[Senate Hearing 113-394]
[From the U.S. Government Publishing Office]
S. Hrg. 113-394
RESOURCES AS REVENUE
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HEARING
before the
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
TO
FOCUS ON THE STATE AND LOCAL GOVERNMENT BENEFITS IN TERMS OF REVENUE
GENERATION AND JOBS CREATED FROM NATURAL RESOURCE PRODUCTION
__________
JULY 22, 2014
Printed for the use of the
Committee on Energy and Natural Resources
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
MARY L. LANDRIEU, Louisiana, Chair
RON WYDEN, Oregon LISA MURKOWSKI, Alaska
TIM JOHNSON, South Dakota JOHN BARRASSO, Wyoming
MARIA CANTWELL, Washington JAMES E. RISCH, Idaho
BERNARD SANDERS, Vermont MIKE LEE, Utah
DEBBIE STABENOW, Michigan DEAN HELLER, Nevada
MARK UDALL, Colorado JEFF FLAKE, Arizona
AL FRANKEN, Minnesota TIM SCOTT, South Carolina
JOE MANCHIN, III, West Virginia LAMAR ALEXANDER, Tennessee
BRIAN SCHATZ, Hawaii ROB PORTMAN, Ohio
MARTIN HEINRICH, New Mexico JOHN HOEVEN, North Dakota
TAMMY BALDWIN, Wisconsin
Elizabeth Leoty Craddock, Staff Director
Sam E. Fowler, Chief Counsel
Karen K. Billups, Republican Staff Director
Patrick J. McCormick III, Republican Chief Counsel
C O N T E N T S
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STATEMENTS
Page
Gould, Gregory, Director, Office of Natural Resource Revenue,
Department of the Interior..................................... 6
Landrieu, Hon. Mary L., U.S. Senator From Louisiana.............. 1
Murkowski, Hon. Lisa, U.S. Senator From Alaska................... 3
Nelson, Laura, Director of the Utah Governor's Office of Energy
Development, Salt Lake City, UT................................ 25
Pearce, Paul, President, National Forest Counties and Schools
Coalition, STEVENSON, WA....................................... 18
Randolph, Charlotte A., President, Lafourche Parish, Thibodaux,
LO............................................................. 14
Shafer, Sean, Consulting Manager, Quest Offshore Resources, Inc.,
Sugar Land, TX................................................. 22
Taylor, Duane, Director, Federal Affairs, Motorcycle Industry
Council, Arlington, VA......................................... 31
Webster, Joel, Director, Center for Western Lands, Theodore
Roosevelt Conservation Partnership, Missoula, MT............... 19
APPENDIXES
Appendix I
Responses to additional questions................................ 47
Appendix II
Additional material submitted for the record..................... 51
RESOURCES AS REVENUE
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TUESDAY, JULY 22, 2014
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The committee met, pursuant to notice, at 10:36 a.m. in
room SD-366, Dirksen Senate Office Building, Hon. Mary L.
Landrieu, chair, presiding.
OPENING STATEMENT OF HON. MARY L. LANDRIEU, U.S.
SENATOR FROM LOUISIANA
The Chair. Good morning. Welcome to our Energy and Natural
Resource Committee meeting this morning, Leveraging America's
Resources and Revenue Generator and Job Creator.
Thank all of our members for attending. We're going to have
a busy morning. I think a very informative panel.
We thank you, Director Gould, for being with us this
morning.
We are going to have votes called at 10:45, a series of 3.
So we hope to get through this panel. We'll leave at the end of
the vote time and then recess for a half an hour and then come
back for the second panel.
I thank all of you for being with us this morning to
consider the production and distribution of the value of
America's natural resources. We have a short list including
oil, gas, coal, minerals, including gold, copper, lead, zinc,
uranium. We have grazing and timber. Our revenues, recreational
fees that range from entrance fees to our beautiful parks,
cabin rentals, for example, boat launch rentals and others. So
this is a very short list, but gives a sense of what our
Committee is going to be exploring.
How these revenues are generated?
How they are shared?
How we can be better stewards?
We will explore just how much revenue is generated from all
sources and how this revenue is distributed.
We will also explore and expand and improve our revenue
sharing partnerships with States and communities that share the
responsibilities, both advantages and disadvantages of this
production.
To enhance our stewardship of these natural resources.
This is an issue that Senator Murkowski and I have cared a
great deal about for a long period of time coming from very
rich, natural resource States. I'm pleased that she has joined
me in this oversight effort.
Since 1985 America's natural resources have generated $248
billion of revenue for our Treasury, an average of about $9
billion a year. I am extremely interested in hearing from our
witnesses about how we can ensure these revenues, have been
part of our past, how we can ensure they'll be part of our
future. How we can use them to continue to generate wealth,
prosperity and jobs for the communities that are our partners
in this production.
As many of you know I've been a long time advocate of full
funding for the Land and Water Conservation Fund that was
authorized and created in 1965. But only in two of the last 50
years has it ever been fully funded, as I'm sure was the vision
of its creators. I think this is a challenge. I hope our
Committee is up to meeting it.
Natural resource production has played a critical role for
many States, Louisiana and Alaska, just to listing two. In the
late 19 and early 20th century, newly formed western States
faced the challenge of building adequate infrastructure to
support their rapidly expanding populations and economic
development. At the same time many of these States, especially
Wyoming and New Mexico, discovered abundant reserves of
critical natural resources such as oil, gas, coal and other
minerals.
Under the 1872 Minerals Leasing Act individuals and private
investors had free reign to harness these natural resources on
Federal lands and could claim private ownership of any minerals
they discovered. States were then able to use property taxes
and other revenues from these lands to finance their budgets,
provide basic services to their growing population.
However, over time these laws changed. The oil boom of the
early 20th century prompted the Federal Government to reassess
its Minerals Lands Use policy so that not only private
interests were served, but public interest could be served as
well. Congress stepped in and passed the Minerals Land Act of
1920 which provided the foundation of revenue sharing
partnership that some States enjoy to this day.
Then, as offshore oil and natural gas production continued
to grow in the years following World War II, Congress passed
the Outer Continental Shelf Lands Act of 1953 which claims
submerged lands up to 200 miles around our coast. That act, one
act in itself, expanded the territory of the United States by
10 percent.
Unfortunately that law, in my view, failed to expand
revenue sharing to coastal States that hosted this new and
lucrative offshore energy production. I'd like to correct that
injustice. Have been working on it for more than 20 years and
have made some significant progress passing GOMESA. But there's
more work to be done.
In 2006 I was joined by Senator Pete Dominici, former Chair
of this Committee. Together we passed GOMESA, the first law of
its kind to establish and expand revenue sharing for the 4
energy producing Gulf States, Louisiana, Alabama, Mississippi
and Texas. These States now share 37.5 percent of the revenues
they produce. However, there was an arbitrary collective cap on
these States placed at $500 million a year. No other State or
group of States in the country operates under such a cap.
As our country continues to produce more energy offshore,
GOMESA provides us a strong foundation to establish a more full
partnership with all of our coastal States including Alaska.
Our next step is to lift the cap to accelerate these payments
and to make this more in line with interior States.
I have a bill before the Committee. There are others
pending as well. The FAIR Act which has been introduced by
Senator Murkowski, myself, Senator Begich along with the
support of Senator Wyden, is a comprehensive approach to
modifying the terms of this partnership to be more productive,
I think, for the States and the country.
Louisiana is a very important part of our natural resource
production. Other coastal States are as well. But the interior
States produce a tremendous amount of energy for our country.
Timber harvest on the lands are important. As I said, grazing
rights, recreational revenues come in from both coastal and
interior States.
In our second panel we will hear from Charlotte Randolph,
the President of Lafourche Parish. She can speak to the
specifics of the absence of more robust revenue sharing and
what it's doing to her parish.
In conclusion, America's natural resources play a critical
role in the economy of the United States, both a revenue
generator and job creator. I'm looking forward to the testimony
from our witnesses, both at the local level to see how it also
affects local communities from coastal States to interior
States.
I'd like to now turn to my Ranking Member, Senator
Murkowski, for her opening statement. Thank her for her
interest, her passion and her support to try to get this right
for all 50 States, Senator. To really honor the work of our
local communities in and recognize their partnership in
production.
STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR
FROM ALASKA
Senator Murkowski. Thank you, Madame Chairman. Appreciate
the work with you on these important issues.
I want to thank our witnesses, the Director, this morning
and those that will be part of the second panel.
I really have one take home message this morning. It is as
follows. The only way that American resources will generate
revenue and create jobs is if American workers and businesses
are allowed to access those resources. You have to have access.
Back in June the EIA released a report showing what's
happened on Federal and Indian lands over the last 10 fiscal
years.
We've seen coal production down 8 percent.
Crude oil and lease condensate production are down 11
percent.
Natural gas production is down 43 percent.
Overall, fossil fuel production from Federal and Indian
lands declined, declined, by 21 percent over the past decade.
When we're talking about generating revenue and creating
jobs we're really talking about increasing production. When
we're talking about increasing production we're really talking
about increasing access. So let's talk about access.
I know that people like to point out that most shale
resources appear to be on State and private lands. That's why
production from State and private lands is so high right now.
But that's not the case with our conventional resources.
Consider it the Arctic Coastal Plain within the non-
wilderness portion of ANWR. According to USGS there are between
5.7 billion and 16 billion barrels of oil located there. If you
take the mean estimate at 10.3 billion at a price of $100 per
barrel and the taxes and royalties generated from that
production would amount to some $153 billion over 30 years,
$153 billion over 30 years.
That's not my math. That's coming from the Congressional
Research Service, from CRS.
Consider the Alaska offshore region where the Bureau of
Ocean Energy Management estimates contains some 26 billion
barrels of oil and condensate plus another 132 trillion, with a
T, cubic feet of natural gas.
Now every American has heard of the Gulf of Mexico and many
have now heard of the Bakken and the Eagle Ford. I live and
breathe for the day when every American will have also heard of
the Chukchi, of the Beaufort, of Cook Inlet and other resource
rich areas that we have in Alaska.
Now some accuse me of talking about Alaska too much. They
say that the boom is really in the lower 48 right now. That
Alaska has, kind of, missed out. Missed out on those revenues,
missed out on those jobs.
But look at what's going on around the world.
We have Iraq ablaze.
Syria in turmoil.
Russia and Ukraine in Europe on the brink.
With energy security on everybody's mind and with
policymakers here in Washington debating how, not whether, to
use our energy resources as an instrument of national
advantage, my answer is why not talk about Alaska? Why not talk
about what we have up North?
Resources, of course, are more than just energy. Certainly
the mining industry provides thousands and thousands of good
jobs across the country as it provides the building blocks for
nearly every other part of our economy. The Federal Government
also made a promise over a century ago to actively manage our
national forests and pay 25 percent of the receipts to
counties, parishes and boroughs containing national forest
land.
It was only fair because the Federal Government doesn't pay
local taxes. So it would share revenue generated from these
forests to help fund essential services such as schools and
roads. These payments are often called National Forest Receipts
or 25 percent payments.
Back in 1937 BLM also began sharing commercial receipts
generated on Oregon and California grant railroad lands.
The primary source of commercial receipts for these revenue
sharing programs is timber receipts. I can tell you for a while
we cut a lot of timber and generated a fair amount of money. It
created some good jobs, some very good jobs, in our rural
communities that you could raise a family on. At the peak in
1989 the Forest Service shared approximately $362 million with
counties and BLM O and C payments totaled about $110 million.
But all that changed, somewhat abruptly. Receipts generated
have declined dramatically since. You only need to look at
where we are today.
In Fiscal Year 2013 if revenue sharing had been used to
make payments rather than Secure Rural Schools, the estimated
25 percent payment would have been just $58 million, the lower
dotted line on there. That's $58 million for the entire forest.
In my home State of Alaska on the Tongass the devastation
could not have been more apparent. Back in 1990 the Tongass
supported a vibrant timber industry with more than one thousand
good, middle income jobs. We harvested more than 400 million
board feet and generated more than $47 million which we shared
with communities across Southeast Alaska.
But do you know how much we're earning nowadays?
In FY2013 we barely harvested 35 million board feet. The
receipts generated from that paltry harvest were just about a
million dollars. That's a rounding error compared to where we
used to be.
Those good jobs? We now have a third of the jobs, roughly
300 than we counted on in the 1990s.
So what happened?
What happened is that Federal, environmental policy,
regulations, the 2001 Clinton Roadless Rule, the listing of the
Northern Spotted Owl and the ensuing litigation halted timber
harvesting on our national forests, crippled the timber
industry. It turned many of our forests into tinderboxes and
devastated the economies of rural communities across the West.
These days we actually burn more timber than we cut. We pay
counties Secure Rural Schools money to basically look the other
way. This is a travesty, Madame Chairman.
We've taken away the economic ability of these communities
to survive on their own and make them dependent on Federal
assistance. It's not the community's fault. Which is why I've
supported the Secure Rural Schools extension and re-
authorizations, but the status quo isn't sustainable either.
SRS was never meant to be a permanent entitlement. It was
supposed to be a temporary safety net. So it's time we returned
to actively managing our national forests and put our timber
communities back to work.
Often we hear that we need to look at recreation and
tourism as the economic engine of the future. We all recognize
that these activities are important and no State, certainly, is
more proud of our recreation activities than Alaska. But
recreation and tourism are not adequate substitutes for
responsible resource development on Federal lands.
In Alaska, for more than 50 years, we've shown that
resource development, recreation and tourism can co-exist. We
need to actively manage our Federal lands for multiple uses. If
not, we should divest the Federal Government of those lands and
let the States or the counties manage them.
Now some will paint this as a clear choice that is somewhat
extreme. But we do need to address, head on, the fact that
federally owned land has a profound impact on the communities
that depend on them for their survival. I think we'll probably
hear that from the witnesses in the second panel.
Thank you, Madame Chairman.
The Chair. Thank you for that excellent and very strong
statement. You can see that I've got a passionate ranking
member and partner here. I'm really looking forward to working
with her as we move forward with a policy that is, I think,
better for our local communities as job generators and for the
public.
Director Gould, we'll take your opening statement. Then as
earlier indicated we're going to take a break and come back for
our questioning and our next panel.
STATEMENT OF GREGORY GOULD, DIRECTOR, OFFICE OF NATURAL
RESOURCE REVENUE, DEPARTMENT OF THE INTERIOR
Mr. Gould. Madame Chair Landrieu, Ranking Member Murkowski
and members of the committee, I appreciate the opportunity to
be here today to talk about the State and local government
benefits of revenue generated and jobs created from our
Nation's natural resource production.
My name is Greg Gould. I'm the Director of the Office of
Natural Resource Revenue or ONRR as we are called in the
Department of Interior.
In 2011--in 2010 ONRR was established within the Office of
the Secretary as part of a departmental reorganization. The
reorganization presented an opportunity for the office to
improve the management and oversight of the royalty and revenue
collection and disbursement activities for the Department. ONRR
is responsible for collecting, disbursing, verifying Federal
and American Indian, natural resource revenues on behalf of all
Americans.
At the Department of Interior we manage public lands and
Federal waters. It is from these areas that we get the natural
resources that are critical to our Nation's energy security.
The lands and resources that the Department manages are vast.
For onshore lands there are Federal leases located in 34
States totaling more than 37 million acres.
Offshore, the Department has made 60 million acres
available for development in just the past three offshore lease
sales. In the Gulf of Mexico alone, there are over 32 million
acres under active lease.
According to the Department's 2013 economic contributions
report, Interior's activities contributed $360 billion to the
U.S. economy supporting 2 million jobs and activities including
outdoor recreation and tourism, energy development, grazing and
timber harvest. In Fiscal Year 2013 ONRR disbursed more than
$14 billion to the U.S. Treasury, various State and Indian
accounts and special use accounts such as the Land and Water
Conservation Fund. Included in that $14 billion, was $932
million disbursed to American Indian tribes and individual
Indian mineral owners.
In 1982 with the passage of the Federal Oil and Gas Royalty
Management Act the Department created a comprehensive,
consolidated system for the collection, accounting and
disbursement of these revenues. From that time through Fiscal
Year 2013 Interior provided $257 billion to Federal, State and
American Indian recipients. Out of the $257 billion collected
since 1982 approximately $157 billion has gone to the general
fund of the U.S. Treasury, $35 billion to the States and over
$9 billion to American Indian communities.
Special purposes funds, like the Land and Water
Conservation Fund, the National Historic Preservation Fund and
the Reclamation Fund, have received over $56 billion.
I'd like to take a moment to mention how States and local
governments have used their $35 billion which is truly
significant.
Many States have developed formulas to return moneys to
individual counties that may have been impacted by energy
development. For instance, the State of Louisiana distributes
the Federal funds between individual parishes for schools,
local projects and the local governing authority for each
parish.
In the Western part of the country, States use
disbursements to fund their educational systems,
infrastructure, correctional systems, water conservation and
public safety.
At Interior we are always looking for ways to improve our
collection and disbursement activities to benefit all American
taxpayers, States and Indian communities. An example of our
recent work includes regulatory changes for the Gulf of Mexico.
Back in 2006 the Gulf of Mexico Energy Security Act opened
additional areas in the Gulf of Mexico for offshore oil and gas
leasing. The act provides that 37.5 percent of the revenues for
these new areas are distributed to the four Gulf of Mexico oil
and gas producing States of Alabama, Louisiana, Mississippi and
Texas and their coastal, political subdivisions and 12.5
percent to the Land and Water Conservation Fund.
Through proposed regulations that we published earlier this
year, beginning in 2017 the act will share additional revenue
from any new lease issued after December 20, 2006. The revenue
would be shared in the same percentages as for the newly opened
areas, 37.5 percent to the Gulf States and their coastal,
political, subdivisions and 12.5 percent to the Land and Water
Conservation Fund. However, this additional revenue sharing is
subject to a cap of $500 million per year through 2055.
Any revenues in excess of this cap will go into the U.S.
Treasury.
