[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]








     EXAMINING ACCESS TO OIL AND GAS DEVELOPMENT ON FEDERAL LANDS

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

                           OVERSIGHT HEARING

                               before the

                       SUBCOMMITTEE ON ENERGY AND
                           MINERAL RESOURCES

                                 of the

                     COMMITTEE ON NATURAL RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                        Thursday, June 29, 2017

                               __________

                           Serial No. 115-13

                               __________

       Printed for the use of the Committee on Natural Resources





[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]







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

                         U.S. GOVERNMENT PUBLISHING OFFICE 

26-167 PDF                     WASHINGTON : 2017 
-----------------------------------------------------------------------
  For sale by the Superintendent of Documents, U.S. Government Publishing 
  Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; 
         DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, 
                          Washington, DC 20402-0001
      
      
      
      
      
      
      
      
      

                     COMMITTEE ON NATURAL RESOURCES

                        ROB BISHOP, UT, Chairman
            RAUL M. GRIJALVA, AZ, Ranking Democratic Member

Don Young, AK                        Grace F. Napolitano, CA
  Chairman Emeritus                  Madeleine Z. Bordallo, GU
Louie Gohmert, TX                    Jim Costa, CA
  Vice Chairman                      Gregorio Kilili Camacho Sablan, 
Doug Lamborn, CO                         CNMI
Robert J. Wittman, VA                Niki Tsongas, MA
Tom McClintock, CA                   Jared Huffman, CA
Stevan Pearce, NM                      Vice Ranking Member
Glenn Thompson, PA                   Alan S. Lowenthal, CA
Paul A. Gosar, AZ                    Donald S. Beyer, Jr., VA
Raul R. Labrador, ID                 Norma J. Torres, CA
Scott R. Tipton, CO                  Ruben Gallego, AZ
Doug LaMalfa, CA                     Colleen Hanabusa, HI
Jeff Denham, CA                      Nanette Diaz Barragan, CA
Paul Cook, CA                        Darren Soto, FL
Bruce Westerman, AR                  Jimmy Panetta, CA
Garret Graves, LA                    A. Donald McEachin, VA
Jody B. Hice, GA                     Anthony G. Brown, MD
Aumua Amata Coleman Radewagen, AS    Wm. Lacy Clay, MO
Darin LaHood, IL
Daniel Webster, FL
Jack Bergman, MI
Liz Cheney, WY
Mike Johnson, LA
Jenniffer Gonzalez-Colon, PR
Greg Gianforte, MT

                 Todd Ungerecht, Acting Chief of Staff
                      Lisa Pittman, Chief Counsel
                David Watkins, Democratic Staff Director
                                 ------                                

              SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES

                      PAUL A. GOSAR, AZ, Chairman
            ALAN S. LOWENTHAL, CA, Ranking Democratic Member

Louie Gohmert, TX                    Anthony G. Brown, MD
Doug Lamborn, CO                     Jim Costa, CA
Robert J. Wittman, VA                Niki Tsongas, MA
Stevan Pearce, NM                    Jared Huffman, CA
Glenn Thompson, PA                   Donald S. Beyer, Jr., VA
Scott R. Tipton, CO                  Darren Soto, FL
Paul Cook, CA                        Nanette Diaz Barragan, CA
  Vice Chairman                      Vacancy
Garret Graves, LA                    Vacancy
Jody B. Hice, GA                     Raul M. Grijalva, AZ, ex officio
Darin LaHood, IL
Jack Bergman, MI
Liz Cheney, WY
Rob Bishop, UT, ex officio
                                 ------      
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                CONTENTS

                              ----------                              
                                                                   Page

Hearing held on Thursday, June 29, 2017..........................     1

Statement of Members:
    Gosar, Hon. Paul A., a Representative in Congress from the 
      State of Arizona...........................................     1
        Prepared statement of....................................     2
    Lowenthal, Hon. Alan S., a Representative in Congress from 
      the State of California....................................     3
        Prepared statement of....................................     5

Statement of Witnesses:
    Flynn, Ryan, Executive Director, New Mexico Oil and Gas 
      Association, Santa Fe, New Mexico..........................    13
        Prepared statement of....................................    14
    MacGregor, Katharine, Acting Assistant Secretary, Land and 
      Minerals Management, Department of the Interior, 
      Washington, DC.............................................     7
        Prepared statement of....................................     8
        Questions submitted for the record.......................    12
    Nelson, Laura, Governor's Energy Advisor, Utah Governor's 
      Office of Energy Development, Salt Lake City, Utah.........    27
        Prepared statement of....................................    28
        Questions submitted for the record.......................    31
    Squillace, Mark, Professor of Law, Natural Resource Law, 
      University of Colorado, Boulder, Colorado Law School, 
      Boulder, Colorado..........................................    17
        Prepared statement of....................................    19
 
  OVERSIGHT HEARING ON EXAMINING ACCESS TO OIL AND GAS DEVELOPMENT ON 
                             FEDERAL LANDS

                              ----------                              


                        Thursday, June 29, 2017

                     U.S. House of Representatives

              Subcommittee on Energy and Mineral Resources

                     Committee on Natural Resources

                             Washington, DC

                              ----------                              

    The Subcommittee met, pursuant to notice, at 10:04 a.m., in 
room 1324, Longworth House Office Building, Hon. Paul Gosar 
[Chairman of the Subcommittee] presiding.
    Present: Representatives Gosar, Lamborn, Wittman, Pearce, 
Tipton, Westerman, Graves, Cheney, Bishop; Lowenthal, Brown, 
Tsongas, Beyer, Soto, and Barragan.
    Dr. Gosar. The Subcommittee on Energy and Mineral Resources 
will come to order. The Subcommittee is meeting today to hear 
testimony on examining access to oil and gas development on 
Federal lands.
    I ask unanimous consent that the gentleman from Arkansas, 
Mr. Westerman, be allowed to sit with the Subcommittee and 
participate in the hearing.
    Without objection, so ordered.
    Under Committee Rule 4(f), any oral opening statements at 
the hearings are limited to the Chairman, the Ranking Minority 
Member, and the Vice Chair. This will allow us to hear from our 
witnesses sooner, and help Members keep to their schedules. 
Therefore, I ask unanimous consent that all other Members' 
opening statements be made part of the hearing record, if they 
are submitted to the Subcommittee Clerk by 5:00 p.m. today.
    Without objection, so ordered.
    I ask that there not be any type of disruption regarding 
the testimony given here today. It is important that we respect 
the decorum and the rules of the Committee of the House, and to 
allow the Members and the public to hear our proceedings.
    Today, the Subcommittee will examine access to oil and gas 
development on onshore Federal lands. Our Subcommittee is 
holding a hearing in several weeks to discuss offshore Federal 
oil and gas development, and we ask the Members to reserve all 
offshore questions for the next hearing.

 STATEMENT OF HON. PAUL A. GOSAR, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF ARIZONA

    Dr. Gosar. Federal mineral estates are owned by all 
Americans, and the Bureau of Land Management is obligated to 
responsibly manage and develop these valuable resources. 
Onshore Federal oil and gas accounts for roughly 20 percent of 
America's production, and is integral to our Nation's energy 
independence and security.
    However, non-Federal production far outpaces Federal 
production figures, due in large part to the overwhelming 
administrative burdens of the Federal mineral development 
process. Not only has the new Administration inherited a 
backlog of 3,000 drill permit applications, but an incredibly 
burdensome regulatory scheme that discourages investment and 
development. It is critical that we evaluate these obstacles to 
access, to ensure a fair return to the American people.
    There are many factors that influence an operator's 
decision to lease and develop hydrocarbons, including oil 
price, geology, and transmission infrastructure. While some may 
point to a low commodity price as a reason to withhold leasing 
and production, market conditions are no excuse for poor 
policies, or for the Federal Government failing to uphold its 
statutory obligations. In fact, many operators avoid Federal 
lands due to unquantifiable risk and level of uncertainty 
associated with the leasing and permitting schematic.
    The current Federal oil and gas leasing and permitting 
processes are fraught with uncertainty, duplication, and delay. 
Designating lands for development can take years, and parcels 
nominated for lease were often explicitly retracted from the 
auction. Although the Mineral Leasing Act requires the BLM to 
hold quarterly lease sales of eligible lands, this requirement 
has not been enforced for years.
    Furthermore, once an operator has successfully navigated 
the Federal leasing scheme, the lessee must still proceed 
through the Application for a Permit to Drill, or ``APD,'' 
review process, which could set drilling back over a year. The 
uncertainty, delay, and risks presented throughout the process 
make operational and financial planning nearly impossible, and 
is a detriment to the locality, state, and the American people.
    Despite the complications and inefficiencies of leasing and 
permitting under the previous administration, we are confident 
that the new Administration will take the time to carefully 
examine and optimize the BLM's processes. Secretary Zinke, a 
friend and former member of this Committee, testified before us 
last week and shared some of the steps he is taking to recommit 
the BLM to upholding its mission.
    In addition to increasing program funding, Secretary Zinke 
is committed to improving field office performance. We are 
grateful for the Department of the Interior's initial steps in 
the right direction, and look forward to finding practical 
solutions that optimize the responsible developmental process.

