horizon have already exceeded $14 billion. The big five oil 
companies made over $118 billion in profits in 2012 alone. So 
that means together they could pay for the maximum legal 
liability for four offshore oil spills every day for a year, 
and still have profits left over. BP waived its liability cap, 
but there is no guarantee that the next company will be solvent 
enough to pay more than the law requires. It is Congress's job 
to take care of this problem.
    Fortunately, other opportunities exist to create jobs and 
increase our domestic offshore energy production. Offshore wind 
is a proven source of commercially scalable power that carries 
far fewer environmental risks. The United States has yet to 
construct its first offshore wind farm, but countries like 
Denmark, Germany, and the UK have installed thousands of 
megawatts of offshore wind capacity in their coastal waters. 
And industries are developing in China, South Korea, India, and 
other parts of the world.
    The Department of Energy has set a goal of developing 54 
gigawatts of offshore wind energy by 2030, which it says would 
create 43,000 jobs in the engineering, construction, and 
manufacturing sectors. And earlier this week the Department 
opened its first auction process for an offshore wind area off 
the coast of Rhode Island and Massachusetts.
    Finally, this legislation simply ignores the reality that 
our current energy habits are changing the climate of our 
planet. According to a recent NASA study, 97 percent of climate 
scientists now agree that climate change is happening, and is 
very likely caused by human activity, 97 percent of scientists 
at NASA. Science is not political. Science doesn't care who can 
afford more commercial air time on television. Science is 
reality. And until we start reducing our reliance on fossil 
fuels and carbon pollution, and seeking alternative forms of 
electricity and energy to fuel our economy, we are putting our 
own future and our children's future in dire peril.
    The Offshore Energy and Jobs Act is not part of a true all-
of-the-above energy strategy. It is an anything-goes energy 
strategy that ignores our past failures and creates a game that 
means, for big oil, to play is to win. But the losers in this 
game are sustainable ocean and coastal industries, our marine 
environment and some of our most beloved places for rest and 
recreation and recuperation. American prosperity will come from 
diversifying our economic growth, not supporting one industry 
at the expense of all others, and tilting the playing field 
dramatically in favor of oil and gas companies that already 
dominate our economic landscape.
    Once again, I thank you, and I look forward to the 
opportunity to answer any questions you may have.
    [The prepared statement of Mr. Conathan follows:]
 Prepared Statement of Michael J. Conathan, Director of Ocean Policy, 
                      Center for American Progress
                h.r. 2231--offshore energy and jobs act
    Chairman Lamborn, Ranking Member Holt, and members of the 
Committee, thank you for the opportunity to testify today on the 
Offshore Energy and Jobs Act of 2013.
    Our Nation's ocean space is one of our greatest treasures. It gives 
us sustenance in the form of the seafood we consume and two-thirds of 
the oxygen we breathe. It provides a trade route that brings 90 percent 
of the material goods we import to our shores. It regenerates our souls 
with one of our most popular destinations for vacation, rest, and 
restoration of spirit and mind. And as we are here to discuss today, it 
also provides much of the energy that fuels our economy.
    And in providing all of these services, our oceans and coasts are 
also fundamental economic drivers. According to the National Ocean 
Economics Program and the Monterey Institute of International Studies' 
Center for the Blue Economy, in 2011 the ocean economy--which consists 
of construction, living resources, minerals, ship and boat building, 
tourism and recreation, and transportation--accounted for 2.7 million 
jobs and contributed more than $250 billion to our gross domestic 
product.\1\
---------------------------------------------------------------------------
    \1\ Center for the Blue Economy, ``Market Data: OceanEconomy Search 
Results,'' available at http://www.oceaneconomics.org/Market/ocean/
oceanEconResults.asp?IC=N&selState=0&sel
County=All&selYears=2010&selToYear=none&selSector=8&selIndust=All&selVal
ue=All&selOut=
display&noepID=unknown (last accessed June 2013).
---------------------------------------------------------------------------
    Particularly in today's economic environment, we must strive to 
protect all the sources of revenue we receive from our ocean. The 
legislation we are here to consider today unfortunately prioritizes one 
industry over all the rest, to the detriment of both our economic and 
environmental well-being.
    The Offshore Energy and Jobs Act of 2013 focuses on increasing 
energy production and, to that end, seeks to prioritize job creation 
exclusively in the energy field. But one cannot truly consider the 
potential effect of expanded oil and gas production on the economy and 
on employment without looking beyond just a single industry. The ``all 
of the above'' energy strategy espoused by members of both political 
parties and echoed from both ends of Pennsylvania Avenue must mean 
exactly that--all sources of energy production must be included. The 
Offshore Energy and Jobs Act is an incomplete bill for an ``all of the 
above'' energy strategy.
    The fact is, accelerating offshore oil and gas production in an 
attempt to create more jobs might be a fine idea if nothing else took 
place in our exclusive economic zone. But the ocean is a busy place, 
and prioritizing one industry will surely come at the expense of 
others.
    So the first thing I would ask this Committee to consider is a 
revision of perspective. Instead of asking how to create more oil and 
gas jobs, take a step back and ask how to create more good jobs in 
industries that rely on the ocean. The options are suddenly far 
stronger.
    Here is the reality of today:

      Offshore oil and gas production is already a growth 
industry. According to The Wall Street Journal, ``today . . . offshore 
drilling is booming in the Gulf of Mexico.''\2\ Every year of the Obama 
Administration, there has been more oil produced on the outer 
continental shelf than the last year of the previous Administration, 
and every year but 2012 saw more production than any year of George W. 
Bush's presidency.
---------------------------------------------------------------------------
    \2\ ``Should the U.S. Expand Offshore Oil Drilling?'', The Wall 
Street Journal, April 12, 2013, available at http://online.wsj.com/
article/SB10001424127887324020504578398610851042612
.html.
---------------------------------------------------------------------------
      In 2010 the Gulf of Mexico experienced the worst 
accidental offshore oil spill in the history of the world. Since then, 
Congress has passed exactly zero laws to strengthen oversight of 
offshore oil production or increase pathetically low liability limits 
of $75 million.
      Despite this massive quantity of production, this 
legislation would stomp on the gas pedal, accelerating production even 
further and forcing the opening of new areas in the Atlantic, the 
Pacific, and the gulf coast, including areas where local residents 
resoundingly oppose having their coastlines threatened by oil 
production.
      In many of these regions, the current economy depends on 
clean, healthy oceans. The increase in industrial activity and the risk 
of blowouts, spills, and pollution that comes with offshore drilling 
would threaten oceans.
      Instead of creating offshore energy jobs by doubling down 
on dirty energy policies of the 20th century, we should be investing in 
the future: renewable energy. Shallow water offshore wind is ready for 
prime time in U.S. waters, and other offshore renewable technologies 
are right behind.
Offshore Oil and Gas Production is Already Booming
Production in Offshore Waters is Currently Outpacing Production Under 
        the Bush Administration
    There has been quite a bit of rhetoric from the oil industry about 
the decline of oil production from Federal lands and waters under the 
Obama Administration. These claims are disproved by the data from the 
Energy Information Administration as analyzed by the Congressional 
Research Service.\3\ Oil production from federally owned places was 
higher in every one of the past 4 years compared to 2008 when oil hit a 
record-high price of $142.50 per barrel.\4\
---------------------------------------------------------------------------
    \3\ Marc Humphries, ``U.S. Crude Oil and Natural Gas Production in 
Federal and Non-Federal Areas'' (Washington: Congressional Research 
Service, 2013), available at http://energycommerce
.house.gov/sites/republicans.energycommerce.house.gov/files/
20130228CRSreport.pdf.
    \4\ Energy Information Administration, Weekly Cushing, OK WTI Spot 
Price FOB (Department of Energy, 2013), available at http://
www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=
RWTC&f=W.


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



Increasing Production Will Not Lower Gas Prices
    One of the issues Americans care about most fervently when it comes 
to oil production is the price of gasoline. But the fact is that 
increasing production will do nothing to lower prices at the pump. In 
2012 the Associated Press, or AP, tested the theory of whether more 
U.S. drilling would lower gasoline prices. It conducted an exhaustive 
analysis of 36 years of monthly U.S. oil production and gasoline price 
data. AP found ``[n]o statistical correlation between how much oil 
comes out of U.S. wells and the price at the pump.''\5\
---------------------------------------------------------------------------
    \5\ The Center for Public Integrity, ``Fact Check: More U.S. 
drilling didn't drop gas prices'' (2012), available at http://
www.publicintegrity.org/2012/03/21/8474/fact-check-more-us-drilling-
didnt-drop-gas-prices.
---------------------------------------------------------------------------
    As fundamental as the law of supply and demand might be to 
macroeconomic theory, the on-the-ground reality is that more drilling 
will not lower gas prices. The Energy Information Administration finds 
that even if we wave the green flag for our entire exclusive economic 
zone, it will do nothing more than reduce the cost of gasoline by 2 
cents and not until 2030.\6\
---------------------------------------------------------------------------
    \6\ Energy Information Administration, Impact of Limitations on 
Access to Oil and Natural Gas Resources in the Federal Outer 
Continental Shelf (Department of Energy, 2009), available at http://
www.eia.gov/oiaf/aeo/otheranalysis/aeo_2009analysispapers/aongr.html.
---------------------------------------------------------------------------
    Here is why:

      As of 2012 U.S. oil production was at an 8-year high,\7\ 
and the most recent ``Short-Term Energy Outlook'' from the Energy 
Information Administration projects production to continue growing at 
least through 2013 based on current activity.\8\ By the end of 
President Obama's recently issued 5-year drilling plan, fully 75 
percent of our undiscovered, technically recoverable offshore reserves 
will be open for drilling.\9\ All that additional activity has not 
brought down the price of gasoline at the pump.
---------------------------------------------------------------------------
    \7\ ``Barack Obama says U.S. oil production is at 8-year high,'' 
Politifact.com, January 24, 2012 available at http://
www.politifact.com/truth-o-meter/statements/2012/jan/24/barack-obama/
barack-obama-says-us-oil-production-eight-year-hig/.
    \8\ Energy Information Administration, Short-Term Energy Outlook 
(Department of Energy, 2013), available at http://205.254.135.7/
forecasts/steo/pdf/steo_full.pdf.
    \9\ Department of the Interior, ``Secretary Salazar Announces 2012-
2017 Offshore Oil and Gas Development Program,'' Press Release, 
September 8, 2011, available at http://www.doi.gov/news/pressreleases/
Secretary-Salazar-Announces-2012-2017-Offshore-Oil-and-Gas-Development-
Program.cfm.
---------------------------------------------------------------------------
      If oil companies wanted to increase production, they 
could. In March 2011 the Department of the Interior released a report 
revealing that two-thirds of oil-and-gas companies' offshore leases and 
more than half of their onshore leases are not being produced.\10\
---------------------------------------------------------------------------
    \10\ Department of the Interior, ``BOI Releases Report on Unused 
Oil and Gas Leases,'' Press Release, March 29, 2011, available at 
http://www.doi.gov/news/pressreleases/DOI-Releases-Report-on-Unused-
Oil-and-Gas-Leases.cfm.
---------------------------------------------------------------------------
      Gasoline supply is ultimately constrained not by oil 
production but by refining capacity. More than half of the Nation's 
refineries are controlled by five companies, and in the spring of 2011 
as gas prices surged close to $4 per gallon, the Los Angeles Times 
reported that domestic refineries were ``operating at about 81 percent 
of their production capacity,'' and that exports of refined products 
such as gasoline were increasing because foreign buyers were ``willing 
to pay a premium.''\11\
---------------------------------------------------------------------------
    \11\ Ronald D. White, ``Oil companies are making more money and 
less fuel,'' Los Angeles Times, April 28, 2011, available at http://
articles.latimes.com/2011/apr/28/business/la-fi-oil-refineries-
20110429.

    Richard Newell, then-administrator of the Energy Information 
Administration, testified before the full House Natural Resources 
Committee in 2011 to explain that ``[w]e do not project additional 
volumes of oil that could flow from greater access to oil resources on 
Federal lands to have a large impact on prices given the globally 
integrated nature of the world oil market.''\12\ In other words, 
because the price of oil is set on a global market rather than a 
domestic market, opening up protected lands and waters to more drilling 
would not substantially affect oil prices.
---------------------------------------------------------------------------
    \12\ Richard Newell, Testimony before the Committee on Natural 
Resources, March 17, 2011, available at http://www.eia.gov/neic/
speeches/newell_03172011.pdf#page=7.
---------------------------------------------------------------------------
Legacy of the BP Deepwater Horizon Oil Spill
Congressional Inaction
    In the spring and summer of 2010, horrified Americans watched as 
the worst oil spill in America's history gushed uncontrollably into the 
Gulf of Mexico more than a mile below the surface. By the time BP's 
Macondo well was finally plugged 89 days after the explosion that 
killed 11 men and sunk the Deepwater Horizon drilling rig, nearly 5 
million barrels of oil had polluted the gulf, compounded by the 
application of millions of gallons of chemical dispersant.
    In the aftermath of the incident, President Obama convened the 
National Commission on the BP Deepwater Horizon Oil Spill to 
investigate what happened in the accident and how the country could 
improve future operations and reduce the chances of another such 
disaster. In January 2011 the commission published its final report, 
including a 60-page summary document with recommendations for Congress, 
the industry, and the Administration to overhaul our drilling 
procedures and make adequate reparations in the aftermath of the spill.
    In the more than 2 years since this report was published, Congress 
has enacted exactly zero bills to strengthen our oversight of offshore 
drilling activities, even those carried out in ultra-deep water like 
the Deepwater Horizon operation.
    The Offshore Energy and Jobs Act would partially address one of 
these recommendations: codifying changes to the former Minerals 
Management Service to increase Federal oversight and ensure separation 
between the Government's permitting and revenue collection authorities 
and its enforcement arm. Yet even this change would be late in coming. 
The Obama Administration has acted swiftly to resolve this issue with 
the creation of the Bureau of Ocean Energy Management and the Bureau of 
Safety and Environmental Enforcement.
    Yet numerous other issues remain unaddressed, and we should not be 
aggressively accelerating offshore oil and gas development until we 
have fixed the problems that either led to or were exposed by the BP 
disaster in 2010. Perhaps the most glaring area in need of 
congressional attention is the issue of oil companies' liability for 
spills.
    The current liability cap for offshore oil spills remains at a 
pathetically low $75 million per incident. According to the 
Congressional Research Service, BP has already paid approximately $14 
billion on cleanup operations alone.\13\ Early on in the process, BP 
agreed to waive the $75 million cap and pay all costs of the clean up, 
but they were not legally required to do so.
---------------------------------------------------------------------------
    \13\ Jonathan L. Ramseur and Curry L. Hagerty, ``Deepwater Horizon 
Oil Spill: Recent Activities and Ongoing Developments'' (Washington: 
Congressional Research Service, 2013), available at http://www.fas.org/
sgp/crs/misc/R42942.pdf.
---------------------------------------------------------------------------
    Opponents of raising the liability cap argue that it would prevent 
smaller companies from entering into the industry because they would be 
unable to get insurance to cover the extent of their liability. Even 
disregarding the counterargument that if a company cannot afford to 
clean up the potential mess, they should not attempt the action in the 
first place, there are ways around this conundrum. One would be to 
create a shared risk pool that would make all oil companies jointly 
liable for major accidents. A similar structure already exists for the 
nuclear industry under the Price-Anderson Act that, as of 2011, would 
cover the first $12 billion of liability for a nuclear accident.\14\
---------------------------------------------------------------------------
    \14\ United States Nuclear Regulatory Commission, ``Fact Sheet on 
Nuclear Insurance and Disaster Relief Funds'' (2011), available at 
http://www.nrc.gov/reading-rm/doc-collections/fact-sheets/funds-
fs.html.
---------------------------------------------------------------------------
    To date, the only meaningful piece of legislation Congress has 
passed following the spill was the RESTORE the Gulf Coast Act, which 
ensures 80 percent of BP's fines under the Clean Water Act will be 
distributed to the Gulf Coast States for economic and environmental 
restoration activities. This action was called for by the Commission 
and in ``Beyond Recovery''--a report released in February 2011 by the 
Center for American Progress and Oxfam America \15\--and it will ensure 
the bulk of the funds received by the Federal Government are repurposed 
to specifically repair some of the damage caused by BP and its 
partners' mistakes.
---------------------------------------------------------------------------
    \15\ Kate Gordon and others, ``Beyond Recovery: Moving the Gulf 
Cost Toward a Sustainable Future'' (Washington: Center for American 
Progress, 2011), available at http://www.americanprogress.org/issues/
green/report/2011/02/09/9048/beyond-recovery/.
---------------------------------------------------------------------------
Direct Impacts of the BP Disaster
    The Gulf of Mexico is one of the Nation's most productive fishing 
grounds. But in 2010 at the peak response to the oil spill, about 40 
percent of gulf waters were closed to all commercial and recreational 
fishing--a huge blow to area fishermen, many of whom have yet to 
rebound. Louisiana oysterman Terrence Shelley recently told Bloomberg 
that total losses from his family's 18,000 acres of oyster reefs could 
reach $20 million by 2017--the year their oyster leases are projected 
to fully recover.\16\
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    \16\ Allen Johnson Jr., Laurel Calkins, and Margaret Cronin Fisk, 
``BP Spill Victims Face Economic Fallout Two Years Later,'' Bloomberg, 
February 23, 2012, available at http://www.bloomberg.com/news/2012-02-
23/bp-oil-spill-haunts-gulf-business-owners-almost-two-years-after-
disaster.html.
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    And while long-term damage estimates vary, a new study published in 
the Canadian Journal of Fisheries and Aquatic Sciences determined that 
over 7 years, the oil spill could have an $8.7 billion impact on the 
economy of the Gulf of Mexico including losses in revenue, profit, 
wages, and close to 22,000 jobs.\17\
---------------------------------------------------------------------------
    \17\ ``Deepwater Horizon Disaster Could Have Billion Dollar 
Impact,'' Science Daily, February 17, 2012, available at http://
www.sciencedaily.com/releases/2012/02/120217115553.htm.
---------------------------------------------------------------------------
    The ultimate environmental and human health effects of the oil 
still emerging from the beaches and wetlands are to this day unknown. 
Auburn researchers, however, found that Deepwater Horizon tar balls 
contained 10 times more of the bacteria Vibrio vulnificus, which is the 
leading cause of death from seafood contamination, than the surrounding 
sand and up to 100 times more than nearby seawater.\18\
---------------------------------------------------------------------------
    \18\ Stephanie Pappas, ``Deadly bacteria lurk in Deepwater Horizon 
tar balls, NBC News, April 4, 2012, available at http://
www.msnbc.msn.com/id/46958825/ns/technology_and_science-science/%22%5Cl 
%22.T4X5ctniFXs.
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    Another alarming discovery came in the ``State of the Beach'' 
report released this week by the Surfrider Foundation. The report found 
that the mixture of toxic dispersants and crude oil has now weathered 
into tar product. The ``unholy mix'' is allowing potentially 
carcinogenic concentrations of organic pollutants to remain in the 
environment and is absorbed by wet skin twice as fast as by dry 
skin.\19\
---------------------------------------------------------------------------
    \19\ Julia Whitty, ``BP's Corexit Oil Tar Sponged Up by Human 
Skin,'' Mother Jones, April 17, 2012, available at http://
motherjones.com/blue-marble/2012/04/microbes-arent-eating-oil-gulf-
beaches-thanks-corexit-dispersant.
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    The BP oil spill shocked the gulf coast's already compromised 
ecosystem, which will continue to degrade until comprehensive coastal 
restoration is undertaken. A new report from the National Wildlife 
Federation determined that 3,000 miles of beaches and wetlands along 
the gulf coast were contaminated by oil and that ``oil contamination or 
efforts to clean it up can damage wetlands, killing vegetation and 
thereby causing accelerated erosion and conversion of land to open 
water.''\20\
---------------------------------------------------------------------------
    \20\ Douglas B. Inkley, ``Restoring a Degraded Gulf of Mexico'' 
(Washington: National Wildlife Federation, 2013), available at http://
www.nwf.org/news-and-magazines/media-center/reports/archive/2013/04-02-
13-restoring-a-degraded-gulf-of-mexico.aspx.
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    Coastal wetlands serve as critical buffers to storm surges and sea 
level rise, as well as filtering pollution and providing habitat for 
juvenile fish that ultimately mature and fill the nets of commercial 
fishermen. The financial impacts of these environmental services are 
difficult to quantify, but efforts to protect them will clearly have a 
positive effect on the region's economy.
Legislation Would Open Inappropriate Areas to Production
    Perhaps the most troubling aspect of the Offshore Energy and Jobs 
Act is its sheer scope. Drilling is already prominent in the Gulf of 
Mexico where about 95 percent of our offshore oil and gas is 
produced.\21\ But in most other parts of the country, the ocean and 
coastal economy depends on activities that would be put at risk by the 
imposition of offshore oil and gas drilling.
---------------------------------------------------------------------------
    \21\ Institute for Energy Research, ``U.S. Oil Production Up, But 
On Whose Lands?'' (2012), available at http://
www.instituteforenergyresearch.org/2012/09/24/u-s-oil-production-up-
but-on-whose-lands-2/.
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    The coastal economies of States along the Atlantic and Pacific 
coasts are driven by such industries as tourism and recreation, 
fisheries, shipping, and military installations. Most of these uses are 
incompatible with oil and gas development as proposed in the Offshore 
Energy and Jobs Act.
    In Virginia, for example--a State that the bill would specifically 
require to be included in a revised 5-year leasing plan--tourism is a 
massive economic driver. A recent PricewaterhouseCoopers analysis of 
Virginia's tourism industry reported that the sector supports more than 
200,000 jobs, which yielded an economic impact of more than $20 billion 
in 2011.\22\ Virginia's coast and ocean also support thriving 
fisheries; in 2011 fishermen in Virginia landed 247,000 tons of seafood 
worth more than $191 million, ranking it the third largest seafood 
producer in the country by weight.\23\
---------------------------------------------------------------------------
    \22\ PricewaterhouseCoopers, ``Virginia State Tourism Plan'' 
(2013), available at http://www.vatc.org/uploadedFiles/
Partnership_Alliance_Marketing/VirginiaStateTourismPlanVTC
3292013.pdf.
    \23\ National Oceanic and Atmospheric Administration, ``Annual 
Commercial Landings by Group,'' available at http://
www.st.nmfs.noaa.gov/st1/commercial/landings/gc_runc.html (last 
accessed June 2013).
---------------------------------------------------------------------------
    The bill would also force the expansion of drilling operations into 
areas of Alaska where the risk posed by offshore drilling operations is 
simply too high, primarily in the Bristol Bay region and along the 
Arctic coast. Despite potentially large reserves of petroleum in those 
places, they should remain off-limits.
    In 2011 Alaska fishermen hauled in about 35 percent of America's 
catch by value--more than three times as much as Massachusetts, the 
State in second place.\24\ Alaska fishing also provides more than half 
of total U.S. landings by weight--more than four times as much as 
Louisiana, the runner-up.\25\ Even by Alaska's standards, Bristol Bay's 
salmon fishery is a huge economic driver. One study from the University 
of Alaska found that in 2010 Alaska created the equivalent of nearly 
10,000 full-time jobs across the United States and $1.5 billion in 
total economic output.\26\
---------------------------------------------------------------------------
    \24\ ``National Oceanic and Atmospheric Administration, ``Annual 
Commercial Landing Statistics,'' available at http://
www.st.nmfs.noaa.gov/commercial-fisheries/commercial-landings/annual-
landings/index (last accessed June 2013).
    \25\ Ibid.
    \26\ Gunnar Knapp, Mouhcine Guettabi, and Scott Goldsmith, ``The 
Economic Importance of the Bristol Bay Salmon Industry'' (Anchorage: 
University of Alaska Anchorage Institute of Social and Economic 
Research, 2013), available at http://www.bbrsda.com/wp-content/uploads/
2013/05/Economic-Importance-of-Bristol-Bay-Full-Report.pdf.
---------------------------------------------------------------------------
    The thriving Bristol Bay ecosystem underpins all of these jobs by 
supporting an astounding number of wild fish. Since the early 1990s 
annual upriver runs of sockeye salmon from Bristol Bay have averaged 
more than 37 million fish, the biggest run of sockeyes anywhere in the 
world.\27\ As a result, this sockeye run is also the world's most 
valuable. Since 1991 Bristol Bay's commercial sockeye fishermen have 
landed an average of 25.6 million fish annually,\28\ which is about 51 
percent of the global sockeye catch; British Columbia's Fraser River 
region takes a distant second place, contributing about 11 percent.\29\ 
And exports of the salmon return $250 million to the U.S. economy,\30\ 
comprising nearly 6 percent of all U.S. exports of seafood in 2010.\31\
---------------------------------------------------------------------------
    \27\ Alaska Department of Fish and Game Division of Commercial 
Fisheries, ``2012 Bristol Bay Salmon Season Summary,'' Press release, 
September 21, 2012, available at http://www.adfg.alaska.gov/static/
home/news/pdfs/newsreleases/cf/226013052.pdf.
    \28\ Matt Jones and others, ``2011 Bristol Bay Area Annual 
Management Report'' (Anchorage: Alaska Department of Fish and Game, 
2012), available at http://www.adfg.alaska.gov/FedAidPDFs/FMR12-21.pdf.
    \29\ Nature Conservancy, ``Global Sockeye Salmon Production,'' 
available at http://www2.epa.gov/sites/production/files/sockeye-
piechart_0.jpg (last accessed June 2013).
    \30\ Knapp, Guettabi, and Goldsmith, ``The Economic Importance of 
the Bristol Bay Salmon Industry.''
    \31\ National Oceanic and Atmospheric Administration, Seafood 
Export Facilitation: The Latest and Greatest on What you Need to Know 
(Department of Commerce, 2011), available at www.seafood.nmfs.noaa.gov/
Boston_2011_EUPresentation.pptx.
---------------------------------------------------------------------------
    The Offshore Energy and Jobs Act would also likely have the result 
of accelerating offshore drilling in the Arctic Ocean despite the fact 
that recent operations in that region have proven that the industry is 
currently incapable of carrying out safe operations in one of the 
harshest environments on earth. In the summer of 2012, after committing 
5 years and investing nearly $5 billion in the process, Royal Dutch 
Shell finally received the green light to begin drilling in the 
Beaufort and Chukchi Seas off Alaska's north slope. The result was an 
unmitigated failure.
    Over the course of 2012:

      A February report from the Government Accountability 
Office identified a slew of environmental, logistical, and technical 
challenges associated with Arctic offshore drilling and concluded that 
Shell's ``dedicated capabilities do not completely mitigate some of the 
environmental and logistical risks associated with the remoteness and 
environment of the region.''\32\
---------------------------------------------------------------------------
    \32\ Government Accountability Office, ``Oil and Gas: Interior Has 
Strengthen Its Oversight of Subsequent Well Containment, but Should 
Improve Its Documentation'' (2012), available at http://www.eenews.net/
assets/2012/03/30/document_gw_04.pdf.
---------------------------------------------------------------------------
      In July Shell briefly lost control of its Noble 
Discoverer rig when the vessel slipped its mooring and came close to 
running aground in Dutch Harbor, Alaska.\33\
---------------------------------------------------------------------------
    \33\ Kiley Kroh, ``Shell Loses Control of Arctic Drilling Rig in 
Alaskan Harbor,'' ThinkProgress, July 16, 2012, available at http://
thinkprogress.org/climate/2012/07/16/521391/shell-loses-control-of-
arctic-drilling-rig-in-alaskan-harbor/.
---------------------------------------------------------------------------
      Later in July Shell's oil spill response barge, a key 
piece of oil spill response equipment, repeatedly failed to obtain 
Coast Guard certification. In conjunction with late lingering sea ice 
that blocked access to the drill sites, these delays prevented Shell 
from beginning drilling work on schedule.\34\
---------------------------------------------------------------------------
    \34\ ``Shell's Arctic Oil Spill Response Still Behind Schedule,'' 
ThinkProgress, July 20, 2012, available at http://thinkprogress.org/
climate/2012/07/20/556141/shells-arctic-oil-spill-response-still-
behind-schedule/.
---------------------------------------------------------------------------
      In August Norwegian oil and gas company Statoil announced 
that it would suspend its own plans to drill offshore in the Alaskan 
Arctic Ocean after watching Shell's struggles in the region.\35\
---------------------------------------------------------------------------
    \35\ Lisa Demer, ``Oil company delays exploration in Arctic waters 
off Alaska,'' Anchorage Daily News, September 6, 2012, available at 
http://www.adn.com/2012/09/06/2614308/oil-company-delays-arctic-
exploration.html.
---------------------------------------------------------------------------
      In September, after repeatedly failing to receive Coast 
Guard approval for its containment barge, Shell was forced to postpone 
exploratory drilling operations until 2013 and settle instead for 
beginning to drill two non-oil-producing preparatory wells.\36\
---------------------------------------------------------------------------
    \36\ Kiley Kroh, ``Shell Postpones Arctic Offshore Drilling For The 
Year Due To Technical Problems And Rough Ice Conditions,'' 
ThinkProgress, September 17, 2012, available at http://
thinkprogress.org/climate/2012/09/17/859091/shell-postpones-arctic-
offshore-drilling-for-the-year-due-to-technical-problems-and-rough-ice-
conditions/.
---------------------------------------------------------------------------
      In December internal emails between Department of the 
Interior officials revealed that the September test of Shell's oil 
spill containment system was not just a failure but a complete 
disaster. The containment dome ``breached like a whale'' and was 
``crushed like a beer can''--and all in the comparatively temperate 
waters of Puget Sound.\37\
---------------------------------------------------------------------------
    \37\ Kiley Kroh, ``Shell's Failed Arctic Oil Spill Equipment: 
`Breached Like A Whale' And `Crushed Like A Beer Can,' '' 
ThinkProgress, December 5, 2012, available at http://thinkprogress.org/
climate/2012/12/05/1284301/shells-failed-arctic-oil-spill-equipment-
breached-like-a-whale-and-crushed-like-a-beer-can/.
---------------------------------------------------------------------------
      And on the last day of the year, in a rush to avoid 
paying Alaska State taxes on its rig for 2013, Shell lost control of 
the rig in heavy weather, and it ended up running aground.\38\
---------------------------------------------------------------------------
    \38\ Lisa Demer, ``Shell rig left Alaska port to avoid taxes, 
company official testifies,'' FuelFix, May 26, 2013, available at 
http://fuelfix.com/blog/2013/05/26/shell-rig-left-alaska-port-to-avoid-
taxes-company-official-testifies/.