Madame Chair, all of us at the Department of Interior are
committed to effectively managing these resources for the good
of the American people and our Indian communities, who all
share in their ownership. As we continue to move forward with
executing our mission, we are committed to enhancing our
royalty management program to ensure that the American public
receives every dollar due.
Thank you for the opportunity to testify. I'd be happy to
answer any questions that the committee may have.
[The prepared statement of Mr. Gould follows:]
Prepared Statement of Greg Gould, Director, Office of Natural Resources
Revenue, Department of the Interior
Introduction
Madame Chairman Landrieu, Ranking Member Murkowski, and members of
the Committee, I am pleased to appear before you today to discuss the
impact of leveraging natural resource production as a revenue-generator
and job-creator for States and local governments.
Economic Impacts and Importance to State and Local Governments
The Department of the Interior manages the public lands and Federal
waters that provide resources critical to the Nation's energy security;
is responsible for collecting and distributing revenue from energy
development; and ensures that the American taxpayer receives a fair
return for development of those Federal resources. The lands and
resources managed by the Department are vast. Onshore, in the 33 states
where there are Federal leases, over 36 million acres are under lease.
Offshore, the Department has made 60 million acres available for
development in the past three offshore lease sales alone. In just the
Gulf of Mexico, there are over 32 million acres under active lease.
These onshore and offshore lands contribute to our nation's economy
in large and small ways. According to the Department's 2013 Economic
Contributions Report, a project that the Office of Policy Analysis led,
the activities of the Department of the Interior contributed $360
billion to the U.S. economy in 2013, supporting 2 million jobs in
activities including outdoor recreation and tourism, energy
development, grazing, and timber harvest.
The Leasing Process
When individuals or companies lease Federal lands, they
competitively bid and pay an initial bonus and annual rent for the
right to explore and develop energy and mineral resources on the leased
lands. If they find, extract, and sell minerals, the Federal Government
is entitled to a certain percentage of-or royalty on-the production. In
many cases, States and, sometimes, local governments receive a direct
share of these revenues.
Disbursements
The Federal Government has been collecting leasing revenues from
energy mineral production on Federal onshore lands since 1920; on
American Indian lands since 1925; and on Federal offshore lands since
1953. In 1982, the Federal Oil and Gas Royalty Management Act (FOGRMA)
created a comprehensive, consolidated system for the collection,
accounting, and disbursement of these revenues. From 1982 through
fiscal year 2013, Interior has provided $257.0 billion to Federal,
State, and American Indian recipients through this program.
Approximately 61 percent of all annual collections have gone to the
General Fund of the U.S. Treasury, 22 percent to special purpose funds,
14 percent to States, and 3 percent to the American Indian community.
In fiscal year 2013, the Office of Natural Resources Revenue (ONRR)
disbursed over $14.0 billion to the U.S. Treasury, various State and
American Indian accounts, and special use accounts, such as the Land
and Water Conservation Fund.
Special purpose funds, including the Land and Water Conservation
Fund (LWCF), the National Historic Preservation Fund, and the
Reclamation Fund, have received $56.5 billion in ONRR collected mineral
revenues since 1982.
Disbursements to States
Revenues disbursed to States and local governments from energy and
mineral development occurring on Federal lands within their borders are
particularly important to many States today. They apply these revenues
to a variety of local needs ranging from school funding to
infrastructure improvements and water conservation projects. States
have used Federal mineral revenues to build new schools, senior citizen
facilities, and hospitals. In some cases, this money pays salaries for
teachers, funds local road improvements, and provides grants for
important local projects.
In Wyoming, for example, revenues that the State receives from
energy production on Federal lands are generally distributed on a
percentage basis. A portion of the money goes to the State general
fund, the University Fund, the School Foundation (K-12,), the Highway
Fund and county roads, cities, and towns based on population, School
Capital Construction (K-12) and to the Budget Reserve.
The State of Louisiana distributes the Federal funds to individual
Parishes for schools and other local projects: it distributes 50
percent to Parishes for schools, and 50 percent to the ``Police Jury''
(the local governing authority for each Parish), based on production
that occurs in the local parishes.
In New Mexico, the State Land Office collects Federal royalties
and, primarily, their distributions support education. Approximately 83
percent goes to public schools (K-12), which pays teacher salaries and
provides overall operating funds. In addition to public schools, a
portion of the money goes to Higher Education. A small percentage also
goes to the correctional system.
Federal mineral lease revenues to the State of Colorado are
distributed in a formula set in state statute. The State distributes
Federal mineral lease revenues to education (K -12), local governments
for operating and capital expenses, water conservation, and for higher
education capital projects.
In Utah, a portion of the Federal disbursements goes to the
Community Impact Board, which makes awards to local governments (in the
form of grants or loans) for various projects, including
infrastructure, water and sewer, and public safety. A portion of the
funds are returned to the county of origin.
Many other States benefit in a similar manner from the revenue that
the Department of theInterior collects and disburses.
Revenue Distribution
The distribution of revenue is governed by statute and varies by
land type, as follows:
Onshore mineral leasing receipts from public domain lands
leased under Mineral Leasing Act (MLA)\1\ authority disburse at
a rate of 49 percent to the States, 40 percent to the
Reclamation Fund for western water projects, and 11 percent to
the General Fund of theU.S. Treasury. Alaska receives 88.2
percent of mineral leasing receipts for Mineral Leasing Act
lands.
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\1\ Section 302 of the Bipartisan Budget Act of 2013 directs the
Department to deduct 2 percent from the amount payable to each State in
fiscal year 2014 and each year thereafter. Percentages shown in the
text have been adjusted to reflect this deduction.
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The collections from State Select Lands disburse at a rate
of 90 percent to the States and 10 percent to the General Fund
of the U.S. Treasury. Alaska receives 100 percent of mineral
leasing receipts from State Select Lands.
The collections from geothermal production disburse at a
rate of 50 percent to the States, 25 percent to the county, and
25 percent to the General Fund of the U.S. Treasury.
Collections from the National Petroleum Reserve in Alaska
disburse at a rate of 50 percent to Alaska and 50 percent to
the General Fund of the U.S. Treasury.
--The Energy Policy Act of 1992, P.L. 102-486, requires the
Secretary of the Interior to disburse monthly to States all
mineral leasing payments authorized by Section 6 of the
Mineral Leasing Act for Acquired Lands. Therefore, the
Department distributes:
--Collections from lands acquired for flood control, navigation,
and allied purposes, transferring 25 percent of the total
to the General Fund of the U.S. Treasury and 75 percent to
the States.
--Collections from National Forest Lands, transferring 75 percent
to the Forest Service and 25 percent to the States.
Outer Continental Shelf (OCS) receipts, including rents,
bonuses, and royalties, are the main funding source for the
mandated $900 million required to be deposited annually in the
Land and Water Conservation Fund (LWCF). OCS receipts also
provide $150 million in funding for the Historic Preservation
Fund. Of the remaining OCS receipts, the majority are deposited
into the general fund of the U.S. Treasury.
The Gulf of Mexico Energy Security Act of 2006 (GOMESA, P.L.
109-432) opened additional areas in the Gulf of Mexico for
offshore oil and gas leasing. The Act provided that 50 percent
of revenues from these open areas (termed ``qualified OCS
revenues'') disburse to four Gulf of Mexico oil and gas
producing States (Alabama, Louisiana, Mississippi, and Texas)
and their Coastal Political Subdivisions (CPSs) and to the Land
and Water Conservation Fund, with specific provisions for
allocation during fiscal years 2007-2016. Beginning in 2017,
the Act would allocate additional revenue to these States,
their CSPs, and the LWCF from any new leases signed after
enactment in the current program areas of the Gulf. The revenue
would be shared in the same percentages (37.5 percent to Gulf
States and their CPSs and 12.5 percent to LWCF) in the newly
opened areas, and payments are similarly made in the year
following the revenue collection. However, this additional
revenue sharing is subject to a cap of $500 million per year
(through 2055); revenues in excess of this cap would continue
to go to the U.S. Treasury. The National Park Service (NPS)
currently administers GOMESA funds allocated to LWCF State
grants.
Under Section 8(g) of the OCS Lands Act, payments are also
made to coastal States for an area known as the 8(g) zone,
which is the area approximately three miles seaward from the
State/Federal boundary. States receive 27 percent of OCS
collections within the 8(g) zone.
ONRR Background
Within the Department of the Interior, ONRR is responsible for
collecting, disbursing, and verifying Federal and Indian energy and
other natural resource revenues on behalf of all Americans.
ONRR's 2010 reorganization into the Office of the Secretary
provided an opportunity for a strategic review to improve the
management and oversight of revenue collection and disbursement
activities for the Department. We institutionalized our employee-driven
continuous improvement process by implementing semiannual
prioritization discussions, requesting regular employee input, and
integrating recommendations into day-to-day mission work.
ONRR's goal is to be a world-class natural resources revenue
management program, setting the standard for accountability and
transparency. We are focused on implementing priority initiatives
aligned with our strategic goals to achieve:
Timely and accurate revenues and data distributed to
recipients.
Timely compliance from companies and payment of every
dollar due.
Trust in ONRR's professionalism, integrity, efficiency, and
quality.
Conclusion
Madame Chairman, the Department of the Interior manages these
Federal resources for the good of the American people, who all share in
their ownership. As we continue to move forward with executing our
mission, we are committed to enhancing our royalty management program
to ensure that the American public receives every dollar due. Thank you
for the opportunity to testify. I am happy to answer any questions that
the Committee may have.
The Chair. Alright.
We're going to each ask one question and then take a break
and come back to finish our questioning, if you don't mind,
Director. Then take our second panel.
I'd like to put up on the easel though, a couple of charts
that I brought as well. Please put these up, the charts,
please.
This is the Federal land receipts by source since 1985. The
reason I'm pointing this out is because while the numbers are
impressive from one perspective when you talk about the total
amounts of money reinvested. My calculation is that all of the
revenues collected from 1985 and we're using the 1985 start
date just for the purposes of this hearing, comparing apples to
apples. From 1985 to the present time the total revenues from
all sources is about two hundred and $48 billion.
Is that your record?
Mr. Gould. That's correct. Yes.
The Chair. Approximately? OK.
Mr. Gould. That's close.
The Chair. Interestingly, that is how much the Federal
Government collects in 1 year from corporate income tax. So in
some ways it sounds like a really big number, but in some ways
it's a really small revenue stream for the Federal Government.
It's a huge revenue stream or lack of revenue stream for local
communities in Alaska, Louisiana, Gulf Coast States, but it's
relatively a small stream of revenue.
So one could ask, since it's just a small, you know, over
from 1985, the whole amount, equals 1 year of corporate
revenue. Why couldn't we share more of it with the local
communities? It's a very interesting question.
For instance, in Louisiana last year offshore, just
Louisiana, there are four producing States in the Gulf, but
Louisiana share territory is the largest and the most
productive. It's actually responsible for 80 percent of the
offshore production. Last year your office, ONRR, collected $9
billion. Eighty percent of that came from offshore Louisiana,
roughly. Yet the State received only $297 thousand.
Do you think that's in line with any revenue sharing bill
that this country has ever put forward whether it was--any, any
comparable to that considering the Western States keep about 50
percent of their funding?
Mr. Gould. So as the Director of the Office of Natural
Resource Revenue, my job is to make sure that we collect,
verify and then disburse the appropriate revenues as dictated
by both the statute and regulation.
The Chair. But let me ask you this. Is there any State that
receives less revenue relative to what they produce than
Louisiana? Do you know?
Mr. Gould. Relative to production? I don't know that exact
number, but I can definitely look that up for you.
The Chair. OK. I think you'd be hard pressed to find
another State that produces more and receives less even though
we've made progress with GOMESA and passed it. But we have this
arbitrary cap. We had to press the funding back for budget
issues.
But you wonder what budget issues could really be that
significant given that 1 year of corporate income tax equals
the total amount of revenues collected in all streams since
1985. What could possibly be pressing the budget that much that
would short change these production States in such a dramatic
way?
Senator Murkowski.
Senator Murkowski. Just very quickly, Madame Chair, because
I know we've--we're running on the tail end of the votes.
I just want to make sure that my facts are accurate when we
go back to, kind of, the history of where we got here with
revenue sharing.
In your written testimony you State that between 1982
through FY2013 Interior has provided $257 billion to Federal,
State and American Indian recipients through the program. So is
it correct to assume that that was when this whole, the
concept, of revenue sharing to the States began, was 1982 or
was it prior to then?
Some have suggested that what Senator Landrieu and I are
proposing with additional revenue sharing to the States,
particularly offshore, is that this is a brand new concept. Can
you give me a little bit of the background here? Are my dates
right?
Mr. Gould. Your dates are right in terms of the--my
testimony and the period for that amount of money.
In terms of revenue sharing it dates back to the Mineral
Leasing Act in 1820, I believe was when that was passed. So
revenue sharing has been a concept that's been part of our
regulations and part of our statutes for almost a century.
Senator Murkowski. That's onshore. Offshore the history
would begin when?
Mr. Gould. With the OCS Lands Act in 1976, I believe.
Senator Murkowski. So more of a quarter of a century for
offshore and century plus for onshore, this concept of revenue
sharing to the States and to our tribes.
Mr. Gould. Correct.
Senator Murkowski. Has been something that we have done
historically.
Madame Chairman, I'll have one more quick question for the
Director when we come back.
Mr. Gould. Actually a point of clarification.
I think it was in 1986 when you were sharing the AG portion
of the OCS Lands Act, revenues with the States.
Senator Murkowski. The HE, yes.
Mr. Gould. The AG. It's that 3 mile area.
The Chair. The AG is the line between 3 and 6 miles that
we, sort of, cleaned up the boundary.
Senator Murkowski. Right.
The Chair. I'll talk about that when I get back in a
minute.
We're going to go vote.
But please be prepared to break down that $247 billion into
timber, minerals, oil, gas, coal, grazing, etcetera because we
want to get those numbers on the record.
Thank you.
We'll take a break for 30 minutes. Recess.
Mr. Gould. Thank you.
The Chair. The committee will stand in recess.
[RECESS]
The Chair. The Energy and Natural Resources Committee will
come out of recess and continue our hearing on Leveraging
America's Resources as Revenue Generators and Job Creators.
We had an opening statement from both myself and Senator
Murkowski, then opening statement from Director Gould. We're
now into the period of questioning.
But before I do I wanted to go to a few graphs up here
where we left off.
From 1985 for the purposes of this hearing to get apples to
apples and oranges to oranges, we're starting with the 1985
date.
You testified, Director, that we had raised how much money
overall? Two hundred and?
Mr. Gould. Two Hundred and Fifty-two billion.
The Chair. Fifty-two billion. Could you break those down
into the main categories, please?
Mr. Gould. So, and my numbers again are back to 1982. I'm
sorry to say we are going to have our staff try and get the
numbers to match your 1985 numbers.
Mr. Gould. Also the Office of Natural Resource Revenue, we
don't collect the grazing fees, the boat rentals and all, BLM
and Park Service and other offices. I've got contacts back to
them to start looking up that data for you.
Mr. Gould. I can give you the numbers for royalties
associated with coal, $13.4 billion since 1982.
Royalties associated with natural gas, $87.7 billion.
The Chair. Is that onshore or off or both?
Mr. Gould. That's total.
The Chair. Could you break it down onshore and off, please?
Mr. Gould. OK, so for coal it's obviously onshore and the
coal is $697.4 million.
The Chair. Wait, I'm sorry, you had 13.4 for coal.
Mr. Gould. That's--and then American Indian land makes up
the balance of 78.2.
I'm sorry, I only have those breakouts by Fiscal Year 2013.
The Chair. OK.
Mr. Gould. I don't have the totals by--is that correct?
So I can't break off onshore and offshore with me right now
by that total accumulative, I don't think.
The Chair. OK. For the record it's really important for us
to break down these revenues.
Mr. Gould. Yes.
The Chair. Because that's what this committee is very
interested in is not only how much is generated but in what way
and where are they generated.
Mr. Gould. Yes.
The Chair. Then we're going to get to how they're
distributed and how they're used which is the undergirding
information for this important hearing.
Mr. Gould. Correct.
The Chair. So your office, since it was created, is focused
on collecting these revenues, keeping a record of these
revenues and you have partners in the Federal Government where
you can get additional information.
Mr. Gould. That's correct.
The Chair. OK, if you would submit all of that information
before the last--the next 2 weeks that would be helpful.
Now, are you responsible for timber harvest on BLM lands?
Mr. Gould. No, ma'am.
The Chair. Alright. Who is responsible for timber harvest
on BLM land?
Mr. Gould. BLM is.
The Chair. OK. Alrighty.
I think that my questions for you are done. Thank you, Mr.
Gould. We'll introduce the next panel.
Mr. Gould. Thank you, Madame Chair.
The Chair. Thank you very much.
As the next panel comes forward and we're going to try to
wrap up our hearing about 12:30 or quarter to one. So we want
to ask everyone to be as succinct as possible. I'll introduce
them as they're going to speak.
First, the Honorable Charlotte Randolph, President of
Lafourche Parish served for over 6 years as a citizen activist
before being elected Parish President. She's the first female
president in Lafourche Parish history. Has been one of the
leaders against Parishes Against Coastal Erosion, the PACE
organization.
This organization represents over 2 million people in
Southern Louisiana fighting for significantly higher share of
royalty money from oil and gas revenues to protect and sustain
our coast.
Next we'll have Paul Pearce, President of the National
Forestry Council and School Coalition. Mr. Pearce, it was good
to see you, I think, recently. You are responsible for
advocating for Federal funding for Secure Rural Schools, County
Payments and advocating for the Federal forest management,
prior to that you were a county commissioner in the State of
Washington.
Joel Webster, Director, Center for Western Lands, the
Theodore Roosevelt Conservation Partnership. Joel is the
Director of that organization. He joined in 2007, has spent the
past decade working along hunting and fishing groups, wildlife
managers, decisionmakers and agency leaders to shape Federal,
public lands policy. Welcome, Mr. Webster.
