[Senate Hearing 114-185]
[From the U.S. Government Publishing Office]
DEPARTMENT OF THE INTERIOR, ENVIRONMENT, AND RELATED AGENCIES
APPROPRIATIONS FOR FISCAL YEAR 2016
----------
WEDNESDAY, MAY 13, 2015
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 10:07 a.m., in room SD-124, Dirksen
Senate Office Building, Hon. Lisa Murkowski (chairwoman)
presiding.
Present: Senators Murkowski, Cochran, Hoeven, Daines,
Cassidy, Udall, and Merkley.
DEPARTMENT OF THE INTERIOR
Bureau of Land Management
STATEMENT OF NEIL KORNZE, DIRECTOR
OPENING STATEMENT OF SENATOR LISA MURKOWSKI
Senator Murkowski. We will call to order the Senate
Appropriations Subcommittee on the Interior, Environment, and
Related Agencies.
Welcome to the committee, Mr. Kornze. We appreciate you
being here today.
I think it is fair to say that in recent years discussions
about the Bureau of Land Management (BLM) budget or oversight
issues in this subcommittee have been wrapped up into the
bigger, broader budget hearing for the entire Department of the
Interior. As we move toward marking up a bill, I do think that
it is beneficial for subcommittee members to have an
opportunity to discuss the operations and programs of the
largest land manager in the United States in greater detail
than can be accomplished at the broader department-wide budget
hearing for the Interior.
For fiscal year 2016, the President's budget has requested
$1.2 billion for the BLM. This is a $107.6 million amount more
than the current level. As I have noted in our subcommittee
hearings, the President's request assumes Congress does not
have to comply with spending limits. But with the budget that
we passed last week, that assumption is no longer relevant.
This subcommittee will have to make some tough choices about
where to spend limited resources given the spending limits that
we face in a way that the President's budget was able to avoid.
The BLM is responsible for managing roughly 250 million
acres of Federal land--this is about 38 percent of the entire
Federal surface estate--and 700 million acres of subsurface
estate. The vast majority of this land is in our 11 Western
States and Alaska.
BLM has a multiple use mission, part of which is
facilitating most Federal onshore natural resource development.
Consequently, BLM-managed lands are important economic drivers
beyond recreation and conservation, and this is especially true
in Alaska.
While BLM only manages a small portion of the Alaska land
base because of the large size of my State, nearly one-quarter
of all BLM lands are located in the State of Alaska, the
largest portion of this land is within the National Petroleum
Reserve Alaska, NPRA. It is no secret that I believe
responsible development of our Nation's energy resources is
important to both our economic and our national security. The
resources within NPRA can and must be developed in a
responsible manner, and as a Nation we are relying on the BLM
to make this responsible development possible.
The work to bring affordable energy to our homes has come
with some challenges. Prior to 1982, the Federal Government
drilled more than 130 exploratory wells in an effort to
determine the extent of oil and gas resources in the region.
But unfortunately, those wells were abandoned and many of them
are awaiting cleanup to this day.
Passage of the Helium Stewardship Act a couple years ago
provided BLM with the funding needed to make progress on
cleanup of these blights, and we have made some headway in that
area. We recognize that there is more to be done here, and I
look forward to asking you, Mr. Kornze, about both the
contaminated well issue and implementation of the Helium
Stewardship Act.
The BLM has made considerable progress on issues important
to me and to Alaskans. I would like to thank you, Mr. Kornze,
as well as Alaska State Director Bud Cribley. The team that has
been working to complete the transfer of the economic tracks to
see Alaska has worked well, and I appreciate that. I did have
the opportunity to meet with Mr. Cribley a couple weeks ago. We
are making some progress on the conveyance of Alaska lands
under the Alaska Native Claims Settlement Act (ANCSA). It has
been a long time in coming, though. It was the Alaska Lands
Conveyance Act of 2004 that we passed and was signed into law,
and the promise at that time was that the completion of the
conveyances would be done by the 50th anniversary of statehood,
which of course was 2009. We are sitting here in 2015. While we
may be on track, we still have a ways to go there.
We have some other challenging issues that need to be
addressed. The Greater Mooses Tooth Project. I have expressed
my frustration with the mitigation requirements and other
process issues that have proceeded throughout that process. And
some of the issues have been settled, but we are still in a
place where the Federal Government is proposing to put
conditions on the project that threaten to make it unaffordable
to move forward.
This is really about prioritization and pace of responsible
energy development on public lands not only in Alaska but in
the Lower 48 as well. I think many of my colleagues from the
West can relate to the struggles that we face in Alaska.
The most challenging issue facing the interior West, where
most of the BLM-managed lands in the lower 48 are located, is
potential regulatory action relating to the Greater sage-
grouse. While the threat of an Endangered Species Act listing
looms, there are significant fears that regulations put in
place to preserve sage-grouse habitat are perhaps even more
restrictive and provide less certainty in the permitting
process than an ESA listing. It is my understanding that the
land use plan amendments that will govern management for sage-
grouse on BLM and Forest Service lands will be made public at
the end of this month. And like my colleagues, I look forward
to the release, the evaluation, and reception by impacted
States. The contents of those plans will help this subcommittee
determine the merits of the requested $45 million increase BLM
requested for sage-grouse activities in the fiscal year 2016
budget.
The BLM included several other notable budget proposals,
including the request to once again raise fees on public land
users like grazers and onshore oil and gas producers. Oil and
gas activities on public lands contributed more than $5 billion
to the Federal Treasury in 2014. So I am not convinced that
raising fees will not reduce this contribution by discouraging
activity on our Federal lands. Less activity will ultimately
result in less revenue to the Treasury and the communities
which rely on these activities for economic sustainability.
So, Mr. Kornze, I look forward to hearing from you this
morning about BLM's national priorities, including renewable
energy development, their role in the Secretary's wildfire
strategy, and many other important issues before the committee.
So again, thank you for agreeing to be with us this
morning.
And with that, I turn to my friend and ranking member,
Senator Udall.
STATEMENT OF SENATOR TOM UDALL
Senator Udall. Thank you, Chairman Murkowski. Good morning.
And I would also like to welcome Director Kornze. Thank you
for joining us today as we discuss the fiscal year 2016 budget
request for the Bureau of Land Management.
The lands managed by BLM in New Mexico are vital to our
economic vitality and to our natural and cultural heritage. Oil
and gas production, mineral extraction, renewable energy,
grazing, and hunting and recreational opportunities from hiking
to class 6 rapids all can be found on BLM lands and are a part
of what makes New Mexico la tierra encantada.
I am proud to have worked with my constituents and this
administration to designate two of BLM's newest conservation
units, the Organ Mountains-Desert Peaks National Monument in
the south and the Rio Grande del Norte National Monument in
northern New Mexico. Director Kornze, I really appreciate that
you came to the State personally to walk the land we were
talking about protecting. You and the BLM employees in New
Mexico were so supportive and helpful to work with us on these
designations. And I appreciate the outreach that is taking
place now to include the local communities in the planning
process. Both monuments are up for increased spending in the
President's budget. We will talk about that today.
I am also glad that we will have time to discuss oil and
gas production. We hear a lot about offshore production, but
Federal lands are an important energy producer as well. In
2014, Federal lands were responsible for 41 percent of U.S.
coal, 40 percent of geothermal, 11 percent of domestic natural
gas, and 5 percent of domestically produced oil.
BLM also approved renewable energy projects for up to
16,000 megawatts of power. That is enough energy to take care
of 4.8 million homes.
And BLM provides key access to minerals, including uranium,
gold, silver, potash, gypsum, and building stones, sand, and
gravel. This all makes a difference to our economy, our
vitality, and our security.
I believe in responsible energy production and have long
called for a ``do it all, do it right'' approach. Despite what
its detractors may say, this administration has overseen a
remarkable increase in oil development. We have seen an
incredible 81 percent increase in production on public and
tribal lands in 2014 versus 2008. Energy development is
important to our economy in my State and elsewhere. But we also
need to protect the environment and drinking water and make
sure that the American public receives its fair share of
revenue from industry's production of public resources.
The Government Accountability Office has had the Interior
Department's oil and gas programs on its high risk list for
many years. There are two major concerns: the BLM's lack of
authority to collect inspection fees and the difficulty in
hiring and retaining a skilled workforce. The President's
budget once again proposes to collect $48 million from new
inspection fees for onshore oil and gas producers. This would
bring onshore production in line with offshore production where
Congress instituted an inspection fee in fiscal year 2012. And
it would put the responsibility for paying for inspections on
leaseholders not the American taxpayer.
Director Kornze, another issue is the sage-grouse. I know
that you have spent a good deal of time on this. I would like
to talk about the next steps with you this morning. While not
on the same scale in New Mexico as we have recently dealt with
the endangered species issues from the lesser prairie chicken
and the sand dune lizard, listing and delisting of species by
Congress goes against the intent of the Endangered Species Act.
It requires that the Government make these decisions based on
science not politics.
I believe that in New Mexico, we have created an effective
model. In the case of the sand dune lizard, the U.S. Fish and
Wildlife Service found that enough acres were enrolled
voluntarily for legally binding conservation agreements for
that protection to last and to take care of the species. It
concluded that a listing was not warranted. For the lesser
prairie chicken, Fish and Wildlife found that the significant
conservation efforts were able to avoid an endangered species
listing, but it was not enough to prevent a threatened listing.
And the Service is working closely with the States to provide
maximum flexibility under the law. I believe the process is
working, bringing all stakeholders in to discuss how to protect
species and habitat while ensuring economic growth.
So I look forward to talking with you, Director Kornze,
about oil and gas, national monuments, sage-grouse conservation
efforts, and other important matters. Thank you again for being
here this morning.
Thank you, Madam Chair.
Senator Murkowski. Thank you, Senator Udall.
Mr. Kornze, welcome to the committee. Mr. Kornze is the
Director of the Bureau of Land Management for the U.S.
Department of the Interior. You have generated a crowd this
morning, which I am assuming is a good thing. It could be fan
club. It could be lots of people with equal interests in this
aspect of the Department of the Interior. So, again, we thank
you for being here before the subcommittee this morning. We
look forward to your opening statement and for the opportunity
to ask some questions. So, Mr. Kornze, if you want to begin
with your comments. Thank you. Welcome.
SUMMARY STATEMENT OF NEIL KORNZE
Mr. Kornze. Thank you very much. Chairman Murkowski,
Ranking Member Udall, Chairman Cochran, members of the
subcommittee, thank you for the opportunity to be here with you
today.
The Bureau of Land Management manages nearly 250 million
acres of land across the country and 700 million acres of
subsurface estate. That means 10 percent of the Nation's
surface or more and nearly a third of the Nation's minerals and
soils. We manage these lands under the dual framework of
multiple use and sustained yield.
As you know, the BLM also manages nearly 20 percent of the
State of Alaska.
I recently traveled to Alaska to meet with the Governor to
discuss our innovative approach for surveying for land
conveyances and hosted a Federal roundtable related to
contaminated lands. We appreciate your partnership and support
as we address the unique issues on public lands in places like
Alaska and New Mexico.
Today, the entire Bureau's work is more complicated than
ever, and the professionals at the BLM have to work hard to
make quality choices in a difficult environment every day. And
we make sure that the public has a strong voice in the work
that we do. We play a major role in the economies of many
States in supporting oil and gas development, all kinds of
recreation, hunting and fishing, helium production, timber,
coal production, ranching, wildland fire fighting, and even
beekeeping.
Last year the BLM and the lands we manage supported more
than 450,000 jobs across the country, and we are one of only a
handful of agencies that returns more revenue to the Government
than we receive in appropriations. In fact, for every dollar
you provide, we return $5.
In terms of the 2016 budget, I want to highlight four
different programs today.