    As a result of this lengthy series of mistakes and failures, Shell 
has announced that it will not attempt to drill in the Arctic in 2013 
as both of its rigs are now in Asia awaiting repairs.
    As a 2012 report from the Center for American Progress points out, 
the United States currently lacks adequate response capacity in the 
Arctic region. No rail lines and only one highway connect the north 
slope of Alaska to the rest of the State. There is no deepwater port 
facility, and the closest Coast Guard station is more than 500 miles 
away in Kodiak. Should a spill occur in the Arctic region of Alaska, 
mounting a response would be all but impossible with limited 
accessibility and nowhere to house response personnel. There is equally 
scant scientific knowledge about how oil behaves in frigid water or how 
we might go about cleaning it up.
    The bottom line is that Alaska's waters are among the most pristine 
and productive on earth, and whether the region in question is the 
fish-rich area around Bristol Bay or the remote, unknown, and untested 
Arctic, they should remain off-limits to oil and gas exploration.
Blue Economy Is More Vibrant Than Drilling
    The motive to create more jobs in America is a good one. With 
unemployment stubbornly hovering around 8 percent, we clearly need 
them. There is, however, more than one way to generate employment from 
our oceans and coasts, and, in many cases, accelerating offshore oil 
and gas development will hinder job creation in other industries. We 
have already seen how one accident 3 years ago devastated the coastal 
economy of an entire region. We must do all we can to ensure that we 
protect and grow the jobs currently supported by vibrant, healthy 
oceans and coastal regions.
Commercial and Recreational Fisheries
    Fishing is perhaps the first vocation that comes to mind when 
considering ocean and coastal economic activity. We also have better 
data for the fishing industry than many other ocean industries. A 
report released in March by the National Oceanic and Atmospheric 
Administration, or NOAA, found that ``U.S. commercial and recreational 
saltwater fishing generated more than $199 billion in sales and 
supported 1.7 million jobs in the Nation's economy in 2011.''\39\ By 
comparison, the oil and gas extraction and refinement industry employed 
approximately 641,000 people, according to the Bureau of Labor 
Statistics. Adding in employees of gasoline service stations to account 
for supply chain employment, that figure reached 1.4 million jobs but 
still falls short of the jobs created from fishing.\40\
---------------------------------------------------------------------------
    \39\ National Oceanic and Atmospheric Administration, Fisheries 
Economics of The U.S. 2011 (Department of Commerce, 2011), available at 
http://www.st.nmfs.noaa.gov/economics/publications/feus/
fisheries_economics_2011.
    \40\ Bureau of Labor Statistics' sectors used in this report 
include: Oil and gas extraction; Support activities for oil and gas 
operations; Oil and gas pipeline construction; Petroleum refineries; 
and Pipeline transportation. Bureau of Labor Statistics, 
``Employment,'' available at http://www.bls.gov/data/#employment (last 
accessed June 2013).
---------------------------------------------------------------------------
    Furthermore, as the members of the Committee on Natural Resources--
which has jurisdiction over our Nation's fisheries--know very well, we 
have effectively ended deliberate overfishing in the United States. 
NOAA's most recent ``Status of Stocks'' report to Congress showed a 
record number of domestic fish populations rebuilt to sustainable 
levels.\41\ In her testimony before the Senate Committee on Commerce, 
Science, and Transportation in 2011, former NOAA Administrator Jane 
Lubchenco estimated that rebuilding all U.S. fish populations to 
sustainable levels could generate ``an additional $31 billion in sales 
impacts, support an additional 500,000 jobs and increase the revenue 
fishermen receive at the dock by $2.2 billion . . . more than a 50 
percent increase from the current annual dockside revenues'' (emphasis 
in original).\42\
---------------------------------------------------------------------------
    \41\ National Oceanic and Atmospheric Administration, Status of 
Stocks 2012 (Department of Commerce, 2013), available at http://
www.nmfs.noaa.gov/sfa/statusoffisheries/2012/2012_SOS_RTC.pdf.
    \42\ Jane Lubchenco, ``New England Groundfish Management,'' 
Testimony before the Senate Committee on Commerce, Science, and 
Transportation, October 3, 2011, available at http://
www.noaanews.noaa.gov/stories2011/20111003_testimony.html#_ftnref2.
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Recreation and Tourism
    Visiting the beach is the greatest connection to our oceans for 
many Americans, and coastal tourism and recreation sustain our coastal 
economies. Traveling to the shores along our coasts and Great Lakes and 
snorkeling, boating, and surfing are activities that directly 
contribute to local economies. According to the Joint Ocean Commission 
report titled ``America's Ocean Future,'' in 2007 the leisure and 
hospitality industry in U.S. Coastal States supported almost 11 million 
jobs and more than $214 billion in wages.\43\
---------------------------------------------------------------------------
    \43\ Joint Oceans Commission Initiative, ``America's Ocean Future: 
Ensuing Healthy Oceans to Support a Vibrant Economy'' (2011), available 
at http://www.jointoceancommission.org/resource-center/1-Reports/2011-
06-07_JOCI_Americas_Ocean_Future.pdf.

                                   Benefits of Coastal Tourism and Recreation
                 [Contributions of ocean tourism and recreation establishments by region, 2009]
----------------------------------------------------------------------------------------------------------------
           Region                Establishments         Employment             Wages                 GDP
----------------------------------------------------------------------------------------------------------------
Great Lakes                               12,223              217,265         $3.6 billion         $7.9 billion
Gulf of Mexico                            14,938              229,466         $4.2 billion         $9.1 billion
Mid-Atlantic                              36,097              514,668        $11.4 billion        $25.1 billion
North Pacific (Alaska)                     1,238               13,045        $0.25 billion        $0.51 billion
Northeast                                 10,833              147,319         $2.9 billion         $5.9 billion
Pacific (Hawaii)                           3,543               86,198         $2.2 billion         $4.6 billion
Southeast                                 14,210              248,422         $4.8 billion        $10.7 billion
West                                      23,239              405,486         $8.6 billion        $18.3 billion
                             -----------------------------------------------------------------------------------
    Total                                116,321            1,861,869       $37.95 billion        $82.1 billion
----------------------------------------------------------------------------------------------------------------
Source: Data courtesy of NOAA Coastal Service Center, Economics: National Ocean Watch.

    Coastal tourism generates significant economic activity every year. 
As David Beckman, water program director for the Natural Resources 
Defense Council, told the Christian Science Monitor, ``Beach going and 
resort attendance is big business in America--especially on Fourth of 
July weekend. Some 450 million people will visit over 3,000 U.S. 
beaches this year [2011].''
    Florida is a prime example of the great economic value of 
nonextractive ocean and coastal activities. Florida's tourism, fish and 
wildlife, ports, and defense-related industries generate more than $175 
billion in economic benefits and over 2.2 million jobs annually.\44\ 
Tourism alone is Florida's leading industry, employing around 1 million 
people and accounting for more than one-fifth of the State's total 
sales tax revenue and 9.3 percent of its gross domestic product.\45\
---------------------------------------------------------------------------
    \44\ Mitch Stacy, ``Florida tourism rebounds in 2011, overseas 
visits up,'' USA Today, December 30, 2011, available at http://
travel.usatoday.com/destinations/story/2011-12-31/Florida-tourism-
rebounds-in-2011-overseas-visits-up/52295150/1.
    \45\ Catherine Hollander, ``Florida's Housing Mess Puts GOP 
Hopefuls on Uncomfortable Turf,'' National Journal, January 23, 2010, 
available at http://www.nationaljournal.com/2012-presidential-campaign/
florida-s-housing-mess-puts-gop-hopefuls-on-uncomfortable-turf-
20120123?mrefid=election2012.
---------------------------------------------------------------------------
    The oceans and Great Lakes are not an everlasting source of 
recreation and GDP, however. All of these activities and industries 
require healthy oceans and coasts to prosper. Who wants to relax on a 
contaminated beach or surf through an oil slick?
    This is why Floridians have long been wary of offshore drilling and 
its potential to kill the tourism industry--the goose that lays the 
State's golden eggs. Even in the face of mounting pressure to open more 
areas to drilling, Florida has maintained a two-decade-old ban on 
drilling in State waters.\46\
---------------------------------------------------------------------------
    \46\ ``Offshore Oil Drilling `Not In Florida Waters,' Lawmaker 
Says,'' CBS Miami, June 30, 2011, available at http://
miami.cbslocal.com/2011/06/30/offshore-oil-drilling-not-in-florida-
waters-lawmaker-says/.
---------------------------------------------------------------------------
    Oil spills and other disasters are inevitable consequences of 
offshore drilling, and the Deepwater Horizon disaster took a huge toll 
on Florida's economy. In the immediate wake of the spill, for example, 
``many Panhandle hotels and restaurants reported seeing sales down by 
50 percent in the peak summer months'' and in Franklin County, located 
in the northwestern panhandle, tourism in July 2010 declined by 25 
percent from the previous year, according to the county's tourism 
bureau.\47\
---------------------------------------------------------------------------
    \47\ Laura Figueroa, ``A year after BP oil spill, Panhandle towns 
seeing signs of recovery,'' Tampa Bay Times, June 6, 2011, available at 
http://miami.cbslocal.com/2011/06/30/offshore-oil-drilling-not-in-
florida-waters-lawmaker-says/; Alana Semuels, ``Oil skips most Florida 
beaches, but so do many tourists,'' Los Angeles Times, July 21, 2010, 
available at http://articles.latimes.com/2010/jul/21/nation/la-na-oil-
spill-florida-tourism-20100721.
---------------------------------------------------------------------------
    The Joint Ocean Commission's report also found that as of 2007, 
more than 85 percent of California's gross domestic product and nearly 
12 million jobs derived from economic activity in the State's coastal 
estuarine areas. California's beaches are also vital assets to the 
State's economy with total value estimated between $1.5 and $3 billion 
per year.\48\
---------------------------------------------------------------------------
    \48\ Joint Oceans Commission, ``America's Ocean Future.''
---------------------------------------------------------------------------
Offshore Renewable Energy
    Energy must unquestionably be part of America's ocean economy, but 
even in the energy sector, we can create tremendous growth in 
employment without solely prioritizing the oil and gas sector.
    Countries throughout the world are embracing offshore wind energy 
from traditional players such as Denmark, Germany, and the United 
Kingdom to newcomers such as China, India, and South Korea. Countries 
the world over are acknowledging the economic and environmental 
benefits of turning sea breezes into electricity. Yet the United States 
has yet to install the first offshore wind turbine in our waters 
despite offshore wind's proven economic viability.


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




    The 2008 report from the Department of Energy set a target of 
developing 54 gigawatts of offshore wind energy in U.S. waters by 
2030--slightly more than 1 percent of the total 4,150 GW of potential 
energy identified in areas out to 50 miles from shore.\49\ A follow-up 
report released in 2011 that focused exclusively on a potential 
offshore wind industry found that those 54 GW ``would create more than 
43,000 permanent operations and maintenance jobs and would require more 
than 1.1 million job-years to manufacture and install the 
turbines.''\50\
---------------------------------------------------------------------------
    \49\ National Renewable Energy Laboratory, 20% Wind Energy by 2030: 
Increasing Wind Energy's Contributions to the U.S. Electricity Supply 
(Department of Energy, 2008), available at www.nrel.gov/docs/fy08osti/
41869.pdf.
    \50\ Office of Energy Efficiency and Renewable Energy, A National 
Offshore Wind Strategy: Creating an Offshore Wind Industry in the 
United States (Department of Energy, 2011), available at http://
www1.eere.energy.gov/wind/pdfs/national_offshore_wind_strategy.pdf.
---------------------------------------------------------------------------
    Last Tuesday, June 4, the Department of the Interior began the 
first auction process for developers to bid on leases for a designated 
offshore wind area off the coast of Rhode Island and Massachusetts.\51\ 
While the results of that process will not be known for some time, it 
is encouraging to see the Administration moving forward with the 
offshore leasing process. But the fact is, offshore wind developers 
need certainty on the tax breaks and subsidies that will be required to 
grow this burgeoning industry.
---------------------------------------------------------------------------
    \51\ CIT TK.
---------------------------------------------------------------------------
    Last year, Congress made offshore wind projects eligible for the 
investment tax credit--a critical policy. That policy will 
unfortunately expire at the end of 2013 unless Congress acts again to 
renew it. With the threat of expiration dangling over the industry, it 
will be extremely difficult to attract the investments required to 
build these projects. And since the vast majority of the cost of 
offshore wind energy production comes in the construction and 
development phase, without adequate upfront capital investment, the 
industry will not become viable.
    The Federal Government has a long history of subsidizing energy 
development. The oil and gas industry has received $442 billion in 
subsidies over the past 90 years,\52\ and even today it still receives 
about $4 billion per year even as the five largest oil companies 
reported $118 billion in profits in 2012 alone.\53\ It is time to 
refocus our priorities and diversify our energy supply to truly 
implement an ``all of the above'' energy policy.
---------------------------------------------------------------------------
    \52\ Nancy Pfund and Ben Healy, ``What Would Jefferson Do?'' (San 
Francisco: DBL Investors, 2011), available at http://
www.dblinvestors.com/documents/What-Would-Jefferson-Do-Final-
Version.pdf.
    \53\ Daniel J. Weiss and Jackie Weidman, ``Speed Trap: Big Oil 
Profits from High Gasoline Prices'' (Washington: Center for American 
Progress, 2013), available at http://www.americanprogress.org/issues/
green/news/2013/02/06/51967/big-oil-profits-from-high-gasoline-prices/.
---------------------------------------------------------------------------
A Word About Climate Change
    We ultimately cannot talk about energy production without talking 
about climate change. The science is clear and the facts are in. Human-
induced climate change is here, it is real, and we are simply not doing 
enough to address it. Glaciers and Arctic ice sheets are retreating to 
levels never before recorded. Extreme weather events driven by warmer, 
moister air are pummeling the planet more than ever before. Our oceans 
are more acidic than they have been in tens of millions of years, 
threatening the very foundations of the ocean food chain. Sea levels 
are rising. And this past month the concentration of atmospheric carbon 
shot past a terrifying benchmark--400 parts per million, a level last 
seen between 2 million and 4 million years ago.
    These are facts not theories. The National Aeronautics and Space 
Administration reports that ``97 percent of climate scientists agree 
that climate-warming trends over the past century are very likely due 
to human activities, and most of the leading scientific organizations 
worldwide have issued public statements endorsing this position.''\54\
---------------------------------------------------------------------------
    \54\ National Aeronautics and Space Administration, ''Consensus: 97 
percent of climate scientists agree,'' available at http://
climate.nasa.gov/scientific-consensus (last accessed June 2013).

---------------------------------------------------------------------------
    If we continue down the path of unending devotion to fossil fuels, 
our children and grandchildren will inherit a planet that is far more 
volatile. Livelihoods, our food supply, and even global stability will 
be put at risk as the planet's population blossoms to 9 billion people 
by 2050. The rising oceans are stealing our land. Volatile weather 
patterns will make agriculture less stable, as we have already seen in 
the form of epic droughts in the American Midwest and grain shortages 
in Russia. Less land, less food, more people; the math does not add up 
to a prosperous future.
    Now is the time we should be drawing the line. Rather than rushing 
headlong down the path to short-term profits, we have to step back and 
consider the long game. Smart, targeted investment in renewable energy 
technology is the way to a prosperous future. Perpetuating the same old 
policies of yesterday is a road to ruin.
                                 ______
                                 
    Mr. Lamborn. OK. I want to thank each of you for being 
here. We are going to start a round of questions now by the 
members of this Committee. And I will start off. And this 
question is directed to Mr. Felmy, Mr. Miller, and Mr. Guith.
    For nearly a generation, the Gulf of Mexico was the only 
offshore game in the world. But not anymore. Around the world, 
more and more countries are making significant headway 
developing their own deepwater energy resources, driven largely 
by technology developed here in the United States. Russia's 
Gazprom recently announced a partnership with Shell to explore 
the Russian Arctic. Brazil continues to move full steam ahead 
with both economic and political support from President Obama.
    Meanwhile, China is becoming more focused on their offshore 
resources, recently changing maps to propose a radical claim of 
most of the South China Sea. Canada already has development in 
the Atlantic Ocean off the coast of Nova Scotia, and has issued 
leases in the Arctic. Mexico has signaled interest in getting 
commercial development in their deepwater Gulf of Mexico, and 
eagerly await the approval of a Transboundary Agreement which 
we passed in this Committee several weeks ago. And we are not 
even mentioning offshore development off Africa, Israel, Japan, 
Australia, and other countries.
    In the face of all this global development, this 
Administration has proposed an offshore Outer Continental Shelf 
plan that left 85 percent of the OCS closed to development. Do 
you believe that the Administration's 5-year plan includes 
enough leasing to make our Nation competitive with other 
nations, and to produce enough energy, number one? And, number 
two, does this bill that we are looking at today set the 
framework to improve the situation? And the three of you, could 
you please answer?
    Mr. Felmy. Well, I will start. I think it does. I think, in 
the words of Chairman Hastings, we are missing opportunities 
that, if you look around the globe of where everything is being 
discovered around all those places, exciting and interesting 
places like the Falklands, for example, or other parts, we are 
leaving our resources in the ground. And that is a loss of 
opportunity, in terms of jobs, in terms of revenue, in terms of 
energy security.
    We have known about this for a long time. This is a vast 
amount of resources. We will need these resources. And it is 
nice to talk about alternative energy sources and so on, but 
let's remind ourselves that electricity doesn't power cars at 
this point. And so we are going to need these resources, going 
forward.
    Mr. Lamborn. Thank you.
    Mr. Miller. You mentioned Brazil, Canada, and Africa. And 
just recently, Brazil had $2 billion invested, Canada had $2 
billion invested in new leases, and west Africa is seeing lots 
of activity. Uruguay picked up $1.2 billion investment last 
year. These are all dollars that the E&P industry is taking out 
of the United States to spend internationally. What we need is 
access to the east coast, and then we would have some of those 
dollars spent in this country.
    The one part of the bill that we would like to see is the 
eastern gulf put back into it. This one just covers the east 
coast, the mid and south, but there is still a lot of activity 
to be seen in the eastern gulf.
    Mr. Lamborn. Thank you. Mr. Guith.
    Mr. Guith. To your first question, whether or not the 
current Department of the Interior 5-Year Plan is enough to 
provide competitiveness for the United States, I would say 
absolutely not.
    I mean as you went through the litany of places that are 
exploring off their coasts, I think it is important to realize 
that in almost every one of those instances, you were talking 
about a state-owned company exploring for state-owned 
resources. Congress loves to bring oil companies up here and 
berate them when prices get too high. But I think it is very 
important for people to understand that the real ``Big Oil'' is 
nationally owned oil companies who control over 90 percent of 
the proved reserves in the world. And that is who we are 
competing against. And by putting 86 percent of our own 
resources off limits, it is very difficult to compete, going 
into the future.
    Mr. Lamborn. Thank you. And it is also interesting, people 
come and they highlight the vast profits made by the oil 
companies, and they don't mention the vast amount of taxes paid 
by the oil companies, which are maybe even vaster.
    Mr. Felmy, can we do the offshore production of oil and gas 
and yet still be environmentally responsible?
    Mr. Felmy. I believe we can. If you talk about the programs 
that I mentioned earlier, in terms of what are approaches, in 
terms of prevention, intervention, and response, we have worked 
very hard in terms of understanding what happens in the past, 
and that it not be repeated.
    This is a core asset of our industry, in terms of 
environmental performance and safety. We understand that we 
need to do it right, we need to do it in the context of also 
remembering there are tremendous opportunities.
    Mr. Lamborn. OK, thank you all for your answers. I will now 
recognize Mr. Lowenthal.
    Excuse me, we had a wrong notation here. I apologize.
    Mr. DeFazio. This week--I don't know what I have to do. But 
anyway----
    Mr. Lamborn. Representative DeFazio.
    Mr. DeFazio. Mr. Chairman, thank you. Mr. Conathan, the 
Chairman just noted that the oil industry pays a vast amount of 
taxes. I do know they pay some taxes. But what was the recent 
tax rate on profits? Do you have any numbers?
    Mr. Conathan. I apologize, Congressman. I don't have those 
numbers in front of me now. I will attempt to get them and 
supply them to you for the record. I know that my colleagues at 
the Center for American Progress have done a lot of work in 
this area, and I do know that the oil companies are actually 
quite adept at figuring out how to avoid paying a lot of the 
taxes that they----
    Mr. DeFazio. Yes, I have seen a lot of single-digit or zero 
numbers for income taxes.
    Mr. Conathan. They are lower than I pay. The rate is lower 
than I pay. I will put it that way.
    Mr. DeFazio. Yes, OK.
    Mr. Conathan. And I would also point out that we are quite 
good at giving them additional tax breaks, as well, on the 
order of about $4 billion a year----
    Mr. DeFazio. Right, OK, thank you.
    Mr. Conathan [continuing]. To add to those coffers.
    Mr. DeFazio. Mr. Felmy, you made a statement I thought was 
interesting, ``leaving resources in the ground,'' in talking 
about the need to expand leasing. Yet, I would note as of 
February 1, 2013, the industry holds drilling rights to 30 
million acres offshore; 85 percent of the acreage under lease 
is not producing.
    According to the Interior Department, the area under lease 
in the Gulf of Mexico, you mentioned specifically you wanted 
more leasing in sensitive areas near Florida, where there is a 
huge tourism industry, not subject to pending developments 
estimated to contain 17.9 billion barrels of undiscovered, 
technically recoverable oil, and 49.7 trillion cubic feet of 
natural gas.
    So, very briefly, why do you need more acreage, when you 
haven't developed that which you have?
    Mr. Felmy. Because it is a lengthy thing you go through to 
develop. If you have 100 prospects, by the time you work 
through all the time required in terms of seismic, in terms of 
measurement, in terms of assessment, you may not find any oil.
    Mr. DeFazio. OK. Well, thank you.
    Mr. Felmy. The critics of it----
    Mr. DeFazio. Thank you, thank you. That is enough, because 
I don't have much time here. But the estimates are 17.9 billion 
barrels under these leases that have not been exploited. We 
have the same situation up in the former naval petroleum 
reserve, where there has been no development.
    So, I have a question there. But let's go to another point. 
We are talking about market forces here. And this is going to 
be more of a statement, and I will see if there is time left 
for a question.
    But we are seeing the annual celebration by the oil 
industry on Memorial Day. Unfortunately, I think it is kind of 
unpatriotic. They jack up the prices for Memorial Day, $.50 a 
gallon they went up in 2 weeks on the west coast. Now, oh, 
there are reasons for it. There is actually scheduled refinery 
shut-downs, there is unscheduled refinery shut-downs. What we 
have here is a refinery shortage, not an oil shortage. The oil 
is sitting there, waiting to be processed into gasoline. There 
is actually no shortage at the gas stations, no red flags, 
nobody is out of gas. But the price has to go up $.50 a gallon 
because the industry does this every year to celebrate the 
beginning of the driving season, which happens to fall on 
Memorial Day.
    Now, if this Committee and Congress wanted to do something, 
they would support my request to Chairman Issa of the Oversight 
and Government Reform Committee that he investigate what is 
going on with restrictions and collusion in and among the 
refinery capacity in this country, which is driving up prices 
unnecessarily.
    They also might want to join me in my request to this 
Administration, which, unfortunately, they have ignored, as has 
past Administrations, that we file a complaint against OPEC, a 
number of those countries are members of the World Trade 
Organization, for illegal collusion to drive up the price of 
oil.
    I note as we increase production over the last 2 years, 
Saudi Arabia dropped it, because they want to keep the price 
up. That is not a free market. That is a collusive, manipulated 
market, which you are all going along with, because it is 
wildly profitable. Isn't that a sweet thing? So, I would urge 
Members, if they really want to do something, join me in my 
request to this Administration, and they file a WTO complaint 
against the illegal activities of those member states of OPEC 
that are in it.
    And then, finally, last year we had testimony from the 
Chair of ExxonMobil, and he was being very defensive about the 
high prices at Memorial Day. At a Senate hearing, I think it 
was 2 years ago actually, he said, ``Don't blame me. Blame Wall 
Street. It is $.75 a gallon speculative, useless, speculative 
activity by non-producers, non-consumers, just Wall Street 
hedge funds.'' And I would urge people to join me in trying to 
reign in that market, too, and move ahead with the position 
limits that were in the Financial Services reform.
    I mean this is not a supply shortage in the United States. 
We have projections of being energy-independent within 20 years 
without doing all the stuff we are talking about here today. We 
have that projection. It is about a manipulated market for 
profit. And I will tell you they aren't paying a hell of a lot 
of taxes, and I am disappointed the witness didn't have those 
numbers, I thought he would, on those profits. Thank you, Mr. 
Chairman.
    Mr. Lamborn. Representative Fleming.
    Dr. Fleming. Yes. Thank you, Mr. Chairman. First of all, 
let me say that this conspiratorial stuff that we have heard 
for decades now about the manipulation of all oil prices and 
all of that is aluminum hat stuff. And this has been 
investigated time after time after time. Oil is a commodity and 
it is subject to price changes, based on the market. Can't help 
that; that is just the way it is.
    However, I will say this. As we move forward, gentlemen, 
toward the next decade that hopefully will be fully energy 
independent, we will be taking away the power of OPEC to 
function in a cartel, and really free the market up completely. 
But to suggest that somehow American oil companies are in some 
way manipulating prices, that has all been investigated many 
times.
    I also have another bone to pick with my colleagues. They 
were complaining that the Administration is not represented 
here. Well, that is certainly not surprising, considering the 
fact that they continue, time after time, to disperse 
inaccurate information. Let's be clear about the facts from the 
May 2013 EIA report on fossil fuels from Federal lands. Federal 
offshore oil production is down, down, I say, 8 percent in 
2012, and oil production from all Federal lands decreased to 26 
percent of total U.S. production, down, down, from 31 percent 
in 2011.
    Our colleagues keep saying that oil production is up on 
Federal lands, and we keep coming back with the facts. Federal 
offshore natural gas production was down, down, 19 percent in 
2012. All the while, the Administration in 2012 closed 85 
percent of our OCS regions to offshore development. It comes as 
no surprise that they are not here to defend this terrible 
record.
    So, really, I want to open it up to the panel in the 3 
minutes or so that I have to respond to this, and also the 
comment that there is supposedly oil or natural gas way down 
deep in the earth that you have already leased. And, for 
heaven's sakes, gentlemen, why don't you just go and get that 
substance out of the ground? Please respond to that.
    Mr. Felmy. If I could start, there is little reason to 
believe that. I find it amazing when politicians think they 
know where oil is, and geoscientists don't. I find this 
amazing. There is little reason to believe these estimates, and 
so on. The fact of the matter is if companies have spent 
billions of dollars to lease land, to develop it, and so on, 
the notion that they wouldn't develop it is just silly.
    Dr. Fleming. So you are telling me that it doesn't make 
business sense to go out and spend a lot of money to lease land 
and not attempt to get some return on investment, then?
    Mr. Felmy. That is exactly right. And irrespective of that, 
what is wrong with additional leasing? The government collects 
money, you collect more activity, you move forward. And so, why 
don't we just move forward on these things where we know there 
is a lot of opportunity?
    Dr. Fleming. So you go where the oil is, right?
    Mr. Felmy. I am just an old country boy, but I think that 
would be my philosophy.
    Dr. Fleming. It is empirical. Great. Anyone else like to 
respond?
    Mr. Guith. Yes, if I may. I mean you go where the oil is, 
where you are allowed to go.
    Dr. Fleming. Yes.
    Mr. Guith. I mean the Department of the Interior loves to 
play with statistics and mislead the public. But it is 
important to understand that right now, under this 5-year 
leasing plan, more than 86 percent of all the OCS acreage is 
off limits; 86 percent of what you and I, as American citizens 
own, has not been available for even exploration in more than 
30 years.
    So, when they say that X percent of what's available is 
open, I mean that is playing with numbers.
    Dr. Fleming. Yes.
    Mr. Miller. Just one point I would like to make is our 
industry needs access to acquire this seismic data off the east 
coast, and the BOEM is working on this programmatic EIS very 
slowly, but we anticipate that this may come to a record of 
decision in March or April of next year.
    That seismic data is not going to produce oil the next 
year, but we need to understand what resources we have off of 
the east coast. And it takes years for that data to become 
production. The longer we wait to acquire this data, the longer 
it pushes that off.
    Dr. Fleming. Right.
    Mr. Conathan. Congressman, I would just like to point out 
that while production was down slightly in 2012, we are still 
producing at higher levels than we were at the end of the Bush 
Administration, that there are 50 percent more oil rigs 
operating right now in the Gulf of Mexico than there were prior 
to Deepwater Horizon, and we still have not codified reforms to 
drilling safety and operations in the aftermath of that 
accident.
    Dr. Fleming. Well, I can tell you I was here during and in 
the immediate aftermath of the Macondo incident. And I am from 
Louisiana. And I can tell you that what production we have, and 
been able to stand up, was a real battle right here in this 
room. So we drug the Administration, kicking and screaming, 
through court battles and all of that.
    So, again, I am very hesitant to give the Government credit 
for opening up those lands. And again, remember that this 
massive increase in production is a function of the new 
technology, particularly horizontal drilling, that is going on. 
And so, again, while that may be benefiting us somewhat on 
Federal lands, it is not because of what the Administration is 
doing to be helpful, it is because of the advance in 
technology.
    And with that, I yield back, Mr. Chairman. Thank you.
    Mr. Lamborn. Representative Lowenthal.
    Dr. Lowenthal. Thank you, Mr. Chairman. I have been here 
just a few months, and I am starting to see a pattern. We seem 
to be repeating fairly fruitless exercises. And I have to ask. 
Why are we doing this?
    Why are we continuing to spend our time looking at old, 
rejected ideas, ideas that don't stand a chance in the Senate, 
and will not be signed into law by the President? But here we 
are again, spending our time trying to open up more Outer 
Continental Shelf, the OCS lands, for oil and gas drilling off 
southern California and other States, and to maintain the 
leasing of all OCS areas over an arbitrary resource threshold. 
And, of course, skipping meaningful environmental review.
    This is a tired strategy, one that has been rejected, and, 
in my opinion, is not productive. Let's just talk about one 
section of the bill that is of particular concern to me, since 
I represent the area just right near there, and that is opening 
up new OCS leases off southern California.
    First, expanded drilling in the OCS is not supported by 
local Californians, nor the State itself. I just was recently 
speaking to my dear friend, the State Senator from that region 
in the California State Senate, Senator Hannah-Beth Jackson. 
And she wanted me to share this statement with you and the 
Committee. ``The people of Santa Barbara County and the State 
of California have a long history of opposing offshore oil 
drilling along our magnificent coast. We vehemently oppose any 
further efforts to despoil our beautiful and pristine waters in 
the name of oil or other fossil fuels. Now is the time to wean 
ourselves off dirty and polluting oil, and find clean and 
sustainable ways to provide the energy that we need. At a time 
when we are seeing severe weather events throughout the Nation 
and the world, we should be working to reduce our use of fossil 
fuels, not drilling even further in our pristine waters for 
more of them. It would be irresponsible to allow our coast to 
be despoiled by such folly. Not now, not ever again.''
    The County of Ventura, along with the coast in these areas, 
has expressed its opposition to the Offshore Energy Jobs Act, 
stating that, ``The Board of the Ventura County Supervisors 
believe that any additional offshore energy exploration and 
production will negatively impact the air quality of Ventura 
County, harm the scenic, recreational, economic, and 
environmental resources, and the value of our coast, and have 
the potential to lead to an ecological disaster similar to what 
happened in the Deepwater Horizon explosion in 2010.'' I ask 
that letter be placed into the record.
    [The letter submitted by Dr. Lowenthal follows:]
      Letter for the Record Submitted by Thomas P. Walters to the 
                         Hon. Alan S. Lowenthal
                                 County of Ventura,
                                   County Executive Office,
                                      Washington, DC, June 3, 2013.
The Honorable Alan S. Lowenthal,
U.S. House of Representatives,
Committee on Natural Resources,
Subcommittee on Energy and Mineral Resources,
Washington, D.C. 20515.