Sean Shafer, Consulting Manager of Quest Offshore
Resources. Sean manages as a full service marketing research
and consulting firm focused on offshore oil and gas, for the
offshore oil and gas industry. In this position he leads the
production of specialized market reports to these operators and
is in a good position to give us some insight into what the
future may hold in that area offshore.
Dr. Laura Nelson, Office of Energy Development, has
significant experience in government relations, permitting,
power planning. She was Vice President of Energy and
Environmental at Red Leaf Resources from 2007 to 2012. She
was--served as Energy Advisor to the Utah Governor, John
Huntsman.
Then finally, we have Duane Taylor, Director of Federal
Affairs, Motorcycle Industry Council and I'll put some
additional remarks for you, Mr. Taylor in the record.
The Chair. Thank you all for being here.
Ms. Randolph, we'll start with you, please. If we can limit
this to 5 minutes each and then we'll have a round of
questions.
Thank you so much.
STATEMENT OF CHARLOTTE A. RANDOLPH, PRESIDENT, LAFOURCHE
PARISH, THIBODAUX, LO
Ms. Randolph. Thank you, Chair Landrieu, Ranking Member
Murkowski and members of the committee for the opportunity to
testify before you today on how parishes and counties are
leveraging America's resources as a revenue generator and job
creator.
My name is Charlotte Randolph. I'm the President of
Lafourche Parish, in the State of Louisiana. Our population is
about 98,000 people.
I'm also proud to represent the National Association of
Counties. NACo is the only national organization that
represents county governments in the United States including
Alaska's boroughs and Louisiana's parishes. Founded in 1935,
NACo assists America's 3,069 counties in pursuing excellence in
public service to produce healthy, vibrant, safe and resilient
counties.
I'm here today to discuss how revenues generated from our
Nation's natural resources should be shared with parishes and
counties. Revenue sharing whether from oil and gas production,
timber, renewable energy or other types of natural resources
can be a central component of a county's revenue stream. How
counties can use natural resource revenues can vary widely.
Some States the counties must use those revenues for
construction and maintenance of county roads. Other States
dictate that local governments must use natural resource
revenues for public schools, transportation and retirement
funds are our county's general fund.
My testimony will discuss these points. In particular,
energy production significantly impacts communities and local
governments. Natural resource production is critical to
Lafourche Parish. Lafourche Parish is critical to natural
resource production.
Domestic energy production is a major component of our
economy. It directly and indirectly generates tens of thousands
of jobs which in turn generate millions of dollars to our local
community and State.
In 2013 approximately $2.8 billion came from the sale of
new oil and gas leases in the Federal waters off Louisiana's
coast in the Gulf of Mexico. These areas remain the Nation's
primary offshore source of oil and gas, generating about 97
percent of all Outer Continental Shelf production. In fact,
this makes Louisiana the second largest producer of crude oil
and the second largest producer of natural gas in these United
States.
Port Fourchon, our Lafourche Parish port services 90
percent of the deep water drilling structures located in the
Gulf region. In fact the port is now in the final phase of an
expansion project which will more than double its size and
accommodate the growing needs of the oil and gas industry.
Further, the Louisiana Offshore Oil Port, LOOP, located 14
miles off our coast provides tanker offloading for some of the
largest tankers in the world. They handle about 13 percent of
the foreign oil and connects the Nation's only deep water port
to more than 50 percent of the Nation's refining capacity.
Blessed with abundant resources Lafourche Parish plays a
pivotal role in our national energy policy. But people require
services that the parishes provide including law enforcement
and courts, emergency management, infrastructure maintenance
and development and environmental protection to name just a
few. While to some degree or other most counties provide these
basic services. There are additional services we provide that
directly relate to our natural resource industries.
Infrastructure is a prime example. Counties own about 45
percent of public roads. Natural resources counties, we build
and maintain the roads, bridges and ports that enable people to
access the natural resources. Revenue sharing enables counties
to keep these facilities in good repair and the economy moving.
LA Highway 1 in Lafourche Parish is a 50 year old road to
LOOP and to Fourchon. It's been designated a high priority
corridor on the National Highway system because of its role as
critical energy infrastructure. The road needs to be maintained
and expanded. We borrowed $175 million in addition to some
State and Federal funding to complete a portion of this road,
but we need $315 million more to complete the highway.
These local challenges can have national impacts. A recent
economic study found that if Highway 1 were to be washed out
due to a natural disaster, rebuilding the unimproved portion
could take 90 days. That would result in $7.8 billion loss in
the Gross Domestic Product.
The same study also revealed that a week disruption to
Louisiana's pipeline system would raise gasoline prices by
almost 22 cents a gallon. Over a week period this translates
into a $1.7 billion cost to consumers. That's at $60 a barrel.
Oil is now at $100 a barrel.
In conclusion, madame chair, I commend you and the
committee for holding this hearing and examining the impact of
how we can leverage our natural resources to generate revenue
and create jobs.
Thank you.
[The prepared statement of Ms. Randolph follows:]
Prepared Statement of Charlotte A. Randolph, President, Lafourche
Parish, Thibodaux, LO
Thank you Chair Landrieu, Ranking Member Murkowski and Members of
the Committee for the opportunity to testify before you today on how
parishes and counties are leveraging America's resources as a revenue
generator and job creator.
My name is Charlotte Randolph, and I am the President, or elected
Chief Executive Officer, of Lafourche Parish in the state of Louisiana.
Lafourche Parish serves a population of 97,029, is comprised of 1,472
square miles and is situated in south eastern Louisiana on the coast of
the Gulf of Mexico.
I am also proud to represent the National Association of Counties
(NACo). NACo is the only national organization that represents county
governments in the United States, including Alaska's boroughs and
Louisiana's parishes. Founded in 1935, NACo assists America's 3,069
counties in pursuing excellence in public service to produce healthy,
vibrant, safe and resilient counties. NACo promotes sound public
policies, fosters county solutions and innovation, promotes
intergovernmental and public-private collaboration and provides value-
added services to save counties and taxpayers money.
I am here today to discuss how revenues generated from our nation's
natural resources should be shared with parishes and counties. Revenue
sharing-whether for oil and gas production, timber, renewable energy,
or other types of natural resources- can be an essential component of a
county's revenue stream. Whether counties are allotted revenue from
natural resources may depend on state laws. Additionally, how counties
can use natural resource(s) revenues can vary widely. For example, in
some states, the counties must use revenues for construction and
maintenance of county roads. Other states dictate that local
governments must use natural resource revenues for public schools,
transportation, retirement funds and/or a county's general fund.
My testimony will discuss three key points;
1. The importance of natural resource production to Lafourche
Parish, Louisiana
2. Energy production significantly impacts communities and
local governments
3. The Federal government should proportionally share revenue
generated by energy development to support of local
infrastructure
1. Natural resource production is critical to Lafourche Parish and
Lafourche Parish is critical to natural resource production! Domestic
energy production is a major component of the economy in Lafourche
Parish. It directly, and indirectly, generates tens of thousands of
jobs which in turn generate millions of dollars to our local community
and state. In 2013, approximately $2.8 billion dollars alone came from
the sale of new oil and gas leases in the federal waters off
Louisiana's coast in the Gulf of Mexico. These areas remain the
nation's primary offshore source of oil and gas, generating about 97
percent of all Outer Continental Shelf production. In fact, this makes
Louisiana the second largest producer of crude oil and the second
largest producer of natural gas among the 50 states.
Port Fourchon, our Lafourche Parish's port, services 90
percent of the deep water drilling structures located in the
Gulf region. In fact, the port is now in the final phase of an
expansion project which will more than double its size and
accommodate the growing needs of the oil and gas industry.
Further, the Louisiana Offshore Oil Port (LOOP), located 14
miles off the coast near Port Fourchon, provides tanker
offloading for some of the largest tankers in the world. LOOP
handles 13 percent of the foreign oil and connects the nation's
only deep water port to more than 50 percent of the nation's
refining capacity.
Blessed with abundant natural resources, Lafourche Parish
plays a pivotal role in our national energy policy.
2. Energy production significantly impacts communities and local
governments.--In Lafourche Parish, we have benefited significantly from
having so many jobs directly related to the production of oil and gas.
For example, median household income in our parish (between 2008 and
2012) was 13 percent higher than the state average ($50,573 vs
$44,673).
This is clearly a net positive for our community, but you
must remember that people require services that the parish
provide-including law enforcement and courts, emergency
management, infrastructure maintenance and development, and
environmental protection, to name just a few. While to some
degree or another most counties provide these basic services,
there are additional services we provide that directly relate
to our natural resource industries.
Infrastructure is the prime example-counties own 45 percent
of the public roads in 43 states. And in natural resources
counties, we build and maintain the roads, bridges and ports
that enable people to access the natural resources and get them
to market-helping to ensure that our nation is globally
competitive. Revenue sharing enables counties to keep these
facilities in good repair and the economy moving. This is
especially important for counties in rural areas. You should
remember that of the nation's 3,069 counties, 50 percent
(1,542) serve counties with populations below 25,000 residents.
Louisiana Highway 1 in Lafourche Parish is a 50-year old road
to LOOP, has been designated a High Priority Corridor on the
National Highway System, because of its role as a ``critical
energy infrastructure.'' It is imperative that we maintain and
expand Highway 1. While we have been able to secure some state
and federal funding to build a portion, we have borrowed $175
million to complete this section. We need another $315 million
to complete the highway to this nationally significant port.
These local challenges can have national impacts. A recent
economic study found that if Highway 1 were to be washed out
due to a natural disaster, rebuilding the unimproved portion of
the highway could take up to ninety days. This could result in
a $7.8 billion loss in the Gross Domestic Product. The same
study also revealed that "a three-week disruption to
Louisiana's pipeline system would raise gasoline prices by 21.6
cents per gallon nationwide. Over a three-week period, this
translates into a $1.74 billion cost to consumers." That is
with oil at $66 a barrel. Today's oil price is well over $100.
Additionally, it must be said that oil and gas activities
have taken a toll on barrier islands and coastal zones,
lowering coastal communities' protection from storms, as
evidenced by Hurricanes Katrina, Gustav and Ike. Coastal
parishes and counties want to take action to protect and
restore valuable coastal wetlands and affected areas but simply
are not able to generate sufficient resources to do so on their
own.
3. The Federal Government should proportionally share natural
resources revenue with affected parishes and counties.--Lafourche
Parish and NACo strongly support responsible development of our
nation's natural resources. Such development can, and does, build
strong local economies while generating enormous revenues for the
federal treasury. However, any economic activity requires local
infrastructure which is built and maintained at the local level.
Specifically, NACo supports amending the Federal Mineral
Leasing Act so that an additional five percent from the federal
portion of mineral lease revenue would be returned to the
county from which the mineral was extracted. NACo also supports
sharing federal leasing and rights-of-way revenues from
renewable energy development (wind, solar, and geothermal) and
federal Stewardship Contracts on federal lands with county
governments where that development and contracts occurs. In
addition, NACo supports the historic 25 percent national forest
revenue sharing and we encourage you to extend the Secure Rural
Schools Program as a bridge to more sustainable landscape scale
forest management.
In conclusion, it is critical that the federal government
share natural resource development revenues proportionally with
the counties that support and are affected by that development-
as they are responsible for the needs of the citizens they
serve.
Madam Chair, I commend you and the Committee for holding this
hearing and examining the impact of how we can leverage our
natural resources to generate revenue and create jobs.
Counties, parishes and boroughs across the country play a key
role in natural resource stewardship and development and look
for your continued leadership to ensure that we have a strong
federal-state-local partnership. Local communities depend on
robust federal revenue sharing to help their citizens and
ensure the economic viability of our nation.
As you take steps to examine existing revenue sharing
programs, we look forward to working with you in the future.
The Chair. Thank you very much.
Mr. Pearce.
STATEMENT OF PAUL PEARCE, PRESIDENT, NATIONAL FOREST COUNTIES
AND SCHOOLS COALITION, STEVENSON, WA
Mr. Pearce. Thank you.
Madame Chair Landrieu, Ranking Member Murkowski and
Senators on behalf of counties, parishes, boroughs and schools
impacted by national forests, we thank you for this opportunity
to testify on the success of SRS and on production within the
forests.
We wish to thank Chair Landrieu for your comment at the
National Association of County meetings 2 weeks ago on SRS and
PILT where you expressed support for continued funding of both
payments. Thank you very much.
We thank Ranking Member Murkowski for her hard work over
the many years on forest health issues and SRS bridge funding.
The revenue sharing contract between the U.S. Government
and counties worked well into the early 1990s when court
decisions and endangered species listings, agency priorities,
dramatically reduced extraction activities on public lands
including timber. In 1992 Congress created OWL Guarantee moneys
for the 51 counties impacted by the Northern Spotted Owl. The
listing and critical habitat designation has accounted for the
loss of 30 thousand jobs between 1992 and 2012.
In 2000 Congress passed the Secure Rural Schools Act which
was reauthorized through Fiscal Year 2013. SRS must be
reauthorized this Fiscal Year or we face a devastating loss of
over $240 million in revenue to these rural counties and
schools. We do respectfully request that any SRS
reauthorization contain new language which replaces the current
cumbersome formula with a statement, ``All counties opting to
receive a portion of the State payment will receive an amount
equal to their Fiscal Year 2010 payment.'' Fairness for all.
There are many who believe that SRS payments have decoupled
sustainable timber harvest and revenue sharing programs to
counties and schools. We disagree. As actual shared receipts
are the first dollars you use to pay SRS each year, these
receipts accounted for $58 million in Fiscal Year 2013.
SRS contains 3 titles. All of which have been successful
for counties and schools.
Title I is direct payments to county roads and schools.
In a handful of counties these funds are available to
support public health, law enforcement and other services. In
many counties these are the majority of their road funds. The
fact is counties are responsible for 45 percent of the roads
and 39 percent of the bridges in the United States.
The impact of these moneys on many rural schools is the
district remaining open or closing their doors.
Dr. Eyler, an economist, reports the result of losing SRS
is $1.3 billion in sales, $187 or $178 million in taxes, over
10,000 additional jobs including more than 3,000 in education
and 1,400 in counties.
Title II our money is used for forest projects utilizing
Resource Advisory Committees or RACs which have consistently
proven to be the most successful collaborative entities
nationally for over a decade, other than the Clearwater in
Idaho which has been a national icon.
A few examples include Louisiana on the Kisatchie National
Forest. RAC moneys leveraged local funds and secured completion
of road repair, protecting endangered species, water quality
and safe access to public recreation.
Sitka, Alaska. RAC funds a science mentor program
partnering high school students with Forest Service, Fish and
Game and University of Alaska to collect and analyze data on
the Tongass National Forest.
Washington on the Gifford Pinchot Forest, Forest Youth
Success employs 40 kids and crew leaders to work doing a
multitude of projects throughout the forest. It's a partnership
between schools, WSU extension, counties and the Forest
Service.
Title III funds are a reimbursement for emergency services
like search and rescue, community wildfire planning and fire
wise implementation.
Examples of just two searches in 2012 in my home county
include a hiker who fell into Mount St. Helens' crater
eventually costing local, State and Federal agencies over
$150,000 .
The second involved a 2-week search for a young woman lost
in the Columbia River gorge costing local, State and Federal
agencies $550 thousand.
Without Title III the counties could not absorb these
costs.
We pledge to work to assist in enactment of legislation
that provides continued bridge funding to forestry counties and
schools but believe that long term, economic vitality must
include active, sustainable forest management including
sustainable timber harvests to achieve resilient forests,
lands, jobs and economic vitality.
We have been working with the LWCF coalition, NACo and a
number of other partners on trying to find agreement where SRS,
PILT, LWCF might be fully funded, long term.
Thank you very much for this opportunity to appear before
you and comment on the future and current success of SRS, a
program that we must reauthorize.
Thank you.
The Chair. Thank you, Mr. Pearce.
Mr. Webster.Joel Webster, Director, Center for Western
Lands, Theodore Roosevelt Conservation Partnership, Missoula,
MT
STATEMENT OF JOEL WEBSTER, DIRECTOR, CENTER FOR WESTERN LANDS,
THEODORE ROOSEVELT CONSERVATION PARTNERSHIP, MISSOULA, MT
Mr. Webster. Madame Chairwoman Landrieu, Ranking Member
Murkowski and members of the committee, thank you very much for
the opportunity to testify.
My name is Joel Webster. I am the Director of the Center
for Western Lands at the Theodore Roosevelt Conservation
Partnership, a national conservation organization that is
working to guarantee every American quality places to hunt and
fish. We work with 36 partner organizations that represent the
wide spectrum of the hunting and fishing community.
America's natural resources are the infrastructure of a
robust, outdoor recreation economy.
One, that according to a 2012 Outdoor Industry Association
report, accounts for $646 billion in direct consumer spending
and more than 6 million jobs. Never has the phrase, Made in the
USA, been so accurate. American jobs in industries rely on
America's natural resources. They cannot be exported but they
do run the risk of being downsized if investments in the
conservation and access are not prioritized.
Hunting and fishing activities are not only a valued part
of America's heritage, but a significant contributor to the
outdoor economy. Thirty-seven million Americans hunt and fish
and spend $58 billion annually.
While recreational activities like hunting and fishing
might appear to be expendable or mere pastimes, they're vital
everyday activities to those communities that rely on that
business.
To the tackle shop owner in Cocodrie, Louisiana, who sells
bait, ice and fuel, fishing is not a pastime. It will send a
kid to college.
For the outfitter based in Fairbanks, Alaska, who relies on
booking trips for caribou hunts, hunting is not expendable, it
pays the mortgage.
I'd like to share a quick personal study--story. In 1961 my
grandfather and a friend hired public lands outfitters, who
took them on a hunting trip of their lives. On this trip my
grandfather traveled into the Bridger-Teton National Forest in
Wyoming where he harvested a bull elk, a buck mule deer and a
bear.
He wasn't a rich man, but between all the goods and
services his trip required he spent a significant amount of his
hard earned money. Years later my father would allocate his
discretionary income to fund his own public lands hunting,
fishing adventures. Fortunately I became the lucky recipient of
a long standing and sustainable hunting and fishing tradition.