    [The prepared statement of Dr. Gosar follows:]
Prepared Statement of the Hon. Paul A. Gosar, Chairman, Subcommittee on 
                      Energy and Mineral Resources

    Today, the Subcommittee will examine access to oil and gas 
development on onshore Federal lands. Our Subcommittee is holding a 
hearing in several weeks to discuss offshore Federal oil and gas 
development, and we ask that Members reserve all offshore questions for 
the next hearing.

    Federal mineral estates are owned by all Americans, and the Bureau 
of Land Management is obligated to responsibly manage and develop these 
valuable resources. Onshore Federal oil and gas accounts for roughly 20 
percent of American production, and is integral to our Nation's energy 
independence and security. However, non-Federal production far outpaces 
Federal production figures, due, in large part, to the overwhelming 
administrative burdens of the Federal mineral development process. Not 
only has the new Administration inherited a backlog of 3,000 drill 
permit applications, but an incredibly burdensome regulatory scheme 
that discourages investment and development. It is critical that we 
evaluate these obstacles to access to ensure a fair return to the 
American people.
    There are many factors that influence an operator's decision to 
lease and develop hydrocarbons, including oil price, geology, and 
transmission infrastructure. And while some may point to low commodity 
prices as a reason to withhold leasing and production, market 
conditions are no excuse for poor policies, or for the Federal 
Government failing to uphold its statutory obligations. In fact, many 
operators avoid Federal lands due to the unquantifiable risk and level 
of uncertainty associated with the leasing and permitting scheme.
    The current Federal oil and gas leasing and permitting processes 
are fraught with uncertainty, duplication, and delay. Designating lands 
for development can take years, and parcels nominated for lease were 
often inexplicably retracted from auction. Although the Minerals 
Leasing Act requires the BLM to hold quarterly lease sales of eligible 
lands, this requirement has not been enforced for years. Furthermore, 
once an operator has successfully navigated the Federal leasing scheme, 
the lessee must still proceed through the Application for a Permit to 
Drill, or ``APD,'' review process which could set drilling back over a 
year. The uncertainty, delay, and risks presented throughout the 
process make operational and financial planning nearly impossible, and 
is a detriment to the locality, state, and American people.
    Despite the complications and inefficiencies of leasing and 
permitting under the previous administration, we are confident that the 
new administration will take the time to carefully examine and optimize 
the BLM's processes. Secretary Zinke, a friend and former member of 
this Committee, testified before us last week and shared some of the 
steps he is taking to recommit the BLM to upholding its mission. In 
addition to increasing program funding, Secretary Zinke is committed to 
improving field office performance. We are grateful for the Department 
of the Interior's initial steps in the right direction, and look 
forward to finding practical solutions that optimize the responsible 
development process.

                                 ______
                                 

    Dr. Gosar. With that, I now recognize the Ranking Member 
for his statement.
    Thank you.

   STATEMENT OF HON. ALAN S. LOWENTHAL, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Dr. Lowenthal. Thank you, Mr. Chairman. First, I want to 
compliment you, and I want to compliment all the Members on 
both sides of the aisle of this Committee, as we have been 
doing so well in our last few meetings. They have been 
bipartisan, they have been cooperative, and they have been 
constructive. I think today is going to be a little bit more 
contentious, and I hope that that doesn't end that spirit.
    Mr. Chairman, I do not oppose oil and gas development on 
public lands. But I do oppose letting the oil and gas industry 
call all the shots on how to manage those lands that are owned 
by all Americans.
    An all-of-the-above policy does not mean that we do not set 
priorities, and I am concerned about our priorities.
    It has only taken 5 months, and nearly every move on energy 
that this Administration has made could have come right out of 
the executive boardrooms of the American Petroleum Institute or 
the National Mining Association. And that may actually be the 
case, given the number of oil, gas, and coal lobbyists that now 
occupy high-ranking positions at the Interior Department, at 
the Energy Department, at the Environmental Protection Agency, 
and in the White House.
    Rules to protect public health? Gone. Rules to protect our 
land, air, and water, and cut down on pollution? Gone. Rules to 
protect fish and wildlife? Gone. Rules to make sure that 
companies are paying their fair share? Gone. The standard seems 
to be: did the Obama administration put it in place, and did 
one oil, gas, or coal company complain about it? If so, it is 
gone.
    In no place is it more important to balance multiple uses, 
environmental protection, as well as economic development, than 
on America's public lands. But this idea of balance, this idea 
that some areas should be protected while others can be 
developed, is at least endangered now. And soon that could be 
gone, too.
    To quote the statement of the Acting Assistant Secretary, 
``America's free markets will help determine where and when 
energy development on public lands is feasible.'' That means 
that the idea that these lands, which belong to all Americans, 
should be managed in a way that will ensure that they are here 
for our children and our grandchildren, that idea is now gone.
    Instead, the Administration is operating under the idea 
that the Department of the Interior should become a service 
station for the oil and gas industry. Which lands would you 
like to lease? Where and how fast do you want to drill? What 
regulations do you want us to repeal? Are these national 
monuments getting in your way? Just let us know. The Department 
of the Interior is apparently here to keep you happy.
    Secretary Zinke paid lip service to the idea of supporting 
all forms of energy, to be in favor of the ``all-of-the-above'' 
policy. But if we look at his budget, it increases oil, gas, 
and coal programs by $34 million, while renewables suffer a 
$15.3 million cut. In fact, the fossil fuel program increase 
seems to be the only one in the entire Interior budget that has 
an increase.
    We have seen this movie before, we have seen an 
administration where energy policy was literally written by big 
oil. During the 8 years of the Bush administration, the only 
measure of success for the Bureau of Land Management was how 
many drilling permits it could issue.
    But what did we get? Interior Department officials thrown 
in jail, regulators doing drugs and literally getting into bed 
with the people they were supposed to be regulating, and a 
thirst for mineral revenues that put safety standards on the 
back burner, and helped to contribute to the Deepwater Horizon, 
according to the Presidential Oil Spill Commission.
    When it comes to giving the keys to our public lands to the 
oil and gas industry, President Trump has made the Bush 
administration look bush league.
    The fact is that oil and gas companies are doing just fine 
on our public lands and in our oceans, despite the misleading 
statistics that they are going to throw around today.
    Oil statistics really show that oil production on public 
lands is up 59 percent since 2008. Offshore production is at a 
record high. Companies have more than 7,500 approved drilling 
permits that they are not using, and 26 million acres of public 
land under lease to be developed. It shows you from 2008, right 
through 2015, the Federal onshore oil production has increased 
every single year up to 2015. And 2016 was slightly below 2015, 
but above all the other years.
    So, kind of in closing, I just want to say our new quest 
for energy dominance, whatever that means, is not going to be 
enough. Nothing is ever going to be enough. We must do more. 
Hunting, fishing, camping, hiking, boating, off-roading, 
grazing, and all other uses of our public lands, are now 
second-class. Oil and gas are dominant.
    Mr. Chairman, we have an opportunity on this Subcommittee 
to ensure that energy policies reflect the multiple uses of our 
public lands, for the benefit of all of our constituents, not 
just for the special interests of a few billionaires. Let's not 
squander that opportunity.
    Mr. Chairman, I just want to say in closing that I 
understand your desire--and you sent out a few days ago--that 
the title of this hearing would be focusing on onshore, and I 
will try to abide by that. However, the title to the hearing 
was really, ``Examining Access to Oil and Gas Development on 
Federal Lands.'' And, as you know, our Outer Continental Shelf 
is really defined as submerged lands lying seaward of the coast 
line.
    Ms. MacGregor is responsible for overseeing both offshore 
and onshore development, so there may be some questions that 
come up because people did not know. I am just letting you know 
that, even though we understand.
    [The prepared statement of Dr. Lowenthal follows:]
   Prepared Statement of the Hon. Alan S. Lowenthal, Ranking Member, 
              Subcommittee on Energy and Mineral Resources
    Thank you, Mr. Chairman.
    You know, we have been doing so well in our last few EMR hearings--
they have been bipartisan, cooperative, and constructive. I hope that 
it is not coming to an end today.
    Mr. Chairman, I don't oppose oil and gas development on public 
lands. But I do oppose letting the oil and gas industry call all the 
shots as to how to manage these lands owned by all Americans. It's only 
taken 5 months, and nearly every move on energy that this 
Administration has made could have come right out of the executive 
boardrooms of the American Petroleum Institute or the National Mining 
Association. And that might actually be the case, given the number of 
oil, gas, and coal lobbyists that now occupy high-ranking positions at 
the Interior Department, at the Energy Department, at the Environmental 
Protection Agency, and in the White House.
    Rules to protect people's health? Gone.
    Rules to protect our land, air, and water, and cut down on 
pollution? Gone.
    Rules to protect fish and wildlife? Gone.
    Rules to make sure companies are paying their fair share? Gone.
    The standard seems to be: did the Obama administration put it in 
place, and did one oil, gas, or coal company complain about it? If so, 
it has to go.
    In no place is it more important to balance multiple uses--
environmental protection as well as economic development--than on 
America's public lands. But this idea of balance--the idea that some 
areas should be protected while others can be developed--is gone.
    To quote the statement of the Acting Assistant Secretary, 
``America's free markets will help determine where and when energy 
development on public lands is feasible.'' That means the idea that 
these lands, which belong to all Americans, should be managed in a way 
that will ensure they are still here for our children and our 
grandchildren--that idea is gone.
    Instead, the Administration is operating under the idea that the 
Department of the Interior should become a service station for the oil 
and gas industry.
    Which lands would you like to lease? Where and how fast do you want 
to drill? What regulations do you want us to repeal? Are these national 
monuments getting in your way? Just let us know. The Department of the 
Interior is apparently here to keep you happy.
    Secretary Zinke pays lip service to the idea of supporting all 
forms of energy, to being in favor of ``All of the Above.'' But his 
budget increases oil, gas, and coal programs by $34 million while 
renewables suffer a $15.3 million cut. In fact, the fossil fuel program 
increase seems to be the only one in the entire Interior Department 
budget.
    We've seen this movie before. We've seen an administration where 
energy policy was literally written by Big Oil. During the 8 years of 
the Bush administration, the only measure of success for the Bureau of 
Land Management was how many drilling permits it could issue.
    What did we get? Interior Department officials thrown in jail. 
Regulators doing drugs and literally getting into bed with the people 
they were supposed to be regulating. And a thirst for mineral revenues 
that put safety standards on the back-burner and helped contribute to 
the Deepwater Horizon, according to the Presidential Oil Spill 
Commission.
    When it comes to giving the keys to our public lands to the oil and 
gas industry, President Trump has made the Bush administration look 
bush league.
    Look, the fact is that oil and gas companies are doing just fine on 
our public lands and in our oceans, despite the misleading statistics 
that are going to be thrown around today. Here are some statistics: Oil 
production on public lands is up 59 percent since 2008. Offshore 
production is at a record high. Companies have more than 7,500 approved 
drilling permits they're not using, and 26 million acres of public land 
under lease waiting to be developed.
    But in our new quest for ``energy dominance,'' whatever that means, 
this is not going to be enough. Nothing is ever going to be enough. 
Hunting, fishing, camping, hiking, biking, boating, off-roading, 
grazing, and all other uses of our public lands are now second-class. 
Oil and gas are dominant. The oil barons want everything, and this 
Administration is trying to serve it to them on a silver platter.
    Mr. Chairman, we have an opportunity on this Subcommittee to ensure 
that energy policies reflect the multi-use nature of our public lands, 
for the benefit of all our constituents, not just the special interests 
of a few billionaires. Let's not squander that opportunity.
    I yield back the balance of my time.