    Dear Congressman Lowenthal:

    I am writing on behalf of the Ventura County Board of Supervisors 
to express its concerns with provisions in the draft Offshore Energy 
and Jobs Act that would allow offshore drilling in the Santa Maria and 
Santa Barbara! Ventura Basins.
    Since 2005, the Board has opposed Federal efforts that reduce the 
role or authority of State and local governments in the siting and 
approval of offshore energy facilities or diminish the public and 
environmental review process. The Board also opposes time extensions of 
existing undeveloped offshore oil and gas leases. Furthermore, the 
Board believes that any additional offshore energy exploration and 
production will negatively impact the air quality of the Ventura County 
air shed, harm the scenic, recreational, economic, and environmental 
resource values of our coast and has the potential to lead to an 
ecological disaster similar to what happened to the Deepwater Horizon 
explosion in 2010.
    As your Committee begins consideration of the Offshore Energy and 
Jobs Act, please take into consideration the views of the Ventura 
County Board of Supervisors and their constituents.
            Sincerely yours,
                                         Thomas P. Walters,
                                         Washington Representative.
                                 ______
                                 
    Dr. Lowenthal. Also, in the 5-year OCS leasing program, the 
Bureau of Ocean Energy Management explained why the Pacific 
Coast States were not included for lease sales, by stating, 
``The exclusion of the Pacific coast is consistent with the 
long-standing interest of Pacific Coast States as framed in an 
agreement that the Governors of California, Washington, and 
Oregon signed in 2006. This agreement expressed the Governors' 
opposition to oil and gas development off their coasts, and the 
States continued to voice these concerns, including in formal 
comments in the 2009 DPP.''
    And then, there is the President. President Obama strongly 
opposes these measures that are contained in this bill, as 
evidenced when they were contained in the H.R. 6082 last 
Congress. As the President stated in his 2012 Statement of 
Administrative Policy, ``H.R. 6082 would require the Department 
of the Interior to open up a number of new areas on the OCS. 
The actions would be directed without secretarial discretion to 
determine whether these areas are appropriate for leasing 
through balanced consideration of factors such as resource 
potential, State and local views and concerns, and the maturity 
of the infrastructure needed to support oil and gas 
development, including in the event of an oil spill. The bill 
would mandate OCS lease sales along the east and west coast and 
elsewhere, without regard for significant issues such as State 
and local concerns and impacts upon important fishing areas and 
with an inadequate consideration.''
    Yet, here we are again on this fruitless exercise, spending 
Congress's time and energy on a bill that has no chance of 
support from local affected populations. So I don't have a real 
question at this moment, but I wanted to express my frustration 
that we are doing this and not spending our time on issues 
where we can work together, on which there is some agreement 
on, not which the communities that are impacted feel most angry 
about. And maybe there are other parts of the bill that we 
might be able to work on together. But having this makes it 
impossible for me to support. Thank you, and I yield back.
    Dr. Wittman [presiding]. Thank you, Mr. Lowenthal. We now 
go to Mr. Duncan.
    Mr. Duncan. Thank you, Mr. Chairman. All right, guys. You 
may not be able to see it from there, but we have got three 
areas with some sort of resource in them. And we are going to 
allow you to explore and produce from these resources. And so, 
we are going to offer a lease sale in this area, and you are 
already producing out of that area. So, you are going to invest 
money in a lease sale. And you know that there is a good chance 
there is going to be resources here, so you are going to invest 
your money there.
    But we have got this area over here that you can't tell 
from there whether it has got any resources or not. And we are 
going to allow you to possibly research that, or possibly 
produce there. But in order to find out, you are going to have 
to invest a heck of a lot of money to find out if there is any 
resource there. And we may or may not open this area up for you 
to produce.
    Are you going to invest that money to just discover whether 
there might be a resource, oil or natural gas, in that area 
without any hope, promise, or understanding from the Government 
that area will ever be included in a future lease sale?
    The answer is no. You are not going to invest the money 
that it would take to drag the seismic in the Atlantic to find 
out what resources may be there, without some sort of promise 
from the Government that is going to be included in a future 
lease sale. That is why it is so important to open up this area 
for exploration, Mr. Chairman, because the last time that 
seismic was drug in the Atlantic off the coast of your State or 
my State was in the 1980s. And that was with 1980, 20th 
century, 30-year-old technology, what is known as 2D technology 
now.
    Mr. Miller, what kind of technology is there now, in the 
21st century?
    Mr. Miller. The technology that industry is proposing off 
of the east coast, the southern and mid-section, is 
substantially different than what was employed at that time, in 
the 1980s. Industry has come a long way with the imaging of 
deeper targets, with longer equipment, further offsets, moving 
from 2D to 3D.
    The investment will be there. We actually feel that the 
investment will increase in this area, as access is given to 
the E&P business. But there is too----
    Mr. Duncan. Are you all going to spend money? And I am 
talking millions of dollars----
    Mr. Miller. There is----
    Mr. Duncan. To go out off the Atlantic coast and find out 
whether there are resources there, without any sort of hope, 
promise, or certainty that area is going to be opened up at 
some point in time?
    Mr. Miller. That is why we are pushing the BOEM to get this 
programmatic EIS out, so we can acquire this data. There are 
two reasons right now to acquire that data. One of them is for 
a regional architecture of the Atlantic east coast. We are 
competing for dollars with west Africa, with Brazil. Everyone 
is trying to put this Trans-Atlantic margin together. But the 
missing puzzle right now is the east coast of the United 
States. There are companies that will license the seismic data 
to understand the regional geology of the east coast United 
States.
    At the same time, the larger E&P's, they do their homework 
not the day before a lease sale. They do it years and years 
before a lease sale. So we need this data out early, and that 
is what we are pushing for, is to get this programmatic passed 
and a record of decision made on it.
    Mr. Duncan. All right. In the Marcellus shale, in 2002, 
they did some seismic work and they estimated there was 1.9 
trillion cubic feet of natural gas. Just recently, in 2011, a 
decade or so later, do you know how much the increase, 
projected increase, is in the Marcellus with new technology? 
Forty-four times greater. Forty-four times greater than what 
they projected was there in 2002.
    So, just in a decade, changes in technology for just 
seismic, not necessarily the changes that we are talking about 
by the gentleman from Louisiana, with horizontal drilling and 
other ways to recover those resources.
    I would say this in my last seconds here, that South 
Carolina, my home State, Virginia, and other areas around the 
country that have areas in their OCS want to see those areas 
opened up and offered in a lease sale. And they also want to 
see the royalties come back to the State at 37.5 percent that 
are currently available. That is what this bill does. It 
provides Virginia an opportunity to receive revenue back to the 
State. This could be used for infrastructure, the bridges and 
roads that we need to drive our economy, provide the jobs that 
the Chamber of Commerce talks about that we know result from 
energy exploration. South Carolina wants that, as well.
    And so, I urge passage of this. I enjoyed the testimony; I 
look forward to hearing more of it. I yield back.
    Dr. Wittman. Thank you, Mr. Duncan. We will now go to Mr. 
Garcia.
    Mr. Garcia. Good morning, gentlemen. I was intrigued by 
your statement, Mr. Guith, that the Department of the Interior 
likes to play with numbers. Right? So we are looking at some 
numbers here, and I just want to get an understanding.
    Hasn't oil production increased in the United States?
    Mr. Guith. Not on Federal lands, no.
    Mr. Garcia. No, but oil production has increased in the 
United States, to the highest levels since----
    Mr. Guith. Since 1987, yes, on public and private lands. 
But both Federal onshore and Federal offshore have declined 
over the last 4 years. I mean the Federal OCS----
    Mr. Garcia. On Federal lands.
    Mr. Guith. Correct. Federal OCS and the gulf----
    Mr. Garcia. But, overall, production is up.
    Mr. Guith. Yes, on private lands and State lands.
    Mr. Garcia. Correct.
    Mr. Guith. Net.
    Mr. Garcia. Right. But we are still producing more.
    Mr. Guith. And we are still importing 50 percent of the 
crude that we are using in this country.
    Mr. Garcia. I wanted to check that number. Isn't oil 
production down almost 40 percent from our levels in 1988, I 
think I have got here?
    Mr. Guith. Oil production?
    Mr. Garcia. Oil importation. Isn't it down to the lowest 
levels that we have ever had before?
    Mr. Guith. The high-water mark was 2006, where it was 
roughly about 60 percent, 65 percent was imported. Now we are 
down to 50 percent.
    Mr. Garcia. Right. We are down to 40 percent, is what I 
have got.
    Mr. Guith. No, that is incorrect. Fifty percent of crude 
oil. Yes, it is 7.5 million barrels a day produced 
domestically, 7.5 million barrels a day imported.
    This is the part of playing with number things, people 
don't always understand the difference between crude oil and 
crude oil as well as products. We are now a net----
    Mr. Garcia. You wouldn't argue with me that the President's 
strategy of all-of-the-above, which is a strategy that we can 
argue about, but is, in essence, a strategy that has produced, 
there is more oil being produced in the country. We are 
importing less oil than we have in the past. Right?
    Mr. Guith. Correct.
    Mr. Garcia. And that is a success, wouldn't you say?
    Mr. Guith. For the----
    Mr. Garcia. I mean because you are here, and you are upset, 
you are huffing and puffing, but the reality is we are making 
substantial gains on this, and you should be happier. But I 
assume you want to be angry about this. But we are headed in 
the right direction.
    Mr. Guith. Congressman, do you think importing 50 percent 
of our crude is a success? Because we at the Chamber don't.
    Mr. Garcia. No, I don't. I think having an energy policy 
that goes all-of-the-above, that properly distributes 
electricity through the country, that we use the natural 
resources, I would rather we didn't import anything. But I also 
know that we have got enough natural gas to replace most of 
that crude, we wouldn't need to look for it because of the huge 
success we have had. But thank you.
    I wanted to ask Mr. Conathan. You have heard my questions. 
I look at these numbers and we may try to shade them our way, 
but I like driving as much as the next guy. I drive a Cube, 
which is not as efficient as it should be, but I am sure much 
more efficient than most. But when I look at these numbers, or 
at least the numbers that staff counsel has given us, or staff 
Committee has given us, I think we are headed in the right 
direction. What would you say about that?
    Mr. Conathan. Well, I think there is no question that 
reduction on reliance on foreign oil is heading in the positive 
direction. I think there are a lot of gains that we can make in 
terms of demand in this country, and efficiency in this 
country, that will assist in that means. And the policies that 
the Obama Administration has implemented in terms of fuel 
efficiency and other standards that they have implemented since 
taking office have certainly moved us in that right direction 
and helped reduce demand, which I think is the other part of 
the equation.
    An additional policy that would be extremely useful in this 
regard would be to keep oil produced on American lands and keep 
American oil on American soil, and reduce the ability to export 
oil that is produced on public land, and to keep it domestic.
    Mr. Garcia. There I disagree with you, right? This is a 
commodity, right? And it doesn't matter where it ends up in the 
same place, but I wanted to ask Mr. Miller, or, better yet, Mr. 
Felmy.
    I am reading here that we are up 50 percent more in the 
Gulf of Mexico, in terms of oil production from where we were 
since BP. Is that correct?
    Mr. Felmy. We have had an increase, because you had a 
virtual shut-down of the gulf in post-incident.
    Mr. Garcia. Right. Oh, so you are saying we are up 50 
percent from we stopped producing?
    Mr. Felmy. I am not verifying that number. I do not know 
that exact number, in terms of----
    Mr. Garcia. Does anyone know if that number is right or 
wrong?
    Mr. Guith. It is about right. I will say that if you look 
at the EIA data, in 2009 to 2012, Federal production in the 
gulf is down 10 percent. From 2009, pre-Macondo, to last year, 
when we had the last full data, down 10 percent, from 1.56 
million barrels a day to 1.4 million barrels a day.
    Now, we expect it to go up----
    Mr. Garcia. What do you account that for?
    Mr. Guith. I am sorry?
    Mr. Garcia. What----
    Mr. Guith. Well, it was the moratorium. But I mean, let's 
be clear here. I am not suggesting that you are, Congressman, 
but people play with numbers. It is clear right now that in the 
Gulf of Mexico, production is lower than it was 4 years ago. It 
is on its way up, and we are thankful to see that. But let's 
not say that it is up when it is not, especially when it is 
going up.
    Mr. Garcia. Mr. Chairman, thank you for your generosity on 
time. I yield back.
    Mr. Lamborn [presiding]. OK. And thank you for those good 
questions.
    And now, a gentleman who has been very helpful to me this 
morning and has been very patient, Representative Wittman.
    Dr. Wittman. Thank you, Mr. Chairman and panel members. 
Thank you so much for joining us. We appreciate it.
    I want to begin just talking a little bit about Virginia. 
We heard from some other Members from other States that have 
said that they and their counties within the State are not in 
favor of offshore development. I can tell you Virginia is, in a 
grand bipartisan way, fully in favor of the development of our 
offshore energy resources. And, as you know, we have been 
somewhat frustrated by Virginia not being included and at least 
allowing for the planning and development of those resources.
    As you know, the 2012 to 2017 Outer Continental Shelf oil 
and gas leasing program did not include the OCS off of the east 
coast, which is of deep concern to us. Virginia is ready to go. 
I think we are perfectly situated. We are, in a bipartisan way, 
in favor of making sure that we develop these energy resources. 
We know that there is an awful lot of economic potential there. 
We know just there, in Virginia, there is about $19.5 billion 
in economic production, and that goes to folks working, 
building those oil rigs, maintaining those oil rigs, tending 
those oil rigs, and gas production in that area.
    So, we are very, very interested in seeing this effort go 
forward. That is why I am so happy and honored to join with 
Chairman Hastings in supporting and cosponsoring H.R. 2231, the 
Offshore Energy and Jobs Act, which we believe will get us back 
on track to open up the leasing there off of Virginia and the 
east coast, and make sure that we extend revenue-sharing to 
those States. I think those things are particularly important.
    I want to talk a little bit about some of the concerns that 
you all expressed earlier. Mr. Miller, you expressed some 
concern about the delay that BOEM has put in place in 
completing the programmatic environmental impact statement for 
the Atlantic OCS, and their delay in issuing a record of 
decision. As you know, the ROD was supposed to be released in 
October of 2013, and now is scheduled for March of 2014. That 
delay is, I think, of significance.
    So, I wanted to get your perspective. And how does this 
delay impact your planning and efforts to collect seismic data 
in the Atlantic? And you heard some other Members talk about 
it. Mr. Duncan alluded to the fact that if there is no 
certainty in what you can expect on the development side, how 
does that impact, well, all these elements. Obviously, these 
delays. But how do you see these decisionmaking delays 
impacting your efforts there in the Atlantic?
    Mr. Miller. That is a very good question. I think if we 
look back, the original record of decision was supposed to be 
March of 2013.
    Dr. Wittman. Right.
    Mr. Miller. We have to go back. So it is continually being 
delayed. It looks to be on track now to get a record of 
decision in March or April of next year. What is delaying 
things further? Is there going to be new rules for us to 
operate on? Which we respect and we appreciate. Not knowing 
those until they make that record of decision is just going to 
delay our permitting process further, because we cannot, our 
industry cannot, permit these surveys until this programmatic 
EIS is complete, and a record of decision is made.
    When we find out the rules, on the day that is announced, 
it may take another year before we have to file our permits 
through NMFS, and et cetera. Knowing that information now, we 
know it is in the documentation, but it can't be released, that 
would help speed things up. But we have to schedule vessels, we 
have to schedule budgets, we have to work with the E&P business 
that help fund these surveys. That takes time. So that is what 
is causing the delays.
    Dr. Wittman. Thank you, Mr. Miller. I do want to ask a 
quick question about the economic impact. Both Mr. Felmy and 
Mr. Guith talked about the economic impact of offshore energy 
development. And you spoke about, Mr. Guith, the overall 
numbers in the United States. I think about 240,000 jobs, 
direct and indirect.
    Can you give me a little perspective, when you boil that 
down, to a State like Virginia, and what Virginia could expect, 
as far as economic growth or jobs or whatever metric you might 
have that you are comfortable with, as a result of offshore 
energy production there in Virginia?
    Mr. Guith. I can try. As a current Virginian, I hope to see 
it successfully grow.
    Dr. Wittman. Yes.
    Mr. Guith. Or start, to begin with. But if you look 
comparison-wise, I mean, obviously the Gulf of Mexico is a much 
larger resource base than any area adjacent to any of the Mid-
Atlantic States. But within the Gulf of Mexico we know that 
somewhere in the neighborhood of 12 percent of the entire 
economy is reliant upon offshore development.
    So, until folks like Mr. Miller can get out there and we 
can tell precisely what that resource base is, and start that 
market going, it is difficult for anyone to tell you what sort 
of development is going to be there. But when you look at your 
friends further south, 12 percent of their economy is dependant 
solely upon this one function. I think it bodes well for 
Virginians.
    Dr. Wittman. Very good. Thank you, Mr. Chairman. I yield 
back.
    Mr. Lamborn. OK, thank you. Now the gentleman from the 
State with the lowest unemployment in the country, 
Representative Cramer from North Dakota.
    Mr. Cramer. Thank you, Mr. Chairman, and thanks to all of 
the witnesses. And let me say I agree when I hear my friends on 
the other side talk about tired, old arguments. And one of 
those tired, old arguments is based on a different world order 
than the one we live in today. It is an argument based on 
scarcity, rather than abundance. And many of the arguments they 
make are not relevant in today's abundance of natural 
resources. And North Dakota is the evidence of that.
    The other argument that I get tired of hearing about is 
that, ``What are we all complaining about? After all, oil 
production is up.'' And let me say, on behalf of the citizens 
of North Dakota, you are welcome.
    [Laughter.]
    Mr. Cramer. But the other argument I have grown weary of is 
this argument of those awful speculators, and it is one that 
should be put to rest.
    And we have an Administration that has, without question, 
wants to limit supply, so that they can force reduction of 
demand. And they want to limit demand. I mean the President, in 
his State of the Union Address just this year said, ``I propose 
we use some of our oil and gas revenues to fund an energy 
security trust that will drive new research and technology to 
shift our cars and trucks off oil for good.''
    Now, I don't know about you, but when we take oil and gas 
money to make oil and gas extinct, I am not sure how that is 
going to continue to be funded. So he wants to attack the 
demand side and he wants to attack the supply side. When the 
former Secretary of Energy calls for $7 gasoline, you know that 
is a priority.
    So, to put this topic to rest, I want to submit, Mr. 
Chairman, to the record this MIT study, ``The Simple Economics 
of Commodity Price Speculation.''
    Mr. Lamborn. If there is no objection, that will be 
submitted into the record.
    [The MIT study submitted for the record by Mr. Cramer has 
been retained in the Committee's official files and can also be 
found at http://www.nber.org/papers/w18951.pdf?new--window=1:]
    Mr. Cramer. Now, this is one of the better things to come 
out of Massachusetts in quite a while. And the author's key 
finding was, ``Although we cannot rule out that speculation had 
any effect on oil prices, we can indeed rule out speculation as 
an explanation for the sharp changes in prices since 2004. 
Unless one believes the price elasticities of both oil supply 
and demand are close to zero, the behavior of inventories and 
future spot spreads are simply inconsistent with the view that 
speculation has been a significant driver of spot prices. If 
anything, speculation has a slight stabilizing effect on 
prices.'' So the facts speak for themselves.
    Another thing I want to get to in terms of questions, we 
have heard a lot about big oil. We hear about it all the time, 
speaking of tired, old arguments. I come from a State where 
people could claim that big oil is getting rich. I would like 
to ask each of you. Which economic class benefits most from 
enhanced oil production? In North Dakota, I have noticed the 
middle class that has done the best. We have got more people in 
the middle class, we have seen people move up within the middle 
class.
    What would be your response to this, the rich-keep-getting-
richer argument?
    Mr. Felmy. Well, let me start with I am a native of 
Pennsylvania, a former dirt-poor country boy. And driving 
through the Marcellus right now, I see things I never saw 
growing up: Help Wanted signs. You had an area that was very, 
very poor for 100 years. And now, folks can graduate from high 
school with some technical training, and support a family. And 
that is something we have never seen before. And so, those are 
the first folks who benefit: the direct workers, the suppliers, 
all the local communities from restaurants to car dealers to 
everybody. It is the full community that is benefiting from it.
    And it is also the retirees who happen to have their 
investments in those companies to support their retirement.
    Mr. Guith. Mr. Cramer, we spent some time with API and some 
other groups, trying to quantify the overall impact that the 
Unconventional Revolution up in the Bakken and elsewhere have 
had on this country. And perhaps the numbers that were most 
striking were what the average wages were in this industry 
throughout the country.
    Say, for example, in West Virginia it is over $97,000 a 
year. That is the average. I mean that is not to say that 
people don't make less than that, but they are making well in 
excess of double the statewide average. In Pennsylvania it was 
about $96,000. In North Dakota, it was about $94,000. So these 
are very high-paying jobs. Many of them are very highly 
skilled, but don't require college degrees, and therefore 
present one of the only jobs markets, especially in a flagging 
economy.
    Mr. Conathan. Congressman, I would say that the greatest 
nexus for the middle and lower class to oil production is 
largely what they pay at the pump, which is entirely unaffected 
by increases in production. Their energy costs and their cost 
at the pump will not go down as production increases.
    I would also say that they are the ones who suffer the most 
from the external costs of oil production, be they pollution or 
increasing events of extreme weather and climate change that 
affect the middle and lower classes far more than the upper 
classes do.
    Mr. Felmy. May I challenge that? That is absurd. If you 
look at the average gas consumers in the United States, they 
have seen significantly lower natural gas costs. That is an 
absurd statement.
    Mr. Guith. Not just natural gas, but also gasoline. I mean 
people are operating under the same metric of 10 years ago, 
that United States could never produce enough to change the 
price. Well, it is clear that it has, to the point where WTI 
has dislocated from crude to the point where we are realizing 
upwards of a 20 to 30 percent discount for oil paid here. And 
that has empirically translated into lower gasoline prices in 
this country than we otherwise would have had. And certainly, 
in comparison to other states around the world. That may very 
well come back into equilibrium some time in the near future. 
But to say that it hasn't had an impact is just patently false.
    Mr. Cramer. Thank you. Obviously, my time has expired, Mr. 
Chairman, and I regret that we can't get into a discussion 
about the difference between a subsidy for one form of energy 
and a deduction of expenses for another.
    Mr. Lamborn. Well, I still have a lot of questions, so 
let's do a very short follow-up round of, like, 3-minute 
questions.
    And, Mr. Miller, I would like to ask you about seismic. In 
1995, the USGS thought that the Bakken Formation had 151 
million barrels of oil. Now we know that there is about 7.4 
billion, a fiftyfold increase. You mentioned the gulf, how 
there has been a 500 percent increase. Do you think that this 
would happen in the Atlantic coast, off the Atlantic coast?
    Mr. Miller. Well, what we have seen happen in the Gulf of 
Mexico is with enhanced and new technology on the seismic 
imaging was the discovery of the lower tertiary trend, which 
was the very significant resource. We still don't understand 
completely how large it is. You can also push it back onto the 
shelf, where the deep gas trend is developing. So, with this 
new technology in a proven basin, that is where there is 
reserve estimates pushed upwards.
    In the Eastern United States, off the eastern coast, the 
old data, it does not image at depth. And what we are seeing, 
where we work internationally in Brazil and West Coast Africa, 
is a deep play that they are trying to pull that same play into 
the east coast of the United States, but they cannot image that 
because there is no new data. So that is what we expect to see 
off the east coast of the United States, is definitely an 
increase in reserves when they are able to image the deeper 
area----
    Mr. Lamborn. So no modern seismic has been done off the 
Atlantic coast.
    Mr. Miller. No, sir.
    Mr. Lamborn. And how much better is the technology today 
than back when it was done previously?
    Mr. Miller. I mean, the science is very similar, but the 
equipment that we use is leaps and bounds. I mean, if you look 
at the same time in 1984, that is, I think, when Motorola came 
out with the bag phone that some of us may have recognized we 
used, and now we do everything on our cell phone. It is not 
just the seismic, but since it is a drilling business, it is 
the IT business, that was also Windows version 1 was in 1984. 
Seismic has kept up with that technology.
    Mr. Lamborn. And along with that, from an environmental 
perspective, if you have better seismic and pinpoint formations 
better, does that reduce the environmental footprint of 
extraction?
    Mr. Miller. Yes, sir. We acquire a regional data set to 
help understand the basin architecture, and you develop your 
plays. And that is where the argument that we keep hearing 
about, ``Why is every lease not drilled?'' There is not oil 
under every lease. But seismic allows you to pinpoint the areas 
where the resource will be.
    Mr. Lamborn. OK. Thank you so much. Representative Cramer.
    Mr. Cramer. Thank you. I do want to explore a little bit 
this argument about subsidies versus deductions. And perhaps 
somebody can just take it from there, because I suspect you 
know exactly what I am talking about.
    Mr. Felmy. I will start. The oil industry is accused of 
getting subsidies. That is certainly not true. We don't get 
subsidies in any way, shape, or form. We get to deduct our 
costs, just like every other business. And, yes, those costs 
are specific to oil, because we produce oil. If we produced 
widgets, we would be deducting costs for widgets. This is just 
political spin in Washington that has absolutely no basis in 
fact.
    Mr. Conathan. Congressman, it is $40 billion worth of 
political spin. It is not spin, it is money. It is money that 
the oil companies are not paying into the Federal coffers that 
they should be paying into the Federal coffers to provide the 
American people a proper return on the natural resources that 
we allow them to extract that belong to all of the American 
people.
    Mr. Cramer. Would you be surprised if it was over 50 
percent, and all the taxes that the oil industry and everything 
related to it pays, including those service companies, income 
taxes, sales taxes, State taxes? Would you be surprised if it 
was 50 percent or more that they actually pay in to the benefit 
of our Government?
    Mr. Conathan. What I know is that I received some of the 
numbers that Congressman DeFazio was asking for earlier. 
ExxonMobil paid a 13 percent tax rate last year, 13 percent. 
That is about a third of what I pay in taxes.
    Mr. Cramer. And you are talking about corporate income tax 
rate, not all the other taxes that they pay at every other 
level. Is that right?
    Mr. Conathan. Federal taxes.
    Mr. Cramer. All right. So, you talked about the wind 
development. I cited about 1,500 megawatts of wind in North 
Dakota when I was an energy regulator there. And I think you 
state in your testimony that but for the production tax credit, 
there probably wouldn't be wind development. I think that is 
probably pretty accurate. We have seen a dramatic increase in 
electricity prices for those States that have mandated it, and 
we have built it for them and are happy to sell it to them if 
they are willing to pay more for it. That is up to them.
    But are you suggesting that the ability of the oil industry 
to deduct their expenses and lower their rate, as a result of 
that, by the way, utilizing the capital they spend to pour back 
into the jobs that they create, is somehow equal to a subsidy 
for wind that could not possibly be built, but for that 
taxpayer subsidy?
    Mr. Conathan. No----
    Mr. Cramer. Coming from the oil industry, perhaps, in many 
cases?
    Mr. Conathan. Congressman, I don't think they are equal at 
all. I think that, in fact, an industry that is emerging and 
developing from zero in this country, as the oil industry got 
when they began their production early on, then at that time 
subsidies were appropriate. At this time, for the wind 
industry, those subsidies are appropriate, because that is how 
we develop an industry in this country that creates jobs and 
creates additional energy independence.
    Mr. Cramer. And I have supported those emerging technology 
subsidies. And at some point, though, we have to get off of 
them. We just can't, especially if it is proven to not be very 
efficient.
    Mr. Conathan. Exactly. We have to get off of them for oil, 
but we can't get off of them for wind, because they haven't 
started yet.
    Mr. Cramer. That said, let me just close, Mr. Chairman, 
because we hear a lot about independence, in 20 years, I think 
Mr. DeFazio said. I prefer to be energy secure next year. Not 
necessarily independent, but secure. And I think that we can do 
that, if we stop the demagoguery and get down to business and 
have a discussion based on not scarcity, but abundance. Thank 
you, Mr. Chairman.
    Mr. Lamborn. OK, thank you. And I want to thank each 
member, each and every member of the panel for your helpful 
testimony. I have learned a lot. I think the public has learned 
a lot through this. We got various perspectives, and it has 
been very illuminating.
    Members of the Committee may have additional questions for 
the record, and I ask that you would respond to those in 
writing.
    If there is no further business, without objection the 
Committee will be in recess until further announcement.
    [Whereupon, at 12:30 p.m., the Subcommittee recessed, 
subject to the call of the Chair.]