I've been able to spend the past 30 years of my life
hunting with my father, friends and colleagues. Last year for a
2-month hunting season, I spent about $3,500 bucks on fuel,
licenses, food and hunting gear. When you look at the big
picture the recreational activity of 37 million individual
hunters and anglers adds up.
These benefits do not stop with direct consumer spending
and jobs. These activities generate $39.9 billion in Federal
tax revenue and $39.7 billion in State and local taxes. In
fact, sportsmen have long understood the intersection between
conservation and hunting and fishing.
Through the Pittman-Robertson and Dingell-Johnson Federal
excise taxes on guns, ammunition, fishing tackle, boats and
fuel which are invested back into our natural resources,
sportsman have been paying their own way for the better part of
a century which leads me to a bigger point. Conservation of our
natural resources is the critical first step in maintaining the
vitality of the hunting and fishing economy.
Our natural resources take many forms. But a tangible
example for me, as a Westerner, is the value of our Federal/
public lands. These lands help drive the economic engines of
rural communities and are where the large majority of western
sportsmen hunt.
According to the U.S. Fish and Wildlife Service, 72 percent
of all hunters from the Pacific and Mountain West hunt on
public lands. Each summer and fall sportsmen crowd towns like
Meeker, Colorado, Elko, Nevada, Salmon, Idaho, Cody, Wyoming
and La Grande, Oregon to hunt and fish. They happily spend
their hard earned money on vehicles, sporting goods, food,
fuel, lodging, outfitters and guides. These sportsmen and the
local economies depend on public lands for hunting and fishing.
Just as conservation of our resources is paramount,
ensuring access to these places is also a necessity. There
needs to be a commitment to providing public access to public
lands. A 2000 report to the House Appropriations Committee
concluded that more than 35 million acres of BLM and U.S.
Forest Service land had inadequate access.
Proposed legislation such as making public lands public in
the Hunt Act would dedicate 1.5 percent of the Land and Water
Conservation Fund, an important program in itself, to provide
public access to currently landlocked public lands.
In closing $646 billion in direct consumer spending and
more than $6 million in American jobs rely on the conservation
and responsible management of our natural resources. It is
vital that decisionmakers commit themselves to reinvesting in
public access and priority fish and wildlife habitat to support
the sustainable outdoor recreation economy.
Thank you very much for the opportunity to testify. I look
forward to working with you on these issues moving forward. I'd
be happy to answer any questions.
[The prepared statement of Mr. Webster follows:]
Prepared Statement of Joel Webster, Director, Center for Western Lands,
Theodore Roosevelt Conservation Partnership, Missoula, MT
Chair Landrieu, Ranking Member Murkowski, and Members of the
Committee, thank you very much for the opportunity to testify. My name
is Joel Webster, and I am the Director of the Center for Western Lands
at the Theodore Roosevelt Conservation Partnership, a national
conservation organization that is dedicated to guaranteeing every
American quality places to hunt and fish. We work with 36 partner
organizations that represent the wide spectrum of hunting and fishing
activities and conservation interests across the sporting community.
I have been asked to testify regarding the potential for America's
natural resources to generate revenue and create jobs. Specifically, I
am here to highlight the importance of Federal public lands in
generating revenue and jobs through hunting and fishing related
activities.
I'd like to start with a short story. In 1961, my grandfather and a
friend hired a public lands outfitter who took them on the hunting trip
of their lives. On this trip, my grandfather traveled into the
Thoroughfare country of the Bridger-Teton National Forest in Wyoming
where he harvested a bull elk, a buck mule deer and a bear. He wasn't a
rich man, but between all the goods and services his trip required, he
spent a significant amount on his hard-earned money. Years later, my
father would allocate his discretionary income to fund his own public
lands hunting and fishing adventures.
I grew up as a boy staring at the bear rug on my grandfather's
wall, asking him about the trip and imagining what it must have been
like to experience the land and wildlife up close. I was eager to set
out on a similar adventure. Fortunately, I became the lucky recipient
of a long-standing and sustainable hunting and fishing tradition. I've
been able to spend the past thirty years of my life hunting with my
father, friends and colleagues. All of us spend a large portion of our
discretionary incomes on hunting and fishing gear, licenses and hunting
trips. And we do so every year with enthusiasm for what we hope will be
a life-long pursuit.
Thirty-seven million sportsmen enjoy the valued American tradition
of hunting and fishing. And while these 37 million sportsmen derive
personal benefits from a pastime they love, these sportsmen also
provide a sustainable influx of money into the economy. According to a
2012 Outdoor Industry Association report, sportsmen pump $58 billion
annually into the US economy. Hunting and fishing are a critical part
of the American outdoor recreation economy, which generates $646
billion annually, supports 6.1 million jobs, and generates $39.9
billion in Federal tax revenue and $39.7 billion in state/local tax
revenue.
Every summer and fall, sportsmen crowd towns like Meeker, Colorado;
Elko, Nevada; Munising Michigan, Salmon, Idaho; Cody, Wyoming; and La
Grande, Oregon to hunt and fish, and they happily spend their hard
earned money on vehicles, sporting goods, food, fuel, lodging, and
outfitters and guides. According to the US Fish and Wildlife Service,
72 percent of all hunters from the pacific and mountain west hunt on
public lands. These sportsmen and the local economies depend on public
lands for hunting and fishing.
Federal public lands help feed this economic engine. In order to
sustain and continue building the outdoor economy and hunting and
fishing opportunities, decisionmakers, non-government partners, and the
public must make a long-term commitment: support the responsible
management of Federal public lands and invest back into these lands.
First, there needs to be a commitment to providing public access to
public lands. A 2004 report to the House Appropriations Committee
concluded that more than 35 million acres of BLM and US Forest Service
land have inadequate access. Proposed legislation such as Making Public
Lands Public, would dedicate 1.5 percent of the Land and Water
Conservation Fund-an important program in itself-to provide public
access to currently landlocked public lands.
Second, in order to maintain the hunting and fishing participation
that plays such a vital role in this economic engine, fish and wildlife
habitat needs on public lands should be met through conservation
policies that safeguard priority habitats, and through active
management such as habitat restoration and enhancement.
Active habitat management is an industry in itself. A 2013 study
conducted by Southwick Associates found that in 2012, $38.8 billion
dollars was invested into Natural Resources Conservation (such as
forest, fisheries and wildlife resources) by corporations, private
donors, non-profits, and the government at the Federal, State, and
local levels. That $38 billion dollars generated $12.9 billion in
Federal and state tax revenues, fostered $93.2 billion in total
economic activity and supported 660,000 jobs across the United States.
These activities support fish and wildlife habitats and help to sustain
the hunting and fishing economy in America.
In closing, if we want continued public hunting and fishing and a
strong and sustainable outdoor recreation-based economy, we need to
retain and responsibly manage Federal public lands and put forth a
strong investment in public access and natural resource conservation.
Thank you very much for the opportunity to testify. I look forward to
working with you on these issues moving forward. I would be happy to
answer any questions you might have.
The Chair. Thank you, Mr. Webster, for that personal and
passionate testimony. Appreciate it.
Mr. Shafer.
STATEMENT OF SEAN SHAFER, CONSULTING MANAGER, QUEST OFFSHORE
RESOURCES, INC., SUGAR LAND, TX
Mr. Shafer. Thank you, Chairman Landrieu, Ranking Member
Murkowski, members of the committee. My name is Sean Shafer. I
would like to thank you for the opportunity to testify before
the committee.
Just to give you a brief overview I'm going to focus on the
economic impact of the oil and gas industry in the U.S. and
especially on the impact of opening up new areas of the OCS.
The Nation's oil and gas industry supports 9.8 million U.S.
jobs and 8 percent of the U.S. economy. Approximately 2.6
million of the jobs are directly within the industry. Due to
their on average, higher paying nature, many jobs within the
industry tend to have larger effects on overall employment
throughout the economy. Additionally the oil and natural gas
industry has been at the forefront of the Nation's economic
recovery, experiencing job growth at a significantly faster
rate than the rest of the economy.
From 2007 to 2012 oil and gas employment grew 40 percent
compared to overall employment's 1 percent growth, accounting
to around 160,000 of the one million new jobs created. These
numbers do not take into account the actual, excuse me, these
numbers do not take into account employment effects in
manufacturing and other industries that have benefited from
lower electricity and feed stock prices. Additionally, the
Nation's oil and gas industry provides significant revenue to
both Federal and State governments.
The governments receive $85 million per day from the oil
and natural gas industry while State and local governments
receive millions more. An important component of the Nation's
oil and gas industry is the offshore industry centered around
the central and western Gulf of Mexico with some legacy
production off California and Alaska. The Gulf of Mexico alone
produces around 1.3 million barrels of oil per day and 3.6
billion cubic feet of natural gas.
Estimates of current employment due to the offshore oil and
natural gas industry produced by Quest are around 375,000 total
jobs of which around 100,000 are directly in the industry.
Employment is centered around the Gulf Coast States with these
States accounting for around 70 percent of total employment.
But the effects are felt throughout the country. Additionally
the industry is estimated to provide over nine billion a year
of revenue to the Federal Government.
The contributions of the offshore oil and natural gas
industry, in particular, are limited due to the fact that
approximately 85 percent of acreage in the Federal offshore
waters is inaccessible to offshore oil and natural gas
development either through a lack of Federal lease sales or
outright moratoriums. The only Federal OCS areas which are
unrestricted for leasing are the central and western Gulf with
98 percent of the eastern Gulf, all the Atlantic OCS and the
Pacific OCS inaccessible for new activity. Increasing the oil
and natural gas industry's access to Federal waters would
likely increase domestic energy production, contribute to
greater employment and provide increased revenues to the
Federal and State governments.
As an example of the possible impacts of increasing access
to the U.S. OCS for oil and natural gas development I'll
present a brief overview of a study recently completed by Quest
Offshore on the possible impacts of opening the Atlantic OCS to
offshore oil and natural gas activity.
Oil and natural gas development off the Atlantic Coast has
been restricted since the 1980s with a lease sale canceled off
the Coast of Virginia that was planned for 2011. No lease sales
in the Atlantic OCS are currently scheduled. Although plans for
seismic in the area have just been approved and discussions on
limited leasing in the upcoming 5 year plan have taken place.
The Quest report completed in 2013 constructed a scenario
of oil and gas development in the Atlantic OCS based on the
resource potential of the area, geologic analogs and the full
value chain of the oil and gas industry. The study found that
if leasing in the Atlantic OCS began in 2018 with seismic in
2017 the annual capital investment and other spending would be
projected to grow from nearly $7 billion a year in 2025 to
nearly $20 billion a year in 2035. Cumulative capital
investment and other spending from 2017 to 2035 was projected
at about $195 billion.
Atlantic Coast OCS oil and gas activities could create
nearly 80,000 jobs by 2025 of which nearly 45,000 would be in
the Atlantic States. By 2035 total national employment due to
the Atlantic OCS oil and gas production would reach about
280,000 jobs with 215,000 of these jobs in the Atlantic States.
Combined State and Federal revenue from bonuses, rents and
royalties were projected to reach about $645 million per year
in 2025 with these revenues projected to grow to nearly $12.2
billion a year in 2035.
If a legislated State/Federal revenue sharing agreement was
enacted the Atlantic States could see significant gains to
their budgets. With a 37.5 percent revenue sharing agreement
State revenue is projected to be about $250 million per year by
2025 with these revenues expected to grow to around $4.5
billion a year by 2035.
Important to note that no revenue sharing legislations in
place in the Atlantic and also, you know, any caps or anything
else that were enacted would affect that.
Additionally the report projected that the Atlantic OCS oil
and gas development could produce about 1.35 million barrels of
oil equivalent per day by 2035.
Under this scenario it's pretty clear that allowing access
to the Atlantic OCS as well as other areas would cause
significant increases in employment, government revenues as
well as overall economic activity. Allowing access to the
remainder of the 85 percent of the Federal OCS which is
inaccessible would undoubtedly have similar effects.
Thank you.
[The prepared statement of Mr. Shafer follows:]
Prepared Statement of Sean Shafer, Consulting Manager, Quest Offshore
Resources, Inc., Sugar Land, TX
Good Morning Chairman Landrieu, Ranking Member Murkowski, and
Members of the Committee, my name is Sean Shafer and I would like to
thank you for the opportunity to testify before the committee.
The nation's oil and natural gas industry supports 9.8 million U.S.
jobs and 8 percent of the U.S. economy. Approximately 2.6 million of
the jobs are directly within the oil and gas industry. Due their on
average higher paying nature, many jobs within the oil and gas industry
tend to have larger effects on overall employment throughout the
economy. Additionally, the oil and natural gas industry has been at the
forefront of the nation's economic recovery, experiencing job growth at
a significantly faster rate than the rest of the economy. From 2007 to
2012 oil and gas employment grew 40 percent compared to overall
employments 1 percent growth, accounting for around 160 thousand of the
total one million new jobs created in this period. These numbers do not
take into account employment effects in manufacturing and other
industries that have undoubtedly benefited from lower electricity and
feedstock prices, driven by increased domestic production of oil and
natural gas.
Additionally, the nation's oil and natural gas industry provides
significant revenue to both the Federal and state governments. The
Federal Government alone receives $85 million per day from the oil and
natural gas industry while state and local governments also receive
millions more.
An important component of the nation's oil and natural gas industry
is the offshore industry, centered on the central and western Gulf of
Mexico with some legacy activity off California and Alaska. The Gulf of
Mexico alone produces around 1.3 million barrels of oil per day, and
3.6 billion cubic feet per day of natural gas. Estimates of current
employment due to the offshore oil and natural gas industry produced by
Quest are around 375 thousand total jobs, of which around 100 thousand
jobs are directly in the industry. Employment is centered in the Gulf
Coast states, with these states accounting for around 70 percent of
employment, but the employment effects are felt throughout the country.
Additionally, the offshore oil and natural gas industry is estimated to
provide over $9 billion/year of revenue to the Federal Government.
The contributions of the offshore oil and natural gas industry in
particular are limited due to the fact that approximately 85 percent of
acreage in Federal offshore waters is inaccessible to offshore oil and
natural gas development, either through a lack of Federal lease sales
or outright moratoriums. The only Federal OCS areas with unrestricted
leasing are the central and western Gulf of Mexico, with 98 percent of
the Eastern Gulf of Mexico, all of the Atlantic OCS, and the Pacific
OCS inaccessible for new activity. Increasing the oil and natural gas
industry's access to US Federal waters would likely increase domestic
energy production, contribute to greater employment, and provide
increased revenues to the Federal and state governments.
As an example of the possible impacts of increasing access to the
US OCS for oil and natural development I will present a brief overview
of a study recently completed by Quest Offshore on the possible impacts
of opening the Atlantic OCS to offshore oil and natural gas activity.
Oil and gas development off the Atlantic coast has been restricted
since the 1980s. A lease sale off the coast of Virginia was planned for
2011, but was subsequently canceled. No lease sales in the Atlantic
Outer Continental Shelf (OCS) are currently scheduled although plans
for seismic in the area have just been approved and discussions on
limited leasing in the upcoming 5 year plan have taken place.
Quest's report completed in December 2013 constructed a scenario of
oil and natural gas development in the Atlantic OCS, based on the
resource potential of the area, geologic analogs, and the full value
chain of oil and natural gas development and production. The study
found that if leasing in the Atlantic OCS began in 2018 and seismic in
2017, annual capital investment and other spending would be projected
to grow from nearly $7 billion per year in 2025 to nearly $20 billion
per year in 2035. Cumulative capital investments and other spending
from 2017 to 2035 were projected at about $195 billion.
Atlantic coast OCS oil and gas activities could create nearly 80
thousand jobs by 2025, of which nearly 40 thousand would be in the
Atlantic coast states. By 2035, total national employment due to
Atlantic OCS oil and gas exploration and production would reach nearly
280 thousand jobs, with 215 thousand of these jobs in Atlantic coast
states.
Combined state and Federal revenues from bonuses, rents and
royalties were projected to reach about $645 million per year in 2025,
with these revenues projected to grow to nearly $12.2 billion per year
in 2035.
If a legislated state / Federal revenue sharing agreement was
enacted, the Atlantic coast states could see significant gains to their
state budgets. With a 37.5 percent sharing agreement, state revenues
were projected to be around $250 million per year by 2025, with these
revenues expected to grow to over $4.5 billion per year by 2035. Due to
a lack of current Atlantic revenue sharing legislation all projected
state revenues would be subject to adjustment depending on any future
legislation.
Additionally, the report projected that development of the Atlantic
coast's offshore oil and natural gas reserves would lead to production
of around 1.35 million barrels of oil equivalent per day by 2035.
Under the scenario laid out in the study it is clear that allowing
access to the Atlantic OCS for oil and natural gas activities would
have a significant effect on the economy, employment and government
revenues. Allowing access to the remainder of the 85 percent of the
Federal OCS which is currently inaccessible to offshore oil and natural
gas development would undoubtedly have similar effects.
The Chair. Thank you, Mr. Shafer.
Dr. Nelson.
STATEMENT OF LAURA NELSON, DIRECTOR OF THE UTAH GOVERNOR'S,
OFFICE OF ENERGY DEVELOPMENT, SALT LAKE CITY, UT
Ms. Nelson. Thank you, Chairman Landrieu and Ranking Member
Murkowski and members of the committee. I appreciate the
opportunity to testify here today. My name is Laura Nelson and
I am the Director of the Utah Office of Energy Development.
I'm going to focus this morning primarily on energy
revenues and energy jobs. However, I think it's important to
note that mining and agriculture are also critical natural
resource sectors in Utah, as are our State and national parks.
We leverage all of these natural resources to generate revenues
and create jobs.
Unfortunately given our status as a public land State, Utah
is not at liberty to chart its own course to determine how to
best balance its development and conservation goals. Utah is
willing and we've proven our ability to manage natural
resources effectively. But we remain subject to arcane Federal
regulatory processes that hinder our natural, environmentally
responsible, economic growth.