First is sage-grouse. The Bureau of Land Management is
leading the west-wide effort with Western Governors from 11
States to strengthen management of sage-grouse habitat
including extensive collaboration with State agencies, the
Forest Service, the Fish and Wildlife Service, counties, and
many other partners. The President's budget requests a total
$60 million to engage our partners and implement projects on
the ground that will reduce the threat of wildfire, that will
slow and reverse the spread of invasive species, that will
improve riparian areas, and that will remove hundreds of
thousands of pinyon juniper trees. Without this investment in
proactive sage-grouse conservation, the agency is more likely
to be faced with difficult decisions in the future regarding
balancing the conservation of this bird and many other
important resources.
The second program I want to highlight is our National
Conservation Lands. The President requests an important
increase in this program this year. These special areas make up
roughly 10 percent of the lands that we manage, but they
receive roughly 25 percent of the visitors that we have to the
Nation's public lands. Additional support for these
congressionally and presidentially protected areas will allow
us to provide basic levels of service to our many visitors and
will boost the economies of local communities that rely on
visitation to these areas.
The third program is the BLM Foundation. In connection with
this budget, the President has moved forward language that
would allow Congress to establish a chartered foundation, a
nonprofit, that would support the Bureau in a manner very
similar to the work done by the National Park Foundation, the
National Forest Foundation, and the National Fish and Wildlife
Foundation. I would submit to you that the Bureau of Land
Management has the most complicated mission of any of these
agencies, and we could greatly use the support and the outside
facilitation that would come with the BLM Foundation.
The fourth program I would like to highlight today is the
oil and gas fee proposal. In the last 10 years, the BLM has
authorized more than 50,000 new oil and gas wells, bringing our
total portfolio to nearly 100,000 wells nationwide. We are
proud of oil and gas production on lands that we have a role in
regulating. The production on those lands closely tracks
comparable production on State and private lands. From 2008 to
2014, the years during this administration, oil production from
lands requiring a BLM permit has increased 81 percent, from 113
million barrels to 205 million barrels. With the modest fee
that we are requesting, we are seeking the ability to be
responsive to the ups and downs of the oil and gas industry,
ensuring that these activities are done safely on the public
lands, and our expanding portfolio requires that we have more
inspectors than ever before. It is a natural consequence of the
success of the oil and gas program that we have. Today we have
roughly 160 inspectors. We need 220. In order to get to where
we need to be for a safe and responsible program, we need your
help.
In conclusion, this is a very important time for the
American West, for the Bureau of Land Management. And we
greatly appreciate the relationship that we have had with this
committee in years past and we look forward to working with you
on the 2016 budget. Thank you.
[The statement follows:]
Prepared Statement of Neil G. Kornze
Madam Chairman and members of the subcommittee, I am pleased to
join you today to discuss the President's fiscal year 2016 budget
request for the Bureau of Land Management (BLM). The BLM manages nearly
250 million acres of land and 700 million acres of subsurface estate.
That's more than 10 percent of the Nation's surface and nearly a third
of its minerals. The BLM manages this vast portfolio on behalf of the
American people under the dual framework of multiple use and sustained
yield. This means the BLM manages public lands for a broad range of
uses including renewable and conventional energy development, livestock
grazing, timber production, hunting, fishing, recreation, and
conservation. We manage lands with some of the most significant energy
development in the world and some of North America's most wild and
sacred landscapes.
The professionals at the BLM make hard choices every day and we
take pride in making sure the public has a strong voice in the work we
do. Compared to many other Federal agencies, we are relatively small in
number--just 9,700 full-time equivalent (FTE)--but the impact of the
BLM and BLM-managed resources is tremendous. Recent Interior studies
indicate BLM's management of the public lands provides an outstanding
economic return to the American public. In 2013, activities on lands
under the BLM's management were estimated to contribute over $107
billion to the Nation's economic output and support more than 440,000
jobs across a broad range of industries. While the BLM receives just
over a billion dollars in annual appropriations to support our programs
nationwide, our programs support the collection and distribution of
more than five billion dollars to the U.S. Treasury and to State
governments each year.
Our fiscal year 2016 budget continues our tradition of serving the
American public by supporting economic development and jobs in
traditional and emerging industries, conserving our natural resources,
reducing our dependence on foreign energy, protecting our Nation's
cultural heritage, and preserving some of our Nation's most cherished
places.
blm budget request
The fiscal year 2016 BLM budget request is $1.2 billion, an
increase of $107.6 million from the 2015 enacted level. The budget
proposes $1.1 billion for the Management of Lands and Resources
appropriation and $107.7 million for the Oregon and California Grant
Lands appropriation, the BLM's two operating accounts. The budget also
proposes $38.0 million in discretionary funding for Land Acquisition,
to complement $55.4 million proposed in mandatory Land Acquisition
funding. These investments fall under the following program areas.
supporting and modernizing management of increased energy production
The 2016 budget advances the President's all-of-the-above energy
strategy to continue to promote safe and responsible energy
development. The fiscal year 2016 budget request advances the goals of
this strategy with priority funding for both renewable and conventional
energy development on public lands.
Renewable Energy.--In the past 6 years, the BLM has worked to
facilitate a clean energy revolution on public lands through the
approval of scores of utility-scale renewable energy generation and
transmission projects. This includes 29 utility-scale solar facilities,
11 wind farms, and 12 geothermal plants, with associated transmission
corridors and infrastructure to connect with established power grids.
When completed, these projects will provide more than 14,000 megawatts
of power, or enough electricity to power about 4.8 million homes, and
provide over 20,000 construction and operations jobs.
The 2016 President's budget requests $29.4 million for Renewable
Energy Management, which maintains funding at the 2015 enacted level
plus an increase of $295,000 for fixed costs. This would provide the
BLM the necessary resources to continue to actively facilitate and
support solar, wind, and geothermal energy development on BLM lands,
which will create jobs, provide clean energy, and enhance U.S. energy
security by adding to the domestic energy supply. It will also support
the President's aggressive goal of increasing the permitting of new
renewable electricity generation on public lands to 20,000 megawatts by
2020. The BLM is committed to contributing to this goal by permitting
environmentally responsible projects on public lands.
Conventional Energy.--The agency has also overseen continued
natural gas production and a significant increase in oil production
from public lands in recent years. Oil production from Federal and
Indian lands in 2014 rose 12 percent from the previous year and is now
up 81 percent since 2008--113 million barrels to 205 million barrels
per year. For comparison, nationwide oil production over the same
period increased 73 percent. It is also worth highlighting that the BLM
continues to make public lands available for oil and gas development
well in excess of industry demand.
The BLM works closely with partners across the country to ensure
development of renewable and conventional energy occurs in the right
places and projects are managed safely and responsibly. The President's
budget proposes significant investments for improving how the BLM
leases, permits, and inspects oil and gas wells, including updating
regulations to reflect current industry practices and putting needed
technology in the hands of BLM employees.
The 2016 budget for oil and gas management activities from all
sources represents an increase of $29.1 million over the 2015 enacted
level, a roughly 20 percent increase. This additional funding will help
make the BLM faster and more effective in responding to management
challenges, public concerns, and the needs of industry. The President's
budget reflects a new approach to providing resources to the field with
a proposal to strengthen BLM's inspection program by charging a fee
comparable to that charged in offshore oil and gas development. The new
fee is estimated to generate $48 million in 2016, which will provide a
program increase of $6.9 million for these activities, while reducing
the need for direct discretionary appropriations.
The increased funding will allow the BLM to hire additional
inspectors who are sorely needed to fulfill the agency's high priority
inspection workload. Approximately 220 inspectors are required
nationwide to complete the agency's large and growing inspection
workload. While last year's budget provided a small increase for this
program area, we remain understaffed in this important program, with
only 155 inspectors. This increase is critical for the BLM to be more
responsive to industry demand and a constantly changing inspections
workload. Significantly, it will also support BLM efforts to address
ongoing program management concerns that have placed the program on the
Government Accountability Office's (GAO's) High Risk list. Finally, the
President's budget also reflects the BLM's commitment to improving its
processes for responsibly permitting oil and gas operations, requesting
an increase of $4.0 million to complete the final phase of the BLM's
transition to a new electronic permitting system.
Coal produced from Federal lands is the source of over 20 percent
of all U.S. electricity. The BLM is working to strengthen management of
coal leasing activities and address recommendations made by GAO and the
Inspector General (IG) in 2013 and 2014 reports. These efforts enhance
the appraisal process and determination of fair market value when
conducting lease sales, help ensure a consistent and efficient coal
lease sale process, and enable BLM to account for export potential
through analysis of comparable sales and income. An increase of $1.1
million in Coal Management will support the automation and tracking of
licenses, leases and permitting as well as inspection activities,
including production verification associated with coal. A $1.1 million
increase is also requested for a similar automated tracking system in
the Other Mineral Resources Management program.
Transmission.--The BLM also supports the modernization of energy
transmission infrastructure. To support necessary upgrades for
reliability and increased capacity, the budget includes a $5.0 million
increase to identify and designate energy corridors in low conflict
areas and to site high-voltage electrical transmission lines,
substations, and related infrastructure in an environmentally sensitive
manner.
restoring sage-grouse habitat through partnerships and collaboration
To ensure the long-term viability of sage-grouse and the continued
vitality of western economies, the BLM is leading an unprecedented,
collaborative west-wide effort to update and strengthen management of
sage-grouse habitat. Key collaborators include western Governors, State
wildlife agencies, counties, the U.S. Fish and Wildlife Service, U.S.
Geological Survey, and the U.S. Forest Service. The 2016 BLM budget
request includes a total of $60 million--a $45.0 million increase over
the 2015 enacted level--for implementing the Sage-Grouse Conservation
Strategy to enhance sage steppe conservation and restoration; a
landscape which supports significant economic activity and more than
350 species.
These funds will allow the agency and its many partners to take
meaningful steps forward on restoring rangelands, minimizing the threat
of wildfire, controlling invasive plants, and improving riparian areas.
Since 2013, the BLM has targeted $15.0 million per year toward the
implementation of broad-scale sage-grouse planning and conservation
activities. These efforts involve extraordinary collaboration between
the BLM, western Governors, and non-governmental partners to conserve
the sage steppe ecosystem.
supporting the blm national conservation lands, america's newest
conservation system
The President's budget includes an $11.2 million program increase
for the BLM National Conservation Lands, which celebrate their 15th
anniversary this June. This investment will address high-priority needs
in conservation areas, including providing basic support for recreation
and visitor services. While National Conservation Lands represent only
a small portion of the lands managed by BLM, one-quarter of all
visitors to BLM lands visit these special areas. This investment will
help to ensure these untamed places remain a legacy for all future
generations.
Although visitation to BLM-managed lands has grown, financial
investment in the Recreation and Visitor Services program has not kept
pace with this growth. This request proposes an additional $6.6 million
to implement a National Recreation Strategy that aligns BLM Recreation
& Visitor Services Program resources with the desired benefits sought
by local communities. A strong commitment to conservation also means
proactive management of cultural and paleontological resources. The
2016 budget also includes increases for programs funded through the
Land and Water Conservation Fund, a vital component of the America's
Great Outdoors initiative. The 2016 budget proposal includes a total of
$93.4 million for conservation land acquisition from willing sellers,
including $38.0 million in requested discretionary appropriations and
$55.4 million in mandatory funding.
other priority initiatives
Helium.--Additionally, the BLM has begun implementation of the
Helium Stewardship Act of 2013, which authorized the program to
transition out of the role it has played for a century. With the start
of Phase B Helium Auctions and Sales last year, the BLM conducted its
first ever helium auction that offered 92.8 million cubic feet (MMcf)
and a sale that offered 835.3 MMcf of helium for delivery in fiscal
year 2015 and an additional 250 MMcf of helium for delivery in fiscal
year 2016. The auctioned helium sold for an average price of over $161
per Mcf, much higher than anyone expected. The average auction price
was factored into the helium sale price, which was set at $106 per Mcf.