             [Additional Material Submitted for the Record]

 Prepared Statement of The Honorable Edward J. Markey, Ranking Member, 
                     Committee on Natural Resources
    Thank you.
    From Cape Cod to Cape Ann; New Bedford to Newburyport; 
Massachusetts fishing families are hurting. Our fishermen in 
Massachusetts have been pushed to the brink by the economic disaster 
declared for the New England groundfish fishery last year in 
anticipation of severe cuts to fishing quotas for cod, haddock, and 
flounder.
    House Republicans already turned their backs on coastal communities 
in the Commonwealth earlier this year when they refused to allow my 
amendment on the House Floor to provide millions of dollars in economic 
disaster assistance to fishermen and coastal communities. The bill that 
we are considering today from the Majority would add insult to injury 
by opening up Georges Bank off the coast of New England to oil 
drilling.
    Under this legislation, New England fish stocks and their habitat 
would be threatened with oil spills that could wipe out the fishing 
industry for good. Protecting Georges Bank from drilling is critical to 
ensuring that efforts to rebuild and manage New England groundfish 
stocks are not in vain.
    Georges Bank is one of our Nation's most fragile and important 
marine ecosystems and a key economic driver for the region. This 
special place is home to more than 100 species of fish and shellfish, 
whales, dolphins and porpoises. That is why President Obama and the 
Interior Department have protected Georges Bank from drilling through 
2017.
    But Georges Bank remains a top target of the oil and gas industry. 
The Majority's legislation would put Georges Bank back in the 
crosshairs by forcing the Interior Department to lease at least half of 
the waters off of New England for drilling.
    In Massachusetts, the commercial fishing industry is responsible 
for over $2 billion in annual income and supports more than 73,000 jobs 
in the State. For New England as a whole, the commercial and 
recreational fishing industries generate more than $3 billion in annual 
income and 112,000 jobs. Georges Bank is the heart of that New England 
fishery.
    In addition, tourism generates tens of billions of dollars every 
year for Massachusetts and supports more than 200,000 jobs.
    We saw the devastating impact that the BP spill had on the tourism 
and fishing industries in the gulf. One study concluded that the total 
impact of the spill to the tourism industry in the Gulf States could 
exceed $20 billion. At the height of the disaster, roughly 40 percent 
of gulf waters were closed to commercial and recreational fishing. As 
our economy is finally starting to recover, we can't afford to face 
that type of situation in New England.
    Georges Bank represents a tiny fraction of the Outer Continental 
Shelf--less than \1/2\ of 1 percent--but it is massively important to 
our region.
    Georges Bank is named for Saint George, the patron saint of 
England, but that doesn't mean we should hand it over to British oil 
giant BP.
    We much ensure that Georges Bank is never turned into Big Oil's 
Bank and that it can forever remain a home to shellfish, and not Shell 
Oil.
    We should reject this bill and protect this important place.
    I yield back the balance of my time.

                                 # # #
                                     



LEGISLATIVE HEARING ON H.R. 2231, TO AMEND THE OUTER CONTINENTAL SHELF 
 LANDS ACT TO INCREASE ENERGY EXPLORATION AND PRODUCTION ON THE OUTER 
   CONTINENTAL SHELF, PROVIDE FOR EQUITABLE REVENUE SHARING FOR ALL 
 COASTAL STATES, IMPLEMENT THE REORGANIZATION OF THE FUNCTIONS OF THE 
FORMER MINERALS MANAGEMENT SERVICE INTO DISTINCT AND SEPARATE AGENCIES, 
    AND FOR OTHER PURPOSES. ``OFFSHORE ENERGY AND JOBS ACT'' Part 2

                              ----------                              


                         Tuesday, June 11, 2013

                     U.S. House of Representatives

              Subcommittee on Energy and Mineral Resources

                     Committee on Natural Resources

                            Washington, D.C.

                              ----------                              

    The subcommittee met, pursuant to notice, at 11 a.m., in 
room 1324, Longworth House Office Building, Hon. Doc Hastings 
[Chairman of the Full Committee] presiding.
    Present: Representatives Hastings, Lowenthal, Horsford and 
Garcia.
    The Chairman. The Committee on Natural Resources will 
convene.

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

    The Chairman. The Subcommittee on Energy and Mineral 
Resources is meeting again today to hear additional testimony 
on H.R. 2231. To amend the Outer Continental Shelf Lands Act to 
increase energy exploration and production on the Outer 
Continental Shelf, to provide for equitable revenue sharing for 
all Coastal States, to implement the reorganization of the 
functions of the Former Minerals Management Service into 
distinct and separate agencies, and for other purposes.
    The name of the act is the Offshore Energy and Jobs Act.
    This is a continuation, or part 2 of a legislating hearing 
that was held on June 6. And we will go straight to the 
witnesses. But first I want to make an announcement. One of our 
former colleagues, Congresswoman Barbara Vucanovich from 
Nevada, just recently passed away. And I would like to just 
make a brief announcement, considering that this is an Energy 
and Mineral Resources hearing. The Committee is saddened to 
learn that Congresswoman Barbara Vucanovich passed away 
yesterday after a brief illness. She served the 2nd district of 
Nevada from 1983 until her retirement in 1997. Mrs. Vucanovich 
was the Ranking Member of this Subcommittee from 1991 through 
1994, and then Chairwoman of this Subcommittee until her 
retirement.
    Mrs. Vucanovich also served on the House Administration 
Committee, the Appropriations Committee, and was Secretary of 
the Republican Conference from 1995 until her retirement in 
1997. I know everyone on the Committee will join me in offering 
our sincerest condolences to the family.
    I would like to introduce the witnesses and have them come 
forward. We have Mr. Donald Boesch, who is President, 
University of Maryland Center for Environmental Science; Mr. 
Michael LeVine, who is a Pacific Senior Counsel for Oceana; Mr. 
Sean Dixon, who is a Coastal Policy Attorney; and Ms. Ryan 
Alexander, President of Taxpayers for Common Sense.
    Your full statements that you have submitted to the 
Committee will appear in its entirety in the Committee records. 
And so I would like for you to keep your oral statements to 5 
minutes. And the way these lights here work in front of you, 
when the green light is on you are doing fabulously well, when 
the yellow light comes on, it means you are down to 30 seconds, 
and then when the red light comes on, well, we usually don't go 
to the red light. So if you could keep your statements in that 
way, I would appreciate it very much.
    [The prepared statement of Mr. Hastings follows:]
 Prepared Statement of The Honorable Doc Hastings, Chairman, Committee 
                          on Natural Resources
    House Republicans are committed to advancing legislation that will 
open up new offshore areas to energy production and create new American 
jobs. H.R. 2231, the Offshore Energy and Jobs Act, has moved through 
the Committee under regular order. One week notice was given before a 
legislative hearing was held, as is required under House Committee 
rules, and both majority and minority witnesses came to testify on the 
bill.
    While certain Members of this Committee may strongly oppose this 
bill, the fact remains that similar legislation has received bipartisan 
support both in passage out of Committee and on the House Floor last 
Congress.
    Last year, the House of Representatives soundly rejected the 
President's 5-year offshore leasing plan by a bipartisan vote because 
it keeps 85 percent of our offshore areas off-limits. The American 
people and a bipartisan majority of House Members believe we need to do 
better--and that's exactly what this bill does.
     The majority of Americans support expanded offshore energy 
production and this Committee will not give up on our efforts to remove 
government barriers that block access to our Nation's energy resources.
                                 ______
                                 
    The Chairman. We will start now with Dr. Donald Boesch and 
I hope I pronounce that correctly. And you are recognized for 5 
minutes.

  STATEMENT OF DR. DONALD F. BOESCH, PRESIDENT, UNIVERSITY OF 
MARYLAND CENTER FOR ENVIRONMENTAL SCIENCE, FORMER COMMISSIONER, 
 NATIONAL COMMISSION ON THE BP DEEPWATER HORIZON OIL SPILL AND 
                       OFFSHORE DRILLING

    Dr. Boesch. Thank you, Chairman Hastings. My name is Donald 
Boesch. And I, in addition to being President of my unit within 
the University of Maryland, I served as one of the seven 
members of the National Commission on the Deepwater Horizon and 
Oil Spill and Offshore Drilling. And it is in that perspective 
I am offering this testimony on House Resolution 2231.
    The Oil Spill Commission delivered its report on January 
2011. And our Chairman, Bob Graham and Bill Riley testified 
before your Committee, Mr. Hastings, and on the Commission's 
recommendation, shortly after that, delivering the report. 
Since that time, the Commission has been active and following 
through on recommendations, working with many actors in 
government and industry to improve safety of offshore drilling 
and monitoring what changes have taken place as a result. As a 
result of that, we issued a report card 2 years in a row. The 
latest one is here, and I would like to offer it for the 
record. And it helps you put this in perspective of how far we 
have come as a result of learning from that disaster.
    The industry has done many important things, including 
developing a deepwater containment system, creation of a Center 
for Offshore Safety. The Government, the Department of the 
Interior, has reorganized to form the Minerals Management 
Service to separate safety, environmental enforcement 
considerations from those related to development and revenue 
generation, much as we had recommended. In addition, they have 
put many things into place to improve safety and enforcement 
and inspection.
    We are, therefore, very pleased to see the introduction of 
legislation that addresses two of our other recommendations 
that Congress must attend to. One, reorganization of the 
offshore energy management structure within the Department of 
the Interior; and, second, establishment of a funding scheme to 
support the oversight of offshore energy industry. My written 
testimony includes our perspectives on the bill in much greater 
length; I will offer a brief summary.
    First, with regard to restructuring regulatory oversight 
under title IV of the bill, the Commission recommended an even 
greater separation of the offshore energy management and the 
safety and environmental enforcement functions than was 
accomplished under the Department of the Interior's 
administrative reorganization or included in this bill. We 
recommended an offshore safety authority, independent, 
reporting directly to the Secretary and headed by an officer 
appointed for a fixed term that cuts across Administrations.
    Specifically, the Committee recommended that the authority 
have primary statutory responsibility for overseeing the 
structure, structural or operational integrity of the offshore 
energy-related facilities and activities, including both oil 
and gas offshore drilling and renewable energy facilities.
    House Resolution 2231 reduces rather than increases the 
separation and independence of the energy development function 
and the safety function compared to the present organization. 
The Directors of both the Bureau of Ocean Energy and Ocean 
Energy Safety Service under the bill would both report to the 
Assistant Secretary for Ocean Energy and Safety, who would be 
one level deeper than the present Assistant Secretary 
responsibility within the Department. It would, in effect, 
return the organizational model to the Minerals Management 
Service structure by placing both responsibilities within an 
officer whose responsibility is the development of energy and 
minerals on the Outer Continental Shelf.
    Second, with regard to ensuring adequate resources, we are 
very pleased to see that House Resolution 2231 addresses some 
of the agency funding issues that we pointed out; however, we 
would recommend that the proposed system be modified in several 
respects: Fees should pay for the entire management and 
oversight process, we believe, not just inspections, and would 
be dedicated for this purpose without requirement on annual 
appropriations.
    Third, with regard to the expansion and acceleration of 
offshore leasing and development, under titles I and II, our 
Commission was not charged to address that issue specifically, 
but we did recognize that was a distinct possibility and that a 
new offshore areas would be opened for exploration production. 
However, we argue that before these areas are opened they 
should be carefully studied to determine their environmental 
sensitivity, and guide responsible planning within the region, 
and define a baseline. Our concern is that the time scale 
within this bill is not adequate for that purpose.
    And fourth and finally, there are many recommendations in 
our report, for the Congress to act, we would urge you to take 
on, not the least being the liability limits under the Oil 
Pollution Act. We recognize it is a different Committee, but we 
urge you, Congress, to take this up. Thank you.
    The Chairman. Thank you very much, Dr. Boesch. I hope I 
said it correctly. Did I say it correctly?
    Dr. Boesch. Boesch.
    The Chairman. I will never remember it. I apologize for 
that.
    Dr. Boesch. No problem.
    [The prepared statement of Dr. Boesch follows:]
Prepared Statement of Dr. Donald F. Boesch, President of the University 
              of Maryland Center for Environmental Science
I. Introduction
    Chairman Hastings, Ranking Member Markey, Chairman Lamborn, Ranking 
Member Holt and members of the Subcommittee, my name is Donald F. 
Boesch, President of the University of Maryland Center for 
Environmental Science. I was one of seven commissioners who comprised 
the National Commission on the BP Deepwater Horizon Oil Spill and 
Offshore Drilling. I thank you for the opportunity to testify today in 
respect to H.R. 2231, the Offshore Energy and Jobs Act.
    The explosion that tore through the Deepwater Horizon drilling rig 
on April 20, 2010, as the rig's crew completed drilling the exploratory 
Macondo well deep under the waters of the Gulf of Mexico, began a 
human, economic, and environmental disaster.
    Eleven crew members died, and others were seriously injured, as 
fire engulfed and ultimately destroyed the rig. And, although the 
Nation would not know the full scope of the disaster for weeks, the 
first of more than 4 million barrels of oil began gushing uncontrolled 
into the gulf--threatening livelihoods, the health of gulf coast 
residents and of those responding to the spill, precious habitats, and 
even a unique way of life. A treasured American landscape, already 
battered and degraded from years of mismanagement, faced yet another 
blow as the oil spread and washed ashore. Five years after Hurricane 
Katrina, the Nation was again transfixed, seemingly helpless, as this 
new tragedy unfolded in the gulf. Now, 3 years later, the costs from 
this one industrial accident are still not yet fully counted, but it is 
already clear that the impacts on the region's natural systems and 
people were enormous, and that economic losses will total tens of 
billions of dollars.
    On May 22, 2010, President Barack Obama announced the creation of 
the National Commission on the BP Deepwater Horizon Oil Spill and 
Offshore Drilling (the Commission): an independent, nonpartisan entity, 
directed to provide thorough analysis and impartial judgment. The 
President charged the Commission to determine the causes of the 
disaster, and to improve the country's ability to respond to spills, 
and to recommend reforms to make offshore energy production safer. And 
the President said we were to follow the facts wherever they led.
    After an intense 6-month effort to fulfill the President's charge, 
the Commission released its final report on January 10, 2011. As a 
result of our investigation, we concluded:

      The explosive loss of the Macondo well could have been 
prevented.
      The immediate causes of the Macondo well blowout could be 
traced to a series of identifiable mistakes made by BP, Halliburton, 
and Transocean that reveal such systematic failures in risk management 
that they place in doubt the safety culture of the entire industry.
      Deepwater energy exploration and production, particularly 
at the frontiers of experience, involve risks for which neither 
industry nor government has been adequately prepared, but for which 
they can and must be prepared in the future.
      To assure human safety and environmental protection, 
regulatory oversight of leasing, energy exploration, and production 
require reforms even beyond those significant reforms the Department of 
the Interior (DOI) has already initiated since the Deepwater Horizon 
disaster.
      The technology, laws and regulations, and practices for 
containing, responding to, and cleaning up spills lag behind the real 
risks associated with deepwater drilling into large, high-pressure 
reservoirs of oil and gas located far offshore and thousands of feet 
below the ocean's surface. Government must close the existing gap and 
industry must support that effort.
      Scientific understanding of environmental conditions in 
sensitive environments in deep gulf waters, along the region's coastal 
habitats, and in areas proposed for more drilling, such as the Arctic, 
is inadequate. The same is true of the human and natural impacts of oil 
spills.

    We reached these conclusions and made our recommendations in a 
constructive spirit. Our goal was to make American offshore energy 
exploration and production far safer, today and in the future.
    Since we released our report, several other highly qualified 
committees and organizations have also completed analyses of what went 
wrong with the Macondo well and what should be done to protect against 
such a catastrophe happening again. These include the Department of the 
Interior--Coast Guard Joint Investigation, a National Academy of 
Engineering study, and even some industry analyses. We are pleased that 
all of these studies have supported and often reinforced the 
Commission's findings and recommendations.
    The Commissioners, however, were not satisfied with merely issuing 
a report. Too many task forces and commissions, after devoting 
significant time and effort to their assignments, watch the value of 
their contribution diminish as other issues and priorities command 
public attention. As a group, we vowed not to let the spotlight fade 
from our work and elected to do what we can to advance the 
implementation of our recommendations so that the Nation can move 
forward to secure the oil off our shores in a safer, more 
environmentally responsible manner.
    To this end, we established an Oil Spill Commission Action (OSCA) 
project to monitor progress in making offshore drilling safer and more 
environmentally protective, and to meet with many of the actors 
responsible for implementing the recommendations. On the second and 
third anniversaries of the explosion, OSCA issued ``report cards''--the 
most recent was released on April 17--addressing the progress that has 
been made in implementing the Commission's recommendations. I have 
brought copies of this report for Committee members and would like to 
request that it be entered into the record (http://oscaction.org/osca-
assessment-report-2013/).
    As our report cards have indicated, we have been pleased with the 
positive response to many of our recommendations. The oil industry, for 
instance, has established a Center for Offshore Safety, implementing 
one of our major recommendations. Similarly the Department of the 
Interior has implemented many of our recommendations to reduce 
conflicting incentives that had existed in the Minerals Management 
Service (MMS), and improve the efficacy of its regulatory programs. 
Just last month, it announced the implementation of its own Ocean 
Energy Safety Institute.
    As noted in our report cards, however, the lack of response to many 
of our recommendations by Congress has largely been a disappointment. 
Many of the management and safety improvements should be codified and 
some of our recommendations, such as liability limits, are yet to be 
addressed.
    On the positive side, Congress did pass the RESTORE Act last year 
which, as the Commission recommended, will channel 80 percent of the 
fines administered under the Clean Water Act to restoration efforts in 
the gulf. We are concerned that these funds may be diverted from the 
purpose the Commission intended--restoring the gulf's natural 
ecosystems--and intend to monitor their use closely to diminish such 
diversions to the extent we can. The gulf has suffered serious 
degradation over the past decades, and the RESTORE Act provides perhaps 
our last opportunity to restore its natural health.
    We are also pleased to see that H.R. 2231 addresses two of our 
other major recommendations: reorganizing the offshore energy 
management structure in the Department of the Interior and establishing 
a funding scheme to support the oversight of the offshore energy 
industry.
    Before commenting on those elements of H.R. 2231 which are found in 
title IV of the proposed legislation, let me make a brief comment about 
titles I and II which would substantially expand the areas of the outer 
continental shelf being leased for oil and gas development. The 
Commission recognized the possibility that new offshore areas will be 
opened to oil and gas exploration and production. However, before these 
areas are opened they should be carefully studied to determine their 
environmental sensitivity, guide responsible planning within the 
region, and define a baseline against which damages caused by offshore 
energy development can be accurately assessed. The compressed schedules 
set forth in titles I and II do not seem sufficient to accommodate such 
a properly informed process.
II. Restructuring Regulatory Oversight
    As I already indicated, DOI has administratively implemented many 
of the Commission's recommendations on how its offshore energy 
management, safety and environmental enforcement operations should be 
structured. However, we believe it to be very important to have the 
improved structure codified in legislation.
    As you are aware, over the course of many years, political pressure 
generated by industry and a demand for lease and royalty revenues to 
expand access and expedite permit approvals and other regulatory 
processes often combined to push MMS to elevate revenue and permitting 
goals over safety and environmental goals. As a result, the safety of 
U.S. offshore workers has suffered. The United States has the highest 
reported rate of fatalities per hours worked in offshore oil and gas 
drilling among its international peers (the U.K., Norway, Canada, and 
Australia) but has the lowest reporting of injuries. This striking 
contrast suggests a significant under-reporting of injuries in the 
United States.
    These problems were compounded by an outdated organizational 
structure, a chronic shortage of resources, a lack of sufficient 
technological expertise, and the inherent difficulty of coordinating 
effectively with all of the other government agencies that have had 
statutory responsibility for some aspect of offshore oil and gas 
activities. Besides MMS, the Departments of Transportation, Commerce, 
Defense, and Homeland Security, and the Environmental Protection Agency 
(EPA) were involved in some aspects of the industry and its many-
faceted facilities and operations, from workers on production platforms 
to pipelines, helicopters, drilling rigs, and supply vessels.
    To remedy this conflict of interest, we recommended that Congress 
create an independent agency with enforcement authority to oversee all 
aspects of offshore drilling safety (operational and occupational) as 
well as the structural and operational integrity of all offshore energy 
production facilities, including both oil and gas production and 
renewable energy production. The Department of the Interior took steps 
to accomplish this by the administrative creation of the Bureau of 
Safety and Environmental Enforcement (BSEE) separate from the Bureau of 
Ocean Energy Management (BOEM).
    Title IV of H.R. 2231 accomplishes some of the Commission's 
recommendations with respect to the reorganization of the former 
Mineral Management Service. For instance, to a degree, it would codify 
the separation of the management, regulatory and revenue collection 
functions as the Commission recommended. We are also pleased to see 
that it establishes a robust training program within the new Bureau, 
and makes the Outer Continental Shelf Energy Safety Advisory Board a 
permanent advisory board.
    The training program is important because of the rapid 
technological and environmental changes that are occurring in offshore 
drilling. Both the regulators and the new generation of operators will 
require high quality training to manage these new challenges 
effectively. We would expect to see many opportunities for cooperation 
between industrial organizations such as the Center for Offshore Safety 
and the regulators in providing this training.
    For the same reasons, we would support the permanent establishment 
of an Outer Continental Shelf Energy Safety Advisory Board (which I 
presume is a replacement for the Ocean Energy Safety Advisory Committee 
that BSEE established administratively). The regulators need this 
informed input in order to remain current with all the changes taking 
place in the industry and the appropriate manner of addressing the 
challenges the industry is facing and creating.
    Regarding the reorganization proposed in H.R. 2231, it is 
instructive to compare it both to the reorganization put into place 
administratively by the Department of the Interior and to the 
Commission's recommendations. H.R. 2231 would elevate the present 
Assistant Secretary for Land and Minerals Management to Under Secretary 
for Energy, Lands, and Minerals, create a new Assistant Secretary of 
Ocean Energy and Safety, and establish a Bureau of Ocean Energy (BOE) 
and an Ocean Energy Safety Service (OESS), both reporting to the 
Assistant Secretary. BOE and OESS have responsibilities seemingly 
consistent with BOEM and BSEE, both reporting to the Assistant 
Secretary for Land and Minerals Management under the present 
administrative arrangement.
    The Commission recommended an even greater separation of these 
management and safety and environmental enforcement functions, with an 
Offshore Safety Authority, reporting directly to the Secretary and 
headed by an officer appointed to a fixed term that cuts across any one 
Presidential term. Specifically, the Commission recommended that this 
authority have primary statutory responsibility for overseeing the 
structural and operational integrity of all offshore energy-related 
facilities and activities, including both oil and gas offshore drilling 
and renewable energy facilities. We recommended that Congress should 
enact an organic act to establish its authorities and responsibilities, 
consolidating the various responsibilities now under the OCSLA, the 
Pipeline Safety Act, and Coast Guard authorizations. This should 
include responsibility for all workers in energy related offshore 
activities. The Department of the Interior separated and consolidated 
such functions into BSEE, but kept this responsibility under the 
Assistant Secretary for Land and Minerals Management.
    From the perspective of the Commission's recommendation, H.R. 2231 
reduces rather than increases the separation and independence of 
offshore energy development and safety compared to the present 
administrative organization. The directors of both BOE and OESS would 
report to Assistant Secretary for Ocean Energy and Safety, who would be 
one level deeper in the organization of the Department of the Interior 
than under the present structure. It would be in effect a return to the 
organization model of the Minerals Management Service by placing both 
responsibilities to an officer whose responsibility is the development 
of energy and minerals on the Outer Continental Shelf.
    The Commission also recommended the formation of a Leasing and 
Environmental Science Office, with responsibilities roughly analogous 
to the present BOEM and proposed BOE. It would be charged with 
fostering environmentally responsible and efficient development of the 
Outer Continental Shelf and would act as the leasing and resource 
manager for conventional renewable energy and other mineral resources 
on the OCS. The Office would also be responsible for conducting reviews 
under the National Environmental Policy Act (NEPA). The Commission 
further recommended that this bureau include an Office of Environmental 
Science, led by a Chief Environmental Scientist, with specified 
responsibilities in conducting all NEPA reviews, coordinating other 
environmental reviews, and whose expert judgment on environmental 
protection concerns would be accorded significant weight in leasing 
decision-making. Given the importance of ensuring environmental 
responsibility at every state of planning, leasing and development, we 
would urge consideration of inclusion of these functions into the 
statute.
    We also recommended that Congress review and consider amending 
where necessary the governing statutes for all the agencies involved in 
offshore activities to be consistent with the responsibilities 
functionally assigned to those agencies. For example, under the Outer 
Continental Shelf Lands Act (OCSLA), it is up to the Secretary of the 
Interior to choose the proper balance between environmental protection 
and resource development. In making leasing decisions, the Secretary is 
required to solicit and consider suggestions from any interested 
agency, but he or she is not required to respond to the comments or 
accord them any particular weight. Similar issues arise at the 
individual lease sale stage and at the development and production plan 
stage. As a result, the National Oceanographic and Atmospheric 
Administration (NOAA)--the Nation's ocean agency with the most 
expertise in marine science and the management of living marine 
resources--effectively has the same limited role as the general public 
in the decisions on selecting where and when to lease portions of the 
OCS. The Commission recommended that Congress amend OCSLA to provide a 
more robust and formal interagency consultation process in which NOAA, 
in particular, is provided a heightened role, but ultimate decision-
making authority is retained at DOI.
III. Ensuring Adequate Resources
    A second major focus of the Commission's recommendations was on 
ensuring that there would be adequate resources available for funding 
effective and efficient offshore energy oversight programs and for 
responding to any spills that might occur.
    Here we had three major recommendations:

    1. Congress should enact legislation creating a mechanism for 
offshore oil and gas operators to provide ongoing and regular funding 
of the agencies regulating offshore oil and gas development.
    2. Congress should significantly increase the liability cap and 
financial responsibility requirements for offshore facilities.
    3. Congress should increase the limit on per-incident payouts from 
the Oil Spill Liability Trust Fund.
Funding the Government Oversight Agencies
    One of the Commission's major concerns was that the agencies 
overseeing offshore oil exploration and production have adequate 
resources to accomplish their responsibilities effectively and 
efficiently. The agency responsible for ensuring the safety of offshore 
energy production cannot be expected to succeed in meaningfully 
overseeing the oil and gas industry if Congress does not ensure it has 
the resources to do so. Agencies cannot conduct the scientific and 
environmental research necessary to evaluate impacts of offshore 
development if they do not receive adequate support from Congress. In 
short, Congress needs to make funding the agencies regulating offshore 
oil and gas development a priority in order to ensure a safer and more 
environmentally responsible industry in the future.
    The Commission strongly recommended that the oil and gas industry 
be required to pay for its regulators, as is the case with some other 
regulated industries. For instance, the fees paid by the 
telecommunications industry largely support the work of the Federal 
Communications Commission. Regulation of the oil and gas industry 
should no longer be funded by taxpayers but instead by the industry 
that is being permitted to have access to a publicly owned resource. 
This includes the costs of agencies such as BSEE and BOEM primarily 
charged with overseeing the offshore energy operations--ensuring their 
safety and compliance with environmental protection requirements--and 
also the incremental costs of other agencies such as NOAA who help in 
the review and oversight of offshore operations.
    We are pleased to see that H.R. 2231 addresses the agency funding 
issue. However, we would recommend that the proposed system be modified 
in several respects:

    (a) The fees should pay for the entire management and oversight 
process, not just inspections. Inspections are only one component, 
though of course a very important component, of an effective oversight 
system. Substantial resources are also necessary for research, 
investigation, planning, training, and the many other activities that 
combine to create an effective oversight program. The Commission 
recommended that the fees be sufficient to cover all these aspects. And 
this should include those activities undertaken by other agencies, not 
just the Department of the Interior.
    (b) The fees should be dedicated to this purpose and should not 
require annual appropriation by Congress.
    (c) We see no reason for the fees to sunset in 2022. The costs will 
continue well beyond that year.
    (d) We recommended that the fees be based on actual costs. The 
amount of funding needs to keep pace as industry moves into ever-more 
challenging depths and geologic formations because the related 
challenges of regulatory oversight likewise increase. If Congress is to 
set the fee amounts, it should also establish a process for annually 
reviewing the adequacy of those fees. The annual report required in 
section 409 requires a thorough accounting of the fees received, but no 
accounting of the costs of carrying out the responsibilities the fees 
are intended to pay for. We would recommend that this information 
combined with an annual Congressional assessment of the adequacy of the 
fees be included in the legislation.