I want to note that energy jobs in Utah account for 1.4
percent of the State's jobs. That's just under 18,000 jobs. But
this is 2.6 percent of total wages in the State.
This correctly suggests that energy jobs are unusually high
paying jobs. The average energy job in Utah pays about 190
percent of the State's median wage.
With respect to the State's energy revenues they flow a
variety of sources, Federal mineral leases, severance taxes,
royalties from school and institutional trust lands, property
taxes, sales taxes, income tax and conservation tax. Of these
the most significant are the property taxes and Federal mineral
leases. They account for, combined in 2012, about 60 percent of
the $577 million in energy revenue to the State.
Utah has benefited significantly from energy booms in
recent decades. In today's boom which we're experiencing seems
to have staying power. It's driven by market conditions as well
as the technological revolution that has come in the form of
new drilling and well stimulation technologies. We believe to
the extent that we can access our resources, we can create
sustained growth in the development and activity and the
associated jobs and revenues while balancing the need for a
proactive environmental management.
Unfortunately in a public lands State that is 70 percent
federally owned, the ability to access and responsibly develop
our natural resources is dramatically impeded by the abstruse
environmental and species regulations. In addition to those
regulations we've seen significant reductions in permits and
other lease sales from the BLM over the last few years. During
the previous administration's 8 years Utah saw an average of
300 thousand acres leased per year. In the current
administration's first term that number was just over 85,000
acres. That means that annually the administration has leased
less than 30 percent as much land as during the Bush
Administration.
Despite that Utah has continued to see growth in its oil
and gas industries.
In oil production we grew from 15 million barrels per year
to over 35 million barrels per year. That growth is fueled
largely by activities on State trust lands and private lands.
Now I've really focused here on conventional energy
production but I also want to note that we have a nascent solar
industry. The reason I focused on oil and gas production and
conventional energy is it's 95 percent of our energy and
revenue jobs. But we do see great potential for solar.
In the past year due to the 1978 Public Utilities
Regulatory Policy Act we have seen significant solar
development activity as market conditions have aligned with
utility's obligations under this act. What we have seen is that
19 projects ranging in size from 2 to 80 megawatts have signed
power purchase agreements with PacifiCorp. Of those solar
projects not a single one is to be constructed on public land
even though most of these are in the southwest portion of the
State where 85 percent of the lands are under Federal control.
The indication is that even for the solar industry which
seems to be supported by this administration doesn't really see
Federal lands as an option for development.
I also want to mention that we have a large, untapped
resource in oil shale and oil sands resources perhaps our
largest resource. With 77 billion barrels of oil recoverable
from oil shale and 15 barrels of oil recoverable from oil
sands, these are perhaps Utah's most promising energy resources
in terms of future revenue and job creation potential. The keen
challenge is that unlike solar, oil shale and oil sands seems
to have been designated as non preferred energy options.
The key for us is success--is access. The key to our
success is access. The State's goal is to take back the reins,
to the extent possible, so they can follow a resource
development path that makes sense for Utah.
We have learned and we have demonstrated that conservation
and economic development can go hand in hand. We believe that
our partners in DC should support an increased role for the
State in managing its resources.
Thank you so much for allowing us to testify here today. I
look forward to answering any questions you have.
[The prepared statement of Ms. Nelson follows:]
Prepared Statement of Laura Nelson, Director of the Utah Governor's
Office of Energy Development, Salt Lake City, UT
This morning I will focus primarily on energy revenues and energy
jobs; however, mining and agriculture are also critical natural
resource sectors in Utah, as are our state and national parks. Utah
leverages all its natural resources profoundly to generate revenue and
create jobs. Unfortunately, given its status as a public lands state,
Utah is not at liberty to chart its own course, to determine how best
to balance its development and conservation goals. Utah is willing--
and has proven itself able--to manage its natural resources
effectively, but we remain subject to arcane Federal regulatory
processes that hinder our natural, environmentally responsible economic
growth.
In particular, energy jobs in Utah account for 1.4 percent of the
state's jobs -just under 18,000 -but account for 2.6 percent of the
state's total wages; correctly suggesting that energy jobs are
unusually high-paying. The average energy job in Utah pays about 190
percent of the state's median wage.
With respect to the state's energy revenues, they flow through the
following means: Federal mineral leases, severance taxes, royalties
from the School and Institutional Trust Lands Administration permanent
fund, property taxes, sales tax, income tax, and conservation tax. Of
these, most significant are the property taxes and Federal Mineral
Leases, which in 2012 made up over 60 percent of the $577 million in
energy revenue to the state.
Utah has benefited from energy booms in recent decades, and today's
boom seems certain to have staying power; because it is driven not only
by market conditions, but also by a technological revolution that has
come in the form of new drilling and well-stimulation techniques. We
believe that to the extent that we can access our resources, we can
create a sustained growth in development activity and in associated
jobs and revenues, while balancing the need for proactive environmental
management.
Unfortunately, in a public lands state that is 70 percent federally
owned, the ability to access and responsibly develop our natural
resources is dramatically impeded by abstruse environmental and species
regulations. In addition to those regulations, we've seen a significant
reduction in permits and/or lease sales from the BLM over the last few
years. During the previous administration's 8 years at the helm, Utah
saw an average of over 300,000 acres leased per year, and in the
current administration's first term that number was just under 85,000
acres. That means that annually this administration's BLM has leased
less than 30 percent as much land as during the Bush Administration in
any given year.
Remarkably, notwithstanding this trend Utah's growth in production
has been steady. During the same 12 year period-2001-2012-Utah's oil
production grew from 15 million barrels per year to over 35 million
barrels per year. That growth is fueled largely by activities on state
trust lands and private lands.
I have mostly been addressing conventional energy production,
because in Utah that drives approximately 95 percent of energy revenue
and jobs. However when we're talking about development activities
favoring private and state lands, Utah's still-nascent solar industry
is particularly telling. Over the past twelve months market conditions
have aligned with utilities' obligations under the 1978 Public
Utilities Regulatory Policy act to generate significant solar
development activity, and this has occurred without a Renewable
Portfolio Standard. Indeed, during that time 19 projects ranging in
size from 2 to 80 megawatts have signed power purchase contracts with
PacifiCorp.
Of those solar projects, not a single one is to be constructed on
Federal land. And these projects are proposed for the southwest portion
of the state, an area where more like 85 percent of lands are under
Federal control. The indication is that even the solar development
community, an industry sector that is unequivocally endorsed by the
Obama administration, has determined that developing projects on
Federal land in Utah is simply a non-starter. And this is true
regardless of the federally designated ``Solar Energy Zones.''
In 2013, Utah produced:
35 million barrels of oil;
471 million MCF of natural gas; and
17 million tons of coal.
Solar is an exciting opportunity poised for explosive growth.
However, capacity limitations, land requirements, and infrastructure
constraints will limit solar's contribution to Utah's overall energy
jobs and revenue picture. Our foundational resources are oil, gas, and
coal. Utah is 11th among states in oil production, 9th among states in
natural gas production, and 15th among states in coal production. Our
as-yet-untapped oil shale and oil sands resources are by far the
largest resources in the country, with 77 billion barrels of oil
recoverable from oil shale, and 15 billion barrels of oil recoverable
from oil sands. These are perhaps Utah's most promising energy
resources in terms of future revenue and job creation potential. The
numbers are staggering.
The keen challenge is that, unlike solar, oil shale and oil sands
seem to have been designated as ``non-preferred'' energy option. The
Department of the Interior appears to be restricting commercial
demonstration of these promising opportunities through draconian
restrictions in leasing justified by the preconceived notion that oil
sands and oil shale technologies are not yet commercially viable.
Additionally, perennial threats of new listings under the Endangered
Species Act are further restricting the commercial demonstration of
these promising resources.
The State of Utah's goal is to take back the reigns, to the extent
possible, so that it can follow a resource development path that makes
sense for Utahns. As mentioned earlier, Utahns and their elected
leaders fully value the economic and social values underpinned by the
state's pristine natural environment. The state's diverse beauty
attracts tourism, outdoor recreation, the film industry, and many other
sectors that are essential to the state economy. It also provides
multiple benefits to Utahns. It is therefore in the state's interest to
preserve Utah's natural environment while at the same time responsibly
developing its natural resources. Utahns have learned--and
demonstrated--that conservation and economic development can go hand in
hand, and it's time for our partners in Washington D.C. to support an
increased role for the state in managing its resources. This will allow
Utah's policymakers, its regulators, its development community and
other stakeholders to find the right balance for Utah's energy and
natural resource opportunities.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Chair. Thank you very much, Doctor.
Mr. Taylor.
STATEMENT OF DUANE TAYLOR, DIRECTOR, FEDERAL AFFAIRS,
MOTORCYCLE INDUSTRY COUNCIL, ARLINGTON, VA
Mr. Taylor. Thank you.
Chairman Landrieu, Ranking Member Murkowski and
distinguished members of the committee, thank you for the
opportunity to testify about the positive economic impact of
responsible off highway vehicle recreation. I am Duane Taylor,
Director of Federal Affairs for the Motorcycle Industry
Council, Specialty Vehicle Institute of America and the
Recreational Off Highway Vehicle Association.
MIC, SVIA and ROHVA are the trade associations that
represent the power sports industry including the manufacturers
of on and off highway motorcycles, all terrain vehicles and
recreational off highway vehicles which are also known as side
by sides.
The positive economic impact of recreation is well
established. The just released Interior Economic Report for
2013 recognizes the important role recreation plays on DOI
lands noting about recreation.
In Fiscal Year 2013 Interior's lands hosted an estimated
407 million visits.
For fiscal year 2013 value added provided by visitation to
Interior sites was estimated to be $25 billion. Economic output
was estimated to be $41 billion.
About 355,000 jobs were supported.
The Forest Service reports similar findings in its National
Visitor Use Monitoring Results.
When it says, visits to National Forest lands are an
important contribution to the economic vitality of rural
communities.
Spending by recreation visitors in areas surrounding
national forests amounted to nearly $11 billion.
Visitors who live more than 50 miles from the forest
account for a bulk of these contributions. They spend about $5
billion annually.
As visitor spending ripples through the U.S. economy it
contributes a little more than $13 billion to the GDP and
sustains about 190,000 full and part time jobs.''
The associations I represent recently joined with partners
including the Outdoor Industry Association, the Western
Governors' Association, to produce a report which also
highlights the size and scope of the economic impact of
recreation, finding that overall outdoor recreation generated
$646 billion in national sales and services in 2011. This
figure is far greater than--and supported 6.1 million jobs
which is far greater than for example, the pharmaceutical and
motor vehicle and parts industries.
Clearly recreation is big business. We have known this for
quite some time. What we in the OHV communities have known for
quite some time, but had never been studied nationally is that
motorized recreation is a massive component of the revenues
generated through outdoor recreation.
The economic impact of outdoor recreation to which I
referred found that approximately $257 billion or nearly 40
percent of the total $646 billion in economic impact is derived
from motorized recreation.
As I mentioned we in the industry and the broader OHV
community expected these results as we know firsthand the
irreplaceable, positive, economic impact motorized recreation
opportunities have had in many rural areas. I'm thinking of
small towns and communities near the Paiute ATV trail in Utah
or surrounding the Hatfield-McCoy Trails in West Virginia or
all over the State of Colorado as existing economic impact
studies have already found that motorized recreation can
revitalize and/or sustain rural economies that have been hard
hit by the recession.
It is important to highlight the value of motorized
recreation so that land managers and other decisionmakers can
make informed decisions about how best to manage public lands.
While it is clear that OHV recreation isn't appropriate
everywhere, properly managed and sustainable motorized
recreation opportunities can demonstrably provide a dramatic,
positive, economic boost to small towns and businesses across
the Nation.
While OHV enthusiasts are encouraging Interior, Forest
Service and other officials to maintain or expand sustainable
motorized recreation through any manner of planning processes
at the local level, we feel it is important that Congress, as
well as the Administration, hear the positive economic message
about motorized recreation as you make decisions about the
designations of wilderness, national monuments and other
special designations of public lands.
We fully understand that there are spectacular and pristine
areas of public lands that deserve special designation and
should be set aside for limited uses. However, we are concerned
that specially designating massive swaths of public lands is
the wrong way forward. These enormous and inappropriate
designations may either completely rule out or lead to the
restriction or elimination of motorized recreation as well as
other multiple use activities where they would otherwise be
appropriate and could benefit rural economies.
We encourage each of you to carefully consider land use
legislation and the input of all relevant, local stakeholders
to ensure that managed, sustainable, motorized recreation is
maintained or expanded, where appropriate, so that the full
economic impact of recreation can be realized.
Also, last, I would be remiss if I didn't thank Senator
Murkowski for introducing S. 2068. We look forward to working
with you on this legislation.
Thank you.
[The prepared statement of Mr. Taylor follows:]
Prepared Statement of Duane Taylor, Director, Federal Affairs
Motorcycle Industry Council, Arlington, VA
Chairman Landrieu, Ranking Member Murkowski and distinguished
Members of the Committee -thank you for the opportunity to testify
about the positive economic impact of responsible off-highway vehicle
recreation. I am Duane Taylor, Director, Federal Affairs for the
Motorcycle Industry Council (MIC), Specialty Vehicle Institute of
America (SVIA) and the Recreational Off-Highway Vehicle Association
(ROHVA). MIC, SVIA and ROHVA are the trade associations that represent
the powersports industry including the manufacturers of on and off-
highway motorcycles, all-terrain vehicles and recreational off-highway
vehicles -also known as side-by-sides.
The positive economic impact of recreation is well established. The
just-released DOI economic report for fiscal year 2013 recognizes the
important role recreation plays on DOI lands noting about recreation:
In fiscal year 2013, Interior's lands hosted an estimated 407
million visits. For fiscal year 2013, value added provided by
visitation to Interior sites was estimated to be $25 billion,
economic output was estimated to be $41 billion and about
355,000 jobs were supported.
The Forest Service reports similar findings in its National Visitor
Use Monitoring Results:
Visits to National Forest lands are an important contribution
to the economic vitality of rural communities. Spending by
recreation visitors in areas surrounding National Forests
amounted to nearly $11 billion. Visitors who live more than 50
miles from the forest account for the bulk of these
contributions; they spend about $5 billion annually. As visitor
spending ripples through the US economy, it contributes a
little more than $13 billion to GDP, and sustains about 190,000
full and part time jobs.
The associations I represent recently joined with partners
including the Outdoor Industry Association and the Western Governors'
Association to produce a report which also highlights the size and
scope of the economic impact of recreation, finding that overall
outdoor recreation generated $646 billion in national sales and
services in 2011 and supported 6.1 million jobs which is far greater
than, for example, the pharmaceutical and motor vehicle and parts
industries.
Clearly recreation is big business -we have known this for quite
some time. What we in the OHV community have known for quite some time,
but that had never been studied nationally, is that motorized
recreation is a massive component of the revenues generated through
outdoor recreation. The Economic Impact of Outdoor Recreation, to which
I referred found that that approximately $257 billion or nearly 40
percent of the total $646 billion in economic impact is derived from
motorized recreation.
As I mentioned, we in the industry and the broader OHV community
expected these results as we know first-hand the irreplaceable positive
economic impact motorized recreation opportunities have had in many
rural areas. I am thinking of small towns and communities near the
Paiute ATV trail in Utah, or surrounding the Hatfield-McCoy Trails in
West Virginia, or all over the state of Colorado as existing economic
impact studies have already found that motorized recreation can
revitalize and/or sustain rural economies that have been hard hit by
the recession.
It is important to highlight the value of motorized recreation so
that land managers and other decisionmakers can make informed decisions
about how best to manage public lands. While it is clear that OHV
recreation isn't appropriate everywhere, properly managed and
sustainable motorized recreation opportunities can demonstrably provide
a dramatic positive economic boost to small towns and businesses across
the Nation.
While OHV enthusiasts are encouraging DOI, Forest Service and other
officials to maintain or expand sustainable motorized recreation
through any manner of planning processes at the local level we feel it
is important that Congress, and the Administration as well, hear the
positive economic message about motorized recreation as you make
decisions about the designation of wilderness, National Monuments and
other special designations of public lands.
We fully understand that there are spectacular and pristine areas
of public lands that deserve special designation and should be set
aside for limited uses; however, we are concerned that specially
designating massive swaths of public lands is the wrong way forward.
These enormous and inappropriate designations may either completely
rule out, or lead to the restriction or elimination of motorized
recreation as well as other multiple use activities where they would
otherwise be appropriate and could benefit rural economies.
We encourage each of you to carefully consider land use legislation
and the input of all relevant local stakeholders to ensure that
managed, sustainable motorized recreation is maintained or expanded
where appropriate so that the full economic impact of recreation can be
realized.
Thank you.
The Chair. Thank you all for that excellent testimony.
Let me start, Ms. Randolph, with you and thank you for your
long standing leadership, not just in our State, but around the
country as a leader for coastal revenue sharing.
I have two questions for you.
One, you testified that Port Fourchon which is in your
parish, Port Fourchon helps to generate nearly nine billion a
year for the Federal Treasury. Is that correct and can you give
30 seconds about if this port wasn't there how would this money
get out of the Gulf of Mexico?
Ms. Randolph. Thank you, Senator.
Yes, Port Fourchon is the geographic location for deep
water drilling. Therefore because of its close proximity to
that operation it essentially cuts down time and cuts down
costs to get to that energy production. In doing so is able to
produce energy for this Nation at a lower cost and second,
produce money for the Federal Treasury in the form of royalties
and severance taxes.
So, Port Fourchon is the significant port as far as
generating Federal moneys.
The Chair. It's not the only energy port, but it is
designated, not by the Federal Government, but by the industry
itself as, sort of, the center of deep water operations which
is responsible for a great portion of this nine billion.
You said there's a road, LA 1. That is a highway, the only
highway that leads to Port Fourchon. You testified that it
would only cost $315 million to complete if we did that over 5
years, about $60 million a year for 5 years.