As a result of the auction and sale, the BLM collected nearly $130
million. Currently, the BLM is preparing for the next Helium Auction
and Sale scheduled for this summer and expects to offer 25 percent of
the helium available for auction which equals 300 MMcf of helium and
the remaining Phase B Helium Sale volume for fiscal year 2016 of 600
MMcf. The BLM is expecting to use the average auction price to set the
helium sale price. The BLM's crude helium sales are generating revenue
for the American taxpayers and providing 22 percent of the world's
annual Helium supply.
The BLM plays a significant role in Alaska and Arctic resource
management and provides significant support to Native Alaskans. The
2016 BLM budget includes $78.9 million for Alaska and Arctic
activities, an increase of $1.8 million above the 2015 enacted level.
Some of BLM's priority activities in this region are highlighted below.
Legacy Well Remediation.--The BLM continues to prioritize clean-up
of abandoned Federal wells in Alaska and has spent approximately $70
million dollars towards this clean-up through fiscal year 2014. In
fiscal year 2014, BLM spent over $800,000 on priority wells on Simpson
Peninsula preparation for winter remediation. Thanks to the leadership
of Senator Murkowski and others who made the passage of the recent
Helium Act possible, the BLM has spent nearly $10.5 million on
remediation of priority wells identified in the 2013 Legacy Well
Strategic Plan. In March-April 2015, the BLM completed subsurface work
in Umiat through an Inter-Agency Agreement with the United States Army
Corps of Engineers, and with full coordination with the Alaska Oil and
Gas Conservation Commission. Umiat #1, #3, and #11 were plugged, and
wellheads were removed at the previously plugged wells, Umiat #4, #8,
#10. The BLM is currently preparing to conduct surface cleanup in
August 2015 at the Simpson Core Test sites 26, 30 and 30A, and take
additional sampling to verify there are no remaining contaminants from
the wells drilled in the early 1950s. This work is expected to cost
$1.03 million. Additionally, the BLM expects to have contracts in place
for the winter of 2016 to plug and complete surface sampling of 7
legacy wells in the Barrow area.
Alaska Land Transfer Program.--For decades, the Bureau of Land
Management has been surveying and monumenting lands based on standards
outlined in a 1973 agreement between the agency and the State. The
Bureau has recently taken a close look at the best available practices
for this program and has determined that, using modern tools and
techniques, the remaining surveys and conveyances can be accomplished
in a substantially shorter amount of time while providing the State of
Alaska with higher quality data than was ever envisioned in 1973. The
new approach also has the potential to save millions of dollars for the
American taxpayer, while fulfilling the promise of land conveyances
called for in the Alaska Statehood Act. This new approach is a
significant opportunity for the State of Alaska and the Bureau of Land
Management to jointly innovate and demonstrate meaningful progress on
an issue important to many Alaskans. We look forward to formalizing
these new and significantly improved procedures with an update of the
1973 MOU between the Governor of Alaska and the BLM Director.
In fiscal year 2015, BLM Alaska plans to survey nearly 4 million
acres of Alaska Statehood Entitlement land, which will allow for patent
issuance within 3 years. The BLM will also fulfill entitlements for 15
Alaska Native Claim Settlement Act (ANCSA) village corporations this
fiscal year, which means the BLM will have completely fulfilled 50
percent of village entitlements in Alaska. Additionally, the BLM will
undertake a number of surveys this field season including final
entitlement surveys for seven ANCSA village corporations, survey of
nearly 130,000 acres of regional entitlements (including three tracts
of land for Sealaska Corporation conveyed pursuant to the 2015 National
Defense Authorization Act), and three post-conveyance obligation
surveys (ANCSA 14(c)) providing the affected village corporations site
control for community development.
Alaska Native Claims Settlement Act Contaminated Lands.--The BLM is
on schedule to submit a report to Congress in June of this year as an
update to the 1998 Report to Congress. In recent years, the agency has
focused on developing a comprehensive database of potential
contaminated sites conveyed to ANCSA corporations based on inventories
compiled by State and Federal partners in Alaska. To date, the BLM has
reviewed the land status of over 6,000 sites within the database to
determine whether they are on land conveyed to ANCSA corporations and
which agency is responsible for the existing contamination. The BLM is
currently facilitating a collaborative effort with Alaska Native
corporations, Department of Defense agencies, the Federal Aviation
Administration, the State of Alaska, and Alaska Native regional and
village corporations to enhance the inventory data by verifying site
ownership and site cleanup status on lands conveyed to ANCSA Native
entities.
A preliminary review of inventoried sties in the database has found
that a majority of sites are not on land conveyed to an ANCSA entity,
most contaminated sites on conveyed land are on parcels that were not
managed by the BLM before conveyance, and cleanup is complete or
institutional controls have been established for approximately two-
thirds of all known contaminated sites conveyed to an ANCSA
corporation.
Arctic Council.--The Arctic Council is a consensus-based
international body made up of the eight Arctic nations and six
Permanent Participant organizations representing Arctic indigenous
groups, four of which are rooted in Alaska. It allows for non-voting
participation of observer nations and organizations, and manages six
working groups that address matters of concern to the Council. The
United States assumed the 2-year Arctic Council Chairmanship in late
April, a responsibility that will require participation and engagement
from all of the Federal agencies engaged in the Arctic. Interior has
perhaps the most substantial Federal management role in the region, as
we manage 74 percent of the U.S. landmass above the Arctic Circle and
all of the Outer Continental Shelf beyond 3 miles from the coast. BLM
Alaska alone manages 31 percent of the landmass in the U.S. Arctic and
40-percent of the landscape north of the Brooks Range (North Slope of
Alaska).
Of the six working groups under the Arctic Council, the
Conservation of Arctic Flora and Fauna (CAFF) Working Group is the
foundation for the marine, terrestrial, freshwater and coastal
environments. Currently, the BLM and North Slope Science Initiative co-
lead a subgroup of CAFF, the Circumpolar Biodiversity Monitoring
Program (CBMP), with the Kingdom of Denmark (Denmark, Greenland and
Faroe Islands). The CBMP harmonizes data from many disparate sources
and Arctic ecosystems across all eight Arctic nations to support
effective and collaborative large-landscape management. These efforts
provide critical information that U.S. Arctic resource managers
leverage to make informed, defensible land management decisions in the
Arctic.
legislative proposals
Establishing a BLM Foundation.--In connection with the budget
request, the administration sent to Congress a legislative proposal for
a congressionally chartered non-profit foundation for the BLM. A
foundation would strengthen the BLM's efforts to link Americans to
their public lands through an organization that would raise and spend
private funds and foster constructive partnerships in support of the
BLM's mission. The foundation would operate in a manner similar to the
National Park Foundation, the National Fish and Wildlife Foundation,
and the National Forest Foundation, all of which were approved by
Congress.
Oil and Gas Management Reforms.--The administration proposes a
package of legislative reforms to bolster and backstop administrative
actions being taken to reform the management of Interior's onshore and
offshore oil and gas programs, with a key focus on improving the return
to taxpayers from the sale of these Federal resources and on improving
transparency and oversight. Proposed statutory and administrative
changes fall into three general categories: advancing royalty reforms,
encouraging diligent development of oil and gas leases, and improving
revenue collection processes.
Royalty reforms include evaluating minimum royalty rates for oil,
gas, and similar products; adjusting onshore royalty rates; analyzing a
price-based tiered royalty rate; and repealing legislatively mandated
royalty relief. Diligent development requirements include shorter
primary lease terms, stricter enforcement of lease terms, and monetary
incentives to get leases into production, for example, through a new
per-acre fee on nonproducing leases. Revenue collection improvements
include simplification of the royalty valuation process, elimination of
interest accruals on company overpayments of royalties, and permanent
repeal of Interior's authority to accept in-kind royalty payments.
Collectively, these reforms will generate roughly $2.5 billion in
revenue to the Treasury over 10 years, of which an estimated $1.7
billion will result from statutory changes. Related to these
initiatives, the BLM recently released an Advance Notice of Proposed
Rulemaking that seeks comments on whether: royalty rates for new
competitively-issued leases should be changed; annual rental payments
and minimum acceptable bids should be increased; and bonding
requirements and civil penalty assessments should be changed.
Hardrock Mining Reform.--The 2016 budget includes two legislative
proposals to reform hardrock mining on public and private lands by
addressing abandoned mine land hazards and providing a better return to
the taxpayer from hardrock mineral production on public lands. The
first component of this reform addresses abandoned hardrock mines
across the country through a new Abandoned Mine Lands fee on hardrock
mineral production. The second legislative proposal institutes a
leasing process under the Mineral Leasing Act of 1920 for certain
minerals--gold, silver, lead, zinc, copper, uranium, and molybdenum--
currently covered by the General Mining Law of 1872. Under this
proposal, mining for these metals on Federal lands would be governed by
the new leasing process and subject to annual rental payments and a
royalty of not less than 5 percent of gross proceeds.
Recreation Fee Program.--The budget proposes legislation to
permanently authorize the Federal Lands Recreation Enhancement Act,
which will expire on September 30, 2016. The BLM currently collects
approximately $18.0 million in recreation fees annually under this
authority and uses them to enhance the visitor experience at recreation
facilities. These funds represent a significant portion of all the
resources BLM has to devote to supporting recreational activities on
public lands.
Reauthorize the Federal Land Transaction Facilitation Act
(FLTFA).--The 2016 budget proposes to reauthorize the Act, which
expired in July 2011, to allow lands identified as suitable for
disposal in recent land use plans to be sold using the FLTFA authority.
The sales revenues would continue to be used to fund the acquisition of
environmentally-sensitive lands and to cover the administrative costs
associated with conducting sales. Utilization of the FLTFA authority
would help simplify the land patterns of the American West, promoting
both conservation and community development goals.
conclusion
The President's fiscal year 2016 budget request for the BLM makes
important investments at a critical time for our agency and for the
lands we manage across the Nation. The BLM has a unique and broad
mission to manage public lands for multiple-uses and for sustained-
yield. I am incredibly proud of the work done by BLM employees every
day to ensure the agency is engaging with and listening to our partners
and the communities we serve. I look forward to continuing our close
partnership with this subcommittee as we strive to provide BLM's
professionals with the tools and resources they need to succeed and to
make our public lands an even larger contributor to the success of
communities across the United States.
Thank you for the opportunity to present this testimony.
Senator Murkowski. Thank you, Director Kornze.
As a courtesy to the chairman of our full committee, I am
going to turn to Senator Cochran for any comments that he might
make and he may ask the first question.
PINEY WOODS SCHOOL
Senator Cochran. Well, thank you very much, Madam Chairman.
I am pleased to join you in welcoming our witnesses today to
review the BLM's budget request for fiscal year 2016.
In my State of Mississippi, the Piney Woods School is
located in the central part of the State and has an agreement
with the Bureau of Land Management to house a wild horse and
burro short-term holding facility. That agreement ended in
March, and it is my understanding that there have been some
complications related to closure of the facility. I hope we can
get your commitment to personally look into this and work with
the Piney Woods School to reach a reasonable resolution of this
issue.
Mr. Kornze. Chairman, I appreciate your raising this issue.
I just recently became aware of the parting of ways between our
program and the Piney Woods School, and I have asked my State
director to head down there. She will be there before the end
of the month. And we will take a close look at what is going on
and see what we can do.
Senator Cochran. Thank you very much.
I yield back. Thank you.
Senator Murkowski. Thank you.
I will go ahead and turn to Senator Udall for his
questions, and the next is Senator Cassidy.
CHACO CANYON
Senator Udall. Madam Chair, thank you very much.
Chaco Canyon is critically important to my State as an
incredibly rich cultural destination, as well as a sacred place
to the tribes of the Southwest. But as you know, Chaco Canyon
is situated right in one of the most productive oil and gas
production areas in the country. It appears that many new
leases are getting closer to the Chaco Cultural National
Historic Park, which really concerns me. Our congressional
delegation in a letter we sent yesterday--I believe you have a
copy of that. It was sent to Secretary Jewell and the assistant
secretaries. And what we are requesting is that the assistant
secretaries take a personal look at this issue and come to New
Mexico to hear the concerns of our constituents.