                                 ______
                                 

    Dr. Gosar. I thank the gentleman for that clarification.
    I am going to now introduce our witnesses.
    The first one we see is a familiar face, Ms. Katharine 
MacGregor, who is the Acting Assistant Secretary, Land and 
Minerals Management, U.S. Department of the Interior.
    And now I am going to yield time to the gentleman from New 
Mexico to introduce the next witness.
    Mr. Pearce. Thank you, Mr. Chairman. I would like to 
introduce Ryan Flynn, who is the Executive Director of the New 
Mexico Oil and Gas Association. As the director of that, he has 
watched the permitting times on our wells increase from around 
200 man days to get to a permit to something over 400, and he 
was formerly the Secretary of New Mexico Environmental 
Department, where he has a strong reputation for balancing 
energy development with responsible environmental stewardship.
    Ryan, we appreciate you being here to testify today. I 
yield back.
    Dr. Gosar. I thank the gentleman. Our next witness is Mr. 
Mark Squillace, Professor of Law, the University of Colorado, 
Boulder, Colorado Law School.
    And Dr. Laura Nelson, Governor's Energy Advisor, Utah's 
Governor's Office of Energy Development.
    Let me remind the witnesses that under our Committee Rules, 
they must limit their oral statements to 5 minutes, but their 
entire statement will appear in the hearing record.
    Our microphones are not automatic, so you will have to 
press that little button. And if you will kind of watch up 
front, when it goes to the first 4 minutes it is green, then it 
will turn yellow. And when you see red, please summarize.
    I will let the entire panel testify before we ask 
questions.
    And now I will recognize Ms. MacGregor for her testimony.
    Welcome back.

 STATEMENT OF KATHARINE MacGREGOR, ACTING ASSISTANT SECRETARY, 
   LAND AND MINERALS MANAGEMENT, DEPARTMENT OF THE INTERIOR, 
                         WASHINGTON, DC