Over that same period of time the Gulf will generate for
the Federal Treasury $45 billion. Nine times 5 is $45 billion.
Do you see any reason that the Federal Government couldn't
pick up a greater portion of the building of the only highway
to Port Fourchon that generates that extraordinary amount of
money for the country?
Ms. Randolph. First let me acknowledge your leadership in
providing some of the funds that have brought us to this point.
But second, the answer is no. We do see certainly
sufficient money to pay for this highway, to ensure its
continued--the port's continued operation which would continue
the flow of money to the Federal Treasury.
The Chair. Describe, real quickly, is this a 4 lane highway
or a 6 lane highway? What is this highway look like, its
original form?
Ms. Randolph. It's a 2 lane.
The Chair. Is it elevated at all or is it at or below sea
level?
Ms. Randolph. The portion that is unimproved is below sea
level and so anytime----
The Chair. Does that make any sense to you to have a 2 lane
highway below sea level connecting America which is a great
energy super power with a resource that generates $9 billion a
year for the Federal Treasury?
Ms. Randolph. No, Senator, it does not. We also tolled this
road in order to repay the loan.
The Chair. So the people that live there that use it the
most have to pay for the whole country to generate the $9
billion for the Nation?
Ms. Randolph. That's correct, Senator.
The Chair. Yed.
Let me ask you, Mr. Webster.
Your call for access, I think, is really important for the
sportsmen. That's very important to the culture and history of
Louisiana and Alaska. Of course, you're looking at the 2
powerful sportsmen States and others but--and sportswomen
States, I should say.
But the access that you seek, is there any conflict with
the access that Mr. Taylor seeks with the motorized sport
access as opposed to the traditional hunting and fishing or
have your organizations figured out a way to work together or
is there any conflict? I'm going to ask both of you.
Mr. Webster. I mean, it's a great question. The access that
I referred to most specifically is access to public lands.
There's actually a lot of public lands that you can't even get
to because they're landlocked. There's basically, significant
areas of public land that you just can't even get to unless you
maybe fly in or something like that.
So having those programs like making public lands public or
the Hunt Act would actually, you know, provide money to work
with landowners.
The Chair. Making public lands actually public.
Mr. Webster. Making public lands actually public.
I think in terms of once you get onto those forests, you
know, we support multiple use management which means that
motorized access is clearly an important component of uses on
public lands. There's also areas that have priority fish and
wildlife habitats where, you know, there needs to be
conservation in place to make sure that those habitats produce
a lot of wildlife. That is done at the local level through the
local land use planning.
I think we probably both agree that, you know, we look at
local land use plans there may be some things in there that
we'd do a little differently. But that's--but I think
conceptually we agree.
The Chair. Conceptually it can be worked out at the local
level usually.
Mr. Webster. Yes.
The Chair. Mr. Taylor, real quick, 30 seconds.
Mr. Taylor. Sure, yes. I would pretty much agree with what
he said. Say that there is a, you know, pretty significant
amount of overlap between the people who buy our member's
products and the people who go hunt and fish. In fact, a lot of
hunters use ATVs and ROVs for those purposes.
There's obviously a great opportunity for us and other
organizations to work together. We'd be happy to do that.
The Chair. Including it's not just the off road vehicles,
but it's the recreational vehicles, the RVs, the camping
industry is a huge industry in our State. In fact, Angus King
just told me he's going on a camping trip with his RV and wants
to come down to visit in Louisiana. So we'll look forward to
hosting him, the Senator from Maine.
Senator Murkowski.
Senator Murkowski. Thank you, Madame Chairman.
As we're talking about motorized vehicles I had an
opportunity to go to the southern border on Friday, out to
McAllen, Texas. Very clear impressions there, that as we deal
with border enforcement issues part of our reality in being
hamstrung in our ability to enforce is that we have public
lands along that border that are held by the Department of
Interior in refuge and wilderness status. We can't get access
to a road, to a trail for an ATV so our customs and border
patrol agents can patrol that.
We're not asking for a major highway around there, but I
know that this hearing is designed to look specifically at how
we derive revenues. We also need to think about national
security issues and how we enforce our own laws when you
juxtapose that with other priorities within the Federal
agencies. It's something that I'm working on and I would hope
that the Committee would have an opportunity to look at just
that.
I wanted to comment, Dr. Nelson, on some of the points that
you raised and the fact that in Utah you are, you're, actually
working to expand your access in certain areas despite the
Federal policies. What I've heard from just about every one of
you is that whether it's in oil and gas or whether it's what
we're doing for multiple use and recreation--motorized
vehicles, we're, kind of, doing it in spite of some of the
hurdles that are put in place from a Federal perspective.
The example again of not being able to site solar
facilities on our public lands, it just seems so inconsistent
with this message from this Administration that we want to move
toward renewables. Here's Utah, a perfect example.
You have oil and gas resources.
You've got the potential for renewable.
It's the Federal policies that are limited your ability to
access any of them.
I--the term that you used, Dr. Nelson, non-preferred energy
options, is one that, I think, we need to be paying attention
to. You can't say we have an all of the above energy policy
while at the same time say that some of these are not exactly
preferred. So I think it is important that our States do what
they can to, as you say, take back the reins.
Easier said than done, but these are issues that, I think,
that we need to address.
The Director is still in the room with us here, Madame
Chairman. I'm going to be submitting a couple other questions
to him for the record. But one that I would like him to look
into is according to honors statistics.
Back in 2003 the reported revenue from Alaska was $97.7
million. Just 10 years later in 2013 it was down to $33.6
million and this includes rents, royalties, bids, etcetera. So
I'm going to be asking him to outline for me what he thinks
explains this trend and whether or not it is reversible.
Senator Murkowski. I think the question that I will leave
Mr. Pearce with is one that relates to management of our timber
resources in Alaska. As you may know the Governor in the State
has appointed a State timber task force to come up with ideas
as to how we can increase timber production. One of the
recommendations from that task force was to create a 2 million
acre State forest out of our current national forest system
lands.
So the question to you is whether or not the National
Forest Coalition and the Schools Coalition would support States
managing some of our Federal lands on a pilot project basis to
test the effectiveness of State management.
Is that something that the coalition has looked into and
would be supportive of?
Mr. Pearce. Absolutely. In fact there's a similar
discussion at the--in Idaho. As you know, we have two and a
half million acres of State trust land in our State which
actually goes to counties, schools and at different levels. So
absolutely we would support that.
Senator Murkowski. Good. Good to hear that.
Mr. Pearce. Be willing to help with that.
Senator Murkowski. Great.
Then the last question here and this is to you, Mr. Shafer.
You have referred to the revenues that we see coming from
offshore, but you also refer to the cancellation of the
Atlantic lease sale back in 2011, lack of a current schedule.
What does this lack of certainty going forward do to the
prospects, not only for oil and gas revenues but just to the
economy there in general?
Can you speak to that very quickly?
Mr. Shafer. Yes, absolutely.
I mean, I think at this point the lack of certainty around,
specifically, the Atlantic really is probably going to prevent
any serious activity from operators. Within the last few days
they've approved some seismic, you know, initial planning for
seismic in the area. But without the prospect of actually
saying, well in 3 years or 4 years or 5 years, we're going to
be able to lease that area.
It really wouldn't make a lot of sense for operators, in my
opinion, to go out and spend, you know, hundreds of millions of
dollars to shoot those seismic studies without the prospect of
actually being able to lease the lands in the future, so.
Senator Murkowski. OK.
Thank you, Madame Chairman.
The Chair. Thank you.
We're joined by Senator Sanders for a round of questioning.
I'll get to the Senator in just 1 second.
Mr. Pearce, I want to ask you this question about PILT,
payment in lieu of taxes, as well as rural schools. It's a very
important issue to many members of this committee. Louisiana
doesn't benefit as much as some of the western States.
But as you can see on this chart up here this issue of
Federal land and use of Federal land is really, it's almost a
story of 2 different stories depending on whether you're an
eastern State or a western State. Those of us in the middle are
literally, in the middle.
There are, it looks like, 10 States that have more than 25
percent of their land owned by the Federal Government with the
highest being Nevada at 81 percent, Utah at 66 and Alaska at
only 61. I've been thinking it was much higher, but 61 is high.
But Nevada is 81. Washington State is at 28 and then Hawaii is
at 20 percent which would be interesting.
Then there are 10 or 12 States that have less than 2
percent of their land federally owned, Texas, Massachusetts,
Maine, Rhode Island, New York, Kansas, Connecticut.
So it really is a tale of almost two countries, the way we
treat Federal land and how we use it. They are very different
perspectives based on whether you're in a State with 1 percent
of Federal land or whether you're in the State of Nevada with
81 percent Federal land. You could see things very differently.
Our committee is really trying to find a way to unite the
country over some of these issues. So we have quite a job ahead
of us.
Let me ask you quickly and I'll get to Senator Sanders.
Tell me about rural schools.
Some members are very, very supportive of maintaining a
more permanent source of funding, others, the ranking member
said this in her opening statement. She supports it as a
temporary bridge to getting back to timber sales. She'd rather
cut timber and use it for the benefit of everyone rather than
to watch it burn. We have a graph that's pretty dramatic about
how much land is being burned.
You can't do anything with burned timber. Nobody can make a
whole lot of money on it.
So what are your--what is NACo saying and the Westerners
about rural schools? Do you want to see it permanent? Do you
believe it should be temporary? Should we match it with some
sort of increase in timber production or what is your ideal,
you know, if you had to say, what is your ideal position on
rural schools?
Mr. Pearce. The folks that sit on my board that talk about
this issue and especially the county, the schools, excuse me,
and States where the money goes directly to the school. As you
may know, many States, the money is actually--goes to the State
and is used as part of an offset to their basic education.
So Washington schools receive a portion directly.
California schools they get it totally.
We would like to see a return to at least more revenue
production within those counties where the schools are located
mainly because, as you look at SRS, and you look at the last 20
years without guarantee money and SRS, there's been a reduction
over that period of time so folks are hanging on.
How much is the reduction going to be next year?
How much is the reduction going to be the year after?
The Chair. So they need a permanent--what they need is
consistency.
Mr. Pearce. Absolutely.
The Chair. Something they can plan for. The money, if it's
the same rural schools, it should actually go to schools, not
to the slush fund or general fund of States. It should actually
work its way to schools.
If it is going to be made permanent or more reliable then
you also would testify that you'd like to see timber harvest
increased as well. Is that----
Mr. Pearce. We believe timber harvest, sustainable timber
harvest, sustainable forestry, is an absolute must in the West
otherwise we are just going to burn it all up. We certainly are
doing that now.
In my State that I come from you have the Wenatchee fire
which is 109 square miles currently, 109 square miles. You had
the forest fire last year in the Tehama County in California.
It was 400 square miles.
I don't think people actually think in those terms. Often
we talk about acres and folks aren't really used to acres
unless you're a farmer or rancher. But when you talk about 400
square mile fires you realize how big that is.
Yes, we have to have forest management, no matter what, in
order to manage this precious resource that we have. Timber
harvest certainly is going to be part of that.
The Chair. Thank you.
Senator Sanders.
Senator Sanders. Thank you, Madame Chair. I apologize for
not having been here earlier. I thank the panelists for being
with us.
I must say that this is a very interesting hearing because
we talk about leveraging America's resources as a revenue
generator and a job creator. We talk about how we might
increase the production with the extraction of fossil fuel on
Federal lands. Yet the most important issue facing our planet
is not being discussed. That is whether or not we really do
want to extract more fossil fuels from Federal lands or any
other lands.
Mr. Pearce, a moment ago just made reference to the
terrible forest fires we've seen in California and elsewhere.
My understanding is that the forest fires of today are more
severe, more frequent than they've ever been before. What I
think the scientific community will tell you is, yes, that has
a lot to do with climate change and the warming of the planet.
Here we are talking about how we produce more carbon dioxide to
warm the planet even more.
I think, Madame Chair, the President has asked for over
$600 million to fight forest fires in the West. Then on and on
it goes. So when we talk about revenue I think it's appropriate
also to be talking about the fact that if we do not move away
from fossil fuels and transform our energy system away from oil
and coal and gas to sustainable energy and energy efficiency,
the truth is that while, yes, I know extraction of fossil fuels
will create jobs, will provide revenue.
But in the long run if we are creating a planetary crisis
which will cost us hundreds and hundreds of billions of dollars
and make the planet uninhabitable. I think we have to refocus
how we think about this issue.
Madame Chair, I would just, for the record, mention that--
and again when we talk about extreme weather nobody, you know,
says that this event whether it was Katrina in your State or
Irene in my State, is directly caused by global warming. But
what the scientific community does tell us is that we are more
likely, we are more likely, to see these types of events. There
have always been forest fires. But the extent of forest fires
today and the frequency of them, clearly, has a lot to do with
the warming of the planet and the drying of the forests and so
forth.
So I just would, for the record, like to point out when we
talk about revenue, when we talk about money, extreme storms
continue to cost us billions of dollars each year. According to
a White House report released last fall, the U.S. has had 144
climate related storms that each cost a billion dollars or more
since 1980. Combined these disasters have cost more than a
trillion dollars.
In other words, taxpayers are spending huge sums of money.
The estimate is that's only going to go up in order to fight
the impact of climate change. In terms of forest fires, in
terms of storms, in terms of floods, in terms of droughts,
etcetera. NOAA reports that the super storm Sandy caused $65
billion in damage.
How many more super storms Sandy are we going to see unless
we get a handle and reverse on climate change or reverse carbon
emissions?
According to a report published in the Journal of Nature,
flood damage in 136 of the world's largest coastal cities could
start at a trillion dollars each year by 2050 because of
climate change combined with rapid population increases. These
trends are only escalating.
Frank Maddock, of the Reinsurance Association of America,
Madame Chair, not noted as one of the more progressive
organizations in the world citing the Munich Reinsurance Agency
noted, ``Globally climate change alone will increase worldwide
losses for reinsurance companies by 100 percent by the end of
the 21st century.''
So I say, respectfully, and I, you know, very much
appreciate all of the panelists for being here. But Madame
Chair, it is just not good enough for us to continue to talk
about some of the positive aspects of the production of fossil
fuel. I know that there are. I know it creates jobs. I know it
increases revenue. We all know that.
But we have to look at the broad picture and understand
that if we don't transform our energy system and move away. I
know it's not going to happen tomorrow, but start moving away
aggressively from fossil fuel to energy efficiency. We talk
about energy efficiency. We create substantial numbers of jobs
weatherizing older homes in this country, getting our
transportation system much more efficient.
When we talk about sustainable energy, solar. We're growing
a whole lot of jobs in the solar energy, many of them good
paying jobs. Wind. Geothermal. Biomass. Etcetera.
So, Madame Chair, I appreciate very much the testimony of
our witnesses. I don't mean to be antagonistic. You're doing
your jobs.
But I do believe that if we're going to say this planet and
make it habitable for our kids and our grandchildren, we have
to rethink some of the basic premises that we've been
discussing today.
I thank you for the time, Madame Chair.
The Chair. Thank you, Senator Sanders, for that important
perspective.
But I would note that, you know, as noticed in the hearing,
this is much broader than oil and gas. It's about all resources
on Federal lands, all income to Federal lands including
recreation, including alternative energy sources, including
solar, including sportsmen and non-energy related revenues.
What we have determined which is very interesting is that
the total amount of revenues that come into the State from all
these sources, I mean to the Federal Government, is equivalent
to, well, since 1982, 1985, is $250 billion which is--sounds
like a lot of money. It is. But it is only 1 year of corporate
income tax receipts.
So from 1985 every dollar that the Federal Government has
brought in in the management of its resources, all, timber,
oil, gas, solar, minerals, recreation, hunting, fishing,
etcetera. We're leaving out a little bit of the timber revenue
because that's done in a different department, is $242 billion.
In 1 year the corporations of America pay that in tax.
So in one hand, it's a lot of money. We have to be careful
about how we spend it.
On the other hand you could argue that the environment is
really getting short changed because we're not spending nearly
enough of that to do coastal restoration, sustainable living,
at least along the coast, using the benefit of the local
advisory committees for smart land use.
Then Dr. Nelson, Senator, made a very good point. Would you
restate that while the Senator is here, about the lack of solar
on public land. If we should be moving to solar what is
happening in Utah and what did you testify as to what's not
happening on public land for solar?
Mr. Nelson. Thank you for that question.
You know, Utah really supports all types of energy
development whether--and we have opportunities for all of it.
We have geothermal. We have wind. We have solar. We have oil
and gas. We have coal. Of course, we have the unconventional
resources of oil shale and oil sands.
Solar, in particular, which I mentioned, as a nascent
industry which we've really seen coming on board in the last
year, really due in large part to market conditions plus the
interest of the utilities aligning under the public utilities,
PURPA, Public Utilities Regulatory Policy Act of 1978 has
allowed this opportunity for these resources to develop.
We also, in Utah, have an extensive allocation of land that
has been determined on federally managed land as a solar
development zone. We, in the last, I want to say about a year,
have had approximately 19 solar projects that have signed
contracts with PacifiCorp, with the utility. None of those
projects are located on federally managed lands. They are all
either on private lands or State lands.
The reason is because the process of accessing the
federally managed lands, even in the context of a defined
renewable energy development zone, including solar energy
development zone, the process is just too lengthy to realize
the market benefits of developing.
Senator Sanders. Madame Chair, I mean, I think Dr. Nelson
makes a good and fair point.
Mr. Nelson. Yes.
Senator Sanders. Something that we should examine. I guess
I will conclude by saying I'm not a believer in all of the
above. I know it's a catchy bumper sticker statement.
If some of all of the above is destroying our planet I
think we have to limit what we are talking about. As I said
before, I do need--I do believe that now is the time to
transform our energy system.
I think Dr. Nelson is right. We've got to make it easier
for people to develop solar projects, wind projects,
geothermal, biomass, etcetera.
The Chair. On public lands.
Senator Sanders. On public lands.
The Chair. Yes.