I have a couple of questions here. One, can I get your
commitment to work with me to ensure that oil and gas leasing
near this iconic site are handled with the utmost consideration
for the archaeological value that Chaco holds?
Mr. Kornze. Absolutely, sir. I have not had the pleasure of
seeing Chaco myself, but I look forward to it. And I know that
this is an issue that we have been taking very seriously and we
will continue to work with you on.
Senator Udall. Thank you. Thank you very much.
I understand there is some potential for increased
production in the San Juan Basin both for shale gas and shale
oil. What is the status of the regional resource management
plan, and how will it address future increased production in
and around Chaco?
Mr. Kornze. Right now we are operating under a plan from
2003 for the Mancos shale area, or the San Juan Basin. We
initiated a new plan last year in 2014. It will take us
reasonably another 3 or 4 years to complete that plan. But in
the time since 2003, there has been the revolution in shale
production, and we will address that and look at the future
prospectivity and make sure that is built into our operations.
Senator Udall. And you work through these issues in all
your resource plans I believe.
Mr. Kornze. We do.
NEW MEXICO/ARIZONA STATE OFFICES
Senator Udall. Shifting direction here a little bit, you
and I have talked about a possible proposal to merge the New
Mexico and Arizona State BLM offices. As you know, I am very
skeptical of this idea. Having a State director in New Mexico
focused on New Mexico's many unique public lands issues has
served us well for decades. Many New Mexico stakeholders,
including former Bureau managers, are concerned that a merger
might mean less for a State director to focus on New Mexico.
And I share those concerns.
What I want is for the people on the ground to have the
best customer service. How can you assure us that services will
not suffer? Will there not be a negative local impact?
Mr. Kornze. I appreciate you raising this issue. Your
priority is also my priority in making sure that we have the
best customer service in the offices where we have the most
contact with the public. In the last 5 years, we have seen a
reduction of 12 percent in BLM employees in full-time
equivalents (FTE's). It is a major reduction in our workforce.
It means less public contact. It means more work falling on the
shoulders of fewer people. I am very proud of the work that the
agency does, but it really puts us in a very difficult position
in terms of serving the needs of the communities that are
important to you and important to us.
So part of the Arizona-New Mexico concept, which no
decisions have been made on, is we have to run on two tracks.
One is working with you. We have a budget in front of you
that we think is a great blueprint for success and allows us to
move in the direction of fulfilling our mission better and more
fully.
On the other hand, we frequently receive requests from
Congress to figure out, within the pie that we have, how could
we run more efficiently. And so one of the tools that we have
is to look within our management structure and see if are there
ways where we can push more of the resources that have
previously been invested there to our field offices, to our
district offices, so that our boots on the ground are there and
that we have the people and the support for the communities
that see the greatest impact in places where the permitting
gets done or plans get done.
So I look forward to working with you on this. I think a
lot more conversation should take place, and I appreciate you
keeping an open mind about it as we proceed.
Senator Udall. I could not agree with you more, Director
Kornze. I want to work with you on this and hear all of your
proposals that you lay out.
I have two additional questions that I will give you for
the record because I know you are preparing some things to move
us down the right road here. What is your plan for stakeholder
outreach in the five States that will be impacted by this
proposal?
[The information follows:]
potential consolidation of arizona and new mexico state offices
The BLM has commissioned a small team of employees from both the
Arizona and New Mexico organizations to take a hard look at workload in
the two States to identify more precisely where efficiencies can be
gained and assess where there are critical, unmet needs. This will
identify where the BLM may focus any resources made available by gains
in efficiencies. Once this information is in hand the BLM will conduct
outreach to all groups who may be affected by this potential change.
And do you have the metrics from past efforts that
demonstrate the pros and cons of this kind of consolidation?
[The information follows:]
As for the pros, consolidating administrative and oversight
functions increases the efficiency of the organization because less of
the BLM's budget will be invested in these functions and more will be
invested in on the ground work. Consolidating the administrative and
oversight functions increases the productivity of the people engaged in
these functions since they will provide services to a larger number of
employees. Consolidating the two organizations allows for BLM resources
to be focused at lower levels in the organization where more direct
service to the public takes place.
As for the cons, requests for reconsideration of District Manager
decisions may take longer to process. In addition, there are likely to
be some implementation costs to consolidating the two State offices.
But my next question--and I am running out of time here--is
pretty quick. But New Mexico has these two new national
monuments I talked about. And the President's budget includes
$4.4 million for New Mexico's national monuments and national
conservation areas, including Organ Mountains-Desert Peaks and
the Rio Grande del Norte. One of the reasons I supported
creating these national monuments was to increase awareness
across the country of the uniqueness of these landscapes.
Have you already seen an uptick in visitors to these areas?
What can you report there in terms of what is happening on the
ground?
Mr. Kornze. One of my favorite examples of the power of
some of these protected areas is the Rio Grande del Norte. In
the 1 year after designation, the local county saw a 30 percent
uptick in room taxes, and they expect that was corresponding to
a 40 percent increase in visitorship. So the local economy was
very excited about that. There were a lot of businesses on
board, and I think that is paying dividends for the investment
that they are making in their nearby public lands.
Senator Udall. Thank you very much.
Thank you, Madam Chair.
Senator Murkowski. Senator Cassidy.
LAND ACQUISITION
Senator Cassidy. Hi, sir.
So Louisiana has 738 acres in the BLM. But then I look at
this map, and you guys own Nevada.
Mr. Kornze. We manage quite a bit of it. We do.
Senator Cassidy. And he tells me you own a third of--or the
Feds own a third of Montana. And Alaska--I believe I learned
more about Alaska, since becoming a Senator, than I ever
thought I wanted to know.
But you are impressive on this map. Why do you want $38
million more to buy more land? I mean, I am looking at this
thinking, wow, let us break the addiction. You see what I am
saying? We need some rehab. So why do you want to buy more?
Mr. Kornze. So I think you are talking about the Land and
Water Conservation Fund and potential land acquisitions that
would come with that. It has been a very important program for
the Nation in terms of a decision that this Congress made to
reinvest proceeds from the Outer Continental Shelf----
Senator Cassidy. We are billions behind in maintenance. And
you got, Mr. Udall, 12.5 million acres in New Mexico?
Senator Udall. That is right.
Senator Cassidy. It seems like we should be selling. I say
that in all seriousness. If I was Nevada, I would be really
angry. Do you see what I am saying? They do not control their
destiny. You do. Why are we buying more?
Mr. Kornze. Well, I think the simple answer from the
perspective of the Bureau of Land Management is this Congress
and a previous President decided that--and made a very bold
decision in the 1970's--that the estate that we have should
remain in Federal management for the benefit of the public
good. So that is our organic act that lays out that desire.
Now, the estate that we help manage is more scattered than
other agencies. If you work for the Park Service or the Fish
and Wildlife Service, you have a nice bright line around the
lands that they manage. For us, however, sometimes it is
checkerboard, you know, across much of northern Nevada where I
am from.
Senator Cassidy. So we you want to fill in the
checkerboard.
Mr. Kornze. There is a very significant pattern of
complexity, and so in many cases, whether it is in a
conservation unit or elsewhere, acquisitions can, in fact,
decrease our management costs by providing a more unified----
ROYALTY RATES
Senator Cassidy. I accept that rationale, though I am
skeptical of the kind of overall kind of, my gosh, how much are
we going to own.
I want to move on, not to be rude, but because I have other
things.
You want to increase the royalty payments. Now, there is
going to be some price point by which a well is profitable.
Obviously, there is going to be transportation costs. There is
going to be production costs. So if it is $50 per barrel, as
required for something to remain open, have you all done
modeling of the assets that you lease, their economic viability
given the current price of oil, and what your additional
royalty payments will do to the economic viability of that? I
am asking because of the jobs, and so I ask kind of as an
academic, if you will.
Mr. Kornze. Well, I think in order to put some baseline
here, most States have an oil and gas royalty rate of more than
16 percent. Sixteen to twenty-five percent is what most States
have. The Federal Government operates at 12.5 percent. So you
already see a distinction there.
The Government Accountability Office (GAO) has put us on
their high risk list, and part of it is because of the royalty
rate and their concerns about our ability to have a fair return
for the American taxpayer.
So we have not made any decisions related to a royalty
increase. We have an advance notice of proposed rulemaking out
to the public, which has a number of questions so that we can
look at questions like what you have raised in terms of what
the impact of potential increases would be or potential models
that might not simply raise the rate but under certain economic
conditions would allow the rate to rise.
Senator Cassidy. So you mentioned your tiered royalty rate.
It would go up under certain circumstances not under others?
Mr. Kornze. Well, under offshore, for instance----
Senator Cassidy. No. Onshore.
Mr. Kornze. Yes, but I think it is important to note for
the audience that offshore, the rate is 16 percent and a little
bit, and on a lease-by-lease basis, they raise that. So usually
it is more than 18 percent. And so we would be looking at
whether or not models like that or related models would be
something that would be of benefit to the American taxpayer.
Senator Cassidy. Got you. I do not know this, and so I am
asking as purely a question to inform myself. You mentioned
repeal legislatively mandated royalty relief. I am not familiar
with that legislatively mandated royalty relief. What does that
pertain to?
Mr. Kornze. I would need more context.
Senator Cassidy. It is in your testimony.
Mr. Kornze. There are a number of proposals that the Office
of Management and Budget (OMB) and others have pulled together
for potential revenue raisers. I think within the oil and gas
lexicon there are some fairly complicated tax law and other
financial pieces. We could get back to you with more detail.
[The information follows:]
federal onshore oil and gas reforms
The 2017 President's budget includes a package of legislative
reforms to bolster and backstop administrative actions being taken to
reform management of Interior's onshore and offshore oil and gas
programs, with a key focus on improving the return to taxpayers from
the sale of these Federal resources and on improving transparency and
oversight. One of the components of this package of proposed reforms is
the repeal of legislatively mandated royalty relief. Specifically, the
budget would repeal section 344 of the Energy Policy Act of 2005, which
provides incentive for natural gas produced from deep wells in shallow
water in the Gulf of Mexico. The repeal does not pertain to existing
leases that incorporate the section 344 relief authority. It would only
apply to new leases issued after enactment of the proposed legislative.
Senator Cassidy. Please. I am unfamiliar with that, so I
would appreciate that.
And I think I will yield back now. Thank you.
Senator Murkowski. Senator Merkley.
TRANSMISSION LINES
Senator Merkley. Thank you, Madam Chair, and thank you,
Director Kornze.
A couple questions I wanted to get through. One of the
issues--and you mentioned it in your testimony--is the
challenge of draft guidance regarding sage-grouse. And under
the BLM's preferred alternative, it mentions the potential
strategy of burying transmission lines as a mitigation measure.
And this particular provision has produced a lot of feedback in
Oregon from our electrical co-ops. The estimate is it would
cost about $3 million a mile to bury a line.
And to give you one example, in eastern Oregon, Harney
Electric--they have 42 miles of transmission lines through
sage-grouse habitat and 201 miles of distribution lines. So
primary lines and then distribution lines. The estimated cost
to bury those lines would be $400,000 per customer. Obviously,
we stretched a lot of wire to reach communities that were small
communities so they could be electrified.
Is this strategy one that remains high consideration by the
BLM, and how would a small electrical co-op possibly pay to
bury lines at $3 million a mile?
Mr. Kornze. In terms of burial of lines, it is something
that we are looking at more and more in our analysis. It is not
necessarily something we are requiring. But as the West fills
in, and as we have more needs, more uses and more sensitivities
on the public lands, it is one of those tools in the toolbox,
and I cannot tell you it is something that is going to be
required.
In New Mexico, for instance, we were working on a very long
line called SunZia and worked with the military with the idea
that some small portions of that might need to be undergrounded
to prevent impacts to the White Sands Missile Range.
Similarly, if new lines were built, in some areas we might
look at undergrounding as a way to limit impacts on important
bird populations.