    Ms. MacGregor. Thank you, Chairman Bishop, Chairman Gosar, 
Ranking Member Lowenthal, and members of the Subcommittee. I 
have to say it is very good to be back here today. I absolutely 
loved working here, with both Majority and Minority staff.
    My name is Kate MacGregor, and I am currently serving as 
the Acting Assistant Secretary for Land and Minerals Management 
at the Department of the Interior, where our responsibility is 
the management of four bureaus: the Office of Surface Mining 
Reclamation and Enforcement; the Bureau of Ocean Energy 
Management; the Bureau of Safety and Environmental Enforcement; 
and the Bureau of Land Management. I appreciate the opportunity 
to testify on the BLM's onshore oil and gas program, which 
plays a critical role in our Nation's energy economy.
    The BLM manages 245 million surface acres and 700 million 
subsurface acres, most of which are located in 12 western 
states, including Alaska. Production on BLM-managed lands 
accounts for 7 percent of our Nation's onshore oil, 10 percent 
of our natural gas, and 41 percent of coal-produced 
domestically, as well as approximately 18,000 megawatts of 
renewable energy.
    Last year, the BLM oil and gas program generated over $1.56 
billion in royalties, rental payments, and bonus bids, all of 
which were shared with states. States and counties, in turn, 
use these funds for roads, schools, and other important 
municipal needs. Public lands are integral to the 
Administration's America First energy agenda, and Secretary 
Zinke's priority to maintain U.S. energy dominance by growing 
domestic energy production, generating revenue, and creating 
and sustaining jobs throughout our country.
    Access to responsible energy development on these lands 
begins with the planning and leasing process. Ten years ago, 
the BLM had nearly 45 million acres under oil and gas lease. 
Today, we are at 27 million acres. This is nearly identical to 
the total area currently designated as areas of critical 
environmental concern, also known as ACECs, which stand at over 
24 million acres. This is nearly 10 percent of all BLM-managed 
lands in the United States.
    In 2016, the BLM designated 8.2 million acres, the most 
ACEC acreage since 1980. This is one example of designations 
that limit how public lands may be used. Responsible energy 
production and conservation need not be mutually exclusive. 
That is why it is vitally important to Secretary Zinke to 
restore our multiple-use mission and strike the appropriate 
balance in onshore leasing that allows for job creation in 
rural America. This is about restoring balance.
    Under Secretary Zinke's leadership, the Department and the 
BLM have been proactive in prioritizing responsible energy 
production on public lands, including by Secretarial Order. 
Order 3349 aims to remove duplicative burdens on energy 
production while promoting job growth for hard-working American 
families. Order 3352 will jump-start Alaskan energy production 
in the National Petroleum Reserve Alaska, helping to unleash 
Alaska's energy potential and increase throughput in the Trans-
Alaska Pipeline.
    These efforts have already shown to be effective. Under 
Secretary Zinke's leadership, the BLM has had more lease sales, 
offered more acreage, and generated more revenue in the first 6 
months of 2017 than the same time last year. And we are only 
just getting started. The BLM plans to hold 14 additional lease 
sales this year.
    Still, promoting access to public lands does not come 
without its challenges. I am sure that all members of this 
Committee are in close contact with their state and local 
leaders who do not hesitate to communicate their frustrations. 
It is the Secretary's goal to restore trust and improve 
relationships with our state and local partners, many of whom 
rely upon the economic activity and revenues that come from 
responsible oil and gas production on public lands in the West.
    For example, the U.S. Census Bureau has found that rural 
New Mexico has one of the highest poverty rates in the country. 
Yet, rural New Mexico is also home to some of the most 
promising oil and natural gas deposits in the entire world. 
These resources are a tremendous source of jobs, economic 
growth, and revenue for these rural communities. This is why 
the Administration remains committed to promoting responsible 
oil and gas production that create jobs, promote a robust 
economy, and contribute to America's energy security.
    There are a multitude of factors that affect access to 
Federal oil and gas resources, and the Department and the BLM 
are reviewing all of these and taking action where possible to 
encourage development opportunities and improve efficiencies 
without cutting corners on our duties to ensure that these 
activities are done in a smart and environmentally responsible 
way.
    Thank you for the opportunity to testify today, and I will 
be happy to answer any questions.
    [The prepared statement of Ms. MacGregor follows:]
    Prepared Statement of Katharine S. MacGregor, Acting Assistant 
    Secretary, Land and Minerals Management, U.S. Department of the 
                                Interior
    Chairman Gosar, Ranking Member Lowenthal, and members of the 
Subcommittee, I am pleased to join you today to discuss the Bureau of 
Land Management's (BLM's) onshore oil and gas program and our efforts 
to advance the program to help secure American energy independence, 
create jobs, and build a strong economy.
                               background
    The BLM manages about 245 million surface acres and 700 million 
subsurface acres, located primarily in 12 western states, including 
Alaska. This diverse portfolio of lands is administered by the BLM on 
behalf of the American people as part of the agency's multiple-use 
mission--including energy and mineral development, livestock grazing, 
timber production, recreation, and conservation, among others. The BLM 
manages approximately 30 percent of the Nation's minerals. In Fiscal 
Year (FY) 2016, onshore energy production on Federal lands accounted 
for 7 percent of oil, 10 percent of natural gas, and 41 percent of coal 
produced domestically, and another 17,963 megawatts of renewable energy 
projects are approved. Public lands support the Administration's 
America First Energy Agenda and Secretary Zinke's priority to maintain 
our Nation's energy dominance by advancing domestic energy production, 
generating revenue, and creating and sustaining jobs throughout our 
country.
    America First Energy Plan is an ``all-of-the-above'' plan that 
includes oil and gas, coal, and renewable resources. Public lands are 
integral to the development of these important energy resources. 
Through this plan, America's free markets will help determine where and 
when energy development on public lands is feasible. In order to 
respond to our Nation's energy needs, the BLM is engaged in a variety 
of efforts to support domestic production. These efforts include 
predictable leasing; reducing barriers to accessing energy resources on 
BLM public lands; reviewing and streamlining the BLM's leasing and 
permitting processes to serve its customers and the public more 
efficiently and effectively; and improving coordination among key 
stakeholders, including state and local governments, other Federal 
agencies, and the public. The BLM is also committed to supporting 
improved electricity transmission and pipeline development--key areas 
of our Nation's energy infrastructure that stabilize the U.S. electric 
grid and keep energy prices low for American families.
    The BLM oversees onshore oil and gas development on Federal lands 
and lands held in trust for the benefit of various tribes. 
Collectively, these lands contain world-class deposits of energy and 
mineral resources which power millions of homes and businesses. BLM-
managed public lands provide a diverse marketplace for industry and 
play a significant role in creating jobs for hardworking Americans. 
Last year, the BLM economic study estimated the Federal onshore oil and 
natural gas program alone provided approximately $50 billion in 
economic output and supported approximately 188,000 jobs nationwide. 
The BLM is also a key revenue producer for the Federal Government by 
providing a significant non-tax source of funding to state and Federal 
treasuries and is an important economic driver for local communities 
across the country. For example, while Congress appropriated about $135 
million to the BLM's oil and gas program in FY 2016, the program 
generated more than $1.56 billion in royalties, rental payments, and 
bonus bids--all of which were split between the U.S. Treasury and the 
states where the development occurred. States and counties in turn use 
these funds to support roads, schools, and other important community 
needs.
    The BLM is providing access to our diverse energy resources across 
our public lands while also adhering to key environmental laws and 
regulations. We remain committed to the safe and responsible 
development of these resources alongside our state and local neighbors.
           public lands' contribution to energy independence
    Onshore oil and gas production on BLM-managed public lands is a 
significant part of this strategy and makes an essential contribution 
to the Nation's energy supply. The BLM has 27 million surface acres 
specifically under lease for oil and gas development, including 
approximately 94,000 active wells and 40,000 leases. Under Secretary 
Zinke's leadership, the BLM has scheduled a quarterly lease sale in 
nearly every office. To date, the BLM has held 13 lease sales, 
including the February 2017 Wyoming lease sale, which garnered nearly 
$129 million--the second largest amount generated from an onshore lease 
sale in the last 30 years.
    While we are proud of the BLM's contribution to domestic energy 
production, we also recognize that there is a significant amount of 
work to be done. At the Secretary's direction, the BLM established 
ambitious 90-day targets to approve oil and gas Applications for Permit 
to Drill (APDs), shifting resources to the more active offices of 
Carlsbad, New Mexico; Casper, Wyoming; and Dickinson, North Dakota. 
While the first 90-day goal BLM set was to process 711 APDs, the BLM 
approved an impressive 758 APDs. The BLM remains committed to 
completing reviews on all pending APDs and to work with operators to 
match their rig schedules.
       access to energy resources and multiple-use considerations
    There are a number of factors that may open, limit, or close 
Federal lands to oil and gas development, including land use planning, 
statutory and regulatory requirements, consideration of potential 
impacts to public land resources, and whether the resources in question 