Senator Sanders. So with that, Madame Chair, I thank you.
The Chair. Thank you.
Senator Sanders. I thank the panel.
The Chair. Thank you all very much.
Let me ask one more question. Would you put up the Land and
Water Conservation Fund because I've been a champion of funding
the Land and Water Conservation Fund since I got here almost 20
years ago. It was created in 1965.
For the record of this committee, I want it to be noted
that only in 2 years since 1985 or 2 years actually since the
history of the program. It's not on here, but we went back and
looked, since it was created in 1965.
So somebody help me with my math. That's more than 40
years, is almost 50 years. It will be fifty years this year or
next year.
It has only been funded, fully funded, to the authorization
level twice. So think about this. You should ask a question. Is
this a success or a failure?
The creators wanted to take a portion, like a conservation
royalty which makes a lot of sense from a stewardship position,
from a leadership position, from are you being, the question.
Are you being a good steward, if God was asking, you know, are
you being a good steward?
When they created this I think they thought that the
Federal Government would be willing to set aside just a few
million dollars, one billion a year, $900 million a year, as a
portion to give back to the environment, broadly speaking in
many ways. State grants to do a broad range of things, to
protect the environment and to promote, I guess economic
development, etcetera. Recreation was a big part of this early
finding for this group that created it.
It was actually based on a lot of local recreation needs of
kids that live in places that they don't really ever see trees
really. They don't see lakes. They can't access them unlike
places in Louisiana where we take that for granted. There are
millions and millions of children that have never, ever seen a
lake, less alone had a chance to swim in one.
So this was created to help the public access public lands
and to use the public lands for their benefit, revenue
creating, job generating and pleasure and enjoyment. It's only
been funded 2 years out of 50. So at the 50th anniversary I
think we need to give it a good old try. You know? Let's try
again to see if we can get this right.
That's going to be one of the goals in the piece of
legislation that this committee puts forward is full funding
for Land and Water Conservation and how the full funding will
be $900 million. How it's allocated and to where it goes? It's
going to be an interesting debate. How much of that is directed
by Federal agencies and how much of it is directed at the State
and county and local level for the benefit of the people
actually on the ground in places so divergent as Utah, Vermont,
Louisiana, Texas, California, Alaska.
So that is just a, I think, a really important touchstone
that I wanted to get on the record before we conclude.
I'm going to give you all each, you know, 20 seconds to
finish up something that you didn't get to say that you really
feel like you want to get on this record. The record will stay
open for 2 additional weeks.
But I think with the 50 year anniversary of the Land and
Water Conservation Fund, the greatest destruction of land
happening off the coast of Louisiana, the erosion of the land,
almost a destruction of an internationally beloved city of New
Orleans. This is a time to really review how, where these
revenues are being generated. How they're being generated and
how they should be disbursed for the benefit of the Nation, the
taxpayer, the environment, to generate jobs, economic
prosperity and to be good stewards of the land, air and water
that we've all charged, we've all been charged to be.
Ms. Randolph, President Randolph, your concluding remarks?
Ms. Randolph. Senator, you assisted us in forming Parishes
Against Coastal Erosion because you saw that numbers would help
us tell people about our cause and why--what we needed to do.
We took that role and translated and discovered the National
Association of Counties and learned that others throughout this
country have natural resources which generates funding for the
Federal Government. But have problems also with how they are
allocated. How they're harvested. How they're mined. Every
natural resource out there.
So we've learned that through this association we are going
to continue to educate our community members, our State leaders
and make this one of our major causes is ensure that these
natural resources are--and the end product, the revenues
generated by them are allocated back to those who feel the
impact of them and back to those who enjoy their resources as
well.
So thank you for this.
The Chair. Thank you very much.
Mr. Pearce.
Mr. Pearce. Yes, we fully support the full funding of LWCF.
We think that that it has to go back to some of the original
intensions. Monies to the States, to the counties, to the State
parks, so on which has been lost along the way to some extent.
Clearly we think that there's a connection between LWCF and
potentially funding PILT and SRS. We do believe that SRS needs
to be fully funded so that these schools and these counties
continue to get the services that they need to give, as I
discussed in my testimony. But clearly we need to find
appropriate ways to manage those forests that we have.
Thank you.
The Chair. Thank you.
Mr. Webster.
Mr. Webster. Madame Chairwoman, in addition to, you know,
restating our full support for the Land and Water Conservation
Fund, I did want to bring up one of the issues that ties a lot
of things we've been discussing today which is wildfire
disaster funding. As a result of significantly increased costs
in fighting wildfires the U.S. Forest Service's budget has
basically been hammered when it comes to doing other things
like managing the forest and actually reducing fuel loads to
reduce the potential for future fires.
The Wildfire Disaster Funding Act, S. 1875, you know, would
take the most extreme fires and create an emergency account for
those 1 percent of fires. So when we did reach those levels
that money would come out of a separate account and help ensure
that the Forest Service could continue to do its job which is
really important when it comes to managing wildlife habitat,
but also preventing, you know, fire.
The Chair. Thank you for raising that. That was a subject
of last week's hearing. I was happy to conduct a hearing on
fire borrowing.
Happily for Louisiana we do not have forest fires like in
the West because we're actually managing the Kisatchie Forest
and doing prescribed burns and clearing the underbrush to
prevent the fires and increasing our timber harvest.
Interestingly the southeast forest which the forester, our
Chief Forester testified, is really a model, potentially, for
some of our brethren out in the West because we're seeing so
much success.
Now we don't have the similar climate as the West. We don't
have the drought conditions. But some of our pilots have been
extremely successful. So I'm looking forward to sharing that.
But thank you.
But our time is running short, but Senator Lee--and I know
this is very important. If you wanted to just have a question
or two. We need to close up in about five or so minutes.
But go ahead.
Senator Lee. Thank you very much, Madame Chair.
Thanks to all of you for joining us.
Dr. Nelson, it's great to see you again. I was wondering if
you could tell us just a little bit about what's happening in
Utah. I know in Utah, like so many other places, production on
Federal lands has been declining even while production overall
has been on the increase.
Of course, what makes that so significant is that two-
thirds of our land is Federal.
So how is Utah able to do that? What can you tell us about
the sufficiency of the environmental restrictions that we have
on the books in Utah? Is Utah able to achieve these things on
the non Federal lands without degrading the environment?
Mr. Nelson. Thank you, Senator Lee. I really appreciate
that question. It's also very nice to see you again as well.
Maybe I'll try to address that question and also maybe
provide some concluding comments, Madame Chair.
I think local management of resource is really key. I think
your example of forest management and prevention of fires is
key. We work very closely with our local regulators, with our
communities, with industry to manage all of our resources.
As I mentioned at the beginning of my testimony, we not
only have these conventional energy resources which are so
important to the vitality of our economy, we also have
beautiful landscapes and vistas that we want to protect. We
have a proven track record of restoration and collaborative
efforts in Utah.
So I'll go back to, kind of, my point that really there are
2 key issues.
One is access to the resources and our ability to, in Utah,
to effectively manage those resources.
So the challenge is on permitting with regard to federally
managed lands are very, very difficult. They, as I mentioned
with respect to solar developments, the process of getting a
project done is just too lengthy to even realize the benefits
of those very popular resources and supported resources today,
not to mention for some of our conventional resources.
So we have targeted State lands and private lands recently
to see increases, but we will continue to work with our
communities, with policymakers, with local stakeholders, with
regulators to balance both the environmental and the
development outcomes.
Senator Lee. If I can ask one follow up.
So when we do have significant development going on
elsewhere in the State, but we have diminished development on
Federal lands, I think this ends up adversely,
disproportionately affecting some parts of the State where the
percentage of Federal land is even higher than the statewide
average of two-thirds. We've got some counties where the
Federal Government owns well in excess of 90 percent of the
land.
Can you tell us a little bit about how that affects some of
these communities at a local, real level when Federal
production is diminished either as a result of an unnecessarily
prolonged permitting process or otherwise?
Mr. Nelson. I think one of the things that we see in a lot
of these rural communities, I mentioned energy jobs are
particularly high paying. They're 190 percent of the average
wage in Utah. When these communities can't develop those
particular resources what we see is that there really is
stagnation in their ability to realize higher incomes and also
to realize higher levels of employment.
So what we see in these communities is typically that they
are subject to lower wage jobs and they're also subject to
longer periods of suppressed employment. So I think that access
to those resources is critical for bringing up wages in our
rural communities, in particular, because I think they are
disproportionately impacted and also allowing them the same
favorable opportunities for economic growth.
Senator Lee. Great.
Thank you, Dr. Nelson.
Thank you, Madame Chair.
The Chair. Thank you.
Mr. Shafer, your last word and then Mr. Taylor and we're
going to adjourn.
Mr. Shafer. I guess just a quick response to Senator
Sanders. I think the thing that people should understand is
that the U.S. and the world is going to continue to consume oil
and gas for the foreseeable future. The real question is do we
produce it here or do we produce it overseas?
If we produce it here that means jobs. That means
government revenues. Really that means regulations in the U.S.
safety, focus on safety, focus on the environment, compared to
some of the other countries less developed, less strict
regulatory requirements.
So it's not really a yes or no oil and gas at this point in
time. It's a yes or no U.S. jobs, U.S. Government revenue.
The Chair. Thank you.
Mr. Taylor.
Mr. Taylor. Thank you.
I can also close with a Utah example. What's going on in
Utah with Congressman Bishop and others is they've got all the
counties, all the stakeholders together, trying to figure out
the best way to manage public lands. They've essentially got
everyone in a room talking to each other and hammering this
stuff out.
That is the way forward in our belief. But through it
accomplish all of our goals with these obvious, you know,
butting of heads and what have you. So we would encourage, you
know, that model to be followed and not the model of simply
drawing an enormous circle around a big map and saying this is
going to be specially designated. We're going to manage it to
limit uses.
The Chair. I'd like to end with putting the lands map up,
please, that we had. Say that, you know, this committee takes
this work very, very seriously, broadly. There are very
divergent views.
But as Chair I really want to forge a compromise on this
use of resources for the Nation to create jobs, to expand
prosperity, to help build a middle class, to be sensitive to
the environment and very, very sensitive to the local
community's ability to work these issues out to achieve all
those ends. I don't think it has to be an either/or. I think we
can find a way.
For the States that have high land under the Federal
Government. The Federal Government is going to have to be more
cooperative to achieve this. Because they are a big
stakeholder, I mean, 81 percent of the land is owned by the
Federal Government in Nevada. So achieving this cannot be
achieved without the Federal partners leaning forward.
Now in Louisiana only 4.6 percent of our land is federally
owned. We can do a lot of things. If we could just get revenue
sharing we could save our coast. We're going to have to and we
need a partner to do that.
In some of the other States it's minimus the amount of--
diminimus the amount of money that--the amount of land that is
owned by the Federal Government. So this is like, Senator Lee,
when I put this graph up it really shows us, you know, how the
West has such a different.
You can understand view of this then the East Coast States,
but this is one Congress for all States. So we're going to have
to find a way forward which is not going to be easy, but
definitely doable, and accomplish some great things over the
next year or 2 or 3 or more.
So, thank you all very much.
Meeting adjourned.
[Whereupon, at 1:01 p.m. the hearing was adjourned.]
APPENDIXES
----------
Appendix I
Responses to Additional Questions
----------
Responses of Sean Shafer to Questions From Senator Landrieu
Question 1. In your testimony, you state that the federal
government alone receives $85 million per day from the oil and natural
gas industry while state and local governments receive millions more.
According to experts with the American Petroleum Institute, this $85
million is a combination of two income streams that includes: (1)
rents, royalties and bonuses from production or access to development
on federal lands; and (2) corporate income taxes paid by refiners and
exploration and production businesses and reflected in IRS reporting
data. In addition, your testimony notes that offshore production is
estimated to provide more than $9 billion/per year to the federal
government.
A. Can you explain how this $85 million--or, generally, how much of
this revenue is contributed by offshore production? Onshore production?
Answer. Approximately $25 million of this daily revenue is
associated with offshore production, with the remainder attributable to
onshore production. Government revenues from offshore production are
higher relative to production than onhsore production as almost all
offshore production in the U.S. takes places in federal waters in
comparison to onshore production which takes place primarily on private
land. This is because of the federal government receives all royalties
(and shares them to a limited extent with certain states) for federal
offshore production offshore production, whereas royalties from onshore
production on private land are collected by private land owners.
Question 2. In your testimony, you assert that Quest Offshore has
determined that the offshore oil and gas industry has produced 375,000
jobs, but that the contributions of the offshore oil and gas industry
are limited due to the fact that approximately 85 percent of acreage of
federal offshore waters is inaccessible to development. You go on to
point out that Atlantic Coast OCS activities, if allowed, could create
an additional 80,000 jobs and would generate an addition $645 million
per year in additional federal revenue by 2025.
A. Can you explain what percentage of the current 85 percent of
inaccessible acreage includes the Atlantic OCS in your projections?
Sean Shafer: The Atlantic OCs is approximately 15.7 percent of the
total OCS which corresponds to approximately 19 percent of the areas
unavailable to offshore oil and gas production.
B. More broadly, has Quest Offshore prepared estimates on how much
revenue and jobs could be generated if offshore development were to be
expanded to federal offshore waters in addition to the Atlantic OCS?
Answer. Total government revenues from Atlantic OCS oil and gas
activity were projected to reach over $12.1 billion, with the split
between federal and state revenues dependent on new legislation. Quest
is currently completing analysis on the Pacific OCS and the areas of
the Eastern Gulf of Mexico which are currently inaccessible. From this
analysis opening the Pacific OCS to new oil and gas activity could lead
to the creation of around 330 thousand jobs and $15.7 billion of new
government revenue by 2035. Opening the areas of the Eastern Gulf of
Mexico currently inaccessible to oil and gas activity could lead to the
creation of around 230 thousand jobs and $10.4 billion of government
revenue by 2035.
Response of Sean Shafer to Question From Senator Scott
Question 1. Recently, BOEM released an updated assessment of the
oil and natural gas resources in the Atlantic OCS that showed a 43
percent increase in oil and a 20 percent increase in natural gas. How
would this increase in resource estimates impact the numbers in your
Atlantic OCS study?
Answer. The study anticipated increasing resource estimates in the
Atlantic OCS due to historical trends in resource estimates in areas
such as the Gulf of Mexico and North Sea as areas are explored.
However, the increased resource estimates likely make the study more
conservative and indicate additional upside for oil production in the
Atlantic OCS. This increased upside in oil production would be expected
to correlate with an increased upside in job creation, government
revenues, GDP and other effects of Atlantic OCS oil and natural gas
production.
______
Response of Joel Webster to Question From Senator Landrieu
Question 1. In your testimony, you mentioned proposals to provide
public access to currently landlocked public lands, which I support.
Can you elaborate?
Answer. The number one reason hunters and anglers stop pursuing
their outdoor pastimes is lack of access. It begins with a single bad
experience in the outdoors, perhaps an unexpectedly locked gate, an
overly-crowded boat ramp, a no trespassing sign; then this problem of
reduced access and diminished quality of experience metastasizes over a
hunting season or two, until sportsmen -and women ultimately decide not
to purchase licenses, permits, tags, ammunition, hunting gear, fuel,
food, and lodging. The negative economic impacts that occur when people
stop hunting and fishing are profound, and impact communities across
the country, and certainly in Louisiana, in a way that means fewer jobs
and less money for conservation.
Answer. The first major proposal to enhance public access is the
Land and Water Conservation Fund. LWCF has only been fully funded twice
in its 50 year history, and yet still the program has produced
meaningful benefits for American sportsmen. There are examples across
the country of LWCF dollars that have expanded access for hunters and
anglers, making tracts large and small available for outdoor
recreationists, and improving wildlife habitat. Each year, as
Louisiana's resident and non-resident waterfowl hunters head to the
marsh, they could well have in their sights mallards and pintails that
hatched in wetlands protected with LWCF dollars. The funding mechanism
for LWCF expires soon, and Congress will likely be debating an LWCF
reauthorization package; LWCF should not only be reauthorized, but it
should also be taken off-budget and treated as a true trust fund, and
not to be subject to the annual appropriations process.
The second proposal for enhancing sportsmen's access that TRCP
supports is the Making Public Lands Public initiative, which would
utilize 1.5 percent of LWCF funds for use in projects specifically
aimed at enhancing recreation access. For the past several years,
President Obama has included MPLP in his budget request, and much has
been done administratively via this provision to improve access. TRCP
and nearly the entirety of the sportsmen's community believes it is
imperative that the Making Public Lands Public concept be memorialized
in statute, as was attempted in the recent floor consideration of the
Bipartisan Sportsmen's Act of 2014. Making Public Lands Public also
underscores the need for durable off-budget reauthorization of the
underlying LWCF program.
The third legislative vehicle for improving sportsmen's access is
the Hunt Unrestricted on National Treasures (HUNT) Act. Similar to the
Making Public Lands Public concept, the HUNT Act specifically targets
public lands made inaccessible by prevailing land ownership patterns.
The HUNT Act would require BLM and the USFS to determine where large
tracts of ``landlocked'' public lands exist, and then identify the
steps necessary to make those lands accessible to the public. A recent
report indicates that as many as 4 million landlocked acres may exist
across the West. After identifying both the tracts, and the barriers to
access, the HUNT Act would utilize 1.5 percent of LWCF dollars to
purchase voluntary access easements from willing landowners to open
these public lands to use by their owners, the public. In some cases, a
small investment in a spur trail or parking lot, could open tens of
thousands of acres to public use, a wise investment in the future of
hunting and angling.
These three interrelated programs comprise a significant portion of
the sporting community's access initiative. Of course, there are many
programs, from the Forest Service Legacy Roads Program, to the Fish and
Wildlife Fish Passage Program, to the USDA's Voluntary Public Access
program that improve not just access, but improve the quality of the
habitat that is being accessed. Because it's not just about having open
gates, but what is on the other side of those open gates, that matters.