So it is a tool in the toolbox. It might be part of an
analysis.
Senator Merkley. Under your preferred alternative, I do not
think that it referred specifically to new power lines, but is
that your clarification that you are offering today is that
that is the context within which you look at that?
Mr. Kornze. Well, we will be releasing those plans in a few
weeks, so I do not want to get into fine details today. But
this is an issue where I think there is going to be flexibility
for your teams. My sense is we are not looking retrospectively.
HYDRAULIC FRACTURING
Senator Merkley. That is helpful. Thank you very much.
I want to turn to fracking on BLM land. We have about
100,000 active wells, others that are not active. 90 percent of
those wells use fracking. And I am pleased that the agency
finalized a rule in March to update the fracking regulations,
but I have some concerns about it.
It is weaker than many States. For example, Wyoming
requires publication of the proposed chemical components before
fracking occurs so that a baseline can be established to
compare the impact afterwards. Unfortunately, the BLM rule does
not match Wyoming.
Also, there is a loophole in the BLM rule regarding trade
secrets. And specifically, as I understand it, all that a
fracking operator has to do is assert that they believe that
they meet the standard for trade secrets, and that is just a
done deal. So it is very easy. I just say, yes, my chemicals
probably meet this, so therefore this information is not going
to be disclosed, which is a pretty big loophole. That pretty
much violates or wipes out the entire fling of the disclosure.
This is chemicals on public land. This is our public land. This
is not private land. And that is a pretty big deal to have a
secret soup of chemicals that the BLM loophole is going to
allow to continue to be private.
And there is also not even, in that situation, a disclosure
provision for first responders and medical professionals.
Colorado has such a program. Pennsylvania has such a program.
Texas has such a program. Why did the BLM have such deficient
provisions in its rules in March?
Mr. Kornze. Well, I consider the hydraulic fracturing rule
to be a major step forward. A lot of our oil and gas regulation
at the Bureau of Land Management dates back to the 1980s. Some
of it dates back to the time of Dwight D. Eisenhower. So it is
time for a fresh look at a lot of our rules. Hydraulic
fracturing has just been finalized as a rule, as you noted. Our
three big pieces----
Senator Merkley. But should the public not have a right to
know what chemical soup is put into the ground on public lands?
Mr. Kornze. Yes. And so one of the key pieces of the three
is disclosure. There is an exception for trade secrets.
Senator Merkley. But does that not wipe out the self-
assertion of trade secrets, wipe out the requirement for
disclosure?
Mr. Kornze. We are operating in a similar way to most
States. So Wyoming, which you pulled as a best case scenario
under a different piece--they have a trade secrets exception.
We do as well.
However, we have the ability to go and get that
information. So it is held by the company. They have to sign an
affidavit that the information that they are withholding meets
a whole set of standards, and they have to sign that at a
fairly high level within their company. If we have doubts about
that or if we have a medical incident or we have other
concerns, we can access that information and we can use that
information in an appropriate way. So it is not as though that
information is off to the side and is some sort of secret soup.
Senator Merkley. So I am out of time, but it is secret soup
if it is not posted for the public to be able to access it and
if a company can easily assert, as I understand they can, the
trade secrets provision. You say they have to sign an
affidavit. However, that is a signature. That is a pretty
simple standard there.
And the information under your rule is put on an industry-
funded website that has been reported to be inconsistent
information, limited information, and very difficult for the
public to search. And so it does not meet the Federal standards
for databases.
So these are real concerns, and I think it is important to
keep looking at it. The public deserves to know what chemicals
are put into the ground on public land.
Mr. Kornze. I am saying on the trade secrets that there are
trade secret laws that have been passed by this country. So we
are trying to honor that while also having disclosure that is
meaningful for the public. So it is a balancing act.
And in terms of the disclosure mechanism, FracFocus, we are
now a member of the FracFocus board. We have commitments from
FracFocus to make significant improvements related to the
searchability of their database and the information that is on
there. And part of the use of that system, frankly, is a matter
of just practicality. Many States--I believe somewhere in the
ball park of 20 States--are already using it. So we are trying
to go in a place where industry has some experience. Department
of Energy is doing a lot of funding of that system now. But
also when the Secretary of Energy's advisory board estimated
what it would cost the Bureau of Land Management to stand up
and maintain a system like that, it was somewhere in the realm
of $25 million. So I am trying to scrape together every dollar
I can for work, the sage-grouse, land conveyances, other
programs, and if there is an outside system that we think can
get to a quality standard that meets public standards, it is
important that we head in that direction.
Senator Merkley. Thank you.
Senator Murkowski. Senator Daines.
HYDRAULIC FRACTURING
Senator Daines. Thank you, Madam Chair.
It is good to see you here this morning, Director Kornze.
Also, you notice we have a lot of Western States here. We have
got Oregon. We have got New Mexico. We have got Alaska. We have
got Montana.
And I know Senator Cassidy was talking about, I think, less
than 1,000 acres of BLM ground there in Louisiana. I will say
he made the comment about the Land and Water Conservation Fund.
It is a very important tool in the tool chest in my opinion as
it relates to our ability actually to improve our access to our
public lands. We have 2 million acres in Montana of public
lands that we do not have access to, and the LWCF is a tool
that we use to provide better access for the public to their
lands.
But thank you for being here this morning.
As we have spoken before, Montanans rely heavily on their
natural resources for energy, for mineral development, for
jobs, for tax revenues to fund our teachers and our schools.
And we understand that acting safely and responsibly is the
only option when exploring and producing these resources.
Unfortunately, developing our Federal land in Montana has
become ladened with red tape and creating challenges both in
terms of time and money for responsible development.
As I mentioned in April at the Energy and Natural Resources
Committee hearing on hydraulic fracturing, Montana updated its
rules in 2011. And as Senator Merkley was talking about the
regulations, we have some of the most robust hydraulic
fracturing rules and regulations in Montana developed there in
the State in the Nation. And our State depends on hydraulic
fracturing to be able to access these mineral resources to
create the jobs, generate the tax revenues I talked about.
The question for you is, how exactly is BLM proceeding in
implementing the final rule for hydraulic fracturing, and how
much do you believe it will cost BLM to do that?
Mr. Kornze. So I appreciate the opportunity to continue our
conversation from a previous hearing on this.
We are moving ahead through a lot of public outreach,
number one. We have had a number of conversations with State
regulators to make sure that we are sitting down and we are
understanding the best ways to work together because there is
some flexibility built into our rule to make sure that we can
honor higher standards like the ones that you are calling out
for the State of Montana, and then similarly sitting down with
industry and making sure they understand what the regulations
are. We have sat down with hundreds of operators. And so we are
being very aggressive about that outreach to make sure there
are no surprises and that we have a fluid, successful
implementation.
Senator Daines. Do you have idea what it might cost? And
the reason I ask that question is here we are struggling in
Washington, wanting to achieve balance in our budgets,
safeguarding the taxpayer. And yet, there is a redundancy now
coming in in Montana. We have very robust regulations for
hydraulic fracturing, and now we have the BLM coming in saying
we also want to be a part of this equation, when we think we
could save the taxpayer a lot of money, as well as ensure that
we are safeguarding our resource with these very robust
regulations. Any idea what it might cost BLM to implement these
regs?
Mr. Kornze. Well, I will give you some numbers to work with
on potential costs. But I think it is important to point out
that we work in a Federalist system, and the Bureau of Land
Management has oil and gas leases in 32 different States for
which we have oversight responsibility. Montana may have done a
knock-out job. Alaska may have done a knock-out job with their
rules locally, but only roughly half of the States that we have
to regulate have stepped forward and put forward hydraulic
fracturing rules. So we designed a rule to be a basic layer or
basic standard largely modeled off of efforts throughout the
West.
Related to cost, we think this is going to take us on
average for your average drilling permit, application for
permit to drill (APD), about an additional 4 hours. So when you
add that together against all the APD's that are coming in, we
think it will be about an additional 12 positions that we will
have to fill.
SAGE-GROUSE
Senator Daines. I want to pivot over and talk about sage-
grouse. Another potential major challenge to responsible energy
development in Montana is the potential listing of the Greater
sage-grouse and specifically the proposed stipulations in BLM's
resource management plans. Now Montana recently approved and
funded its sage-grouse conservation plan. It is good news. It
is investing significant resources. It is my understanding the
Montana plan is significantly different than the draft Federal
plans, including when it comes to surface occupancy around
leks.
My question is when is the BLM scheduled to release the
final resource management plans in Montana?
Mr. Kornze. I would note we have had a fantastic dialogue
with Governor Bullock and Tim Baker, a lot of folks in your
State. We do appreciate them stepping forward and your entire
legislature recently in funding a very good system on the State
side.
The BLM plans will be coming out within a few weeks, so
before the end of the month.
Senator Daines. And how will these plans reflect Montana's
plan?
Mr. Kornze. So we will have to see in the final, when it
comes out, the fine details. But I will tell you that we have
built in special flexibility related to the needs of each
State. Oregon has a special system. Idaho has a special system.
Montana has a special system. Wyoming has a special system.
There is commonality amongst all of them, but we have been at
the table and listening intently and working closely with
partners in the State of Montana to make sure that we can get
as close to something that works for them as possible.
ROYALTY RATES
Senator Daines. I appreciate the flexibility you have been
able to give on that so we can come together with a solution
that will ensure that the sage-grouse is not listed. So we look
forward to further discussions.
Last question is regarding the increased royalty rates.
Director Kornze, I am aware of the Department of the Interior's
proposed budget requesting reforms to Federal onshore royalty
rates and also the Department of the Interior's advance notice
of proposed rulemaking. Now, according to a Department of the
Interior report for 2011, increasing Federal royalty rates
could result in a competitive disadvantage for energy
production on Federal lands.
Has your Department done analysis how increasing royalty
rates on Federal land would increase or potentially decrease
production on Federal lands?
Mr. Kornze. So we are at the first step of a multi-step
process in a potential rulemaking related to royalty rates. So
we will have an analysis on those questions as part of what we
do.
One thing to point out about the GAO concerns and the
reason that we are on the high risk list, which is a list you
do not want to be on if you are a Government agency--there are
only 25-30 different programs on it--is that they believe--and
they have put this in their reports--we are passing up on
billions of dollars in revenue annually that belong to the
American taxpayer.
So we will balance all these things out, but the ability
for industry to lean forward and produce and make American
energy is something that we care greatly about.
PRODUCTION ON FEDERAL LANDS
Senator Daines. Yes. And I look forward to further
discussions. I know I am out of time, Madam Chair. I know we
have seen production certainly on private and State lands is up
60 percent since the President took office. It is down 6
percent on Federal lands. So I look forward to further
discussions as it relates to how we are continuing to help out
the taxpayer, creating jobs. Those jobs are paying taxes and
certainly have been a big boost to this economy.
Thank you.
Senator Murkowski. Thank you, Senator Daines.
And I will just follow up with some comments here. It is
somewhat interesting in recognizing it was out of the
Department of the Interior in 2013, the report that was
commissioned by the Department of the Interior (DOI), that did
conclude that raising the royalty rates on the onshore oil and
gas production would discourage investment and thus bring less
money into the Treasury and thus was not warranted.
So now GAO comes out with a report, and what we see is, in
the budget proposal, we are going to increase the--the proposal
is to increase the rates.
I appreciate the fact that you are saying you are going to
do an analysis, but one would think that you would do the
analysis before you move to advance it through a budget
proposal. So I agree with Senator Daines. That is something
that I am concerned about because I think it is going to have
an unintended consequence or perhaps intended, depending on
your perspective. I think it is important that we do what we
can to increase production on our public lands and thus
increase revenues to our Treasury because production is up.