    We note that the legislation does specify the fees that would be 
charged in the initial year the legislation would take effect and 
allows them to be adjusted based on the consumer price index for the 
subsequent years. We do not have the capability to judge either whether 
the initial fee levels are adequate or whether the consumer price index 
is an appropriate adjustment. As indicated above, we would recommend 
that the fees be adjusted to reflect actual costs rather than using 
some arbitrary price index.
Oil Spill Liability and Financial Responsibility Limits
    Oil spills cause a range of harms, including personal, economic and 
environmental injuries, to individuals and ecosystems. The Oil 
Pollution Act makes the party responsible for a spill liable for 
compensating those who suffered as a result of the spill--through human 
health and property damage, lost profits, and other personal and 
economic injuries--and for restoring injured natural resources.
    The Oil Pollution Act, however, imposes limits on the amount for 
which the responsible party is liable. It caps liability for damages 
from spills from offshore facilities at $75 million unless it can be 
shown that the responsible party was guilty of gross negligence or 
willful misconduct, violated a Federal safety regulation, or failed to 
report the incident or cooperate with removal activities, in which case 
there is no limit on damages.
    The Oil Pollution Act also requires responsible parties to 
establish and maintain evidence of financial responsibility, generally 
based on a worst-case discharge estimate. In the case of offshore 
facilities, necessary financial responsibility ranges from $35 million 
to $150 million.
    In the case of the Deepwater Horizon spill, BP (a responsible 
party) placed $20 billion in escrow to compensate private individuals 
and businesses through the independent Gulf Coast Claims Facility. But 
if a less well capitalized company had caused the spill, neither a 
multi-billion dollar compensation fund nor the funds necessary to 
restore injured resources, would likely have been available.
    There are two main problems with the current liability cap and 
financial responsibility dollar amounts. First, the relatively modest 
liability cap and financial responsibility requirements provide little 
incentive for oil companies to improve safety practices. Second, as 
noted, if an oil company with more limited financial means than BP had 
caused the Deepwater Horizon spill, that company might well have 
declared bankruptcy long before paying fully for all damages.
    Any discussion of increasing liability caps and financial 
responsibility requirements must balance two competing public policy 
concerns: first, the goal of ensuring that the risk of major spills is 
minimized, and in the event of a spill, victims are fully compensated; 
and second, that increased caps and financial responsibility 
requirements do not drive competent independent oil companies out of 
the market. A realistic policy solution also requires an understanding 
of the host of complex economic impacts that could result from 
increases to liability caps and financial responsibility requirements.
    To address both the incentive and compensation concerns noted 
above, Congress should significantly raise the liability cap. Financial 
responsibility limits should also be increased, because if an oil 
company does not have adequate resources to pay for a spill, the 
application of increased liability has little effect. Should a company 
go bankrupt before fully compensating for a spill, its liability is 
effectively capped. If, however, the level of liability imposed and the 
level of financial responsibility required are set to levels that bear 
some relationship to potential damages, firms will have greater 
incentives to maximize prevention and minimize potential risk of oil 
spills and also have the financial means to ensure that victims of 
spills do not go uncompensated.
The Oil Spill Liability Trust Fund
    The Oil Pollution Act also establishes an Oil Spill Liability Trust 
Fund, and provides an opportunity to make claims for compensation from 
this fund when the responsible party is not able to cover the 
legitimate claims. Claims up to $1 billion for certain damages can be 
made to, and paid out of, this Trust Fund, which is currently supported 
by an 8-cent per-barrel tax on domestic and imported oil.
    However, in the case of a large spill, the Oil Spill Liability 
Trust Fund would likely not provide sufficient backup. Thus, a 
significant portion of the injuries caused to individuals and natural 
resources, as well as government response costs, could go 
uncompensated.
    Therefore, the Commission recommended that Congress increase the 
limit on per-incident payouts from the Oil Spill Liability Trust Fund. 
If liability and financial responsibility limits are not set at a level 
that will ensure payment of all damages for spills, then another source 
of funding will be required to ensure full compensation. The Federal 
Government could cover additional compensation costs, but this approach 
requires the taxpayer to foot the bill. Therefore, Congress should 
raise the Oil Spill Liability Trust Fund per-incident limit. Raising 
the Oil Spill Liability Trust Fund's per-incident limit will require 
the Fund to grow through an increase of the per-barrel tax on domestic 
and imported oil production. An alternative would be to increase the 
Trust Fund through a surcharge by mandatory provisions in drilling 
leases triggered in the event that there are inadequate sums available 
in the Fund.
    In addition to these three areas, the Commission also recommended 
that Congress ensure that adequate funding is provided:

    (a) For oil spill research and development. This should be 
mandatory funding (not subject to the annual appropriations process;
    (b) To support a comprehensive Federal research effort to provide a 
foundation of scientific information on the Arctic;
    (c) To establish adequate Coast Guard response capabilities in the 
Arctic, based on the Coast Guard's review of current and projected gaps 
in capacity.
IV. Continuing Congressional Oversight
    In the years between the Exxon Valdez spill and the spring of 2010, 
Congress, like much of the Nation, appeared to have developed a false 
sense of security about the risks of offshore oil and gas development. 
Congress showed its support for offshore drilling in a number of ways, 
but did not take any steps to mitigate the increased perils that 
accompany drilling in ever-deeper water or into icy Arctic seas. Until 
the Deepwater Horizon exploded, 11 rig workers lost their lives, and 
millions of barrels of oil spilled into the Gulf of Mexico, Congress 
had not introduced legislation to address the risks of deepwater 
drilling.
    The congressional committee structure makes it much harder to focus 
on safety and environmental issues associated with offshore oil and gas 
development. In the 111th Congress, multiple committees in both 
chambers claimed jurisdiction over offshore energy development. The 
House Natural Resources Committee, for example, had jurisdiction over 
``mineral land laws and claims and entries thereunder'' and ``mineral 
resources of public lands.'' Your Subcommittee on Energy and Mineral 
Resources was specifically charged with oversight of ``conservation and 
development of oil and gas resources of the Outer Continental Shelf.'' 
But the House Committee on Energy and Commerce oversaw ``exploration, 
production, storage, supply, marketing, pricing, and regulation of 
energy resources, including all fossil fuels,'' as well ``national 
energy policy generally.'' Similarly, the jurisdiction of the Senate 
Committee on Energy and Natural Resources included ``extraction of 
minerals from oceans and Outer Continental Shelf lands,'' and its 
Subcommittee on Energy was responsible for oversight of ``oil and 
natural gas regulation'' generally. By contrast, the Senate Committee 
on Environment and Public Works claimed oversight over ``environmental 
aspects of Outer Continental Shelf lands.'' Yet, none of the 
subcommittees of environment and public works claimed oversight 
specifically over OCS lands issues.
    In neither the House nor the Senate are any of these committees 
charged with directly overseeing the safety and environmental impacts 
of offshore development, separate from the conflicting goal of resource 
development and royalties. The House Committee on Education and Labor 
and the Senate Committee on Health, Education, Labor, and Pensions both 
emphasize occupational safety and health. But neither committee appears 
to focus on process safety--the vital approach identified by the 
Commission's investigation that encompasses procedures for minimizing 
adverse events such as effective hazard analysis, management of risk, 
communication, and auditing. Finally, no oversight of any of these 
matters has been conducted by any of the several House or Senate 
committees or subcommittees responsible for the Nation's tax policies 
or overall appropriations process, notwithstanding the significant 
impact those policies and appropriations have on both the extent of 
energy industry activities on the OCS and the government's ability to 
oversee that activity effectively.
    After the Deepwater Horizon explosion and resulting oil spill, 
numerous committees took an interest in offshore safety and 
environmental issues and held hearings. In short, it took a catastrophe 
to attract congressional attention. In order to avoid this problem in 
the future, the Commission recommended that Congress increase and 
maintain its awareness of the risks of offshore drilling in two ways. 
First, create additional congressional oversight of offshore safety and 
environmental risks. Second, require the appropriate congressional 
committees to hold an annual oversight hearing on the state of 
technology, application of process safety, and environmental protection 
to ensure these issues receive continuing congressional attention. The 
Commission recommended that the House and Senate Rules Committee each 
assign a specific committee or subcommittee to oversee process safety 
and environmental issues related to offshore energy development.
    These committees should require the Secretary of the Interior to 
submit an annual public report on energy offshore development 
activities to the applicable congressional committees. This report 
should focus on the Department's progress in improving its prescriptive 
safety regulations; steps taken by industry and the Department to 
improve facility management; the Department's progress in implementing 
a stronger environmental assessment program, including developing 
improved NEPA guidelines; and on any other steps taken by industry or 
the Department to address safety and environmental concerns offshore. 
The report should also detail the industry's safety and environmental 
record during the previous 12 months. Finally, the report should 
highlight any areas in which the Department believes industry is not 
doing all that it can to promote safety and the environment and any 
areas where additional legislation could be helpful to the Department's 
efforts.
    These committees should also require the Department of the 
Interior's Office of Inspector General to submit an independent annual 
public report to the applicable congressional committees. The report 
should provide an independent description of the Offshore Safety 
Authority's activities over the previous 12 months, including its 
efforts to improve offshore safety and to investigate accidents and 
other significant offshore incidents. The report should also include 
the Inspector General's evaluation of the Authority's efforts and the 
Inspector General's recommendations for improvement.
V. Conclusion
    Creating and implementing a national energy policy will require 
enormous political effort and leadership--but it would do much to 
direct the Nation toward a sounder economy and a safer and more 
sustainable environment in the decades to come. Given Americans' 
consumption of oil, finding and producing additional domestic supplies 
will be required in coming years, no matter what sensible and effective 
efforts are made to reduce demand--in response to economic, trade, and 
security considerations, and the rising challenge of climate change.
    The extent to which offshore drilling contributes to augmenting 
that domestic supply depends on rebuilding public faith in existing 
offshore energy exploration and production. The Commission proposed a 
series of recommendations that will enable the country and the oil and 
gas industry to move forward on this one critical element of U.S. 
energy policy: continuing, safe, responsible offshore oil drilling to 
meet our Nation's energy demands over the next decade and beyond. Our 
message is clear: both government and industry must make dramatic 
changes to establish the high level of safety in drilling operations on 
the outer continental shelf that the American public has the right to 
expect and to demand. We will continue to encourage Congress, the 
executive branch, and the oil and gas industry to take the necessary 
steps.
                                 ______
                                 
    The Chairman. Mr. Michael LeVine, the Pacific Senior 
Counsel for Oceana. You are recognized to 5 minutes.

  STATEMENT OF MICHAEL LEVINE, PACIFIC SENIOR COUNSEL, OCEANA

    Mr. LeVine. Thank you, Mr. Chairman. My name is Michael 
LeVine. I am Pacific Senior Counsel for Oceana. Oceana is an 
international nonprofit organization dedicated to using 
science, law, and public engagement to protect and restore our 
oceans. Our Pacific work is headquartered in Juneau, Alaska, 
and, I along with nine colleagues, live and work there. I am 
here today on of behalf of Oceana and Alaska Wilderness League. 
My testimony will focus on the potential impacts of H.R. 2231 
in Alaska, and in particular, in the Arctic Ocean. As the 
Deepwater Horizon accident and Shell's ill-fated efforts to 
drill exploration wells in the Arctic Ocean unfortunately 
demonstrate, there is a clear need for change in how the 
Government decides whether to allow industrial activities in 
our oceans, and, if so, under what conditions.
    Unfortunately, H.R. 2231 would take us in the wrong 
direction. Rather than forcing the Department of the Interior 
to hold lease sales and limiting environmental review, we 
should focus on crafting a plan for our oceans and the Arctic 
region that balances healthy ocean ecosystems and affordable 
energy. Anticipated benefits must be balanced equitably against 
increased risks to our economy, culture, and security, 
important places must be protected, and we must begin to think 
of these activities only as part of the needed transition to 
clean, renewable sources of energy.
    Oceans are vibrant, important places that provide economic 
opportunity, food security, recreation, cultural connection and 
a variety of other services. The Arctic Ocean, in particular, 
is central to life in native communities, provides important 
habitat for countless species of wildlife, and plays a vital 
role in regulating the world's climate. The region is also 
threatened by rapid warming, ocean acidification, and 
industrialization, including the potential for offshore oil and 
gas activities, shipping, and commercial fishing.
    With these activities come substantial risks. A devastating 
oil spill is the most obvious of those risks, but even routine 
activities result in oil discharges, other substantial air and 
water pollution, and noise. These risks are particularly severe 
in the Arctic, where there is a dire lack of response and 
rescue equipment, no proven method to clean up spilled oil, and 
widely acknowledged lack of scientific information.
    Unfortunately, Shell's unsuccessful efforts to drill 
exploration wells in the Chukchi and Beaufort Seas in 2012 
provided a stark reminder of these risks. Shell's efforts 
culminated in the grounding of the Kulluk drill rig and 
sensitive habitat near Kodiak Island, a near disaster that put 
lives and our oceans at risk, and likely resulted in part from 
the company's desire to save $6 million in State taxes. The 
Kulluk accident came after a series of mishaps and violations, 
including losing control of the drilling vessel; the Noble 
Discoverer in Dutch Harbor; violating the terms of its Clean 
Air Act permits; arguing with the Coast Guard about the safety 
standards to which its 40-year-barge must retrofit; and having 
its containment dome crushed like a beer can, according to 
Government observers during tests in calm waters.
    As these problems make all too clear, even one of the 
biggest and most well-financed companies in the world is not 
prepared to drill in the Arctic Ocean, and our Government is 
not prepared to provide appropriate oversight and planning. 
Fundamental change clearly is needed. And the question we are 
discussing today is what that change will look like. H.R. 2231 
would prioritize oil and gas ahead of all other uses of our 
oceans by requiring the Department of the Interior to offer 
leases on vast tracks of the Outer Continental Shelf.
    We can and must do better. First, there is no need for 
additional leasing in the Arctic. The current 5-year leasing 
program already includes lease sales in the Chukchi and 
Beaufort Seas, and there is no reason for those sales, let 
alone others. As Shell clearly demonstrated, companies are not 
ready to explore on the leases they control already. Rather 
than trying to force the Department of the Interior to 
prioritize leasing, we should take three steps: First, better 
science clearly is needed. We should commit to a long-term 
research and monitoring program that would provide the baseline 
scientific information needed to identify and protect important 
ecological and subsistence areas, and better understand the 
potential effects of industrial activities.
    Second, companies must be required to demonstrate that the 
response capabilities on which they plan to rely might actually 
work. Vessels, cleanup technologies, and other aspects of 
response plans should be proven in Arctic waters before 
decisions are made to put the Arctic Ocean at risk. Third, we 
must more fully and fairly evaluate the risks and benefits of 
proposed activities. Ultimately, allowing industrial activities 
like oil and gas leasing, exploration and development, amounts 
to a tradeoff, accepting risks that are certain for benefits 
that may or may not outweigh them. The risks, including threats 
to fisheries, coastal communities, and food security, are borne 
by all of us.
    By contrast, large companies stand to benefit the most from 
these activities. Offshore drilling, particularly in the Arctic 
Ocean, will not substantially affect the price consumers pay 
for gasoline, or make us substantially less dependent on 
foreign sources of oil. The United States simply does not have 
enough domestic oil to dramatically reduce its dependence on 
imports, much less to fill its demand. Leasing exploration or 
development offshore if they occur should be undertaken only as 
part of a broader plan that advances the needed transition to 
clean, renewable sources of energy.
    Ultimately, we all need healthy oceans and affordable 
energy. The best way to meet those goals is by obtaining the 
basic scientific information needed to make good decisions, 
requiring demonstrated response capacity, and more carefully, 
looking at the risks and benefits to the American people of 
offshore drilling in remote and difficult places.
    The Chairman. Thank you very much, Mr. LeVine, for your 
testimony.
    [The prepared statement of Mr. LeVine follows:]
  Prepared Statement of Michael LeVine, Pacific Senior Counsel, Oceana
    Good morning, Mr. Chairman and members of the Committee. Thank you 
for the invitation to participate in today's hearing. My name is 
Michael LeVine, and I am Pacific Senior Counsel for Oceana. Oceana is 
an international, nonprofit, marine conservation organization dedicated 
to using science, law, and public engagement policy to protect the 
world's oceans. Our headquarters are in Washington, D.C., and we have 
offices in five States as well as Belgium, Belize, Spain, Denmark, and 
Chile. Oceana has more than 500,000 members and supporters from all 50 
States and from 150 countries around the globe. Our Pacific work is 
headquartered in Juneau, Alaska, and, together, our Pacific staff has 
more than 200 years of experience working and living in Alaska. I am 
presenting testimony today on behalf of Oceana and Alaska Wilderness 
League.\1\
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    \1\ Alaska Wilderness League is a non-profit 501(c)(3) corporation 
founded in 1993 to further the protection of Alaska's amazing public 
lands. The League is the only Washington, D.C.-based environmental 
group devoted full-time to protecting Alaska's wild land and waters. 
The League has four offices in Alaska, including an Arctic 
Environmental Justice Center in Anchorage that provides a base of 
outreach and support for members of Arctic communities who are on the 
front lines of the destruction from industrial development. The 
League's Arctic Ocean program aims to check the unbalanced and 
potentially destructive development of Alaska's Arctic waters.
---------------------------------------------------------------------------
    As companies seek to explore for oil in more remote and difficult 
places, the Government must think carefully about how it balances 
anticipated benefits with increased risks and how it can ensure that 
decisions are based on good science, preparedness, and planning. 
Indeed, both the Deepwater Horizon accident and Shell's ill-fated 
efforts to drill exploration wells in the Arctic Ocean unfortunately 
demonstrated that decisions to prioritize expediency and profit often 
create significant and unnecessary risk to important ocean resources on 
which we depend for economic well-being, cultural connection, food 
security, and many other important uses. They also evidence a 
disturbing lack of Government oversight and substantial problems in the 
manner in which Government agencies have made decisions to allow 
offshore oil and gas activities. Change, clearly, is needed, and that 
change should include requirements for better science, demonstrated 
response capacity, and equitable balancing of risks and benefits to the 
American people.
    Unfortunately, H.R. 2231, the ``Offshore Energy and Jobs Act,'' 
would prioritize oil and gas leasing above all other uses of our 
oceans. This ``leap before you look'' approach would preclude the 
science-based planning needed to ensure the long term health of the 
Arctic Ocean. Rather than forcing the Department of the Interior to 
hold lease sales and limiting environmental review, we should focus on 
crafting a plan for Arctic region that allows for healthy ocean 
ecosystems and affordable, clean energy. Such a plan should provide 
stewardship and oversight based on understanding the Arctic Ocean, 
including identifying and protecting Important Ecological Areas, 
requiring demonstrated response capabilities, and more fully and fairly 
balancing costs and benefits.
    My testimony today will focus on the potential impacts of H.R. 2231 
in Alaskan waters. I will begin with an overview of the importance of 
ocean resources, the changes occurring in the Arctic Ocean, the threats 
from proposed industrial activities, and the difficulties in managing 
those threats. I will then detail the problems Shell encountered in its 
efforts to drill exploration wells in the Arctic Ocean in 2012 and 
explain the broader ramifications of those failures. Finally, I will 
recommend ways to make better decisions about whether to allow these 
activities and, if so, under what conditions.
i. good decisions about ocean resources require science, preparedness, 
                              and planning
    Covering more than 70 percent of the world's surface, oceans and 
seas are our largest public domain, and good stewardship of our ocean 
resources is vital to our lives and livelihoods. As the U.S. Commission 
on Ocean Policy stated, ``the importance of our oceans, coasts, and 
Great Lakes cannot be overstated; they are critical to the very 
existence and well-being of the Nation and its people.'' Similarly, 
President Obama wrote that ``America's stewardship of the ocean, our 
coasts, and the Great Lakes is intrinsically linked to environmental 
sustainability, human health and well-being, national prosperity, 
adaptation to climate and other environmental changes, social justice, 
international diplomacy, and national and homeland security.''
    Oceans provide economic opportunity, sustenance, recreation, 
cultural connection, and a variety of other services. Together, 
recreational and commercial fisheries provide over 2 million jobs in 
the United States. Coastal tourism provides another 28.3 million jobs 
and generates $54 billion in goods and services annually. In addition, 
oceans provide essential protein to nearly half the world's population. 
More than 1 billion people worldwide depend on fish as a key source of 
protein, and wild-caught ocean fish currently provide about as much 
animal protein to humans as eggs do. For these reasons and others, we 
must not risk the long-term viability of our ocean resources by 
prioritizing short-term economic gains or making poorly informed 
decisions that could foreclose future opportunities for sustainable 
management.
A. The Arctic Ocean
    These management considerations are particularly important as 
decisions are made for the Arctic Ocean. Despite harsh conditions, the 
Arctic is home to vibrant communities and healthy ecosystems. The 
Beaufort and Chukchi seas are central to life in coastal communities, 
provide important habitat for countless species of wildlife, and play a 
vital role in regulating the world's climate.
    Thousands of people inhabit the Arctic region of the United States, 
which is entirely in Alaska. The majority of these residents consider 
themselves to be Alaska Natives and, for many, their culture is 
inseparable from subsistence harvesting; sharing of food; teaching 
youth how to fish, hunt, and gather resources; and celebrating 
successful harvests. The Arctic seas are a foundation of the 
subsistence way of life for coastal communities, and for the villages 
that hunt bowhead whales, that hunt is a centerpiece of their culture.
    In addition to the vibrant communities that have adapted to the top 
of the world, Arctic waters also support some of the world's most 
iconic wildlife species, such as beluga whales, polar bears, walrus, 
and ice seals. The endangered bowhead, as well as beluga and gray 
whales spend time in these waters. Millions of birds, including more 
than 100 species, migrate from nearly every corner of the world to feed 
and nest in the Arctic each summer. More than 100 fish species live in 
the U.S. Arctic Ocean, including Arctic grayling, Arctic char, all five 
species of Pacific salmon, capelin, herring, and various species of cod 
and sculpin.
    The Arctic region plays a critical role in the global climate 
system and helps shape weather patterns in the northern hemisphere. The 
colder Arctic is a sink for heat from the rest of the world, and the 
movement of heat from the tropics to the poles affects weather 
patterns. Storm tracks depend on the position, strength, and 
orientation of the jet stream, and fluctuations in polar regions affect 
the location and speed of the jet stream, which affects weather 
patterns, especially at mid-latitudes.
B. Change: Warming, Ocean Acidification, and Industrialization
    The Arctic region is changing. Climate change is resulting in 
substantial warming, and marine absorption of carbon dioxide is causing 
oceans to become more acidic. At the same time, increased industrial 
activity has begun in the Arctic Ocean. As the Interagency Working 
Group on Coordination of Domestic Energy Development and Permitting in 
Alaska explained:
    The U.S. Arctic is experiencing rapid, sustained change, and those 
changes are expected to continue into the coming decades due to climate 
change, resource extraction, and increasing human activities. 
Terrestrial, freshwater, and marine ecosystems as well as broader 
environmental, cultural, and economic trends in the Arctic will be 
affected.
    Together, these changes will have substantial effects on the people 
and ecosystems in the region and the world.
            i. Changing Climate and Ocean Acidification
    The Arctic is warming roughly twice as fast as the rest of the 
world. The scientific consensus is that this warming results from 
human-caused emissions of greenhouse gases, particularly carbon 
dioxide. The more rapid temperature increase in the Arctic, known as 
Arctic amplification, results from particular sensitivities in the 
region, including the presence of ice and snow.
    The most prominent change in the Arctic has been the rapid loss of 
sea ice extent and volume. In 2012, the seasonal minimum sea ice extent 
in the Arctic reached a record low, and that low was only 50 percent of 
the average extent from 1979-2000. The loss of sea ice volume has been 
more dramatic. The record minimum in 2012 was only 20-30 percent of 
previous minimums over the satellite record. If the current trend in 
ice volume loss continues, the Arctic is likely to become seasonally 
ice-free by 2017. Climate change in the Arctic is also accompanied by 
stronger and more frequent storms, sea level rise, melting permafrost, 
and coastal erosion. The changes make subsistence hunting more 
difficult and dangerous, and they affect Arctic species by changing the 
food web and reducing the habitat of ice-dependent species such as 
polar bears.
    The changes in the Arctic have implications for the rest of the 
world. Loss of sea ice cover in the fall is already associated with 
changing weather patterns across the northern Hemisphere with 
consequences for agriculture and losses of life and property from 
extreme weather events.
    In addition to warming, carbon dioxide emissions are also causing 
ocean acidification. Approximately one-third of the carbon dioxide that 
is added to the atmosphere is absorbed by the oceans, and this 
absorption changes the chemistry of the seawater, making it more 
acidic. The Arctic is at particular risk from the effects of 
acidification due to its cold, low-salinity waters, which lead to 
increased solubility of carbon dioxide. A recent study even concluded 
that ``Arctic marine waters are experiencing widespread and rapid ocean 
acidification.'' These changes will fundamentally alter the Arctic 
Ocean ecosystems and may have substantial effects on the people and 
animals dependent on them.
            ii. Increasing Industrial Threats
    As the Arctic environment changes due to climate change and ocean 
acidification, melting sea ice is making the region increasingly 
available for industrial activities. With these activities come 
substantial risks for a part of the world that has remained relatively 
free from large-scale industrialization. These risks arise from both 
accidents and routine activities inherent in oil and gas exploration 
and development, shipping, and fishing.
    We are in the second boom cycle for oil and gas in the Arctic 
Ocean. Companies invested billions of dollars in the 1980s and 90s 
purchasing leases and drilling several exploration wells. Eventually, 
the price of oil collapsed and, along with it, industry interest; by 
2000, almost no leases were owned in the Arctic Ocean. Between 2003 and 
2008, more than 3 million acres of leases were sold in the Beaufort and 
Chukchi seas. Netherlands-based Royal Dutch Shell owns the majority of 
those leases, and the company has pushed forward aggressively to drill 
exploration wells on those leases. As explained below, those efforts 
have resulted in controversy, litigation, and near-disaster. Shell and 
other companies have also conducted seismic surveys across the Arctic 
Ocean.
    In addition, as sea ice continues to retreat and the demand for 
goods increases around the world, the number of vessels transiting the 
Arctic Ocean is predicted to increase. The Aleutian Islands, at the 
southern edge of the U.S. Arctic, are already a major shipping 
thoroughfare, and shipping is predicted to rapidly expand into the 
Arctic Ocean. Similarly, large-scale commercial fishing has been an 
important economic and ecological force in the southern Bering Sea and 
Gulf of Alaska for several decades. There is currently no large-scale 
commercial fishing in the U.S. Arctic Ocean. It has been thought, 
however, that ``[c]limate warming is likely to bring extensive fishing 
activity to the Arctic, particularly in the Barents Sea and Beaufort-
Chukchi region where commercial operations have been minimal in the 
past.''
    With these activities comes substantial risk. The most apparent of 
these risks, of course, is a catastrophic oil spill, which would have 
dramatic impacts on the people and wildlife in the Arctic region. While 
acknowledging the ``limited information'' available upon which to make 
an assessment, the Federal Government has estimated that, ``[f]or a 
catastrophic oil spill, it is assumed that 2 entire years of Arctic 
marine mammal subsistence harvests and 1\1/2\ years of Bowhead whale 
harvests would be lost.'' It has also estimated that there is a 
substantial likelihood of such a spill; in its 2008 Draft Environmental 
Impact Statement for the Chukchi and Beaufort Planning Areas, Federal 
regulators estimated that there is a 40 percent chance of a large spill 
in the Chukchi Sea and a 26 percent chance of a large spill in the 
Beaufort Sea.
    In addition to creating the risk of dramatic impacts from a 
catastrophic spill, oil exploration and production activities also 
routinely release smaller amounts of oil, toxic muds, and other fluids 
into the ocean. Drilling muds, in particular, can have toxic effects in 
the water column. Moreover, discharges of oil are virtually guaranteed 
to result from routine activities. As one Shell executive made clear, 
``There's no sugar-coating this, I imagine there would be spills, and 
no spill is OK.''
    Industrial activities in the Arctic would also increase air 
pollution and contribute to global warming. Combustion will produce air 
pollutants that can cause human health problems and affect the 
environment. In addition, the activities would produce greenhouse gases 
and would emit substantial amounts of soot. The black carbon particles 
in soot are a particular concern in the Arctic because they contribute 
to a feedback loop that accelerates snow and ice-melt.
    Seismic testing, exploration and production drilling, icebreaking, 
and vessel traffic also dramatically increase noise levels in the 
ocean, and this noise can have significant effects on marine mammals 
and other wildlife. As the National Marine Fisheries Service stated, 
``Marine mammals use hearing and sound transmission to perform vital 
life functions. Sound (hearing and vocalization/echolocation) serves 
four primary functions for marine mammals, including: (1) providing 
information about their environment; (2) communication; (3) prey 
detection; and (4) predator detection.'' Additional noise can disrupt 
these functions by displacing animals from breeding and feeding 
habitat, causing temporary or permanent hearing loss, causing stress 
and other physiological responses, making it more difficult for animals 
to hear other, relevant sounds, and, in extreme situations, causing 
stranding or death.
    Further, offshore oil and gas activities are massive industrial 
undertakings. For example, Shell's 2012 activities in the Chukchi and 
Beaufort Seas included a drill rig, a drilling vessel, ice breakers, 
tugs, barges, other support vessels, aircraft, helicopters, and other 
industrial machinery. In addition to the direct impacts to the 
ecosystem discussed above, this large-scale industrialization more 
subtly affects the communities along the coast by bringing an influx of 
people and industry from outside the communities and outside Alaska. 
These changes have economic, social, and cultural impacts to Arctic 
communities.
            iii. Management Challenges
    Effective management and decision-making about industrial 
activities in the U.S. Arctic Ocean is hindered by a lack baseline 
scientific knowledge, remoteness, absence of infrastructure, and the 
lack of adequate and proven oil spill prevention and response 
technology. Together, these challenges make it difficult to understand 
or predict the impacts of activities, to craft appropriate mitigation, 
and to weigh risks.
    Scientists recognize that the recent losses of sea ice during 
summer are fundamentally changing Arctic Ocean ecosystems, but 
relatively little still is known about the abundance and distribution 
of common species, much less how the food webs work in this region. In 
its analysis of the potential impacts from Lease Sale 193 in the 
Chukchi Sea, the Department of the Interior explicitly recognized that 
there is significant missing information about even the most basic 
parameters for every one of the largest and most conspicuous animals in 
the ecosystem--all fish, marine mammals and birds--which in other 
regions are typically the most highly studied animals of an ecosystem. 
The missing information for these species includes abundance, 
distribution, and life history. The U.S. Geological Survey (USGS) has 
detailed information gaps for nearly every species in the Arctic Ocean. 
The final report of the National Commission on the BP Deepwater Horizon 
Oil Spill and Offshore Drilling echoed this sentiment, observing that 
the ``[s]cientific understanding of environmental conditions . . . in 
areas proposed for more drilling, such as the Arctic, is inadequate. 
The same is true of the human and natural impacts of oil spills,'' as 
well as the impacts of routine oil and gas operations.
    The lack of adequate baseline information creates a significant 
impediment to effective planning and preparedness. The U.S. Commission 
on Ocean Policy stated as a principal tenet, ``Ocean managers and 
policy makers need comprehensive scientific information about the ocean 
and its environment to make wise decisions.'' As the USGS explained, 
the gaps in information about the Arctic Ocean are a ``major constraint 
to a defensible science framework for critical Arctic decision-
making.'' Similarly, an inter-agency government report addressing the 
need for integrated management in the Arctic noted that ``scientific 
information and data relevant to U.S. Arctic decisions can be difficult 
to access and it is not clear that the scientific agenda for the U.S. 
Arctic adequately serves the informational needs of decision-makers.''
    Despite harsh and changing conditions, progress is being made. 
Various private and public entities have recently started scientific 
research programs in the Arctic Ocean to fill some of the data gaps. 
For example, the Chukchi Sea Environmental Studies Program, funded by 
ConocoPhilips, Shell and Statoil, is a multi-year, multi-discipline 
marine science research program collecting information on physical 
oceanography, atmospheric conditions, sediments, benthic communities, 
plankton ecology, fish, seabirds, marine mammals, and underwater 
acoustics. Other entities are working to synthesize existing 
information. Nonetheless, there are still substantial gaps in the 
available information, and a comprehensive, long-term research and 
monitoring program is needed.
    Moreover, there is no proven method to respond to spilled oil in 
the Arctic. Indeed, the National Commission on the BP Deepwater Horizon 
and Offshore Drilling found that ``successful oil spill response 
methods from the Gulf of Mexico, or anywhere else, cannot simply be 
transferred to the Arctic.'' The National Academy of Sciences similarly 
determined that ``no current cleanup methods remove more than a small 
fraction of oil spill in marine waters, especially in the presence of 
broken ice.'' Tests of skimmers, boom, and vessels in 2000, were 
characterized as a ``failure,'' despite calm weather. In particular, 
the tests showed that even though mechanical recovery is typically 
assumed to work in up to 30 percent ice coverage, the system only 
actually worked in up to 10 percent ice coverage. In August 2012, the 
Coast Guard conducted oil spill response tests that included the 
deployment of boom and the use of a skimmer designed to recover oil in 
pockets of water trapped by ice. The report of those exercises notes 
that the lack of docking facilities or ports was a challenge, that ice 
and fog inhibited the exercise, and that it was difficult to find 
berthing facilities for personnel.
    Weather and other environmental conditions can be severe in the 
Arctic. The Arctic Ocean is covered with sea ice from approximately 
October through May, and the air temperature goes below freezing on 
nearly every day of the year. Fog, wind, and storms are common, and 
long hours of darkness limits visibility in the late fall and winter. 
These environmental conditions make operations, as well as response and 
rescue, difficult or impossible.
    In addition, there is a significant lack of infrastructure in the 
U.S. Arctic. Very little response equipment is stored on the North 
Slope, and there are hardly any vessels there that could assist in a 
response effort. Senator Begich, for example, has pointed out that 
icebreakers are ``sorely lacking'' as well as Coast Guard ``cutters, 
aircraft hangars, crew quarters, communication capabilities, deepwater 
ports and other infrastructure.'' Characterizing the lack of 
infrastructure, Coast Guard Commandant Robert Papp explained that, 
``[t]here is nothing up there to operate from at present and we're 
really starting from ground zero.'' Moreover, there are not hotels or 
other housing capable of accommodating thousands of responders. Nor is 
there an easy way to move equipment or personnel from one location to 
another. The remoteness of the Arctic is also a substantial challenge; 
the nearest Coast Guard station is in Kodiak, roughly 1,000 miles from 
the likely locations of oil and gas exploration, and the nearest 
deepwater port is Dutch Harbor. Even Dutch Harbor has limited ability 
to service drilling vessels and house people.
 ii. the 2012 drilling season shows that companies are not prepared to 
                       drill in the arctic ocean.
    Since 2004, Shell has invested heavily pursuing oil in the Arctic 
Ocean. The company's unsuccessful efforts to complete exploration wells 
have resulted in controversy, litigation, and, most recently, near 
disaster. In 2012, Shell sought to use the Kulluk drill rig and Noble 
Discoverer drilling vessel to drill exploration wells. Though Shell did 
manage to complete two top holes (the beginning of exploration wells), 
it was not allowed to drill into oil-bearing zones. Along the way, the 
company's lack of preparedness and forethought resulted in a series of 
substantial mishaps:

    1. Spring and early summer 2012--before the drilling season even 
began--Shell:

                  Backtracked on the commitment in its oil 
                spill response plan to clean up 95 percent of a major 
                Arctic oil spill, asserting instead that it intended 
                only to ``encounter'' spilled oil, not necessarily 
                clean it up;
                  Admitted it could not comply with the terms 
                of the Clean Air Act permit is had negotiated over 
                several years and received a ``compliance order'' from 
                the government allowing it to exceed the established 
                standards; and
                  Began a prolonged argument with the Coast 
                Guard about safety standards for its 37-year-old oil 
                spill response barge, the Arctic Challenger, which had 
                been dormant since the 1990s. The barge was not 
                certified until October.

    2. July 14, 2012--On its way to the Arctic Ocean, Shell lost 
control of its drillship, the Noble Discoverer, near Dutch Harbor, and 
the vessel almost ran aground.
    3. September 10, 2012--Shell was forced to abandon its drilling 
operations in the Chukchi Sea less than 24 hours after starting when an 
ice sheet about the size of New York City covered the drilling site.
    4. September 16, 2012--Shell's oil spill containment dome failed 
spectacularly during sea trials off the coast of Washington State in 
calm seas. Government observers said that the dome was ``crushed like a 
beer can'' and ``breached like a whale.''
    5. November 2012--Shell delayed departure of the Kulluk from the 
Beaufort Sea due to cold and windy, but routine, arctic weather. The 
problems included helicopters without de-icing equipment and pilots 
unfamiliar with flying on Alaska's North Slope.
    6. November 16, 2012--The Noble Discoverer suffered a loud 
explosion and fire while docked in Dutch Harbor on its way to Seattle.
    7. November 2012--The Noble Discoverer was boarded by Coast Guard 
personnel and cited for a series of discharge and safety violations--
including skimming oil from main engine piston cooling water with a 
``ladle and bucket.'' The vessel also barely made it to Seward, where 
it was announced that it had suffered substantial engine damage, would 
not be able to sail under its own power, and would be dry towed to Asia 
for repairs.
    8. December 21, 2012--The drill rig Kulluk departed Dutch Harbor 
under tow by a single vessel for Seattle for repairs. It was rumored at 
the time--and has since been confirmed--that the departure was timed at 
least in part to avoid a $6 million State tax payment.
    9. December 27, 2012--The Kulluk separated from its tow vessel in 
bad, but not unexpected, weather and drifted on and off for 4 days. 
During this time, the Coast Guard heroically rescued all 18 crew aboard 
the Kulluk. The Kulluk had more than 150,000 gallons of fuel on board 
as ballast.
    10. December 31, 2012--The Kulluk ran aground on Sitkalidak Island, 
near Kodiak, Alaska.
    11. January 7, 2013--The Kulluk was towed off the rocks and into 
Kiliuda Bay, approximately 45 nautical miles away. It remained there 
for assessment until it was towed back to Dutch Harbor (this time with 
three separate tow vessels) then dry-towed to Asia for repairs.
    12. January 10, 2013--EPA issued two Notices of Violation--one for 
the Discoverer and the other for the Kulluk--making it clear that Shell 
violated the terms of both its original Clean Air Act permits and the 
negotiated ``compliance order.'' The notices, which identify 35 
separate violations, have been referred to the Department of Justice 
for enforcement.

    Shell's mishaps and problems resulted in a series of investigations 
and reports. The Department of the Interior completed a 60-day review 
of the drilling season in March. Violations of the Clean Air Act and 
discharge and safety requirements have been referred to the Department 
of Justice for enforcement. The Coast Guard recently completed a 2-week 
marine casualty hearing and will complete its investigation in coming 
months. Although investigations are still pending, it is abundantly 
clear that there are problems with both corporate actions as well 
Government oversight
    Shell's lack of preparedness put lives and the marine environment 
at substantial risk. Moreover, the response to these problems diverted 
Government resources and led to substantial expenditures of public 
funds. Even Shell's routine operations resulted in violations of air 
and water protections.
    In light of its problems, Shell announced that it was foregoing 
drilling operations in 2013. ConocoPhillips and Statoil have announced 
they would not seek approvals for exploration drilling in 2014.
      iii. moving forward, decisions must be based on science and 
                             preparedness.
    As the problems encountered during the 2012 efforts to drill 
exploration wells make all too clear, even one of the biggest and most 
well-financed companies in the world is not prepared to drill in the 
Arctic Ocean, and Government agencies are not able to provide 
appropriate oversight and regulation. Fundamental reassessment and 
change is needed in order to allow for decisions based on sound 
science, preparedness, and a fair balancing of risks and benefits. 
Unfortunately, many of the provisions of H.R. 2231 would foreclose this 
path.
    Indeed, H.R. 2231 seeks to require the Department of the Interior 
(DOI) to offer leases on vast tracts of the Outer Continental Shelf. 
The bill would change the manner in which DOI balances risks and 
benefits by prioritizing leasing irrespective of the risks it might 
cause. It does so without ensuring that the lease sales it mandates 
will result in public economic good or additional oil production that 
might justify the risks it seeks to impart on coastal communities.
    Nor does the bill take into consideration the lease sales in the 
Beaufort and Chukchi seas that DOI has included in its current 2012-
2017 5-Year Leasing Program. For all the reasons explained below, there 
is no need to hold those sales, let alone additional ones. In addition, 
the leases currently owned in the Chukchi and Beaufort seas were 
purchased more than 5 years ago. Companies have yet to complete any 
exploration wells on those leases.
    Rather than putting a thumb on the scale in favor of drilling, we 
need to address the problems identified above by: (1) obtaining the 
basic scientific information needed to make good decisions; (2) 
requiring demonstrated response capacity; and (3) taking a more careful 
look at the risks and benefits to the American people of offshore 
drilling in remote and difficult places.
    A long-term research and monitoring program would provide the 
baseline scientific information needed to better understand the 
potential effects of industrial activities and the measures needed to 
ensure protection of the marine environment. With that information, 
Important Ecological Areas could be better identified and protected, 
and more informed decisions could be made about whether and under what 
conditions to allow industrial activities.
    Similarly, companies must be required to demonstrate that response 
capabilities on which they plan to rely might work. Vessels, clean-up 
technologies, and other aspects of response plans should be proven in 
Arctic waters before decisions are made to put the Arctic Ocean at 
risk.
    Those two steps--better science and preparedness will also help 
more fully and fairly evaluate the risks and benefits of proposed 
activities. Allowing industrial activities like oil and gas leasing, 
exploration, and development amounts to a tradeoff--accepting risks 
that are certain for benefits that may or may not outweigh them. The 
public at large bears the risks, including threats to fisheries, 
coastal communities, food security, and all of the other things for 
which we depend on oceans. By contrast, large, private companies--many 
of them foreign--stand to benefit the most from these activities. More 
than 80 percent of the leases sold in the Arctic Ocean are owned by 
companies based in foreign countries. In addition, subsidies, royalty 
relief, and other loopholes greatly reduce the payments companies make 
directly to the Federal Government.
    Moreover, offshore drilling--particularly in the Arctic Ocean--will 
not substantially affect the price consumers pay for gasoline. Nor will 
it make us substantially less dependent on foreign sources of oil. The 
United States currently imports roughly 62 percent of our crude oil, 
most of it from Canada and Mexico. The Department of Energy estimates 
that even if we opened all offshore areas to drilling, the United 
States would still import about 58 percent of its oil supply. The 
United States simply does not have enough domestic oil to reduce its 
dependence on imports, much less to fulfill its demand.
    For similar reasons, increasing offshore leasing--as H.R. 2231 
attempts to do--will not increase national security. In fact, it is 
possible that national security needs will be more effectively 
protected by leaving large reservoirs of oil in the ground until other, 
cheaper sources are exhausted. Moreover, increasing offshore oil and 
gas activities threatens the economic benefits and food security 
provided by fisheries and other uses of our oceans.
    It is important to put the situation in the proper context. More 
than 90 percent of the world's oil and gas reserves have been 
nationalized by the countries that control them. As a result, the 
opportunities for large, multi-national corporations have become 
substantially narrower. The push to develop in the U.S. Arctic results 
in part from these incentives, which are not necessarily congruent with 
our national interests.
    Moreover, these oil and gas resources are finite. It is widely 
recognized that we, as a society, must transition away from fossil 
fuels and toward renewable sources of energy. Leasing, exploration, or 
development offshore--if it occurs--should be undertaken only with 
clear recognition that this transition to renewables is necessary and 
only as part of a broader plan that advances that transition.
    Ultimately, we need to make careful decisions about whether to 
allow these types of activities and, if so, under what conditions. As 
Dr. Jeffrey Short, one of the world's experts on the impacts of oil 
spills, stated in his testimony before the Senate Energy Committee in 
November 2009:
    Oil development proposals in the marine environment are often 
presented and discussed as engineering challenges, without sufficient 
regard for the complexity of the environment in which they would occur, 
or the often dubious assumptions implicit in assessments of 
environmental risks and cleanup and mitigation technologies. Oil spill 
contingency plans are treated as exercises in damage control, taking 
for granted that not all damage can be controlled, and based on the 
faulty assumption all potential outcomes are adequately understood, 
predictable, and manageable.
    In other words, we can and must make better informed decisions 
about whether to allow these activities and, if so, under what 
conditions.
                             iv. conclusion
    As we consider any industrial activities in the ocean--oil and gas, 
shipping, fishing, alternative energy development--our first step 
should be to understand and protect the marine environment and those 
dependent on it. Once we better understand the ecosystem and what steps 
can be taken to protect it, we can better balance risks and benefits 
and, therefore, make better decisions about whether and under what 
conditions to allow industrial activities.
                                 ______
                                 
    The Chairman. And now I will recognize Mr. Sean Dixon, who 
is a Coastal Policy Attorney for Clean Ocean Action. You are 
recognized for 5 minutes.

 STATEMENT OF SEAN DIXON, COASTAL POLICY ATTORNEY, CLEAN OCEAN 
                             ACTION

    Mr. Dixon. Thank you, Mr. Chairman. My name is Sean Dixon. 
I am the Coastal Policy Attorney at Clean Ocean Action. We are 
a broad-based coalition, representing over 125 diverse 
organizations in the greater New York, New Jersey region, 
working to protect and improve the water quality of the 
Atlantic Ocean and the New York, New Jersey bite. Over the past 
30 years, Clean Ocean Action has worked to protect marine water 
quality, beaches, and the people that depend on clean ocean 
economies from the mistakes of the past while educating the 
next generation of ocean stewards. The waters of the Mid-
Atlantic Ocean were once known as the ocean dumping capital of 
the world. These waters were home to acid wastes, municipal 
wastes, medical waste dumpsites, and hazardous material 
dumpsites, and really a day at the beach for many years was 
anything but relaxing. Citizen action and decades of bipartisan 
efforts by members of this Committee and their predecessors has 
turned the tide against that pollution. Today, the Atlantic 
Ocean is home to billion dollar economies that support millions 
of jobs despite the absence of offshore oil drilling. This 
hard-won success story, a robust economy free of fossil fuel, 
industrialization, brings Clean Ocean Action to the Offshore 
Energy and Jobs Act. We have submitted written testimony to 
H.R. 2231, and are grateful for the opportunity to briefly 
focus on the communities of the coast that will be affected by 
this proposed legislation, specifically, the multigenerational 
communities and committees that the jobs and ecologies of the 
Atlantic Ocean rely upon.
    Unlike the general portrayal of offshore oil and gas risk, 
the devil is not only in the drilling risk. Impacts from non-
point sourced pollution, air emissions, construction and 
decommissioning, coastal crowding, pipeline installation, and 
most significantly, and most immediately, seismic surveys, all 
impact coastal economies and ecologies through affecting long-
term resiliency of the communities for the coastline.
    The Mid-Atlantic Fishery Management Council, which is 
federally tasked with ensuring that sustainable fisheries are 
present throughout the entire Mid-Atlantic region, in a letter 
to BOEM regarding the currently pending proposed program for 
seismic surveys, stated that the activities would threaten the 
166,000 jobs, $6 billion in associated income generated from 
those Mid-Atlantic Fishery Management Council managed 
fisheries. In sales alone, the New York and New Jersey 
commercial fisheries generated over $11 billion in 2011. These 
fishermen come from multi-generational families, own their own 
boats, and cooperatively own their own dock shore-side 
facilities. These fishermen remember when acid waste dumpsites 
ruined decades of fishing, they remember when seismic surveys 
in the 1970s and 1980s created fish kills and scattered the 
fish populations. These fishermen remember when their neighbors 
couldn't operate boardwalk bars, beach clubs, and restaurants 
because the industrial pollution scared away all the tourists.
    They remember also Hurricane Sandy and Irene, where record 
waves and storm surge left the shore devastated and the 
industries in the coastal zone battered. It is important to 
note that hurricanes eat oil and gas facilities. There is no 
safe place in the ocean when you have something like Superstorm 
Sandy bearing down on a coast.
    In New Jersey, almost two-thirds of the State's $38 billion 
economy is driven by coastal tourism. In Virginia, tourism 
employs 200,000 people. And in Florida, tourism wildlife 
supports 2.2 million jobs. These people, employed and working 
hard to bring us fish and to keep our beaches clean, have jobs 
worth fighting for. Oil expansion into the Atlantic would put 
these hardworking families and the ecosystem that supports them 
in grave danger. This search for oil is a risk for the entire 
coast.
    Moreover, with recovery from Superstorm Sandy still 
underway, with global financial crisis still slogging along, 
and with climate change rising our seas and flooding our 
estuaries, the last thing the people of the Atlantic Ocean need 
is the lifecycle of pollution that would be generated from 
offshore oil drilling.
    Fishermen don't want seismically stunned seafood, boardwalk 
businesses don't want to go back to beaches that were empty and 
closures that left their tables without customers. Tourists 
don't want to wash tar balls off of their towels and have to 
slog through medical waste. Because this act opens up the 
Atlantic to offshore oil drilling, eliminates vital 
environmental and economic impact evaluations from drilling 
decisionmaking, and drives U.S. energy policy down the wrong 
road, on behalf of the 125 organizations and businesses of the 
Clean Ocean Action collation and the citizens that depend on 
clean ocean economies, I urge that this bill not be released 
from Committee. Thank you.
    The Chairman. Thank you very much, Mr. Dixon, for your 
statement.
    [The prepared statement of Mr. Dixon follows:]
Prepared Statement of Sean Dixon, Coastal Policy Attorney, Clean Ocean 
                                 Action
    Chairman Lamborn, Ranking Member Holt, and members of the 
Committee, thank you for inviting me here today to testify on H.R. 
2231, the Offshore Energy and Jobs Act. My name is Sean Dixon, and I am 
the Coastal Policy Attorney at Clean Ocean Action.
    Headquartered at Historic Fort Hancock, on Sandy Hook, New Jersey, 
Clean Ocean Action is a broad-based coalition representing over 135 
boating, business, community, conservation, diving, environmental, 
fishing, religious, service, student, surfing, and women's 
organizations in the New York/New Jersey region. Clean Ocean Action's 
goal is to improve and protect the water quality of the coastal and 
marine waters of the New Jersey/New York region using science, law, 
research, education, and citizen action.
I. Introduction
    Clean Ocean Action (COA) has spent almost 30 years working to 
cleaning up the costly decisions of the past where our ocean was seen 
as a dumping ground of immeasurable capacity and an open canvas for 
industrialization. Fortunately, the ocean is now seen as the 
ecological, economic, and social keystone that it is. On the beach, in 
the waves, and along the boardwalk, coastal business-owners, tourists, 
residents, fishermen, and ocean advocates of all stripes are cognizant 
of the connection between a clean ocean and a robust coastal economy. 
However, without safe water there are no swimmers or surfers, without 
healthy estuaries, there are no fish, without clean beaches, there are 
no beachgoers, and without all of those qualities, there is no coastal 
economy.
    The Government's current OCS Five-Year Plan, while allowing access 
to more than 75 percent of the estimated undiscovered, technically 
recoverable oil and gas resources on the U.S. Outer Continental Shelf, 
does not allow OCS oil and gas activities in the Atlantic Ocean.\1\
---------------------------------------------------------------------------
    \1\ U.S. Department of the Interior. ``Secretary Salazar announces 
2012-2017 offshore oil and gas development program.'' November 8, 2011 
(available at http://www.doi.gov/news/pressreleases/Secretary-Salazar-
Announces-2012-2017-Offshore-Oil-and-Gas-Development-Program.cfm).
---------------------------------------------------------------------------
    H.R. 2231 puts coastal jobs and economies at risk by:

    --Immediately opening the Atlantic Ocean to offshore oil and gas 
        drilling;
    --Driving U.S. energy policy toward a less resilient, less secure 
        future; and
    --Eliminating the ``no action alternative'' from environmental 
        impact assessments, thereby barring from consideration the 
        environmental and economic benefits of an oil-drilling-free 
        ocean.

    For these, and the following reasons, Clean Ocean Action opposes 
the Offshore Energy and Jobs Act of 2013.
II. Seismic Surveys Pose an Immediate Threat to Coastal Economies
    On March 30, 2012, the Bureau of Ocean Energy Management (BOEM) 
issued a Draft Programmatic Environmental Impact Statement (Draft PEIS) 
for geological and geophysical exploration on the Atlantic Ocean Outer 
Continental Shelf.\2\ According to BOEM, these surveys, to be conducted 
``in Federal waters of the Mid- and South Atlantic Outer Continental 
Shelf (OCS) and adjacent State waters,''\3\ are needed ``to make 
informed business decisions regarding oil and gas reserves'' and for 
other purported goals.\4\
---------------------------------------------------------------------------
    \2\ 77 Fed. Reg. 19,321 (March 30, 2012).
    \3\ http://www.boem.gov/Oil-and-Gas-Energy-Program/GOMR/GandG.aspx.
    \4\ Id.
---------------------------------------------------------------------------
    This past January, in a letter to President Barack Obama, the late 
Senator Lautenberg was joined by seven of his coastal colleagues in 
decrying these proposed surveys, warning that the proposed seismic 
testing will ``hurt our coastal communities and the marine resources 
that drive our coastal economy.''\5\
---------------------------------------------------------------------------
    \5\ Letter to President Barack Obama by U.S. Senators Frank R. 
Lautenberg (D-NJ), Sheldon Whitehouse (D-RI), Patrick Leahy (D-VT), 
Robert Menendez (D-NJ), Benjamin Cardin (D-MD), Barbara Mikulski (D-
MD), Barbara Boxer (D-CA), and Maria Cantwell (D-WA)., January 30, 2013 
(available at http://www.lautenberg.senate.gov/assets/seismic.pdf).
---------------------------------------------------------------------------
    The Senators, representing the citizens of California, Maryland, 
New Jersey, Rhode Island, Vermont, and Washington, took issue with the 
currently pending seismic proposals for three reasons.

    First, the most obvious: seismic surveys are only necessary for oil 
and gas drilling.

        ``Seismic airgun testing is used to explore for offshore oil 
        and gas resources. Allowing this activity in the Atlantic Ocean 
        is clearly a step towards permitting dangerous offshore 
        drilling. . . . Even those the proposed seismic testing would 
        only span from Delaware to the middle of Florida, a significant 
        oil spill in the Atlantic Ocean would harm . . . fisheries, and 
        sea life all along the Atlantic Coast. In particular, it would 
        decimate the region's robust tourism economy, which relies on 
        clean and safe beaches.''\6\
---------------------------------------------------------------------------
    \6\ Id. (emphasis added).

    Second, the Senators warned of the direct, known, and significant 
impact these surveys will have on marine mammals--many of which are 
critically endangered yet still support significant tourism economies 
---------------------------------------------------------------------------
and are keystone species in their coastal habitats.

        ``These loud airgun blasts can be heard for hundreds of miles 
        in the ocean and, as a result, can drive whales to abandon 
        their habitats, go silent, and cease foraging over vast areas. 
        At shorter distances, it can cause permanent hearing loss, 
        injury, and even death for whales, dolphins, and fish. 
        According to the Department of the Interior's (DOI) own 
        estimates, seismic testing would injure up to 138,500 marine 
        mammals, and disrupt marine mammal feeding, calving, breeding, 
        and other vital activities.''\7\
---------------------------------------------------------------------------
    \7\ Id.

---------------------------------------------------------------------------
    Finally, fisheries will be significantly impacted by these surveys.

        ``[A]irgun noise has been shown to decrease fisheries catch 
        rates by 40 to 80 percent, forcing fishermen to seek 
        compensation for their losses. Since commercial and 
        recreational fishing off the Mid- and Southeast Atlantic 
        generates $11.8 billion annually and supports 222,000 jobs, we 
        are concerned that DOI did not take these economics impacts 
        into account when assessing the proposed plan for seismic 
        testing.''\8\
---------------------------------------------------------------------------
    \8\ Id. (emphasis added).

    At a June, 2012, meeting of the Mid Atlantic Fishery Management 
Council (MAFMC), held in New York City, BOEM made a presentation on 
these proposed surveys that highlighted the potential for seismic 
surveys to impact clean coastal economies. During the presentation, 
BOEM scientist Dr. Jill Lewandowski noted that ``that there is cross-
over between the frequency of noise that is produced by seismic surveys 
and what at least many of the fish species we think can hear.''\9\ This 
can lead to a variety of effects, according to the presentation, from 
``no effect to habituation to a change in behavior;'' the airguns might 
``mask some of [a fish's] important cues,'' could ``go to hearing 
loss'' or cause ``other physiological effects that maybe don't result 
in mortality but could be sublethal.''\10\
---------------------------------------------------------------------------
    \9\ Minutes, MAFMC Meeting, New York, NY, June 11, 2012 (Available 
at http://static.squarespace.com/static/511cdc7fe4b00307a2628ac6/t/
51657e74e4b0f2e667ba2341/136560600
4639/Council%20Minutes_June%2012_14_2012.pdf).
    \10\ Id.
---------------------------------------------------------------------------
    The BOEM conclusion on the state of science as to how seismic 
surveys impact fish and fisheries was concise: ``there's really not 
much at all.''\11\
---------------------------------------------------------------------------
    \11\ Id.
---------------------------------------------------------------------------
    After hearings on the issue, with input from BOEM, other 
scientists, fishermen, and the public, the Mid-Atlantic Fishery 
Management Council found that there is a 50-meter lethal zone around 
each airgun blast; that while highly-mobile fish may escape this zone, 
``the extensive (months long) survey timeframe makes it likely that 
prolonged avoidance of the arrays will be necessary and could lead to 
interruptions in fish spawning and access to forage;'' and that much of 
the OCS is at a depth less than 50 meters, which would ``place the 
entire water column within the `lethal range' of the array.''\12\
---------------------------------------------------------------------------
    \12\ Mid-Atlantic Fishery Management Council Comments on Draft 
PEIS, June 29, 2012 (available at http://www.boem.gov/uploadedFiles/
BOEM/Oil_and_Gas_Energy_Program/GOMR/Atl
GGCommentsFedStaLoc.pdf).
---------------------------------------------------------------------------
    These concerns were shared by many other government and non-
government organizations, including the State of Delaware Department of 
Natural Resources and Environmental Control, which expressed concern 
that these proposed seismic surveys, and the oil operations that follow 
thereafter ``would be catastrophic for our State economy'' and that 
``[e]ven with the mitigation and monitoring measures outlined in the 
PEIS, significant adverse environmental impacts will still likely 
result from seismic airgun surveys.''\13\
---------------------------------------------------------------------------
    \13\ Delaware Department of Natural Resources and Environmental 
Control Comments on Draft PEIS, May 30, 2013 (available at http://
www.boem.gov/uploadedFiles/BOEM/Oil_and_
Gas_Energy_Program/GOMR/AtlGGCommentsFedStaLoc.pdf).