are located on lands that have been withdrawn from mineral leasing. The 
Department and the BLM are reviewing all of these factors, and we are 
taking action, where possible, to encourage development opportunities 
and improve efficiencies.
Identifying Lands Available for Oil and Gas Leasing/Land Use Planning
    The BLM's land use planning process provides--among many other 
resource considerations--a standardized procedure for analyzing the 
opportunities for oil and gas development on public lands, while also 
ensuring that such development is done in a way that minimizes 
environmental impacts and considers the public interest. Resource 
Management Plans (RMPs) contain general resource allocations and other 
decisions that reflect the BLM's efforts to weigh the many resources 
and competing uses within a planning area, and they often include 
reasonably foreseeable development (RFDs) scenarios that analyze the 
known and potential oil and gas resources of the planning area. For 
purposes of oil and gas leasing, lands within a planning area are 
identified as fitting into one of three categories--lands open under 
standard lease terms, lands open with restrictions, and lands closed to 
leasing.
    While the RMPs identify appropriate uses of public lands, generally 
it is industry and the public who will nominate lands for leasing in 
the form of expressions of interest (EOIs). Upon receipt of an EOI, the 
BLM determines where lands are eligible for leasing under the RMP. 
Following applicable laws and regulations, with limited exceptions the 
BLM holds competitive lease sales quarterly in each of the state 
offices where lands are nominated and available. After the lease sale 
is held, any protests are resolved, and leases are issued, a lessee may 
then submit an APD for a specific area within their lease. The BLM then 
works with the lessees on final surface use and downhole drilling 
plans. Often, however, operators will assess drilling targets based on 
ongoing data analysis of resource potential and determine where and 
when to develop based on a variety of business model decisions.
Regulatory Limitations
    When industry is considering whether to develop Federal onshore oil 
and natural gas resources, current regulations can serve as a 
significant barrier. The Department is committed to the 
Administration's priority of eliminating unnecessary or duplicative 
regulations, thereby reducing burdens that may unnecessarily encumber 
responsible energy production. As directed by Secretary Zinke's March 
29, 2017, Secretarial Order 3349, American Energy Independence, the BLM 
is currently reviewing all regulations related to domestic oil and 
natural gas development on public lands. The BLM has proposed a rule to 
rescind the final rule titled Oil and Gas; Hydraulic Fracturing on 
Federal and Indian Lands and has reviewed the Waste Prevention, 
Production Subject to Royalties, and Resource Conservation Rule, 
postponing the implementation of any rule provisions that have not yet 
gone into effect. Finally, the BLM is working with industry to identify 
areas to adjust the technical requirements for the new regulation 
updates on-site security, metering, and measurement standards. This 
effort is designed to ensure that production accountability is 
maintained, but does not deter the successful development of oil and 
gas resources or lead to premature abandonment of marginal wells.
Stipulations on Oil and Gas Leasing
    During the land use planning process, the BLM determines if lease 
stipulations are needed to ensure that development is done in an 
environmentally sound manner. Lease stipulations may include no surface 
occupancy (NSO), controlled surface use (CSU), and timing limitations 
(TL). Areas identified as NSO open to fluid mineral leasing, but 
surface-disturbing activities cannot be conducted on the lease; 
however, the lease may potentially be developed by directionally or 
horizontally drilling from nearby lands that do not have NSO 
limitations. CSU areas are also open to fluid mineral leasing but, in 
contrast, allow surface-disturbing activities, subject to special 
operational constraints to protect the specified resource or value. 
Finally, areas identified for TL are closed to fluid mineral 
exploration and development, surface-disturbing activities, and 
intensive human activity during identified time frames.
Mineral Withdrawals
    Public land withdrawals are formal land actions that reserve or 
withhold public land by statute or proclamation, or in more limited 
cases by administrative order, from operation of public land, mining, 
mineral leasing, and geothermal leasing laws. Withdrawals are 
established for a broad array of public purposes, including for 
military reservations which account for approximately 16 million acres 
of currently withdrawn BLM-managed public lands. In addition, on lands 
where the Federal estate is split with other Federal agencies, the 
Federal surface management agency may require withdrawal of the Federal 
mineral estate.
Wilderness, Wilderness Study Areas and Areas of Critical Environmental 
        Concern
    Many conservation designations lead to withdrawals from the mineral 
leasing laws through legislation, presidential proclamation or 
administrative determinations. Each of these special designations is 
subject to valid existing rights, and some include exceptions for 
specific types of mineral leasing. The BLM currently manages nearly 8.8 
million acres of wilderness and 517 WSAs comprising approximately 12.6 
million acres across the West. In addition to these designations, the 
BLM also manages approximately 1,100 Areas of Critical Environmental 
Concern (ACECs) spanning over 24 million acres. An ACEC designation by 
itself does not automatically prohibit or restrict other uses in the 
area; rather, the BLM determines as part of the land use planning 
process which activities or uses are consistent with the resources and 
values for which the area was designated.
       putting america first by building a strong energy economy
    Under Secretary Zinke's leadership, the Department and the BLM have 
taken many proactive measures to reduce the burdens associated with 
developing onshore oil and gas resources on public lands. Following is 
a discussion of some of these efforts.
Secretarial Orders
    Improving access to oil and gas resources is an important component 
for ensuring energy independence. As discussed earlier, Secretarial 
Order 3349 provides guidance for removing unnecessary impediments to 
oil and gas leasing while fostering the creation of good jobs for hard-
working American families. Secretarial Order 3348 overturned the 
Federal coal leasing moratorium enacted by the last administration. On 
May 31, 2017, Secretary Zinke signed Secretarial Order No. 3352 to 
jump-start Alaskan energy production in the National Petroleum 
Reserve--Alaska (NPR-A) and update resource assessments for areas of 
the North Slope, helping to unleash Alaska's energy potential. The 
Order calls for the review and development of a revised Integrated 
Activity Plan for the NPR-A that strikes an appropriate balance of 
promoting energy development while protecting surface resources. The 
order also aims to maximize the tracts offered for sale during the next 
NPR-A lease sale.
Online Leasing and Other Technological Process Improvements
    The BLM is proactively streamlining its business processes to 
better serve its customers and the public. In addition to the 13 lease 
sales conducted to date, the BLM plans to hold 14 additional sales 
throughout 2017 using the new authority to conduct onshore oil and gas 
lease sales via Internet-based bidding. The BLM is also committed to 
continuing the National Fluids Lease Sale System (NFLSS) automation 
effort, which standardizes many leasing functions while providing 
additional EOI transparency to the nominator and the public. Finally, 
the BLM is adding features to enhance the new electronic APD processing 
system, the Automated Fluid Minerals Support System II (AFMSS II), and 
plans to decommission parts of the prior APD processing systems--
established nearly 20 years ago--to improve the automation capacity and 
better match the BLM resources to permit activities. These improvements 
increase transparency and reduce overhead costs and processing times, 
leading to increased competition and revenue for states and the 
Treasury.
Building Stakeholder Relationships and Being a Better Neighbor
    The BLM has also sought to improve interagency coordination during 
the oil and gas permitting process, which is instrumental in removing 
communication barriers, providing an efficient means for dispute 
resolution, and eliminating delays during the NEPA process. In order to 
achieve results, the BLM has focused on restoring full collaboration 
and coordination with state and local governments, tribes, individuals, 
and other stakeholders to resolve issues, develop productive 
relationships, and build consensus.
Establishing BLM's Energy and Minerals Task Force
    The BLM is also looking at establishing an Energy and Minerals Task 
Force to assist BLM state and field offices with expediting the leasing 
and permitting process. In order to decrease backlogs, the BLM intends 
to expedite the completion of planning efforts, collaborate with other 
bureaus within the Department as well as external surface management 
agencies, and coordinate resource needs among BLM offices. The Task 
Force will monitor significant actions and resource needs in the field, 
identify trouble spots, and resolve resource challenges.
Prioritization and Capacity Building
    To address the high-priority energy demands of our Nation, the 
President's FY 2018 Budget Request includes an additional $16 million 
for the BLM's oil and gas program. This includes an increase of about 
82 full-time-equivalent employees to enhance the core capacity for 
processing APDs, EOIs, and rights-of-way. In the past, funding 
increases provided by Congress, along with substantial improvements in 
the BLM's approval process, have enhanced the BLM's capacity to process 
and issue leases and permits.
                               conclusion
    The BLM and the Administration remain committed to promoting 
responsible oil and gas production that helps create jobs, promotes a 
robust economy, and contributes to America's energy independence, while 
also protecting consumers, public health, and sensitive public land 
resources and uses. The BLM's oil and gas leasing program is a critical 
component of the Nation's energy infrastructure and is an important 
Federal revenue generator. Thank you for the opportunity to present 
this testimony. I will be glad to answer any questions.