It is interesting to me that when you look at the leasing
statistics through BLM over the past couple decades, we are
seeing a decline in the leasing. Throughout the Clinton
administration, the average acres leased per year was 3.3
million. Then in the Bush administration, the average was 3.6
million per year. During the first 6 years of the Obama
administration, the number drops to an average of about 1.6
million acres per year. So this is a trend that in my view is
not good for us, and then when you overlay the hydraulic
fracking rules, the proposals to increase regulation on
methane, possibly this proposal to increase royalty rates, I
see that just pushing it down further.
Can you give me any hope that in fact we are not going to
continue this downward trend but that we are going to see
increased production on our public lands?
Mr. Kornze. I can give you a lot of hope.
Senator Murkowski. Good. I want a lot of hope.
Mr. Kornze. Because we have seen an 81 percent increase. On
the places where you need a BLM permit to operate, we have seen
an 81 percent increase in oil production during this
administration.
Senator Murkowski. So not necessarily new leases but on
existing leases, you are seeing increased production.
Mr. Kornze. It would be a combination of both. So we have
seen a huge increase, which we are very proud of being part of.
And then there are also some important numbers out there.
One is that 34 million acres of land have been leased. Only a
third of that is producing. So within industry's hands today
there is significant head room for development.
Senator Murkowski. Would you agree that some of the
limitations on the ability to produce have been related to some
of the regulatory issues? I mean, all you need to do is look at
National Petroleum Reserve Alaska (NPRA), and it is a perfect
case in point in terms of acreage out there that is being
leased. But we are not seeing a drop of anything at this point
in time, and it is not because you do not have operators that
are willing and able to move forward. You have got a lot of
going at one another through regulatory requirements that is
just stalling out any initiative there.
Mr. Kornze. Well, I am not sure that is always the case. So
in the Lower 48, there is an average of about 3,000 wells
drilled on public and Indian lands each year. We, however, have
6,000 permits that we have approved and are ready to go. So
industry has come in. They said we would like to drill here. We
have approved that application. It needs no further work from
us at all. They can start today.
Senator Murkowski. How do you respond, though, to those--
and I was out in North Dakota with Senator Hoeven some years
ago, and you talk to the operators that are ready, willing, and
able to go. They have got Federal leases. But quite honestly,
they can move to production so much more quickly on State and
private lands than they can on the Federal that they will
literally go around Federal lands. They will look for every
opportunity to be anywhere except our public lands.
Mr. Kornze. Well, I think when you look at the fact that we
have a 2-year front-log essentially of permits that are ready
to go, I think somewhere there is a disconnect that is very
important because there is huge opportunity out there for
industry to produce today.
Senator Murkowski. We understand that there is huge
opportunity, and as I am talking to those who are ready,
willing, and able to go, they tell me their biggest obstacle is
our Federal Government. It is not that they do not have the
technology. It is not that they do not have the capital to
invest. It is the regulatory hurdles that they face in
accessing our public lands.
ONSHORE PERMITTING
Mr. Kornze. And I hear that occasionally too. Those 6,000
permits, the 2 years' worth of work that can be done today--
there are no hurdles. There is nothing. So there are 2 years'
worth of work. There are billions of dollars of investment that
is available.
And I do appreciate that we need to have a forward-leaning
system for developing American energy. We are doing that. There
are places where we certainly can improve. Our permitting times
are one of those. So a few years ago, when I joined the Bureau
of Land Management, we were at 300 days per permit. We are down
to roughly 200-225 days.
Senator Murkowski. That is certainly not in Alaska.
Mr. Kornze. Well, we are headed in the right direction. One
thing that we are doing system-wide is we are going to an
online system so that instead of passing paper back and forth,
which is a big time-killer, we potentially can get down to
averages like they have seen at times in Carlsbad, New Mexico
where it is in the 60-70 day realm. So we are moving
aggressively. We are trying to find some of the efficiencies
that I think you are pointing at.
Senator Murkowski. Well, and we need to find those
efficiencies. I wish I had the chart with me today that shows
how long it takes to get to permitting on State, private lands
versus how long it is taking us through our BLM lands. And the
contrast is extraordinary. And there are lands that are
literally side by side, and in many cases, operators that
clearly know what they are doing. So saying that we can do a
better job I think belies the obvious, and I think this is one
of those things that we need to get down to.
I know that within the Department of the Interior, you have
got a stated goal of permitting 10,000 megawatts of renewable
energy production on Federal lands. We met that goal back in
2012, I am told. But it does not seem that we are willing to
dedicate equal focus to our more traditional energy sources on
public lands.
Do you even have a measurable goal for conventional
production of oil and gas on our public lands?
Mr. Kornze. I would say that our budget reflects a serious
commitment to conventional energy.
CONVENTIONAL ENERGY PRODUCTION
Senator Murkowski. But I mean, do you have a goal? As you
stated earlier within the Department in terms of what it is
that we want to see with renewables, you set a goal out there.
You met it. Do we do the same for conventional?
Mr. Kornze. We do not.
Senator Murkowski. Why is that?
Mr. Kornze. Well, the renewable energy goal that you noted
was created here in Congress. It was part of the 2005 Energy
Act.
Senator Murkowski. So we would just need to create in
Congress a goal for our conventional fuels on public lands.
Mr. Kornze. Well, I am saying that in the 2005 Energy Act,
there was an aspirational goal saying that by 2015, we would
like to see the Department of the Interior authorize 10,000
megawatts. We exceeded that. At this point, we are at 14,000
megawatts plus. We are very proud of that. We took a program
that basically did not exist and turned it into something
pretty spectacular.
On the oil and gas side, we need the resources to do the
same. So that is part of our roughly 20 percent budget increase
request for our oil program----
Senator Murkowski. Well, wait a minute. When you say you
need the resources to do the same, you have got the private
sector that is out there that is ready, willing, and able to go
after the resource. So it is not as if you and BLM need to
reinvent the wheel. In my view, you need to have a more
expedited process. In many cases, you just need to get out of
the way. So I do not understand why you would say we need more
resourcing to do this.
Now, you mentioned earlier that you do need additional
resources for inspectors. We know that we have got to have a
level of safety and protocol out there. I certainly understand
that.
But again, I think when you are looking at those ways,
those measures that you can enhance production on our Federal
lands to increase jobs, to increase revenues, it is not
something that as a Department you need to increase your budget
to do that. I think you have got an industry that is ready to
go to work, but we make it so hard on our public lands. We make
it so difficult that those that are ready, willing, and able
will go out of their way to avoid the production on our public
lands. And you have cited that you are pleased with the level
of leasing that you have, but in fact what we have seen is a
very direct and clear trajectory downward in terms of leasing
on our public lands over this past 6 years here.
And so, yes, we might be able to say that production is up.
Production is up because you have got a commitment to extract
as much as you can out of these existing leases. But it is
tough to be able to explain to people who believe very strongly
that our energy assets are something that we should value when
we say on our Federal lands, it is just that much more
difficult. It is just that much more complicated. And yet, you
have got good operators making things happen on State and
private lands, contributing to jobs, contributing to our energy
security.
And there is a disconnect here, and I am trying to drill
down to how we can do the reconnect. And we need to be working
with you on these initiatives to make that difference.
I have gone over my time. I want to turn to the Senator
from North Dakota.
VENTING, FLARING AND RIGHTS OF WAY
Senator Hoeven. Thank you, Madam Chairman.
Director, good to see you and thanks for being here today.
We are trying to reduce flaring in our State. Actually the
highest flaring is on Federal lands and particularly on some of
our Native American lands. Now, the right-of-way is the issue.
Getting the right-of-way fast enough is the issue with getting
these gas-gathering systems put in place.
And so how can the BLM help? And I know that BIA is
primarily responsible here, but can you help in some way to
expedite getting this right-of-way so that we can get these
gathering systems put in place to reduce natural gas flaring?
Mr. Kornze. Flaring is very important, and we appreciate
that North Dakota has stepped out on this issue. So thank you
for being part of that leadership team.
Related to the rights-of-way for the capture systems,
absolutely part of the equation. Around the Bureau of Land
Management, we have been focused on getting the right realty
staff in the right places to help make sure that we are not
part of the holdup. I do think that we could--we are in the
course of getting the right people in places like Dickinson
where we have had huge human capital challenges. Folks can walk
across the street and often make twice as much. And so we have
been working hard to get special pay rates and locality pay for
folks in those offices so they have got a reason to stay and to
make sure that we do not have the turnover, which also impacts
our ability to get those rights-of-ways and other efforts
completed.
Senator Hoeven. Is there something Congress can do to help
expedite the process?
Mr. Kornze. Well, having the right people matters. So I
will tell you our special pay rate for our petroleum engineers
and petroleum engineer techs expires at the end of this year.
We have had it for 2 years. It has been a very important thing
for our oil and gas system across the board. We would be
interested in working with you on a potential extension of
that.
Senator Hoeven. Well, one of the things--before 2008, I
think there was one oil well drilled on the Three Affiliated
Tribes reservation. I then signed an agreement--I was Governor
at that time--with the tribe whereby they agreed to have the
State regulatory process apply on the reservation too. So that
was an agreement we signed. And, of course, now I think if that
reservation were a State, it would be like the eighth largest
oil-producing State in the country. I mean, they are just doing
tremendously well, which of course necessitates the need for
more infrastructure.
So is there some kind of cooperative agreement or something
we could do interagency here, or is there legislation that
would help expedite this right-of-way process? And you know,
the chairwoman, Senator Barrasso, and myself have got some
legislation in to try to expedite these gas-gathering systems
and getting this right-of-way. Is that something you can work
with us on? Do you see some ability to help get some tools out
there so we can leverage the manpower that you have?
Mr. Kornze. I do. And so I would be very interested to have
some offline conversations with you about how we can use tools
like the Bakken Executive Group to put a focus on this----
Senator Hoeven. Right.
Mr. Kornze [continuing]. And see if there are other
national resources we need to bring to bear.
HYDRAULIC FRACTURING
Senator Hoeven. Between BIA, BLM, Grasslands, I think there
is enough people. We could certainly better leverage our
efforts, and if there is some legislation required, I would be
very interested in getting your assistance on a number of bills
that we have proposed to expedite this process.
Along that same line, BLM has come out recently with its
hydraulic fracturing rule. So now we have a situation where
States like North Dakota, Alaska, Texas--you know, I think
there are 27 States that produce 99.9 percent of the country's
oil and natural gas. And so we have these hydraulic fracturing
rules that require disclosure. They require using FracFocus.
They require making sure that your seals and your cement and
all these things are properly in place and that you are
monitoring the integrity of the well, the catch basin, the very
things that apply in the Federal rule.
So now we have got this duplicate situation. We have got
the State regulation, and then we have also got the Federal
hydraulic fracturing regulation. So now the energy producers
face two sets of regulation, and they are largely the same. So
you could say, well, what is wrong with that? Right? I mean,
they are the same except now you have got to go through the
State regulatory process and you have got to go through the
Federal regulatory process, and we are back to this long period
of time and delays.
How do we work with BLM so that the State can get primacy
for the regulatory oversight as long as they are properly
overseeing all these things that we both agree should be there?
We do it with air. We do it with water. How do we accomplish
that with hydraulic fracturing?
Mr. Kornze. Well, we specifically designed the hydraulic
fracturing rule to allow for variances, and what that means
essentially is you nest the Federal and the State rule
together. Wherever the higher standard is, that is what we are
going to follow. So if North Dakota has higher standards than
what we put forward, we will be following the North Dakota
standard.
And I think it is important to note that this is how oil
and gas has always worked. So the State of North Dakota and the
Bureau of Land Management have not had completely parallel and
completely matching rules and regulations in all areas of
drilling and oversight. But yet, we have found a way through
decades to work together and to make sure that we have an
efficient system. This is no different. And we have been quite
explicit in this rule to make sure folks understand that if
there are local standards that are better, that we look at
those and we will adopt those.
Senator Hoeven. Where are we in that process of providing
variances to the States? As you know, you have got litigation
going with a number of States. It seems to me this might be,
again, a way we work together to address the challenge. If we
can make that variance process a very clear, understandable
process that States can go through in a straightforward way,
maybe we can address it. So, again, if there is some help
needed from Congress--or you tell me how do we make sure that
then States can go through that process in a straightforward
way so that we are not duplicating regulation.