---------------------------------------------------------------------------
    Based on this input, the MAFMC concluded:

        ``It is clear that G&G activities have substantial impacts on 
        marine environments, yet the Draft PEIS provides insufficient 
        information about how the specific proposed G&G activities may 
        affect fish, marine mammals, benthic communities, and ecosystem 
        structure and function. We understand that these impacts are 
        difficult to predict or quantify, but given the existing value 
        of marine resources to the region and the Nation, it is clear 
        that the potential benefits do not outweigh the risks of 
        initiating the proposed G&G activities at this point.''\14\
---------------------------------------------------------------------------
    \14\ Mid-Atlantic Fishery Management Council Comments on Draft 
PEIS, June 29, 2012 (available at http://www.boem.gov/uploadedFiles/
BOEM/Oil_and_Gas_Energy_Program/GOMR/AtlGGCommentsFedStaLoc.pdf).

    Because the MAFMC found that the seismic surveys could threaten the 
``more than 166,000 jobs with an associated income exceeding $6 
billion'' within the Mid Atlantic Ocean, the Council resolved that it 
``cannot support the Draft PEIS.''\15\
---------------------------------------------------------------------------
    \15\ Id.
---------------------------------------------------------------------------
    Seismic surveys, which are just the first step in OCS oil and gas 
development, have significant impacts on fish, fisheries, and wildlife, 
and pose a direct threat to fishery jobs, coastal ecosystems, and 
coastal economies.
III. The Atlantic is No Place for Offshore Oil and Gas Activities
    Only a few weeks ago, on May 24, 2013, six representatives of 
Atlantic Ocean States, representing coastal districts (and the existing 
businesses, people, economies and ecologies therein), as well as inland 
districts whose residents no doubt rely on a clean coast for state-wide 
economic benefit and for tourism, recreation, and employment, sent a 
letter to Secretary Jewell cautioning her on expansion of oil and gas 
operations into the Atlantic:

        ``OCS drilling is, in fact, quite controversial in our States 
        because of its potential adverse impacts both on the 
        environment and on our coastal communities and the tourism 
        economy on which they depend.''\16\
---------------------------------------------------------------------------
    \16\ Letter to Secretary of the Interior Sally Jewell by Virginia 
Representatives Robert C. ``Bobby'' Scott, Jim Moran and Gerald E. 
Connolly; South Carolina Representative James E. Clyburn; and North 
Carolina Representatives David Price and Melvin L. Watt, May 24, 2013 
(available at http://www.newsobserver.com/2013/05/31/2928854/6-
congressmen-oppose-atlantic.html).

    The Congressmen continued, noting that ``the risks of drilling in 
this sensitive region outweigh the benefits.'' Indeed, the Congressmen 
urge the Secretary to turn away from offshore drilling and ``towards a 
clean energy economy.''\17\
---------------------------------------------------------------------------
    \17\ Id.
---------------------------------------------------------------------------
    This ideal is backed up by economic fact: three times as many jobs 
are created by clean energy investments than with continued investments 
in reliance on fossil fuels.\18\
---------------------------------------------------------------------------
    \18\ http://www.peri.umass.edu/fileadmin/pdf/
other_publication_types/green_economics/economic_benefits/
economic_benefits.PDF.
---------------------------------------------------------------------------
    This sentiment has been echoed in of New Jersey and New York for 
decades with bi-partisan support. Indeed, since Governor Kean's 
administration, every New Jersey Governor has opposed offshore 
drilling, especially where New Jersey would be at risk. Moreover, for 
decades, nearly the entire New Jersey Congressional delegation has 
opposed legislation to expand offshore drilling into the Atlantic.
    ``The Jersey Shore has been known for our boardwalks, rolling surf 
and ocean breezes. But now some are talking about adding oil rigs to 
that list. We say no way,'' said the late Senator Lautenberg, in 
2006.\19\
---------------------------------------------------------------------------
    \19\ Press Release: ``New Jersey Lawmakers Vow to Stop Republican 
Attempts to Open Up Oil Drilling off Jersey Shore.'' July 14, 2006 
(available at http://www.lautenberg.senate.gov/newsroom/
record.cfm?id=258641&).
---------------------------------------------------------------------------
    Senator Robert Menendez joined his colleague in declaring that the 
Jersey Shore ``is far too precious and important to allow oil-crazed 
speculators to set-up shop along our coast.''\20\ According to a New 
Jersey Department of Tourism study, about 60 percent of New Jersey's 
$35.5 billion tourism industry is generated at the shore.\21\
---------------------------------------------------------------------------
    \20\ Id.
    \21\ http://www.visitnj.org/sites/visitnj.org/files/2010-tourism-
ecom-impact-prelim-3-23-2011-2.pdf.
---------------------------------------------------------------------------
    Across the greater New York/New Jersey region, the economic value 
of the clean ocean economy is unquestionable:

      The Port of New York and New Jersey, largest in the 
Atlantic, lies at the top of the Mid-Atlantic and saw over $208 billion 
in cargo,\22\ over 5.5 million cargo containers, and over 86 million 
tons of goods move into and out of the Port.\23\
---------------------------------------------------------------------------
    \22\ Trade Statistics of the Port of New York and New Jersey, 2011, 
at 1. The Port Authority of NY & NJ (available at http://
www.panynj.gov/port/pdf/port-trade-statistics-bar-C2c-2011.pdf).
    \23\ Id.
---------------------------------------------------------------------------
      The Port Authority, which manages the Port, estimates 
that the Port's economic impact supports over 279,000 jobs in the 
region.\24\
---------------------------------------------------------------------------
    \24\ Regional Economic Benefits of the Port Authority of NY & NJ 
(available at http://www.panynj.gov/port/regional-economic-
benefits.html).
---------------------------------------------------------------------------
      In New York State, the ``recreational fishing industry 
generated $369 million in sales, contributed $212 million to gross 
state product, and supported 3,000 jobs across the broader State 
economy'' in 2011.\25\ Commercially, New York's 2011 fisheries 
``generated $5 billion in sales, contributed $1.8 billion to gross 
state product, and supported 42,000 jobs across the broader 
economy.''\26\
---------------------------------------------------------------------------
    \25\ Regional Impact Evaluation; An Initial Assessment of the 
Economic Impacts of Sandy on New Jersey and New York Commercial and 
Recreational Fishing Sectors, at 1-2 (hereinafter ``Sandy Report''). 
NOAA Fisheries, Office of Science & Technology and Northeast Fisheries 
Science Center, March 15, 2013 (available at http://
www.st.nmfs.noaa.gov/Assets/economics/documents/sandy/
Final_Report_Sandy_Regional_Impact_Evaluation_MSA.pdf).
    \26\ Id.
---------------------------------------------------------------------------
      In New Jersey, in 2011, ``the commercial fishing industry 
generated $6.6 billion in sales, contributed $2.4 billion to gross 
state product and supported 44,000 jobs across the broader State 
economy''\27\ while recreational fisheries ``generated $1.7 billion in 
sales, contributed $871 million to gross state product and supported 
10,000 jobs.''\28\
---------------------------------------------------------------------------
    \27\ Id.
    \28\ Id.

    The NY/NJ Port and fisheries impacts, therefore, contributed 
(during a recession) over $220 billion in sales and cargo while 
supporting over 300,000 jobs.
    States across the Atlantic coast have similar statistics and their 
economists would tell similar stories. For example, this committee 
heard testimony last week of a recent analysis showing Virginia's 2011 
tourism industry supports more than 200,000 jobs, yielding an economic 
impact of more than $20 billion,\29\ and data from Florida showing that 
the tourism, wildlife, fisheries, ports, and defense-related industries 
generate more than $175 billion in economic benefits and over 2.2 
million jobs annually.\30\
---------------------------------------------------------------------------
    \29\ PricewaterhouseCoopers, ``Virginia State Tourism Plan'' (2013) 
(available at http://www
.vatc.org/uploadedFiles/Partnership_Alliance_Marketing/
VirginiaStateTourismPlanVTC329201
3.pdf).
    \30\ Mitch Stacy, ``Florida tourism rebounds in 2011, overseas 
visits up,'' USA Today, December 30, 2011, (available at http://
travel.usatoday.com/destinations/story/2011-12-31/Florida-tourism-
rebounds-in-2011-overseas-visits-up/52295150/1).
---------------------------------------------------------------------------
    These industries are not simply elements of the coastal economy--
they are the drivers of the coastal economy. Yet, we are here today to 
speak to the expansion of oil and gas operations--operations which, in 
the Atlantic Ocean, would threaten these keystone elements of the 
coastal economy while only yielding U.S. consumers a three-cent ($0.03) 
reduction in the ``price at the pump'' 10-15 years from now.\31\
---------------------------------------------------------------------------
    \31\ EIA, Impacts of Increased Access to Oil and Natural Gas 
Resources in the Lower 48 Federal Outer Continental Shelf AEO 2007 
(available at http://www.eia.gov/oiaf/aeo/otheranalysis/ongr.html).
---------------------------------------------------------------------------
IV. A Note on Superstorm Sandy
    In addition to the human, social, and economic toll that Hurricanes 
Rita and Katrina took on the Nation in 2005, those disasters triggered 
125 known Gulf of Mexico oil spills (totaling over 16,000 barrels of 
oil),\32\ destroyed 115 gulf petroleum production platforms, and 
damaged 457 sea-to-shore pipelines.\33\ Hurricanes pose similar threats 
in the Atlantic Ocean, and oil and gas drilling along the eastern 
seaboard would be just as vulnerable as along the gulf coast.
---------------------------------------------------------------------------
    \32\ U.S. Minerals Management Service. Estimated Petroleum Spillage 
from Facilities Associated with Federal Outer Continental Shelf (OCS) 
Oil and Gas Activities Resulting from Damages Caused by Hurricanes Rita 
and Katrina in 2005. August 8, 2006 (available at http://
www.docstoc.com/docs/6798709/Estimated-Petroleum-Spillage-from-
Facilities-Associated-with).
    \33\ U.S. Minerals Management Service. News Release. MMS Updates 
Hurricanes Katrina and Rita Damage. May 1, 2006.
---------------------------------------------------------------------------
    In fact, sea level rise and global climate disruption are already 
making our coastal communities more vulnerable; further reliance on 
fossil fuels, installation of offshore energy facilities, and the 
industrialization of the Atlantic Ocean can only exacerbate the 
problems facing the coasts.
    Seven years after Hurricane Katrina, Superstorm Sandy struck the 
Atlantic coast, making landfall in New Jersey on October 29, 2012. A 
Federal disaster area was declared by President Obama for most States 
in the region immediately after landfall. Two weeks later, on November 
16, a Federal fisheries disaster area was declared for New York and New 
Jersey under the citing Magnuson-Stevens Fishery Conservation and 
Management Act (MSA) and the Interjurisdictional Fisheries Act 
(IFA).\34\ After months of recovery, and promises of up to $60 billion 
in disaster relief aid, New York and New Jersey, as well as many other 
communities in the region, are still struggling to recover from the 
storm, return to their communities, and rebuild their lives.
---------------------------------------------------------------------------
    \34\ Regional Impact Evaluation; An Initial Assessment of the 
Economic Impacts of Sandy on New Jersey and New York Commercial and 
Recreational Fishing Sectors. NOAA Fisheries, Office of Science & 
Technology and Northeast Fisheries Science Center, March 15, 2013 
(available at http://www.st.nmfs.noaa.gov/Assets/economics/documents/
sandy/Final_Report_Sandy_
Regional_Impact_Evaluation_KMSA.pdf).
---------------------------------------------------------------------------
    In New York, damages to the recreational fishing sector totaled $58 
million ($36 million at marinas; $17 million at for hire companies; $5 
million at bait and tackle shops) while damages to the commercial 
fishing sector totaled $19 million ($9 million for seafood dealers; $5 
million for federally-permitted commercial fishermen; $5 million for 
seafood processors).\35\ In New Jersey, recreational fishing losses 
exceeded $62 million ($30 million to marinas; $16 million to bait and 
tackle shops; and $16 million to for-hire operations) and commercial 
fishing losses exceeded $11 million for seafood dealers; $3 million to 
federally-permitted commercial fishermen, and $100,000 to seafood 
processors.\36\
---------------------------------------------------------------------------
    \35\ Regional Impact Evaluation; An Initial Assessment of the 
Economic Impacts of Sandy on New Jersey and New York Commercial and 
Recreational Fishing Sectors. NOAA Fisheries, Office of Science & 
Technology and Northeast Fisheries Science Center, March 15, 2013 
(available at http://www.st.nmfs.noaa.gov/Assets/economics/documents/
sandy/Final_Report_Sandy_
Regional_Impact_Evaluation_MSA.pdf).
    \36\ Id.
---------------------------------------------------------------------------
    In the aftermath of Superstorm Sandy, to add OCS oil and gas 
operations and their dangerous risks to the already-full plate of the 
Atlantic Ocean would devastate our natural resources and drastically 
increase the burden on coastal marinas, regulators, citizens, 
businesses, parks and wildlife refuges, and fishermen still looking to 
rebuild or recover. For towns where half of the businesses are open, 
where a only third of the tourists have returned, or where only a 
quarter of the homes have been rebuilt, the answer is not to risk the 
future with the fuels of the past; the answer is to reinvest in the 
clean economies that brought in billions and employed millions before 
Superstorm Sandy.
V. Endangering Long-Term Clean Ocean Economies Is Not in the Public 
        Interest
    The push to expand offshore oil drilling all too often puts the 
short term ahead of the long. As with any offshore fossil fuel project, 
most of the job benefits claimed by oil companies are short-term--
installing and constructing facilities and pipelines. One facility 
proposed for offshore New York, the Liberty LNG ``Port Ambrose'' 
project, would only generate up to 10 staff positions for the operation 
of the port--4 of which are contingent on LNG deliveries.\37\ The long-
term, clean ocean economy jobs of the Atlantic coast, detailed above, 
can suffer immediately (through increased competition and cost for dock 
space, increased burdens on Coast Guard operations, and ecosystem 
impacts from seismic surveys), as well as in the future (through oil 
spills and leaks, tourism and recreation reductions, and multiple-use 
at-sea conflicts).
---------------------------------------------------------------------------
    \37\ Port Ambrose Socioeconomic Study (available at http://
portambrose.com/project-application-materials/volume-2-topic-6-
socioeconomics/).
---------------------------------------------------------------------------
    The problem before us today is whether to support purported short-
term benefits of oil and gas activities in light of the actual short-
term losses and potential long-term vulnerabilities created in fishery, 
tourism, recreation, and trade because of oil and gas. This 
juxtaposition is rarely brought to the public's attention--that the 
jobs promised by the oil companies would not be created in a vacuum.
    This timeframe dichotomy is playing out in the world of energy 
policy as well. ``While the United States may be a net importer of 
crude oil, we are a net exporter of petroleum products, coal, and soon, 
liquefied natural gas. Given that nonrenewable energy resources like 
oil, gas, and coal are, by definition, not infinite, the issue is not 
just how we produce energy domestically, but what we do with that 
energy once it comes to market.''\38\ As with jobs, the national 
discourse over oil production rarely presents the long-term, other-
industry issues pertinent to informed decisionmaking. Oil companies 
extract U.S. domestic public resources for shipment to the top buyer 
(whether that is overseas or not), solicit contractors who are the 
bottom bidders, and have a clear set of economic and energy policy 
priorities driven to maximize dividends, not the long term diverse 
economic vibrancy of coastal communities.
---------------------------------------------------------------------------
    \38\ Dixon, Sean T. and Jonathan Panico, Extraction for 
Exportation: Is There Such a Thing As ``Net Energy Independence''? 
Natural Resources & Environment Volume 27, Number 3, Winter 2013.
---------------------------------------------------------------------------
    As has been stated time and time again by elected officials, 
coastal citizens, and, most recently the Mid Atlantic Fishery 
Management Council, the long-term vitality of the existing uses and 
users of the Atlantic Ocean depends on an oil-free ecosystem. In the 
midst of an economic crisis, and in the wake of a devastating few years 
of Atlantic Ocean hurricanes, employers on fishing boats, boardwalks, 
and beaches are just beginning to restore the industries that took 
generations to build.
VI. Offshore Energy and Jobs Act Conclusions
    The Atlantic Coast has been home to centuries of fishing, tourism 
and trade; the people that live along the Nation's densest coastline 
continue those traditions. From the recreational fisheries of Florida 
to the commercial fisheries of Maine, the crabbing in the Chesapeake to 
the sailing in Long Island Sound, these clean ocean economies drive our 
coastal communities, our Coastal States, and our Nation. Billions of 
dollars and millions of jobs are built within a delicately balanced 
ecosystem, each relying on the other, and each relying on a clean 
ecosystem.
    The Offshore Energy and Jobs Act of 2013 will threaten this 
balance, immediately and with long-lasting impact.
    Over the long history of the New York/New Jersey region, we have 
learned that the ocean does not mix with toxins, medical waste, or acid 
waste--at least not if the goal for the region is one of robust 
fisheries and packed beaches. In the wake of Hurricanes Rita and 
Katrina, and the BP Deepwater Horizon oil disaster, we re-learned the 
lesson that oil and water do not mix.
    Instead of turning our back on history, we should turn towards 
those ocean uses that can have clean, productive futures, help those 
that are still struggling after Hurricane Sandy, and move forward with 
a clean ocean future.
    Oil and gas moves with water and wind and is not contained by 
political boundaries. When the oil well blows, or oil spills from a 
pipe or platform, or leaks from a tanker--oil spreads rapidly and 
contaminates everything in its way whether it's marine life, coastal 
wetlands, the seafloor, or beaches. We continue to learn about the long 
term ecological impact from the BP oil disaster. The myriad other 
impacts generated by expanded offshore OCS activities, from seismic 
surveys to non-point source pollution and air emissions, are similarly 
unconstrained by political boundaries.
    H.R. 2231's activation of OCS operations anywhere in the Atlantic 
Ocean threatens the ecology, and therefore economy of the entire 
Atlantic coast.
    Thank you for the opportunity to speak.
                                 ______
                                 
    The Chairman. And now I recognize Ms. Ryan Alexander, 
President of Taxpayers for Common Sense. You are recognized for 
5 minutes.

   STATEMENT OF MS. RYAN ALEXANDER, PRESIDENT, TAXPAYERS FOR 
                          COMMON SENSE

    Ms. Alexander. Thank you, Chairman Hastings and members of 
the Committee.
    The mission of Taxpayers for Common Sense is to achieve a 
government that spends taxpayer dollars responsibly and 
operates within its means. Over the last 17 years, TCS has 
worked actively to ensure that taxpayers receive a fair return 
to resources extracted from Federal lands and waters. As the 
rightful owners, taxpayers have the right to fair market 
compensation for the resources extracted from our lands and 
waters, just like any private land owner.
    Today's hearing to examine legislation to increase energy 
production in Federal waters is certainly an important 
discussion. Without any oil and gas extraction, taxpayers would 
lose important royalty revenue altogether. But simply providing 
greater access for offshore activities and not addressing the 
larger royalty collection problems will not provide a solid 
basis for the long-term solution to our Nation's financial 
troubles, and could also lead to greater taxpayer liabilities 
down the road.
    In addition, altering the State-Federal revenue shares for 
offshore drilling, as the Offshore Energy and Jobs Act 
proposes, would siphon valuable revenue from the Federal 
coffers for decades to come.
    Natural resources derived from Federal lands and waters can 
and do provide great benefit for entire Nation. In addition, 
their end use and overall domestic economic benefit, their 
extraction provides valuable revenue to the Federal coffers 
with a potential to provide much more. To this end, Federal 
lands and waters must be mined, drilled, and otherwise 
developed in a manner that protects taxpayers' interests. 
Appropriate fees, rents, and royalties must be collected, and 
long-term liabilities, such as potential cleanup or mitigation 
costs, must be shouldered by the extractive industries, not the 
taxpayers. TCS believes in fix-it first. While federally owned 
natural resources currently provide around $10 billion to the 
Federal Treasury, this amount falls dramatically short of what 
is rightfully owed to Federal taxpayers. For example, the 
taxpayers are currently losing billions of dollars on royalty-
free oil and gas leases in the Gulf of Mexico. We must fix 
these problems so that we recoup what we are owed before moving 
forward. Taxpayers for Common Sense is opposed to any 
legislative measure that would allow States to receive a 
greater percentage of oil and gas revenues than is allowed 
under traditional Federal and State revenue-sharing provisions 
for royalty payments.
    We oppose any measure to direct any additional percentage 
of royalties collected on new leases in Federal waters to the 
States. Further, we would like to see the revenue-sharing 
provisions of GOMESA, the Gulf of Mexico Energy Security Act, 
repealed and the original Federal-State shares reinstated. 
Revenues from traditionally defined Federal waters must be 
directed to the Federal Treasury. To be clear, TCS is not 
opposed to offshore drilling or to opening up more areas in 
Federal waters for drilling. Additional Federal resources can 
be derived from new drilling, and Federal taxpayers, the 
rightful owner of these resources, should receive the revenue.
    Determining whether it is in the national interest to drill 
should include an evaluation of offshore resources and 
potential income and also potential long-term liabilities and 
risks of those liabilities.
    Federal taxpayers are due the royalties derived from leases 
operating in Federal waters because those waters are 
administered, protected, and managed by Federal, not State, 
agencies at a cost to Federal taxpayers. Federal taxpayers 
funding agencies charged with royalty collection and lease 
regulation. Additionally, the U.S. Coast Guard, not the States, 
inspects and regulates the offshore drilling rigs. It also 
performs vessel regulation, search and rescue, security, and 
pollution response.
    Unlike onshore energy operations, offshore energy 
operations do not occur in any State. The impact of operations 
beyond State waters has national implications. 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. In addition, they get economic development 
benefits from energy operations in Federal waters near their 
coasts. But all Americans should get the revenue from 
royalties, rents, and bonus bids in Federal waters. These 
waters are more than 6 miles from the coast and 9 miles in 
parts of the Gulf of Mexico. State waters are within 3 miles of 
their respective shorelines.
    The changes made in the 2006 GOMESA legislation, which gave 
the Gulf States a larger share of Federal revenues, demonstrate 
how large the revenue losses can be to Federal taxpayers and 
may result in up to $500 million in annual revenues from 
Federal waters diverted to the States. The new revenue-sharing 
provisions of H.R. 2231 would extend those revenue-sharing 
provisions to new leases, resulting in an additional multi-
billion dollar loss to taxpayers.
    Expanding revenue shares in Federal waters, as proposed in 
H.R. 2231, also presents a logistical nightmare. The Federal 
Government manages and secures operations off our coasts, and 
the taxpayer bears the costs of these services. The impact of 
drilling in Federal waters have national implications. Costs 
and benefits should be carried out in the interests of all 
Americans, not a handful of Coastal States.
    The country is now facing a $17 trillion debt and across-
the-board budget cuts. Many things need to be done to resolve 
the Nation's fiscal woes, not least of which is ensuring 
Federal taxpayers get the revenue they deserve for the 
resources they own. 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. Providing increased access 
without addressing future taxpayers costs is fiscally 
irresponsible and could cost taxpayers billions. Giving 
additional money from Federal resources to the States will 
simply compound our budget problems. H.R. 2231 raises important 
fiscal issues but should be revised with the primacy of the 
Federal taxpayer in mind. One second.
    The Chairman. That was an excellent job. Thank you. Right 
to the second.
    You will get a special award; I don't know what it is, but 
you will be recognized.
    Thank you very much, all four of you, for your testimony.
    [The prepared statement of Ms. Alexander follows:]
  Prepared Statement of Ms. Ryan Alexander, President, Taxpayers for 
                              Common Sense
    Good morning Chairman Lamborn, Ranking Member Holt, and 
distinguished members of the Committee. Thank you for the opportunity 
to testify today on the Offshore Energy and Jobs Act, H.R. 2231. My 
name is Ryan Alexander and I am President of Taxpayers for Common Sense 
(TCS), a national, non-partisan budget watchdog organization.
    The mission of Taxpayers for Common Sense is to achieve a 
government that spends taxpayer dollars responsibly and operates within 
its means. Over the last 17 years, TCS has worked actively 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 significant source of income for the Federal 
Government and must 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, just like 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 and outdated laws. 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 to increase energy 
production in Federal waters is certainly an important discussion. 
Without any oil and gas extraction, taxpayers would lose important 
royalty revenue altogether. But simply providing greater access for 
offshore activities and not addressing the larger royalty collection 
problems will not provide a solid basis for the long-term solution to 
our Nation's financial troubles and could also lead to greater taxpayer 
liabilities down the road. In addition, altering the State-Federal 
revenue shares for offshore drilling, as the ``Offshore and Jobs Act'' 
proposes, would siphon valuable revenue from the Federal coffers for 
decades to come. At a time when we should be discussing how to bring in 
more revenue--not less--to the Federal Treasury, this policy would not 
only be costly, but also short-sighted.
    This morning, I would like to first discuss the need for fair 
return for all resource extraction on Federal lands and waters. Then I 
would like to address several concerns with the changes that H.R. 2231 
would make to the existing Federal-State revenue sharing provisions for 
offshore oil and gas extraction.
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 Nation. In addition to their end 
use and overall domestic economic benefit, their extraction provides 
valuable revenue to Federal coffers, with the potential to provide much 
more.
    To this end, Federal lands and waters must be mined, drilled or 
otherwise developed in a manner that protects taxpayers' interests. 
Appropriate fees, rents and royalties must be collected and long-term 
liabilities such as potential clean-up or mitigation costs must be 
shouldered by the extractive industries, not by taxpayers.
    TCS believes in ``fix it first.'' While federally owned natural 
resources currently provide around $10 billion to the Treasury, this 
amount falls dramatically short of what is rightfully owed to the 
Federal Treasury. For example, the taxpayers are currently losing 
billions of dollars on royalty-free oil and gas leases in the Gulf of 
Mexico, as well as royalty-free operations for hard rock mineral 
extraction on Federal lands. We must fix these problems so that we can 
recoup what we are owed before moving forward.
Royalty Revenue Falls Short
    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 that has sufficient 
oversight and accountability. The many scandals that plagued the 
Minerals Management Service (MMS), the agency that for nearly three 
decades ran the Government's royalty collection system, demonstrated 
how corrupted the system can become.
    For years the Government Accountability Office (GAO) has found that 
the Department of the Interior has not done enough to monitor and 
evaluate its royalty collections. GAO has included royalty collection 
in its last two reports on high-risk Federal programs and activities. A 
report in 2008 found that the DOI had not reviewed how it was 
compensated for extracted oil and gas from public lands for more than 
25 years and had no system in place to even determine whether or not 
such a reassessment was needed. A 2010 study found that DOI had no way 
to determine if it was accurately measuring the amount of resources 
taken from public lands, making it unlikely the Federal Government is 
being fairly compensated. On top of these collection issues, the United 
States has some of the lowest underlying royalty rates in the world.
    Other reforms to existing onshore oil and gas operations could also 
provide more valuable revenue for taxpayers. In 2010, GAO found that 
taxpayers would receive $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.
    At the same time that Federal taxpayers are not assured of adequate 
royalty collection, they are also being asked to provide revenue from 
offshore leases in Federal waters to the States. The Gulf of Mexico 
Energy Security Act (GOMESA) already directs a portion of revenue 
derived from new leases in Federal waters in the Gulf of Mexico to the 
States rather than to Federal taxpayers. Since 2006, this law has cost 
taxpayers more than a billion dollars. and it will cost billions more 
in the years ahead. I will address this issue further in a moment.
Problems With Restructuring at DOI
    Although the MMS has been dismantled, the Department of the 
Interior's new royalty management structure is still a work-in-
progress. Since royalty collection has remained on the GAO's high-risk 
list, despite the new system at DOI under the Office of Natural 
Resources Revenue, it seems like the agency still has work to do in 
this area. 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 a new 
category of leases without assurances that taxpayers are being 
protected.
    While H.R. 2231 addresses the new system at the DOI by codifying it 
into Federal law, it would change little in the current system. Under 
existing law, the Secretary of the Interior has the authority make 
these changes and has proceeded with the dismantling of the Minerals 
Management Service and the restructure of the Office of Natural 
Resources Revenue. Further, H.R. 2231 adds layers to the bureaucracy at 
DOI, with the addition of a new undersecretary and two assistant 
secretaries. These new layers of political appointees will not only 
cost taxpayer money to fund, they will create more red tape in 
processing and executing leases and royalty collection fairly and 
efficiently.
    Finally, while TCS applauds H.R. 2231's application of the user-
pays principle for requiring inspection fees to fall on the oil and gas 
industry not Federal taxpayers, we are concerned that fixing the price 
for the inspections prematurely could lead to taxpayers footing the 
bill for any additional inspection costs.
State Revenue-Sharing Changes Proposed in H.R. 2231
    Taxpayers for Common Sense is opposed to any legislative measure 
that would allow States to receive a greater percentage of oil and gas 
revenues than is allowed under existing Federal-State revenue-sharing 
provisions for royalty payments. We oppose any measure to direct any 
additional percentage of royalties collected on new leases in Federal 
waters to the States. Further, we would like to see the revenue-sharing 
provisions of GOMESA repealed and the original Federal/State shares 
reinstated. Revenues from traditionally defined Federal waters must be 
directed to the Federal Treasury.
    To be clear, TCS is not opposed to offshore drilling or to opening 
up more areas in Federal waters for drilling. Additional Federal 
resources can be derived from new drilling, and Federal taxpayers, the 
rightful owners of those resources, should receive that revenue. 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. Determining whether 
it is in the national interest to drill should include an evaluation of 
offshore resources and potential income, and also potential long-term 
liabilities and the risk of those liabilities.
    Revenue-sharing provisions, like those proposed in H.R. 2231, 
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. Providing an increased share to the States would do 
nothing to encourage energy development, as it doesn't affect 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. Thus, it reduces 
Federal revenues without adding any incentive toward energy 
development.
    Federal taxpayers are due the royalties derived from leases 
operating in Federal waters because those waters are administered, 
protected, and managed by Federal--not State--agencies at a cost to 
Federal taxpayers. 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; it also performs vessel regulation, search and rescue, security, 
and pollution response. Unlike onshore energy operations, offshore 
energy operations do not occur in any State. The impact of operations 
beyond State waters reaches well beyond any one State and has national 
implications.
    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. In addition, they get economic development benefits from 
energy operations in Federal waters near their coasts. But all 
Americans should get the revenue from royalties, rents and bonus bids 
in Federal waters. These waters are more than 6 miles from the coast 
and 9 miles in parts of the Gulf of Mexico. State waters are within 3 
miles of their respective shoreline.
    The changes made in the 2006 GOMESA legislation, which gave the 
Gulf States a larger share of Federal revenues, demonstrate how large 
the revenue losses can be to Federal taxpayers. Under GOMESA, Gulf 
States receive 37.5 percent of the royalty income from certain newly 
opened areas in Federal waters of the gulf. Beginning in 2016 they will 
receive 37.5 percent of royalties from new leases throughout the gulf's 
Federal waters, up to $500 million annually. The new revenue-sharing 
provisions of H.R. 2231 would extend these revenue-sharing provisions 
to new leases, resulting in an addition multi-billion dollar loss to 
the taxpayers.
    Expanding revenue shares into Federal waters, as proposed in H.R. 
2231, also presents a logistical nightmare. Beyond the limited State 
waters designated in Federal law (extending 3 to 6 miles from shore), 
there are simply no State boundaries in Federal waters. Drawing 
boundaries for States and determining the recipient for the increased 
State revenues for waters so far offshore would be a legal and 
technical nightmare. The division of revenue among the States in the 
GOMESA legislation represented a political compromise that would be 
indefinitely more complicated along other U.S. coasts.
    For example, States with concave or convex coastlines may have 
difficulty determining boundaries or agreeing on where their State's 
interests lie. The proposal for leasing wind offshore Rhode Island and 
Massachusetts was delayed nearly a year by negotiations between the 
States, and other areas along the east coast could yield similar 
conflicts.
    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.
Conclusion
    The country is now facing a $17 trillion debt and across the board 
budget cuts. 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.
    All resources extracted from Federal lands must provide Federal 
taxpayers with fair market revenue. It is imperative that energy 
legislation address these problems.
    Making more natural resources available, without ensuring 
recoupment of what taxpayers are already owed for current and past 
operations, is likely to only ensure inadequate collection of royalties 
on new leases and to perpetuate the existing flawed system for even 
longer. Without legislation to address the existing problems, taxpayers 
will continue to lose valuable revenue--revenue that can be used to 
address our Nation's budget deficit.
    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. Giving additional money from Federal resources to 
the States will simply compound our budget problems. H.R. 2231 raises 
important fiscal issues, but should be revised with the primacy of the 
Federal taxpayers in mind.
                                 ______
                                 