We sincerely thank you for the opportunity to testify, and to provide
you with this further information on access, one of the most important
issues to America's hunters and anglers today.
______
Responses of Laura Nelson to Questions from Senator Landrieu
Question 1. Do you think that all states that play host to energy
production, whether onshore or offshore, should receive a fair share of
those revenues back to the state or local communities that host that
production? Why or why not?
Answer. Yes, we absolutely believe that states should received
their fair share of mineral lease royalties, and that comparable
percentages should be contemplated regardless of a facility's onshore
or offshore status.
With respect to western states in particular, given the unusually
large portion of federal lands in the states located to the north,
south, and west of Colorado (28-81%), the 50% royalty allocation is
simply not enough to mediate development impacts and support our
educational systems and other needs. 50% may suffice for a prospective
offshore wind state such as Massachusetts, because only 1.6% of the
land in that state is federally owned. This matters because a state
like Massachusetts--or Pennsylvania, and other Eastern states--has
enough of a tax base to support its social needs. Conversely, in a
state with approximately 70% of its land under federal control, if
federal mineral lease royalties and other associated revenues are not
fairly allocated, communities will undoubtedly be underserved. Impacts
extend beyond the communities where development takes place and royalty
allocation needs to meet the peripheral impacts, as well.
A more sensible approach would be to allocate royalties to states
on a sliding scale associated with the portion of the state under
federal control. Such an arrangement would not mean one deal for Alaska
( 90%) and one deal for ``everyone else'' ( 50%), but rather a scenario
in which Utah and Nevada were treated in a way that, appropriately, was
more comparable to Alaska than, say, to Virginia. This would better
ensure the efficient allocation of benefits and costs of developing
resources that contribute to our regional and national welfare.
Question 2. In your testimony, you mentioned that ``Utah's goal is
to take back the reins'' on resource development. I understand that
almost 70% of Utah's lands are owned by the Federal Government. How do
you balance your desire for more Utah state control over resources when
the Federal Government owns such a large majority of the land?
Answer. There are a variety of ways. One of the primary paths
forward, as suggested by Rep. Bishop's good work in recent years, is to
pursue comprehensive land swaps that help consolidate lands of priority
for federal land management agencies while doing the same for the
state. While this may do little to affect the simple percentage of land
in federal hands, it can have a dramatic effect on the state's ability
to access its resources. This is true because it allows the state to
take its dispersed checkerboard of holdings and consolidate them in
areas of high economic value. Not only does this improve access to
specific, concentrated resources, but it also adds value because the
larger the area, the less likely that a costly federal nexus will be
established by the construction of an access road, a transmission
facility, etc. Land swaps are an important opportunity that require our
ongoing commitment and diligence.
Another opportunity is in further delegation of regulatory
responsibilities for activities underway on public lands. Our
experience has been that federal regulation in the realm of energy
development is steered equally by science and by controversy. This
unfortunate approach leads to over-zealous regulation that is not
reasonable from a cost-benefit perspective, and that puts an undue
burden on companies hoping to invest and create jobs in our rural
communities. States like Utah, on the other hand, tend to base their
regulations on a sensible ``best practices'' approach that leads to
comparable outcomes at far less expense. The federal government should
recognize states with good regulatory track records, judging by
environmental outcomes not environmentalist outcries, and should be
prepared to delegate regulatory authority accordingly.
Question 3. As a follow up, in your testimony, you call for the
Federal Government to support an increased role for Utah in managing
its resources. Can you give me some examples of concrete steps that
could be taken to achieve this?
Answer. Utah has demonstrated its ability and willingness to manage
its resources in a number of ways, including, but not limited to,
preserving threatened species, regulating hydraulic fracturing
practices, and pursuing land exchanges that advance multiple goals.
Utah's Grahams Penstemon Conservation Agreement is a recent example
of diverse stakeholders working together within the state to chart a
species management path free of cumbersome Federal regulations.
Agreement stakeholders included industry, state and local officials,
tribal representatives, and the U.S. Fish and Wildlife Service (FWS),
who came together to develop an approach that would advance both
conservation and development goals. Utah believes a similar approach
can be successful in addressing the sage grouse and other species of
concern. Currently, Utah's plan for sage grouse, which was developed
through a comprehensive stakeholder process, would result in protection
of over 90% of sage grouse population in the state. Impediments to
implementation of such compromise-driven initiatives have come from
special interests whose aim is to discourage development generally.
Utah believes that substantial progress in managing the sage grouse and
other species can best be accomplished by deferring to state-based
plans that address the concerns of the FWS, and that benefit from local
knowledge and expertise in the protection of sensitive species
populations.
In addition to species management, Utah has a significant
regulatory track record in managing the development of its resources. A
key example of Utah's regulatory competency is in the area of hydraulic
fracturing, a technique that has been employed in Utah for decades
without a single recorded incident of water contamination or other
adverse consequences. Another example is the process--and timeline--by
which the state reviews and approves applications for permits to drill
(APD). Utah believes that its effective approach to both the regulation
of well stimulation techniques and disclosure, and its streamlined
approach to managing APDs, are just two examples of how efficient state
processes often are by comparison to their federal counterparts.
Federal land management agencies should be encouraged either to
delegate regulatory authority to the states, or alternatively to adopt
state-specific regulatory approaches that have proven timely and
productive for state regulators.
Collaborative, compromise-oriented approaches to species management
and streamlined regulatory practices established in partnership with
states will be essential tools as we strive to make our public lands
more productive. However, improving the management of public lands is
just one way to increase states' roles in managing their resources.
Another approach is simply through land swaps aimed at the equal
advancement of development and conservation goals. Utah and its School
and Institutional Trust Lands Administration (SITLA) have been leaders
in identifying land exchanges that result in moving lands with
conservation characteristics under Federal management and bringing
resource development areas under state control. The benefits of land
exchanges are significant and include better conservation, more
efficient land development, and overall improved improved social,
economic and environmental outcomes. The challenge is that timeframes
for final approval of land exchanges have become increasingly lengthy,
resulting in lost opportunities for both development and conservation.
Utah encourages Congress to establish a streamlined process for
approving land exchanges, one with definitive timelines aimed at
eliminating the overwhelming process costs--and opportunity costs--that
exist today.
Appendix II
Additional Material Submitted for the Record
----------
National Conference of State Historic Preservation
Officers,
444 North Capitol St., NW, Washington, DC., July 30, 2014
Hon. Mary L. Landrieu,
Chairman, Senate Committee on Energy and Natural Resources, 304 Dirksen
Senate Office Building, Washington DC.
Hon. Lisa Murkowski,
Ranking Member, Senate Committee on Energy and Natural Resources,709
Hart Senate, Office Building, Washington DC.
Dear Chairman Landrieu and Ranking Member Murkowski:
On behalf of the members of the National Conference of State
Historic Preservation Officers (NCSHPO) I write to share with you
background and information on the Historic Preservation Fund (HPF) and
how it's integrally related to your recent hearing titled ``Leveraging
America's Natural Resources as a Revenue Generator and Job Creator.''
The NCSHPO is the professional association of the State government
officials (State Historic Preservation Officers or SHPOs) who carry out
the national historic preservation program as delegates of the
Secretary of the Interior pursuant to the National Historic
Preservation Act of 1966, as amended (NHPA) (16 USC 470). In 2013,
SHPOs reviewed nearly 103,000 federal undertakings, delivered 82,100
national register eligibility opinions, provided guidance and technical
assistance on nearly 1,200 historic tax credit projects, surveyed
approximately 16.3 million acres and evaluated over 135,000 properties
for their historical significance.
HPF--History
In 1976 the National Historic Preservation Act was amended to
create a funding stream, called the Historic Preservation Fund (HPF),
to implement the national historic preservation program as an efficient
federal/state partnership on behalf of the Department of Interior. The
HPF provides matching funds to SHPOs and grants to Tribal Historic
Preservation Offices who carry out the preservation programs that
preserve and utilize our nation's historic resources and simultaneously
generate revenue and jobs. Currently, $150 million is deposited
annually into the HPF. However, recent appropriations have languished
at about one-third of the authorized amount. The current authorization
expires September 30, 2015.
Like the Land and Water Conservation Fund, HPF income is derived
from offshore oil lease revenues. Following the same principal, a
portion of these Outer Continental Shelf (OCS) revenues, derived from
the depletion of non-renewable resources, results in the preservation
of another non-renewable resource--our Nation's historic places which
serve as a permanent legacy to all Americans.
HPF--Jobs and Economic Development
Community Revitalization
Nationwide, communities have experienced how historic preservation
plays a prominent and effective role in community and neighborhood
revitalization. Historic preservation combats the effects of blight and
disinvestment by using the historic built environment as a catalyst for
community change. These changes result in thriving historic downtown
districts, Main Streets, and neighborhoods becoming ``destinations''
consisting of restaurants, office space, art galleries, specialty
shops, living spaces, and civic centers.
Historic Main Streets are also frequently the heart and soul of a
community. It is not, the nondescript shopping centers or malls which
people rally around saving, tour on vacations, or use as the enduring
descriptive ``center'' of their home towns. According to the National
Main Street Center, in 2013, local Main Street programs throughout the
country experienced a net gain in businesses and jobs of 115,381 and
502,278, respectively. The total number of building rehabilitations was
246,158 and the total reinvestment in physical improvements was nearly
$60 billion. In 2013 in Louisiana, 194 new Main Street businesses
opened creating 527 new jobs and new rehabilitation and construction
projects totaled $14 million.
Historic preservation programs, such as in Juneau and Skagway,
serve not only as a means of preserving a community's history, but they
provide a vehicle for guiding that community's growth in the future--
spurring economic development and tourism while trying to save what
makes those places distinctive. For the past ten years, the Alaska
Department of Transportation has promoted the scenic byways program and
enhanced visitor attractions, including several historic buildings,
along Alaska's highways. The agency has also installed interpretive
signs at a number of highway waysides.
Historic Tax Credit
The Federal Rehabilitation Tax Credit (HTC) program, administered
primarily by the State Historic Preservation Offices with funding from
the Historic Preservation Fund, is an important driver in economic
development. The program benefits communities by:
Increasing the value of the rehabilitated property by
returning vacant or underutilized structures to the tax roles
and stimulating adjacent development projects.
Encouraging protection of landmarks through the promotion,
recognition, and designation of historic structures, and acting
as a catalyst for further community renewal.
Revitalizing downtowns and neighborhoods and, since
sometimes paired with the Low Income Housing Tax Credit, at
times increasing the amount of available housing within the
community.
Since inception, the HTC has rehabilitated nearly 39,000 buildings,
created 2.4 million jobs and leveraged $109 billion in private
investment nationwide. On average, the HTC leverages $5 dollars in
private investment for every $1 dollar in federal funding creating
highly effective public-private partnerships. In 2013, the HTC spurred
$3.39 billion in rehabilitation work, created nearly 63,000 skilled,
local jobs and over 25,000 new or renovated housing units. All of which
brings short and long-term economic opportunities for the community.
In 2013, the HTC leveraged over $239 million in private investment
in Louisiana's historic, income-producing buildings. The Louisiana
State Commercial & Residential Tax Credit Programs leveraged over $128
million in private investment in Louisiana's historic buildings and
both programs created a total of 3,871 construction jobs.
Heritage Tourism
Heritage tourism also creates jobs, new businesses, builds
community pride and can improve quality of life. Funding for SHPOs
through the HPF provides the essential resources needed to partner with
communities in identifying historic places and providing research for
tourism interpretation and materials. According to a 2009 national
research study on U.S. Cultural and Heritage Travel by Mandela
Research, 78% of all U.S. leisure travelers participate in cultural
and/or heritage activities while traveling translating to 118.3 million
adults each year. Cultural and heritage visitors spend, on average,
$994 per trip compared to $611 for all U.S. travelers. Perhaps the
biggest benefits of cultural heritage tourism, though, are
diversification of local economies and preservation of a community's
unique character.
Alaska's tourism industry is a key economic driver for the State.
In 2013 the out-of-state visitors totaled nearly 2 million and is
anticipated to continue increasing. When surveyed, many visitors said
they enjoyed heritage sites and learning how people lived in the north.
The totem parks at Ketchikan and Saxman, the gold rush era town of
Skagway, the Alaska Native Heritage Center and Anchorage Museum at
Rasmuson Center in Anchorage and the University of Alaska's Museum of
the North in Fairbanks were among the top visitor destinations.
Tourism also plays a significant role in Louisiana. In 2013, 27.3
million visitors to Louisiana spent $10.8 billion, and contributed $800
million in state tax revenues. Many of these visitors came specifically
to see and experience Louisiana's historic cultural and heritage sites.
To date, Louisiana has 1,240 individual properties and 105 historic
districts for a total of over 50,000 resources listed in the National
Register of Historic Places as well as 53 National Historic Landmarks.
In June, the Poverty Point State Historic Site also became the 1,001st
property listed as World Heritage Site list which will generate
additional tourism revenue from visitors around the world.
HPF--Investing in America's Future
By responsibly leveraging America's natural resources, by using a
small fraction of Outer Continental Shelf revenues for the HPF, for
almost 40 years historic preservation has generated billions of dollars
in revenue at the local, state and federal levels, preserved our
nation's diverse and significant historic resources, revitalized
communities, and created millions of jobs.
As something that truly impacts the daily lives of so many
Americans, this return on investment must continue. It is vital that
the Senate Energy and Natural Resources Committee and all of Congress
commit to reinvesting in our nation's historic resources through
supporting permanent and full funding for the HPF--for the benefit of
preserving the important historic resources of our past as well as for
the future and for the economic well-being of our nation.
Sincerely,
Erik Hein,
Executive Director.
______
National Trust for Historic Preservation,
August 5, 2014.
Hon. Mary Landrieu,
Chairman, Committee on Energy and Natural Resources, 304 Dirksen Senate
Office Building, Washington, DC.
Hon. Lisa Murkowski,
Ranking Member, Committee on Energy and Natural Resources, 709 Hart
Senate Office Building, Washington, DC.
Re: ``Leveraging America's Natural Resources as a Revenue Generator and
Job Creator''
Dear Chairman Landrieu and Ranking Member Murkowski:
Thank you for holding your July 22 hearing on ``Leveraging
America's Natural Resources as a Revenue Generator and Job Creator.''
You and your witnesses described well the long legacy of allocating a
portion of the revenues from the nation's natural resources, including
the Outer Continental Shelf (OCS), to support important programs
benefiting the American public.
The National Trust for Historic Preservation is a privately-funded
nonprofit organization chartered by Congress in 1949. We work to save
America's historic places to enrich our future. With headquarters in
Washington, D.C., 13 field offices, 27 historic sites, 746,000 members
and supporters and partner organizations in 50 states, territories, and
the District of Columbia, the National Trust works to save America's
historic places and advocates for historic preservation as a
fundamental value in programs and policies at all levels of government.
Your hearing appropriately identified important legislative
precedents for allocating portions of revenues from the use of federal
natural resources to vitally important programs, including the Gulf of
Mexico Energy Security Act (GOMESA), the RESTORE Act, Secure Rural
Schools legislation, Payments in Lieu of Taxes (PILT) and the Land and
Water Conservation Fund (LWCF), in addition to strongly supported but
unsuccessful legislation such as the Conservation and Reinvestment Act
(CARA) in 1999-2000 and the CLEAR Act of 2009-2010.
The National Trust believes strongly that any future legislation
allocating OCS revenues should build upon the precedents of CARA and
the CLEAR Act and also provide full and permanent funding for the
Historic Preservation Fund (HPF). The HPF was created in 1976 to fund
the nation's historic preservation programs. The HPF provides formula-
based matching funds, administered by the National Park Service, to the
State Historic Preservation Officers (SHPOs) and grants to Tribal
Historic Preservation Officers (THPOs). These funds support the
implementation of the nation's preservation programs, including
Historic Tax Credit (HTC) applications, section 106 reviews,
nominations for the National Register of Historic Places and surveys of
historic resources. These activities are essential to protecting
historic resources while also permitting the utilization of resources
that generate revenues and jobs. For example, the HTC, signed into law
by President Reagan, has catalyzed the rehabilitation of more than
39,600 buildings throughout the nation. Since its creation more than 30
years ago, the HTC has created 2.4 million jobs and leveraged nearly
$109 billion in private investment.
Each year, the HPF receives $150 million from revenues generated
from oil and gas development on the OCS. Similarly, the LWCF receives
$900 million annually in OCS revenues. However, both funds are
presently subject to annual appropriations, which vary from year to
year. Since FY11, appropriations for the HPF have ranged between $53
million and $56.4 million. The FY14 Omnibus Appropriations bill also
provided $500,000 to launch an important new program of competitive
grants for the survey and nomination of properties associated with
communities currently underrepresented in the National Register of
Historic Places and National Historic Landmarks. Recent studies have
documented that less than 8 percent of such listings identify
culturally diverse properties.
In past years, the HPF also provided funding for the Save America's
Treasures and Preserve America grant programs, as well as grants for
Historically Black Colleges and Universities.
Full funding for the HPF would enable more robust funding for a
broad range of preservation programs, including a restoration of
competitive grants to restore nationally significant historic
properties, similar to the Save America's Treasures program. It would
also provide funding to meet the continuing demands upon SHPOs and
THPOs for their preservation services, including the survey of historic
resources. The funding pressures on THPOs continues to grow, in part
because of the challenges of an increasing number of THPOs
participating in the program, from 131 tribes in FY12 to potentially
156 tribes in FY15, with nearly level funding. Finally, another
important preservation funding need--the digitization of legacy
historic survey data, as called for by a $6 million request for grants
to SHPO's and THPO's in the Administration's FY15 ``Opportunity, Growth
and Security Initiative,'' would improve access to historic property
records and help expedite federal permitting of important
infrastructure projects.
We look forward to working with you and the Committee as it
addresses the challenges and significant opportunities to address the
allocation of natural resource revenues for important national
priorities, including full and permanent funding for the Historic
Preservation Fund.
Sincerely,
Thomas J. Cassidy, Jr.,
Vice President for Government Relations and Policy.