Mr. Kornze. So I believe that Lynn Helms, your regulator,
and our team are in conversation. If that has not taken place,
all they need to do is pick up the phone and call Jamie or call
myself, and we can get that conversation----
Senator Hoeven. But essentially your intent is, through
this variance process, to enable States to play that primacy
role as long as they go through the process and you are
comfortable that the oversight is there.
Mr. Kornze. The way that we are going to work this. You put
the two standards side by side. There is going to be a lot of
commonality. And so if the State standard is equal to or better
than ours, that will continue to be what we enforce on the
Federal lands.
Senator Hoeven. Okay, but there just has to be a
straightforward way to get through that in a timely way so we
do not get back to this we are taking a long time and we are
not getting through the process. That is what I am after here
is a rational process that we can get through in a
straightforward and timely way.
Mr. Kornze. And the rule is fairly straightforward, and our
team has a great relationship with your team.
Senator Hoeven. Yes.
Mr. Kornze. So I do not see a problem there.
Senator Hoeven. So you will work with us on it to see if we
cannot make sure that process works.
Mr. Kornze. Absolutely.
Senator Hoeven. Thanks. I appreciate it, Director.
Senator Murkowski. Thank you, Senator Hoeven.
Senator Udall.
INSPECTION FEES
Senator Udall. Thank you, Madam Chair.
As has been mentioned several times, the President's budget
proposes a new inspection fee for onshore oil and gas leases.
How will instituting this fee impact your inspection and
enforcement programs, or asked another way, what are you not
able to do today without these fees in place?
Mr. Kornze. Thank you for the question.
We have roughly 30,000 oil and gas inspections that we have
to do on an annual basis. About half of those are high
priority. Without the right number of folks, it puts us in a
position where we have to really juggle resources and perhaps
stretch them in a way that is not maximizing our full system on
the production side. We have to be able to cover those
inspections and make sure that we have a safe and responsible
system. That has got to be the foundation of what we do. From
there, you have got your APD's that you are working on, and
then above that, you have got your leasing system. So we have
to do multiple systems at once. We need the resources to do all
of that.
What the fee, which would be roughly $1,000 per lease on
average--would do is allow us, similar to the offshore oil and
gas system, which has a similar fee, which is significantly
higher than what we are asking for--it would allow us to go in
places like North Dakota where there is going to be a huge
amount of production. It allows us to staff up there because
those fees go to those local offices and it returns into the
system. So we need to be able to make sure we have a safe,
responsible program that allows us to build in areas like
production.
SAGE-GROUSE
Senator Udall. Thank you for that answer.
Shifting over on the sage-grouse, I understand that your
land use plans covering the priority areas for conservation are
almost finalized and will be public very soon. Can you preview
for us what we can expect from the release of these plans and
what has been the preliminary reaction from cooperating States?
Mr. Kornze. So the Fish and Wildlife Service has been very
clear with us that they need essentially--they see a three-
tiered stool or a three-legged stool hopefully getting to a
point where they do not have to list the Greater sage-grouse.
And I would note that there was success recently on the bi-
State sage-grouse population on the Nevada-California border
where the Fish and Wildlife Service declared that as not
warranted based on plans the Federal agencies and local
partners put forward.
So there are three pieces that the Fish and Wildlife
Service has asked for. One is strong Federal plans to make sure
that we have allocations and plans in place that will limit
disturbance in places that are important to the sage-grouse to
allow those important population areas to prosper.
The second is making sure that there are similar
conservation-oriented efforts and allocations when possible on
private and State lands. So you have States like Idaho that
have just stepped forward on their State lands to do something
similar.
And then thirdly, they want to make sure that there is
activity in fire to make sure that--the greatest threat to
Greater sage-grouse in the Great Basin, for instance, is fire
and the invasive plants that come in afterwards--and make sure
that we are making headway there with things like the fire fix
and then also efforts related to making sure simply that we are
not losing that habitat. We are working carefully with our fire
teams to make sure the sage-grouse and rangeland priorities are
built into the way that we operate this summer and in all
future years.
Senator Udall. Now, how are you ensuring that the most
important sage-grouse habitat is protected while still
fulfilling your mandate for multiple use and providing access
to resources?
Mr. Kornze. So our multiple use and sustained yield mission
is a continuum. In some places, you are going to have very
significant development and use. In other places, you are going
to have less use, and that can change over time. So it is well
within the bounds of the BLM's mission to have some places that
are set aside for certain uses like wildlife habitat and for
helping this bird recover. And we will have other uses,
traditional uses like grazing on those lands. So it is part of
the balancing act we do on a daily basis.
Senator Udall. The President's budget request proposes an
increase of $45 million for the restoration and protection of
the sage steppe ecosystem for a total of $60 million. This is a
major increase for this program. What will BLM do with this
funding? How is this funding critical to ensure that we can
avoid a listing of the sage-grouse?
Mr. Kornze. So we will do a few things. One, we need to
have an investment in our partners. We do not know everything
about the bird. We have got ranchers. We have got counties. We
have got State agencies that we have to be working hand in hand
with. So part of that money is to build on those partnerships
and make sure that we have those links firmly in place.
Another piece is making sure simply that we have boots on
the ground. In places like Elko County where I was last week to
check on the drought conditions and the fire season, we have
one range conservationist, one range con, for about every
million acres. We are going to have to do better than that in
terms of giving our teams the resources to be working with
grazers and working with other land users to make sure that we
are doing the best thing for multiple use and the best thing
for the bird. So we will be taking steps along those lines.
Senator Udall. And my understanding is it takes a lot of
time and effort and people on the ground to work in a
collaborative way to try to make sure you are moving in the
direction of not listing.
Mr. Kornze. Absolutely.
And the other thing we will do is we will be doing projects
related to making sure that our wet meadows are of high
quality, that our springs are good, that our riparian areas are
supporting good wildlife habitat.
And pinyon juniper encroachment, which is the situation
that is largely in the Great Basin, is a spectacular and
sometimes terrifying thing to look at these valleys that used
to have pinyon juniper at a high elevation and because of the
changed fire regime and climatic changes, these trees are
choking out the sagebrush and sage-grouse and almost completely
filling in these giant, say, 500,000-acre valleys. You can see
it marching down year by year. So we will be making sure that
we are pushing back on those trees and making sure that the
sagebrush that we have that is high quality is protected and
preserved.
Senator Udall. Thank you, Madam Chair.
ALASKA CONTAMINATED LANDS
Senator Murkowski. Thank you.
Let me talk a little bit or let us have a discussion here
about where we are with the contaminated lands that were
conveyed to Alaska Natives, as well as the abandoned well
cleanup there in National Petroleum Reserve Alaska (NPRA). I am
going to be sitting down with Mr. Cribley in Alaska over the
Memorial Day week and be able to go through some certain maps.
So I am not going to drill down too hard here.
But it is my understanding that with the lands that were
conveyed to natives under the Alaska Native Claims Settlement
Act (ANCSA), that we are building out the database, the
inventory that needs to be completed. And it is my
understanding that we are going to find out that a majority of
the sites are not on BLM lands. So identifying the responsible
party is clearly important, but that is just one step of it.
Then we need somebody who serves as the point person, the point
agency, if you will, to work with all the responsible Federal
agencies.
Is this something that BLM will agree to do, to be that
facilitator once we have identified the inventory and just the
priorities there? Is BLM prepared to be able to step up to then
coordinate with all the Federal agencies?
Mr. Kornze. Let me give you a description of where we are.
Senator Murkowski. Okay.
Mr. Kornze. So we have worked with the State and looked for
how many known contaminated sites there are across the State.
Roughly it is around 6,000. We did an overview to see how many
of those were on conveyed lands. We got down to about 900. We
have found that about two-thirds of those, so ball park 600,
are either cleaned up or are in a state of some sort of
remediation. So we have got about 300 that are open question.
You will see that roughly half of those, our current
information suggests, would be DOD-related, and then the other
half is sort of a rainbow of different organizations.
So going forward, I would like to have a conversation with
you about whether or not BLM is the right agency because part
of what you need is someone to compel action. I think you were
looking for cleanup.
Senator Murkowski. Yes.
Mr. Kornze. And I think potentially the Environmental
Protection Agency (EPA) or the State with delegated authorities
from EPA would have a better handle on that kind of work than
we do traditionally.
Senator Murkowski. Well, what I would like to do is figure
that out because, again, it is one thing to identify that these
are these areas. It is another thing to have the action plan
and have everybody understand what that action plan is and the
level of expectation. So probably after my sit-down with Mr.
Cribley in Alaska, we will have an opportunity to better
identify that.
On the abandoned wells, the good news for us is that we
were able to secure some resources to address the abandoned
well cleanup through the Helium Stewardship Act. It was really
just kind of fortuitous. Actually it was a long of dang hard
work. Thank you very much. And we have been able to finish up
work on three of the wells this month at Umiat. So that is
good.
But this is, again, an area where we need to be looking
beyond those one-time monies that we received within the Helium
Stewardship Act to better define how we are going to address
the cost of this cleanup, how we are going to be working with
the State to make sure that there is some efficient use of
dollars here for the cleanup. So we need to address that
further just in terms of how much more you are going to be
looking at to complete the cleanup after we expend the monies
that were received under the Helium Stewardship Act.
Do you want to comment on that?
Mr. Kornze. Yes.
So, first, I want to thank you and Senator Wyden for all
the work that you did to get that funding. It was very
significant.
So we have cleaned up the wells in Umiat, as you noted. The
next group that we will be working on is around Barrow. There
are around seven wells there. The next step after that will be
the Simpson Peninsula. So at that point, we will likely have
expended most of the $50 million. That will be a 2- to 3-year
work plan from now. And we are thinking carefully about what
that larger universe of costs might be. Once we get past those
clusters of wells on those sites that I noted, they get more
spread out. And so we are going to have to get more creative
about potentially piggybacking on new infrastructure that is
built and other opportunities.
Senator Murkowski. Well, and this is where really having
somebody that is coordinating and helping to facilitate, again,
some efficiencies--the costs are extraordinary.
Mr. Kornze. They are.
GREATER MOOSES TOOTH
Senator Murkowski. We acknowledge that. But the obligation
is paramount as well.
Sticking to issues up within the north there and related to
NPRA and Greater Mooses Tooth 1, as I mentioned in my opening
comments, we are kind of at a stall-out or a standstill here
with GMT1 regarding the outstanding issue of measuring
production. I think we are, hopefully, done with the mitigation
piece.
But BLM is proposing this dedicated test separator as
opposed to the multi-phase metering and allocation
methodologies that are currently being used on State land, have
been used on State land for decades. The Alaska Oil and Gas
Conservation Commission, AOGCC, has been working with EPA for
years. There has never been an issue. There has never been a
problem. But now we have got coming out of Interior and BLM
saying, well, you have to have this separate metering system,
this test separator, and an appreciation and understanding in
terms of what the costs then do to the project.
It has not only been the operator Conoco that is saying
this just is not reasonable. You have got the State of Alaska
that has weighed in. You have the Arctic Slope Regional
Corporation, which has objected to the requirement because of
the added costs without appreciable benefits.
So I guess the question to you is have you engaged with the
Alaska Oil and Gas Conservation Commission (AOGCC) regarding
this added requirement and why you think that the way it has
been done for the past several decades is not sufficient and
what we can do to resolve this because I think it is somewhat
telling that it has been decades now that Conoco has been
trying to get something going within the NPRA and we still have
not seen a drop of anything. So we would like to get there. We
thought that Conoco was going to be able to sanction this
project this season and of course they have not. Where are we
with this additional requirement for a test separator?
Mr. Kornze. So the question that we are trying to work out
is basically the error rates. What kind of confidence can we
have in how much oil is flowing through those pipelines?
Senator Murkowski. But have you talked with AOGCC about the
confidence that they have and have had for years now?