                                 ______
                                 

   Questions Submitted for the Record by Rep. Lowenthal to Katharine 
 MacGregor, Acting Assistant Secretary, Land and Minerals Management, 
                    U.S. Department of the Interior

Ms. MacGregor did not submit responses to the Committee by the 
appropriate deadline for inclusion in the printed record.

    Question 1. Ms. MacGregor, please provide the following information 
to the Committee:

  a.  The number of onshore oil and gas drilling permits approved but 
            unused as of September 30, 2016, broken down by BLM State 
            Office and Field Office, indicating how many are on Federal 
            land and how many are on Indian land.

  b.  For the APDs pending as of September 30, 2016, a breakdown of the 
            length of time that those APDs had been pending (i.e. the 
            number that have been pending for less than 30 days, the 
            number pending between 31 and 60 days, and so on), broken 
            down by BLM State Office and Field Office.

  c.  The number of APDs received and approved for each month in Fiscal 
            Year 2017 for which data is available, as well as the 
            number of pending APDs at the end of each month, broken 
            down by BLM State Office and Field Office.

  d.  The number of wells on public land that have been drilled but 
            uncompleted (or drilled but have not reported first 
            production to the BLM), broken down by BLM State Office and 
            Field Office, as well as by the number of months since 
            those wells have been spud.

    Question 2. Certain witnesses supported the idea of granting states 
the primary responsibility for managing Federal oil and gas operations 
within their borders? Under such a system, how would the Federal 
Government assure compliance with the myriad Federal laws and other 
requirements that apply to public lands including, for example:

     The Mineral Leasing Act and its regulations, which charge 
            the Secretary of the Interior and BLM with managing Federal 
            minerals leasing and permitting. See 30 U.S.C. Sec. 226(a); 
            43 CFR Sec. 3162.3-1(c).

     The National Environmental Policy Act and its requirements 
            for environmental impact analysis;

     The Endangered Species Act including its requirements for 
            consultation with the FWS;

     The National Historic Preservation Act including its 
            requirement for consultation with State Historic 
            Preservation Officer and the Advisory Council on Historic 
            Preservation;

     The Secretary's trust responsibility to Native American 
            tribes;

     The Federal Land Policy & Management Act and it 
            requirements for land use planning, for management of the 
            public lands to ``protect the quality of scientific, 
            scenic, historical, ecological, environmental, air and 
            atmospheric, water resource, and archaeological values,'' 
            and for the prevention of unnecessary and undue degradation 
            of public lands.

    Question 3. Several witnesses testified about the need to 
``streamline'' oil and gas permitting on public lands? How would you 
streamline the process in light of the myriad legal requirements that 
apply to activities on public lands as noted in Question 2 above.

    Question 4. The Energy Policy Act of 2005 sets out five categories 
of categorical exclusions from NEPA for certain limited types of oil 
and gas activities. In 2011, the GAO found that the BLM was abusing 
these exclusions by using them for activities that were outside their 
scope. How has the BLM responded to this report and what more, if 
anything, should be done to avoid the abuses of these categorical 
exclusions as found by the GAO?

                                 ______
                                 

    Dr. Gosar. Thank you, Ms. MacGregor.
    I now recognize Mr. Flynn for his 5 minutes. Thank you.

STATEMENT OF RYAN FLYNN, EXECUTIVE DIRECTOR, NEW MEXICO OIL AND 
             GAS ASSOCIATION, SANTA FE, NEW MEXICO

    Mr. Flynn. Thank you, Chairman Gosar, Chairman Bishop, 
Ranking Member Lowenthal, members of the Subcommittee, and 
staff. My name is Ryan Flynn, I am the Executive Director for 
the New Mexico Oil and Gas Association. Prior to taking over 
NMOGA, I was the Secretary of Environment and Natural Resource 
Trustee in the state of New Mexico, and worked in state 
government for approximately 6 years prior to taking this role.
    I want to thank Representative Pearce for recognizing me. I 
want to recognize Representative Pearce, as well, who just had 
to step out of the room. But he has been a tremendous leader, 
and his district is home to one of the most resilient and 
productive oil and gas plays in the world, the great Permian 
Basin.
    I want to talk to you a little bit about New Mexico's oil 
and gas industry, and talk to you about some challenges to oil 
and gas development on Federal lands in New Mexico, and suggest 
some opportunities for improving BLM's operations in New 
Mexico.
    I want to be very clear that my goal here today is not in 
any way, shape, or form to criticize BLM individually. We have 
had a tremendous working relationship with BLM staff and 
leadership, and we look forward to continuing that working 
relationship, moving forward. But like any large agency, there 
are several opportunities for improvement. I believe Secretary 
Zinke has inherited a difficult situation, but he is more than 
capable and up to the task of turning things around in a 
positive direction.
    New Mexico's oil and gas industry is the most important 
economic industry to the state of New Mexico. Last year, in 
2016, New Mexico's oil and gas industry contributed $1.6 
billion to the state's general fund, our budget. That equaled 
roughly 25.8 percent of the budget last year, in 2016. The 
total budget was about $6.2 billion. In the last 10 years, oil 
and gas typically contributes about a third directly to the 
state's general fund. This money goes directly to roads, 
hospitals, schools--that infrastructure in the state would 
simply not be possible without the oil and gas industry's 
contributions.
    Our industry also employs over 100,000 people in the state 
of New Mexico, a state with about 1.8 million people. New 
Mexico also has one of the highest poverty rates in the 
country, with almost a quarter of our population living below 
the Federal poverty line. So, oil and gas jobs are extremely 
attractive in our state, given that the average wage on an oil 
and gas rig is about $75,000 a year.
    Nationally, New Mexico is one of the top energy-producing 
states in the country, ranking fifth in crude oil production 
and eighth in natural gas production. Even during a prolonged 
period of low prices, New Mexico's oil and gas industry has 
remained resilient. In the last 8 months, we have seen major 
acquisitions and purchases in New Mexico, totaling over $13 
billion. The New Mexico portion of the Northern Delaware Basin 
has recently been the focal point of some of the most expensive 
acreage-basis oil and gas acquisitions in the world.
    In calendar year 2016, New Mexico was the largest producer 
of oil and gas from Federal lands, accounting for over 78 
million barrels of oil, and over 770,000 cubic feet of natural 
gas.
    The biggest challenge to oil and gas development on Federal 
lands in New Mexico remains regulatory uncertainty at BLM. And 
I think the best illustration of this issue is to look at the 
Permian Basin and to look at the development in west Texas, 
compared to the development in New Mexico.
    As of June 16, 2017, there were 59 rigs running in the New 
Mexico Permian, versus 309 in the Texas Permian. The main 
difference is the Bureau of Land Management. BLM's Farmington 
field office takes approximately 1 year to process a drilling 
permit, an APD. BLM's Carlsbad field office also takes 
approximately 250 days to process a drilling permit. Right-of-
ways take approximately a year or more, depending on the field 
office.
    Overall, BLM suffers from a lack of staffing, a poorly 
designed and cumbersome new system, the AFMSS 2 program, and 
systematic irregularities in the permit processing protocols. 
These delays translate directly into lost revenue for Federal 
and state stakeholders alike.
    Our estimates are that approximately $1.4 million in 
Federal royalty and $831,000 in state severance tax is deferred 
each day, based on the current backlog at BLM's offices in New 
Mexico. This financial impact is huge in a state like New 
Mexico, where we face prolonged budget issues in light of the 
low market pricing for oil and gas.
    I will conclude by just noting that there are many 
opportunities to improve BLM's operations in New Mexico, such 
as simple edits to the AFMSS 2 program; agreements with state 
regulatory authorities to transfer some of the tedious work of 
processing permits from BLM to state offices like our oil 
conservation division; and BLM making use of existing laws, 
such as categorical exclusions, to allow for expedited review 
and approval of permits.
    Thank you very much, Mr. Chair.