    The Chairman. I will now recognize the gentleman from 
California, Mr. Lowenthal.
    Mr. Lowenthal. Thank you, Mr. Chairman. I concur with you. 
Ms. Alexander, right on the mark.
    I have many issues with this legislation. Including the 
opening up of new leases off to the coast of southern 
California. As I have stated at length before the Committee 
last week, but my first question today focuses for NEPA, the 
National Environmental Policy Act, which is in this bill. There 
is another attempt to limit the important law that provides an 
opportunity for public oversight prior to the Federal 
Government taking a major action, something I think we should 
all be for.
    And this question is for both Mr. Boesch and Mr. LeVine. 
Mr. Boesch and Mr. LeVine, this legislation before us mandates 
the Interior Department to prepare only one Environmental 
Impact Study for all the Outer Continental Shelf lands. And 
that would be open, that is Virginia, South Carolina, southern 
California. My question is, do you think the OCS lands, the 
geology, the subsurface environments, including the 
exploration, development, and cleanup risks, are the same or 
different off of Virginia as they are off of South Carolina, 
and as they are off of southern California? First question is, 
are they the same or different?
    Dr. Boesch. Well, I think, obviously, they are different. 
Even in our Commission investigation of the Deepwater Horizon 
incident, we actually uncovered a lot of differences within the 
Gulf of Mexico that were not taken into account in terms of the 
planning, environmental assessments, and so on, that were done 
prior to the spill. And so they do require some very specific 
analysis related to the environments in question.
    One thing just because I read it this morning in The 
Washington Post, of note that is relevant I think to specific 
provisions of this bill is that there was announcement of a 
discovery of some very unusual, unique long-life cold-water 
corals in Norfolk Canyon, right off the Virginia coast, right 
in the center of the area which is proposed for leasing. Some 
of these corals are the same kinds of corals which were killed 
by this deepwater plume that happened in the Gulf of Mexico. So 
it brings to the point where you really have to take into 
effect the specific conditions that exist in those locations.
    Mr. Lowenthal. So then the follow-up question is, and I 
will ask Mr. LeVine, so obviously we are only doing one EIS. Is 
one EIS sufficient?
    Mr. LeVine. Mr. Chairman, Mr. Lowenthal, you began the 
question with the right statement, which is the importance of 
the National Environmental Policy Act. It is a statute designed 
to foster good decisionmaking. Where it requires the Federal 
Government to look at the potential impacts and alternatives of 
proposed activities in order to figure out which course of 
action to take. It is not an action-forcing statute, it is an 
analysis statute designed to foster better decisionmaking. And 
the broader the scope, the larger the area analyzed, the more 
differences, the more difficult it is to get at the proper 
level of information needed to guide a good decision. It is 
important to note what the Government is doing at the lease-
sale stage. It is deciding where, when, and under what 
conditions to offer public resources to companies for sale. And 
not only is one EIS not sufficient, it may very well be that 
one EIS for each of these planning areas, which can cover tens 
of millions of acres is not sufficient and that we need to look 
even more carefully at the distinct resources and threats in 
the various areas.
    Mr. Lowenthal. Thank you.
    Dr. Boesch, you state in your testimony that the relatively 
modest liability cap and financial responsibility requirements 
provide little incentive for oil companies to improve safety 
practices. Can you elaborate on that statement?
    Dr. Boesch. Well, if the risk of a major accident is capped 
at a fairly modest level, $75 million when the consequences can 
go into the billions, it is in the interest of the company then 
to let someone else bear that responsibility. In the Deepwater 
Horizon spill in a way we were fortunate to have a company, BP, 
which had deep pockets and could find the resources to deal 
with responding to this spill and also felt it was responsible, 
it didn't have to do that under the law, under the existing 
liability required under the oil pollution.
    Mr. Lowenthal. So then you think that Congress should be 
raising the liability cap for offshore oil spills that will 
make sure that taxpayers are not held responsible and oil 
companies have an incentive to improve their safety?
    Dr. Boesch. We have a specific recommendation in our report 
to that very effect. We do not specify the level. We think it 
probably shouldn't be unlimited, but there should be a process 
with Congress to determine what that level should be.
    Mr. Lowenthal. Mr. LeVine, do you agree?
    Mr. LeVine. Absolutely.
    Mr. Lowenthal. And also, Mr. Dixon.
    Mr. Dixon. Anything that puts oil drilling off the coast 
should not be encouraged. It is something that really destroys 
too many jobs and too many ecologies, and the clean ocean 
economies that depend thereon.
    The Chairman. The time of the gentleman has expired.
    The Chair recognizes the gentleman from Florida, Mr. 
Garcia.
    Mr. Garcia. Thank you, Mr. Chairman.
    Mr. Dixon, you made my ears prick. We have the great 
benefit in Florida that we don't have offshore oil drilling, 
and then you mentioned Florida. I didn't see Florida anywhere 
in here. Where is it?
    Mr. Dixon. In the bill itself, is that your question?
    Mr. Garcia. Yes.
    Mr. Dixon. In the ocean, the oil drilling knows no 
political bounds. One of the biggest problems that we are 
facing right now is the Active Seismic Surveys Proposal, which 
is going to affect Florida. It is going to bring seismic airgun 
blasts from the middle of Florida all the way up to Delaware. 
So that is something that can immediately create impacts in 
marine mammal populations. And actually the testimony in front 
of the Mid-Atlantic Fishery Management Council said that would 
also lead to a 50-meter kill zone around each airgun array.
    So when you have a shelf, Continental Shelf that leads to 
productive fisheries, lots of recreational fisheries, and lots 
of coastal tourism, having something like seismic surveys, 
which are part and parcel on any offshore oil exploration, can 
definitely have immediate impacts to Florida. Also, when oil 
drilling is allowed in places like the gulf, you see problems 
with tourism. After the BP Deepwater Horizon, when there was 
very little oil that actually made it in Florida waters, it 
still affected tourism, it affected the perception of the 
availability of that coast for tourists to come visit. So these 
all have multifaceted impacts at the end of the day.
    Mr. Garcia. Thank you.
    Mr. Boesch, well, I guess I can ask all of you, I mean, 
from my reading here what staff has prepared, there are 
literally millions of miles offshore already leased. So tell me 
why we are not exploring that? Why do we need to go toward 
this? Maybe we will start on the left and go to the right.
    Dr. Boesch. Well, I can't answer the question specifically 
other than the fact that there are leases being held which have 
not yet been developed. In the Gulf of Mexico, in particular, 
is extending deeper and deeper waters where there are larger 
and larger reserves being found. So I think if you look at 
where the industry has elected to put its resources in terms of 
its exploration, it is there rather than these other frontier 
areas at the moment.
    Mr. Garcia. Mr. LeVine.
    Mr. LeVine. Mr. Garcia, I will take you far from Florida to 
Alaska, where oil companies own roughly 3 million acres of 
leases purchased all more than 5 years ago. They have yet to 
complete a single exploration well on any of those leases, 
largely due to the lack of attention to detail and forethought. 
I described some the problems Shell has had.
    Mr. Garcia. My colleagues across the aisle would say to you 
these aren't stupid businessmen. They know what they are doing. 
And why wouldn't they? If it was there, they would go for it. 
They are not going for it because there must not be something 
there for them to get.
    Mr. LeVine. The companies are going for it. Shell, in 
particular, has been trying to drill exploration wells for 
several years. They have not managed to have appropriate 
response and rescue equipment approved. In this past year, when 
the company tried to bring its two drill rigs and assorted 
vessels to the Arctic, it ran into a series of logistical 
problems for which it wasn't prepared, resulting in the 
grounding of the Kulluk. And both the drill rig and the drill 
vessel being disabled. So it is less lack of companies trying 
and more the Arctic Ocean telling them they can't do it right 
now.
    Mr. Garcia. Mr. Dixon.
    Mr. Dixon. Thank you. One of the things that I would like 
to address is a slightly different tack, and that is the one of 
the energy exports. Right now, we are seeing that the United 
States, for the first time in a very long time, is a net 
petroleum product exporter. Keystone XL has several contracts 
already slated for export. This is a global market, and energy 
companies can send their product----
    Mr. Garcia. You mean they are going to export that stuff?
    Mr. Dixon. Through export, yes, through refineries. And so 
what we are seeing right now in the natural gas situation is 
that shale gas plays are being kept artificially low, the 
production levels, which is why a lot of companies are now 
applying to export gas as LNG overseas. We have already seen 
under the current Natural Gas Act over 40 percent of our daily 
domestic natural gases are already approved for construction if 
the facilities are built. And so once those export 
applications, then that petroleum product exports, once that 
market really opens up, then a lot of these fields where oil 
and gas have been kept in the ground until prices go up will be 
opened.
    Mr. Garcia. Ms. Alexander, I figure you just want them to 
show you the money. So----
    Ms. Alexander. Pretty much. Wherever they go, we want them 
to show us the money. And I think the answer is this is 
economics and logistics. People are going to develop wells and 
drill where they can make money. And we want them, if it is in 
Federal waters, to give the Federal taxpayer the money. So.
    Mr. Garcia. When you proposition, is that State versus 
Federal? Is that--what is----
    Ms. Alexander. I think essentially the existing revenue 
share model requires that the revenue goes to the States in the 
State waters, and there is a sharing zone of 3 to 6 miles. And 
then in Federal waters, 6 miles off the coast, 9 miles in some 
parts of the coast. Gulf of Mexico, those are Federal waters. 
Federal agencies pay for all of the infrastructure around them 
in terms of safety regulation inspection. And we think the 
Federal taxpayers should get the dollars.
    Mr. Garcia. Thank you, Ms. Alexander. Mr. Chairman, thank 
you very much for your generosity.
    The Chairman. The time of the gentleman has expired. The 
Chair recognizes the gentleman from Nevada, Mr. Horsford.
    Mr. Horsford. Thank you, Mr. Chairman.
    I support economic growth and smart energy development, but 
my experience from Nevada is that we must work with local 
communities when changing Federal policy. This bill would 
curtail the National Environment Policy Act. And review by 
requiring the Secretary of the Interior to conduct lease sales 
off the coast of Virginia, South Carolina and California 
regardless of the project's potential impacts. So I would like 
to ask the panel's assessment to this bill's impact on other 
areas. And specifically, around what types of enforcement, 
penalties, and regulatory oversight should be maintained in any 
type of review by the DOI?
    Dr. Boesch. Well, I think, starting with your first part, I 
mean, the interest in collaboration with the States, Coastal 
States, is important. I actually think that it merits some 
level of revenue sharing to offset the impacts that take place, 
not to support the general treasuries of those States. The 
other point I would like to make is that, as was mentioned 
before, oil development offshore or oil spills know no 
boundaries. And so, for example, a proposal to develop the area 
off of Virginia, that area is the same distance from Ocean 
City, Maryland, where I live in Maryland, as it is to Virginia 
Beach, Virginia. So it has to be multiple States who play a 
role in this decisionmaking.
    Mr. LeVine. Thank you. I would refer you in part to Dr. 
Boesch and his colleagues' report from the National Commission 
of Deepwater Horizon for recommendations on oversight and 
changes in law and regulations that are needed to more 
appropriately manage these activities. Also, I would say that 
in addition to working with States, you need to work more 
closely with communities. If we are going to craft a lasting 
solution for oceans that allows for healthy ecosystems and 
affordable energy, we need to work with the communities, 
including the small coastal communities, like those in Alaska 
and the tribes that have sovereign rights in order to figure 
out how we can move forward to protect local interests while 
best achieving benefits for the American public as a whole.
    Mr. Dixon. Thank you for the great question. One of the two 
points that I want to make here on communities is that these 
decisions that we are making on oil drilling don't exist in a 
vacuum. As I mentioned in my testimony, there are thousands and 
thousands of jobs in every one of these communities that are 
dependent on that community's access to a clean and healthy 
ocean. When you are deciding whether or not to allow oil 
drilling offshore, all of those decisions need to be made with 
respect to the existing economies of the clean ocean area.
    And second, I would like to point out that in our region, 
in New York and New Jersey, and around the greater New York 
region, Sandy really left a trail of devastation that has 
affected the communities' ability to even manage its own 
existing environmental programs. Our communities are still 
vulnerable, our beaches aren't yet reconstructed. And during 
the storm, a tanker ran aground. Lots of hazardous waste went 
into the ocean and ecology. And these agencies at State and 
local levels are already overwhelmed with recovery efforts. To 
add in a whole process of permitting oil pollution as well as 
perhaps preparing for the risk of oil spills is something that 
should not burden those communities at the moment.
    Mr. Horsford. Quickly, because I have a follow-up.
    Ms. Alexander. Go ahead with your follow-up; this is a 
regulatory question.
    Mr. Horsford. So, yes or no, just quickly, do you feel 
there should be increased liability caps under the legislation, 
and do you feel that the DOI should be able to levy against 
companies who violate the laws so that there is some financial 
deterrent? Yes or no?
    Mr. LeVine. Yes to both questions, emphatically.
    Mr. Dixon. I would say unlimited liability. The polluter 
should pay.
    Ms. Alexander. Yes, I would say increase caps.
    Mr. Horsford. And is there a need to codify any of the 
safety reforms that the DOI already has in place? Yes or no?
    Dr. Boesch. Yes, there is. And this bill, as I said, does 
that and to an extent by making sure in the statute those 
functions are separated. However, it does it not in an 
appropriate level of separation.
    Mr. LeVine. Yes. The safety changes that have been made are 
a good start, but they are not sufficient. Not only do we need 
to codify changes that have been made, we need to think more 
broadly about additional changes that should be made. And not 
just safety, but how we are making decisions about whether to 
allow these activities and under what conditions.
    Mr. Dixon. I would echo that. When you have got a 
legislative system that sets up allowing oil and gas that 
doesn't allow other uses to take precedence, then that is a 
failed system.
    The Chairman. The time of the gentleman has expired. I want 
to thank the witnesses. Many times, questions arise after we 
adjourn. So I would ask you that if any member wishes to ask a 
question of the witnesses that you respond in writing, 
obviously, to the Full Committee in a very timely manner.
    I would also like to ask unanimous consent that any member 
that wishes to have a statement in the record today have that 
statement to the Committee by the close of business today. And 
without objection, so ordered.
    If there is no business coming before the Committee, the 
Committee stands adjourned.
    [Whereupon, at 11:40 a.m., the Subcommittee was adjourned.]

             [Additional Material Submitted for the Record]

      Letter Submitted for the Record by The Honorable Lois Capps
                     Congress of the United States,
                                  House of Representatives,
                                     Washington, DC, June 11, 2013.
Chairman Doc Hastings,
U.S. House of Representatives,
Committee on Natural Resources,
Washington, DC 20515.

Ranking Member Edward J. Markey,
U.S. House of Representatives,
Committee on Natural Resources,
Washington, DC 20515.

    Dear Chairman Hastings and Ranking Member Markey,

    I write in strong opposition to the Offshore Energy and Jobs Act 
currently being considered by your Committee.
    This proposed legislation mandates immediate oil and gas lease 
sales off the coasts of my district in Santa Barbara and Ventura 
Counties, despite the communities' well-known, long standing bipartisan 
opposition to new drilling in these areas. Santa Barbara's devastating 
1969 oil spill galvanized central coast residents, and virtually the 
whole State, against more offshore drilling. We were outraged by the 
damage to the environment and wildlife. And we understood the havoc 
that similar blowouts would wreak on our economy--especially tourism 
and fishing, and related industries. That's why Californians led the 
fight to pass groundbreaking environmental laws like the National 
Environmental Policy Act and Coastal Zone Management Act to protect our 
coastline and communities from the devastation that the 1969 oil spill 
brought to Santa Barbara.
    The Offshore Energy and Jobs Act puts the central coast at risk 
again by requiring an offshore lease sale in the Santa Maria, Santa 
Barbara and Ventura Basins by the end of next year. To make matters 
worse, the bill would also prevent proper environmental review of these 
lease sales by requiring a single multi-sale environmental impact 
statement that covers lease sales off both the west and east coasts. 
Such EIS documents are usually done only for lease sales in areas like 
the Gulf of Mexico, where the conditions are well known and similar. 
Furthermore, this legislation would do nothing to implement key safety 
reforms recommended by the BP Spill Commission and others, including 
increasing the spill liability cap and codifying the safety reforms 
already put in place.
    Mandating destructive drilling in communities that do not want it, 
while cutting-out proper environmental review might be good policy for 
oil companies, but it is bard policy for my constituents and it is bad 
energy policy for our Nation. The Offshore Energy and Jobs Act is 
misguided and unnecessary, and I strongly oppose it.
            Sincerely,
                                                Lois Capps,
                                                Member of Congress.
                                 ______
                                 
 Prepared Statement of The Honorable Kathy Castor, a Representative in 
                   Congress From the State of Florida
    My district, the 14th of Florida, borders the Gulf of Mexico. 
Thirty percent of U.S. oil production occurs in the gulf. The citizens 
and businesses I represent learned and lived a very tough lesson after 
the BP Deepwater Horizon blowout in 2010. I have great concerns on H.R. 
2231, the Offshore Energy and Jobs Act, which would open up much of the 
east coast and parts of California and Alaska to offshore oil drilling. 
I commend the Committee for not including the eastern Gulf of Mexico in 
this piece of legislation. However, in light of the catastrophic 
economic and environmental damages caused by the 2010 BP Deepwater 
Horizon oil disaster, no offshore oil drilling legislation should move 
forward until Congress adopts the recommendations made by the National 
Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, 
which was co-chaired by former U.S. Senator Bob Graham of Florida. 
These recommendations include requiring offshore operators to 
demonstrate that well components, including blowout preventer stacks, 
are equipped with sensors or other tools to obtain accurate diagnostic 
information and to raise the liability cap and financial responsibility 
requirements for offshore facilities, among others.
    The 125 mile buffer off the west coast of the State of Florida that 
was instituted in 2006 as a compromise agreement in the Gulf of Mexico 
Energy and Security Act (GOMESA) should be made permanent--Florida and 
the other Gulf States have already compromised to expand oil 
production. The ``buffer'' or ``moratorium'' on drilling in the eastern 
Gulf of Mexico, that was given in exchange for the expansion of oil 
drilling in GOMESA, is vital to the protection of Florida's economy, 
the Panhandle military bases and other national security missions. 
While H.R. 2231 does not open up this area for drilling, I am concerned 
about the potential harm to Florida from an east coast State oil spill. 
Florida's tourism, fish and wildlife, ports, and defense related 
industries generate over $175 billion in economic benefits and over 2.2 
million jobs for Floridians per year. The 2010 BP Oil Disaster was a 
stark reminder that Florida's long-term economic health is dependent 
upon clean water and clean beaches. Therefore, in the same spirit as 
the GOMESA compromise, if there will be an expansion of oil exploration 
the bill should include the trade-off of adopting the recommendations 
made by the National Commission on the BP Deepwater Horizon Oil Spill 
and Offshore Drilling (i.e., requiring, among other things, offshore 
operators to demonstrate that well components, including blowout 
preventer stacks, are equipped with sensors or other tools to obtain 
accurate diagnostic information and to raise the liability cap and 
financial responsibility requirements for offshore facilities.)
    The BP Oil Disaster, the largest oil spill in U.S. history, killed 
11 workers and uncontrollably spewed almost 5 million barrels of oil 
into the Gulf of Mexico for 3 months, devastating the gulf coast 
economy. The BP Deepwater Horizon explosion occurred 300 miles off the 
coast of west central Florida, yet it is estimated to cost Florida $2.2 
billion and almost 40,000 jobs. Small businesses in the tourism 
industry were immediately affected by the disaster, even in cities and 
counties hundreds of miles away from the furthest extent of the oiled 
beaches. The perception was enough to scare off tourists who are vital 
to Florida's economy. The food, beverage and lodging industries saw 
significant decline in sales, along with retail stores and the fishing 
industry. It will some time before we know the full extent of gulf-wide 
economic and environmental damages as a result of the BP Oil Disaster.
    The RESTORE Act of 2012 was certainly a step in the right direction 
for the economic and environmental recovery of the gulf coast, but it 
was only one part of the equation. While there is no guarantee another 
devastating spill will never occur, we can take steps to reduce the 
likelihood and severity of an oil spill. I urge the Committee to adopt 
the National Commission's recommendations.
    H.R. 2231 would threaten tourism, fishing, and coastal environments 
by requiring new, unsafe drilling off the coasts of the majority of 
Eastern States, and parts of California and Alaska, even while domestic 
oil production is at a 20-year high, natural gas production is at an 
all-time high, and domestic production is projected to keep rising. 
H.R. 2231 would do virtually nothing to implement key safety reforms in 
the wake of the BP Deepwater Horizon oil disaster and it would expand 
the amount of Federal revenue diverted to the States during this 
Federal budget crisis. This legislation rewards wealthy corporations 
with new leases in sensitive areas off our coasts, despite the fact 
that they are sitting on 30 million acres worth of approved leases. The 
bill also leaves in place the massive tax breaks these companies have 
enjoyed for a century.
                                 ______
                                 
     Letter Submitted for the Record by Senator Hannah-Beth Jackson
                           California State Senate,
                                Nineteenth Senate District,
                                      Sacramento, CA, June 6, 2013.
The Honorable Alan S. Lowenthal,
Subcommittee on Energy and Mineral Resources,
Committee on Natural Resources,
Washington, D.C. 20515.

    Dear Congressman Lowenthal:

    The People of Santa Barbara County and the State of California have 
a long history opposing off-shore oil drilling along our magnificent 
coast. We vehemently oppose any further efforts to despoil our 
beautiful and pristine waters in the name of oil or any other fossil 
fuels. Now is the time to wean ourselves off dirty and polluting oil 
and find clean and sustainable ways to provide the energy we need.
    At a time when we are seeing severe weather events throughout the 
Nation and world, we should be reducing our use of fossil fuels, not 
drilling even further in our pristine waters for more of them. It would 
be irresponsible to allow our coast to be despoiled by such folly. Not 
now, not ever again.
    Thank you for your support on this issue.
            Sincerely,
                                         Hanna-Beth Jackson
                                             Senator, 19th District
                                 ______
                                 
Prepared Statement of The Honorable David E. Price, a Representative in 
               Congress From the State of North Carolina
    I am writing in opposition to Rep. Hastings' H.R. 2231, the 
``Offshore Energy and Jobs Act,'' which would dramatically and hastily 
expand oil and gas drilling in our Nation's most sensitive coastal 
areas, including many areas where local communities have resoundingly 
rejected it.
    First, this legislation claims to be a jobs bill, but I want to 
remind the Committee that oil and gas production is already a growth 
industry. Despite the rhetoric we hear from the oil and gas industry, 
the Congressional Research Service found that there has been more oil 
produced on the Outer Continental Shelf in every year of the Obama 
Administration than there was during the last year of the Bush 
Administration. Furthermore, although about two-thirds of Federal 
offshore lands leased by the oil industry are currently not producing, 
the Obama Administration has offered--and continues to offer--millions 
of acres of public lands offshore for additional oil and gas 
exploration and production.
    This legislation takes no heed of this fact--nor of the fact that 
the current offshore leasing plan will be updated in 2017--and instead 
unnecessarily accelerates oil and gas production in new areas of the 
Atlantic, Pacific, the gulf coast, and Alaska. Drilling is already 
prominent in the Gulf of Mexico, where about 95 percent of our offshore 
oil and gas is produced, but many of the newly proposed lease areas are 
not appropriate for offshore drilling. In many of these areas, local 
economies rely on clean and healthy oceans and communities have 
resoundingly opposed offshore drilling.
    In my home State of North Carolina, offshore drilling is highly 
controversial because of its potential adverse impacts on the 
environment and coastal communities, as well as the tourist economies 
on which they depend. As you know, the Interior Department's current 
OCS Gas Leasing Program recognized the risks of drilling off the 
Atlantic coast and deferred a decision on oil and gas leasing in the 
region. In its justification, the agency cited a ``lack of 
infrastructure to support oil and gas exploration and development as 
well as spill preparedness and response.'' There are also national 
security concerns to be weighed as our armed forces and NASA maintain 
extensive and exclusive use of ocean space along the east coast for 
training and testing activities. For these reasons, I recently joined 
several of my colleagues from North Carolina, Virginia, and South 
Carolina in sending a letter to Interior Secretary Jewell expressing 
continued opposition to offshore drilling on our coasts.
    I am also concerned about oil and gas production in the Arctic. The 
Arctic Ocean is characterized by hurricane-force storms, 20-foot 
swells, sea ice up to 25 feet thick, sub-zero temperatures, and months-
long darkness. The U.S. Geological Survey concluded that major gaps in 
scientific understanding of the Arctic make it ``difficult, if not 
impossible'' to make informed decisions about oil and gas development 
in the region. Furthermore, the President's National Oil Spill 
Commission's report card on the progress that had been made in 
implementing its 2011 recommendations concluded that ``additional work 
must be done to understand the ecosystems of the Arctic and to 
establish the infrastructure necessary to protect this vulnerable and 
valuable region.''
    In the years since the 2010 BP oil spill, Congress has not passed 
any legislation to update our drilling procedures. While I am pleased 
that this legislation would codify reforms the Administration has made 
to the former Minerals Management Service, I urge you to bring these 
reforms to the House in a stand-alone bill, not in a controversial bill 
that opens the floodgates to new drilling.
    My colleagues claim that they support an ``all of the above'' 
energy strategy, but this bill demonstrates that their true policy is 
``oil above all''. We can't drill our way to cheap gas prices and 
energy independence. If we truly want to optimize the use of our 
resources--including the ocean--create jobs, and promote energy 
independence, we should reject this measure and focus instead on 
developing alternative energy sources that do not pose the same risks 
as drilling.
                                 ______
                                 

The document listed below has been retained in the Committee's official 
files.

    --Oil Spill Commission Acton, Assessing Progress Three Years Later, 
        April 17, 2013 (http://oscaction.org/osca-assessment-report-
        2013/)

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