Mr. Kornze. So the system that ConocoPhillips has put
forward, as you noted, has been used on State lands and under
AOGCC authority. We look at that. ConocoPhillips operates on
BLM lands in southern Alaska and places like New Mexico, and
they have been meeting the standard that we have in place,
which is roughly a .35 error rate. The system that they are
putting forward likely has an error rate of somewhere between 4
and 10 percent, and it is hard to verify.
Senator Murkowski. Have we ever had problems, though, with
the Alaska methodology?
Mr. Kornze. Well, I am not sure there have been problems,
but we certainly have some difference in the demand we are
putting forward in terms of the error rate. So we have a very
important responsibility to make sure that the American
taxpayer and the tribes that we work with and other native
populations----
Senator Murkowski. Well, right now, the American taxpayer
is getting 100 percent of nothing, and the tribes, the native
corporations are not being benefited at all because there is no
production. So we have got a situation where Conoco is prepared
to say we cannot make this pencil out. We just cannot make it
pencil out. And so if you are trying to talk benefits here,
again, if those that are willing to invest hundreds of millions
of dollars into a project and have nothing to show for it and
may be forced to walk away from this project, walk away from
this investment because of an overlay of a requirement that,
again, adds substantial cost, with again minimal to no
appreciable benefit, it causes people to say this does not make
any sense.
And this is where I think the administration gets the black
mark in saying, you know, you say you support an all-of-the-
above energy policy. You say you support increased production
or production on the National Petroleum Reserve Alaska, but you
are not doing much to facilitate it. We just cannot figure out
how we cannot come together to make sense on this. You see my
point.
Mr. Kornze. I do.
And our goal is to get to production on Greater Mooses
Tooth, and I believe we will get there. Part of the more
complicated situation that we are within is that, one,
ConocoPhillips is meeting the standard elsewhere where they
operate on BLM lands in Alaska and in the lower 48. So there
are no surprises here.
Senator Murkowski. But they would have to build a
completely separate system--a completely separate system--up
north within NPRA, a redundant system at extraordinary cost.
Mr. Kornze. It depends on what your standards are. We are
held to a very high standard at the Bureau of Land Management.
Senator Murkowski. And I think Alaska has led in terms of
the standard. If the system was not working for us up there, I
think that there is probably more room for a discussion, but
nobody has ever questioned the soundness, the validity, the
reliability. And that is where I think we have got somewhat of
an impasse.
Let me go to my colleague here for further questions.
Senator Udall. Madam Chair, I have a couple more questions
for the record, but I think I will submit those. So I have
completed my questioning.
Senator Murkowski. I just have a couple more, if I may.
Senator Udall. Please go ahead.
LAND CONVEYANCES
Senator Murkowski. And very quickly to you, as you know,
with the land conveyances, we have been trying to get moving
forward. We have been held back in being able to do the
surveys. I appreciate the Department moving forward and saying
there are other ways that we can do the surveys through GPS.
Are we any closer to getting that level of acceptance and
cooperation with the State on BLM's proposal for Global
Positioning System (GPS) surveys?
Mr. Kornze. I strongly share your desire to fulfill the
Alaska Statehood Act and what is owed to the native
corporations. I think this is an important step. I went up to
Alaska 2 months ago to sit down with the Governor and the
Lieutenant Governor and tell them how much faster we can go and
at what a decreased cost to the Federal Government and to the
State potentially and then also truly if we can come together
on this, I think it is a huge opportunity for all of us. So
that was a positive conversation.
Our teams have been meeting since then. Ed Vogel's team and
Mark Meyers' team have been sitting down with ours.
I am interested in, hopefully, seeing if we can alter our
MOU with the State, which was signed in 1973. Technology was
very different then. We can provide the State of Alaska with a
much better product with much finer detail that they can use
going forward. So any support you can provide on that front is
greatly appreciated.
HELIUM STEWARDSHIP ACT
Senator Murkowski. Well, it is something that we are all
trying to achieve the same goal here, and if we can utilize
technologies to our advantage, it seems to me to make sense. So
let us work on that.
Let me ask about the helium issue. I mentioned a couple
times the Helium Stewardship Act, which I think there was a
good deal of benefit that came out of that, not the least of
which was some revenues that helped.
But just a few weeks ago, we saw a report from GAO raising
questions about BLM's implementation of the act, which
certainly has some repercussions for the helium industry and
taxpayer.
The first area that GAO raised concerns is with regard to
these tolling agreements between the refiners and non-refiners.
And unless both sides can reach agreements on tolling, one of
the central elements of the Helium Stewardship Act, to bring
more competition into the helium program, it is not going to be
achieved.
So can you give me your response to this GAO report? It is
something that there is some real concern about. And we want to
make sure that the provisions of that act function and that in
fact we are able to see a level of competition that will allow
for greater access to helium on the market. So can you address
the GAO?
Mr. Kornze. Absolutely. I think we appreciate the revision
of the system a few years ago through legislation, which I know
was not an easy lift. That legislation was designed at a time
when the Bush Dome, the system that we operate out of Amarillo,
Texas, was a much larger player. So since then, Qatar, Algeria,
a plant in Wyoming have all either come on line or increased
their production significantly, and it has really changed the
dynamics around the system.
Related to tolling, the idea is that we have producers that
are on the system, and if they have excess capacity, they need
to be allowing that to be used by folks who are off the system
that might also have helium that needs to be processed. One of
the things that we are seeing in our gas reservoir is that the
pressure is going down significantly. We are not able to push
as much gas to these producers as they would want to consume
for their own production. So we are seeing significantly less
gas being refined than sort of at an optimal level that they
would need to hit in order to get to this concept of the
requirement that they use their excess capacity for tolling.
I think it is a fairly complex situation, but we are
talking to GAO about some of the complexity. We do not
necessarily see eye to eye with 100 percent of what they came
out with. We would be happy to visit with your staff further
about the situation.
EASTERN AND WESTERN INTERIOR RESOURCE MANAGEMENT PLANS
Senator Murkowski. Yes. I know that we want to explore this
further. I want to make sure that we have got this right and,
again, that we are achieving the progress.
My last issue is one that I probably should not have saved
for the end because it is going to be really animated and
agitated. We have had an opportunity to talk about the BLM's
eastern interior resource management plan. This is the
management plan up in the interior of the State that will
withdraw close to 700,000 acres in the district from mineral
entry. This is something that the small miners in the Fortymile
District are just beside themselves about. These are small
operators, small operators in an extraordinarily remote part of
the country. And to them, they are looking at this proposal and
saying decisions that are being made 4,000 miles from here we
cannot comprehend.
As you know, there is a meeting in Chicken on the 29th of
May. You had been invited to attend. I had asked that you
attend. I understand that you will not be, but I understand
that Bud Cribley is going up. Is anybody from Washington, DC,
going up, do you know?
Mr. Kornze. So I am looking at my schedule to see if it is
possible to go.
Senator Murkowski. That would be fabulous. That would be
fabulous. I think it would be extraordinarily important for you
to hear directly from the men and women on the ground in their
place as to what this means.
And the frustration here is that you have got a proposal to
withdraw, again, nearly 700,000 acres in the Fortymile
District, and you have these miners--not just miners. You have
Alaskans that say, wait a minute. Tell me how this does not
violate the intent of the Alaska National Interest Lands
Conservation Act (ANILCA) and the no-more clause when you have
in place a proposal like this. And I look at it and say I do
not see how, other than a difference in terminology, this is
not just a flagrant, in-your-face violation of the no-more
clause under ANILCA.
And then it is not just the eastern interior land plan, it
is this current planning effort for the Bering Sea western
interior area plan. These are areas that are being proposed for
set-aside for environmental protection as areas of critical
environmental concern, ACEC's. I can tell you most people in
Alaska have never heard of an ACEC, but the proposals that we
have here in terms of limitations on opportunity for access are
really quite extraordinary, proposing to place off limits most
any form of development.
Now, I do understand that the current version of the plan
reduces from 11 to 8 the number of existing ACEC's in western
Alaska, but it also proposes to create eight new conservation
areas. Some like the Unalakleet River ACEC are pretty large.
You have another, the new sheefish spawning area just south of
McGrath surrounding the Big River. You cannot see it from here,
but you look at the map here along the rivers, and the impact
for any level of development is considerable. It is beyond
considerable. It will potentially block the route for a
pipeline to bring any kind of energy to proposed Donlin Creek
mine, an opportunity that the folks in that region have been
keyed in intently. But in order to access mineral resources
there, you have got to have some form of energy other than just
diesel.
But again, we have got provisions within ANILCA that make
it illegal. You cannot do it. You cannot withdraw more than
5,000 acres in Alaska for any single use without congressional
approval. But under many of the agency's pending ACEC's, you
are administratively affecting far more than 5,000 acres for
single purposes, whether it is the sheefish spawning, even
though their original spawning areas are actually outside of
these proposed ACEC's.
So I wander around with a map in my everyday folder that is
what gets me up in the morning. It is what reminds me of my
purpose here in the United States Senate. And these are Alaskan
lands and waters that are withdrawn from development. And it is
things like wilderness and NPRA withdrawals and withdrawals in
the North Aleutian Basin and critical habitat proposed and
wilderness and national park and Federal lands. And the colors
just make a brilliant patchwork.
But what this then does is take that patchwork and muddy
all the colors so that it is even more restrictive so that in
those areas where we thought we might have an opportunity for a
small placer miner to engage in a little bit of income or for a
community to perhaps have an opportunity for some jobs in a
region or for some cheaper energy in a region, but if we are
not going to be able to even allow for a pipeline corridor
because now we have all of these ACEC's, we are going to be
looking at the ESA, the Endangered Species Act, and critical
habitat as chump change because everything else around the
State is going to be blocked off.
And I know I sound apocalyptic, but you have to appreciate
the frustration, the anxiety. We felt that we had in place laws
that are specific and unique to Alaska. Alaska is the ``A'' in
ANILCA, and we thought we had a pretty good understanding as to
what the no-more clause meant. And yet, what we are finding now
is our Federal agencies are coming up with changes in semantics
basically to get around what was clearly a well-defined law.
When it says that you cannot withdraw more than 5,000 acres
without congressional approval, we kind of thought that it
meant what it said.
And so now we are dealing with areas of critical
environmental concern, but it effectively puts you again in a
state of de facto wilderness, not unlike what the President did
with his proposal up in the Arctic National Wildlife Refuge
(ANWR). So it seems like anyway you slice it, any term that you
want to call it, what it ends up being is withdrawal,
restriction, and an inability of a State and a people to access
a resource--resources that we were promised at statehood, land
that we were promised at statehood. So we are feeling a little
burned.
I would encourage you--encourage you--to go to Alaska and
to hear the people. And I thank you for the trips that you have
made. And I know that they are not easy because Alaskans are
pretty unfiltered. We will tell you what is on our mind, but I
think that that is important. I think that that is important
because this is our life. This is our livelihood, and we want
to make sure that our lands are cared for. And we are kind of
proud of how we have done it over the decades. But sometimes we
feel like you all are trying to protect us from ourselves, and
that makes us pretty angry.
So I would encourage you to go to Chicken. I would
encourage you to listen to the people on the ground. We have
some things that we need to be working on together, clearly. I
appreciate the efforts that you are making on the cleanup and
the obligation that the Federal Government has there. We have
got some other things that we need to do. But we must--must--
address some of these withdrawal issues that are strangling
Alaskans. So I appreciate your attention to that as well.
Mr. Kornze. It will have my attention, and let me say thank
you both for your significant investment in issues related to
the Bureau of Land Management and the Department of the
Interior. The personal attention is greatly appreciated.
Senator Murkowski. Thank you.
CONCLUSION OF HEARINGS
With that, we stand adjourned.
[Whereupon, at 11:46 a.m., Wednesday, May 13, the hearings
were concluded, and the subcommittee was recessed, to reconvene
subject to the call of the Chair.]