    [The prepared statement of Mr. Flynn follows:]
 Prepared Statement of Ryan Flynn, Executive Director, New Mexico Oil 
                          and Gas Association
                              introduction
    Chairman Gosar, Ranking Member Lowenthal, members of the 
Subcommittee, thank you for the opportunity to provide testimony today 
about oil and gas development on Federal lands in New Mexico. My name 
is Ryan Flynn and I am the Executive Director of the New Mexico Oil and 
Gas Association (``NMOGA''). Founded in 1929, NMOGA represents over 
1,000 members who account for 95 percent of the oil and gas activity in 
New Mexico.
    Before leading NMOGA, I worked in New Mexico Governor Susana 
Martinez's administration for almost 6 years, where I served as 
Secretary of Environment and the Natural Resource Trustee. My 
experience in state government gave me firsthand experience dealing 
with the sort of problems inherited by Secretary Zinke and his staff at 
the Department of the Interior's Bureau of Land Management. For 
example, when Governor Martinez took office in 2011, inconsistencies 
and delays plagued New Mexico's environmental permitting and 
enforcement programs. In one extreme case, a permit application was 
pending for over 18 years. Permit applications typically took years to 
review and permit conditions varied wildly depending on the individual 
permit writer. Enforcement decisions were at times were driven by 
political agendas with supplemental environmental projects occasionally 
being used to fund pet political projects. These permitting and 
enforcement issues gave the state a reputation for being a difficult 
place to conduct business, which in turn hindered investment in New 
Mexico. Beginning in 2011, under the leadership of Governor Martinez 
and with bipartisan support, we successfully implemented a series of 
regulatory reform efforts focused on various energy and environmental 
issues, including revisions to environmental permitting and enforcement 
programs. Permitting times decreased dramatically. For example, New 
Mexico air quality permits are issued in 45 days or less, and 
applications for permits to drill (``APD'') are issued in 10 days or 
less. While permitting programs became more efficient, the state's 
enforcement programs remained strong. During my tenure, we collected 
approximately $250 million in fines for violations of environmental 
regulations, the overwhelming majority of which were collected from 
Federal agencies operating in New Mexico, such as the U.S. Department 
of Energy.
    While Secretary Zinke and his staff inherited some major challenges 
at the BLM, I believe he is the perfect fit for leading the Department 
of the Interior and I have no doubt he will turn this situation around. 
His success in this regard will have a profound impact on the state of 
New Mexico. In the past year, major acquisitions and purchases in New 
Mexico have totaled over $13 billion and oil production has 
dramatically increased on non-Federal lands. While the rest of New 
Mexico's economy struggles to gain a foothold, the state's oil and gas 
industry remains a bright spot. Strong leadership at the state level 
has helped New Mexico's oil and natural gas industry remain strong over 
the past few years, yet the state has not fully realized its resource 
development potential due to problems at the BLM. Specifically, delays 
for approving permits and rights-of-way is costing New Mexico and the 
Federal revenue millions of dollars each day. NMOGA estimates 
$1,473,000 in Federal royalty and $831,325 in state severance is 
deferred each day due to BLM's administrative problems. With early 
projections showing the state facing a potential deficit of $200 to 
$250 million for the Fiscal Year 2018, the lost revenue associated with 
administrative issues plaguing development on Federal lands in New 
Mexico is a critical issue that must be addressed immediately.
                   new mexico's oil and gas industry
    The oil and gas industry is New Mexico's most important industry. 
In 2016, the oil and gas sector contributed more than $1.6 billion to 
the state's general fund for schools, hospitals, and roads, and 
employed over 100,000 people. For context, New Mexico's total budget 
for 2016 was $6.2 billion, making the oil and gas industry's 
contribution approximately 25.8 percent of the total budget in 2016. 
Nationally, New Mexico is one of the top energy producing states in the 
entire country, ranking fifth in crude oil production and eighth in 
natural gas production. New Mexico is also a leader in other forms of 
energy production, such as renewables.
    New Mexico's oil and gas industry remains resilient even through a 
prolonged period of low prices. In the last 8 months, major 
acquisitions and purchases in New Mexico have totaled over $13 billion, 
and the New Mexico portion of the Northern Delaware Basin has recently 
been the focal point of the some of the most expensive acreage-basis 
oil and gas acquisitions in the world.
    The Oil Conservation Division and the State Land Office are 
primarily responsible for regulating the oil and gas industry at the 
state level while BLM is charged with leasing, selling, and generally 
managing oil and natural gas reserves on Federal land. BLM's field 
offices in New Mexico are among the busiest in the Nation. In calendar 
year 2016, New Mexico was the largest producer of oil and gas from 
Federal lands, accounting for 78,646,829 bbls of oil (53 percent of NM 
oil production) and 771,601,140 mcf of natural gas (65 percent of NM 
gas production).
  challenges to oil and gas development on federal lands in new mexico
    While New Mexico's oil and gas industry has been resilient during 
this difficult period of low prices, challenges to the industry's 
ability to capitalize on the recent investments remain. The greatest 
challenge today is regulatory uncertainty at BLM. Although there is a 
distinct advantage to operating on the New Mexico side of the border in 
terms of royalty rates (12.5 percent for New Mexico Federal vs. 25 
percent for Texas fee land), the fact remains that operators are 
willing to pay a premium to develop in areas where regulatory certainty 
can be relied upon as a matter of course. For example, the Baker Hughes 
rig count from the week of June 16, 2017, indicates the discount 
economic factor associated with the Federal royalty rate for New Mexico 
production is not much of an incentive, with only 59 rigs running in 
the New Mexico Permian versus 309 in the Texas Permian. While some of 
this may be due to the majority of surface acreage defined as the 
Permian Basin being on the Texas side of the line, it cannot account 
for the fact that New Mexico has some of the most sought-after geology 
and development potential, yet consistently trails Texas where 
development is concerned. The oil and gas industry invests millions of 
capital budget dollars in development projects when presented with a 
level playing field, and a lack of regulatory certainty is driving more 
investment to Texas than New Mexico.
    Operators working through BLM's Farmington Field Office (``FFO''), 
which regulates all production in New Mexico's San Juan Basin, have 
seen drilling permit wait times approach the 500-day mark, with an 
average wait time of nearly 1 year for a standard application for a 
permit to drill (``APD'') without revisions. By contrast, New Mexico's 
Oil Conservation Division, the state agency handling drilling permit, 
approves APDs in 10 days or less. Better management practices are 
required to remedy a lack of procedural uniformity, which often leads 
to multiple, differing interpretations of policies and protocols for 
document review. While industry appreciates the efforts of some 
individual staff members to create workarounds in this cumbersome 
system, there is no regulatory certainty in APD processing from the 
FFO. Additionally, the FFO does not use tools already at its disposal, 
such as categorical exclusions and pre-established protocols for NEPA 
review, that would go a long way toward getting projects initiated and 
revenue flowing to the Federal Government and the state of New Mexico.
    The rights-of-way (``ROW'') process at the FFO is likewise 
inefficient, with operators waiting up to a year for approvals. By 
contrast, the state approves ROWs in 45 days or less. Recent internal 
changes to the determination of the ROW starting point have hindered 
infrastructure projects, and constitute a drastic departure from the 
FFO's previous interpretation of lease rights and product transport 
guidelines. Additionally, poor coordination between BLM, the Bureau of 
Indian Affairs and various other tribal authorities has resulted in 
severe delays for ROW approvals. In addition to these difficulties in 
the ROW process, new interpretations of threatened and endangered 
species requirements have curtailed development on Federal lands in the 
San Juan Basin due to a lack of regulatory flexibility and a seeming 
unwillingness to work with industry in this regard.
    The Carlsbad Field Office (``CFO'') is responsible for processing 
applications for development in New Mexico's portion of the Permian 
Basin, a region witnessing a drastic uptick in development from the low 
point of severely depressed commodity pricing in early 2016. While it 
might seem that one of the most prolific oil and gas plays in the world 
should merit additional resources to alleviate a permitting bottleneck, 
this was not the case at the CFO until recently. Fortunately, Secretary 
Zinke and his staff have recently begun giving the Permian Basin the 
attention it deserves. Currently in the Permian Basin, operators wait 
an average of 250 days for an APD, and over a year for a ROW. Companies 
that diligently follow up on applications with CFO staff can achieve 
shorter wait times, but this is not an optimal solution for either 
industry or the CFO staff, especially as the area sees a resurgence in 
activity associated with major recent merger and acquisition activity.
    The biggest challenges facing the CFO include a lack of personnel 
in key positions, and a cumbersome and relatively unworkable permit 
processing system, referred to as the Automated Fluid Minerals Support 
System 2 (``AFMSS 2''). AFMSS 2 was designed to expedite and automate 
permit processing, but has so far failed to deliver on either of these 
promises. Concurrent processing of different portions of APDs and ROWs 
by specialists responsible for independent sections of the permitting 
process was replaced by a completely linear system that does not allow 
for even simple edits by the CFO staff. The rigidity of the system has 
resulted in 70 percent of submissions being rejected for deficiencies, 
when historically there were very few deficiencies reported at the CFO. 
In short, AFMSS 2 has failed to deliver on its promise of greater 
efficiency and the system needs to be fixed or replaced.
    Overall, BLM suffers from a lack of staffing, a poorly designed and 
cumbersome new system in the AFMSS 2 program and systematic 
irregularities in permit processing protocols. The APDs and ROWs 
processed by both the FFO and CFO are generated in spite of the 
organizational structure, rather than as the natural output of the 
organizational structure. While APDs and ROWs are the most significant 
instruments in terms of volume, BLM is also responsible for other 
important permits--such as unitizations, communitizations and 
commingling agreements--that also experience similar delays while 
moving through the current maze of the BLM approval process. These 
delays translate directly into lost revenue for Federal and state 
stakeholders alike. NMOGA estimates $1,473,000 in Federal royalty and 
$831,325 in state severance is deferred each day based on an April, 
2017, count of 491 APD backlog (assuming wells were drilled and 
producing at conservative rates). In a state like New Mexico, where oil 
and gas revenue typically constitutes roughly one-third of the state's 
budget, fixing BLM's permitting issues will provide immediate economic 
benefits.
        opportunities to improve blm's operations in new mexico
    While there are many challenges to overcome on the path to a more 
efficient regulatory process at BLM, several identifiable opportunities 
for improvement exist. Simple edits to the AFMSS 2 program to allow BLM 
staff to edit permits moving through the application corridor will 
greatly enhance the workability of the system. Additional staff 
dedicated to permit processing (at the CFO in particular) will 
essentially guarantee a good return on investment for both state and 
Federal entities, as expediting drilling permits and ROWs translates 
directly into severance tax and royalty dollars that can be put to good 
use for the taxpayers. Agreements with state regulatory authorities 
could transfer some of the more tedious work of processing permits from 
the BLM to local authorities. For example, even a small, focused pilot 
program aimed at allowing the New Mexico Oil Conservation Division to 
process the downhole engineering portions of APDs would free up much-
needed time for BLM staff to focus on multi-use land management on the 
surface and expedite the entire application process. Last, BLM should 
make use of existing laws, such as categorical exclusions that allow 
for expedited review and approval of permits.
                               conclusion
    New leaders at the Federal Government, including President Trump 
and Secretary Zinke, are enacting good policies and regulations that 
are breathing fresh air into American energy production, and helping 
ensure the United States leads the way in safe and responsible energy 
production. Addressing the administrative issues at BLM, which are 
currently restricting access to Federal lands, is critical issue that 
must be addressed immediately if the United States is going to fully 
realize the development potential of our oil and gas resources.

                                 ______
                                 

    Dr. Gosar. Thank you, Mr. Flynn.
    The Chair now recognizes Mr. Squillace for his 5 minutes.

STATEMENT OF MARK SQUILLACE, PROFESSOR OF LAW, NATURAL RESOURCE 
  LAW, UNIVERSITY OF COLORADO, BOULDER, COLORADO LAW SCHOOL, 
                       BOULDER, COLORADO

    Mr. Squillace. Thank you, Chairman Gosar and Ranking Member 
Lowenthal, for this opportunity to testify today. My name is 
Mark Squillace, I am a professor of law at the University of 
Colorado Law School. I want to first note that I began my 
written testimony by asking that we each commit to each other 
that we will engage in a meaningful way on the important issues 
that are the subject of this hearing, and I am offering this 
testimony today in the hope that we can have a constructive 
dialogue.
    I want to make three points regarding oil and gas programs 
on Federal lands.
    First, oil and gas production on Federal lands remains 
strong, despite a weak market and lackluster interest in new 
leases and development.
    Second, efforts to accelerate leasing and development under 
current market conditions are misguided, because what they 
could do is lock up Federal oil and gas resources, even as they 
deny the public a fair return on these valuable assets. In this 
regard, by the way, the Committee's focus really should be on 
improving and reforming our royalty and revenue policies at the 
Federal level, which are much in need of reform.
    Finally, if we are going to have oil and gas development on 
our public lands, it has to be preceded by appropriate 
environmental analysis and planning. In my judgment, it is 
entirely inappropriate to use our Federal lands for industrial-
scale oil and gas development.
    Let me turn to the first question about oil and gas 
production. As I acknowledged in my written testimony, the 
number of Federal leases, the amount of acreage under lease, 
and the number of new leases issued have all declined in recent 
years. But here is the thing: Federal onshore oil production 
more than doubled between Fiscal Year 2008 and 2015. The number 
of Federal producing leases has never been higher. And if you 
look just at the year 2016, the amount of Federal land 
producing oil and gas was higher in only 1 year out of the last 
10.
    What is remarkable about these statistics is that it is all 
happening at a time of weakening demand. Just a few figures 
here to support that claim. First of all, Federal land under 
production amounts to less than 47 percent of the Federal land 
that is under lease. And in 2016, the industry did not even bid 
on two-thirds of the leases that were offered by the BLM. I 
should note, by the way, that in 2015 they bid on only 15 
percent of the leases that were offered.
    Right now, we have 7,500 APDs that have been approved and 
that are not being drilled upon, and that is the most that we 
have ever had at the BLM. If you just look at 2016, the BLM 
issued 2,184 drilling permits, but industry drilled on fewer 
than 39 percent of these permits. By the way, that contrasts 
with most other years, when the number of drilling permits that 
were drilled upon was in the 70 and 80 percent range.
    So, what is going on here? Well, that takes me to my second 
point, which regards market conditions. And here I just want to 
make two observations. One, when I last looked at the market 
price for oil on Monday, the price was at a very low level. On 
Monday, West Texas Intermediate was at $42.46 a barrel. That, 
obviously, has an impact on the interest of the oil and gas 
industry.
    But there is another important point here which the 
Committee needs to recognize. The major plays for oil and gas, 
which have really driven development in recent years, happen 
not to be found on Federal land. There are exceptions; the 
Permian Basin, which Mr. Flynn talked about is one of them. 
But, for the most part, these plays are on private lands and in 
other areas.
    So, what happens is if the government tries to sell these 
leases under these current market conditions, we are going to 
get low-ball kinds of prices. Essentially, we are going to be 
giving away these valuable Federal resources, and that just 
doesn't make sense. What we ought to be doing is looking at 
leases and improving the APD, rather than approving more APDs.
    We need to reform our policies. We now charge just $2 an 
acre for leases that do not otherwise receive a bid, $1.50 an 
acre in rental. That does not generate much revenue, but it 
encourages speculation, and that needs to be reformed. We have 
not reformed our royalty rates since 1920, when the Mineral 
Leasing Act was passed. We need to increase those royalty rates 
to reflect market conditions.
    The state of Texas, by the way, charges 25 percent in 
royalties on oil, twice what the Federal Government charges. In 
my home state of Colorado it is 20 percent. And, as most of you 
know, on offshore lands it is 18.75 percent.
    Finally, if we are going to use our public lands for oil 
and gas development, we really need to be smart about it. I do 
not oppose oil and gas development on our public lands. But for 
now, at least, all of us rely, to some extent, on oil 
production, on gas production for power generation, but we need 
to recognize that we could accommodate these interests without 
doing damage to our public lands.
    If we could, show the slides that I think are on the 
scheme.
    [Slide]
    Mr. Squillace. Mr. Flynn talked about the Permian Basin, 
and this is a picture of the Permian Basin in Texas. And for 
those of you who have not been there, I would urge you to go. 
This kind of development goes on for miles and miles in every 
direction, and it is not the kind of thing that I think we want 
for our public lands.
    This is private land. But on our public lands we ought to 
be doing things like doing appropriate planning, doing 
appropriate environmental analysis. And if it takes more time, 
well, we owe that to the American people, to make sure that if 
we are going to have development, we do it right. I do not 
oppose development of our public lands for some oil and gas 
development, but it is different from our private lands. These 
are our multiple-use lands, and we need to make sure that we do 
better than we have often done on our public lands.
    And, by the way, we cannot do this if we are denying the 
BLM adequate resources in funding and in personnel. Good 
management requires proper funding.
    Thanks very much. I look forward to your questions and to 
the discussion of these issues.
    [The prepared statement of Mr. Squillace follows:]
Prepared Statement of Professor Mark Squillace, University of Colorado 
                               Law School
    Chairman Gosar, thank you for the opportunity to appear before the 
House Subcommittee on Energy and Mineral Resources to offer my views on 
oil and gas development on our public lands. I am a professor of law at 
the University of Colorado Law School. I teach and work primarily in 
the fields of environmental, natural resources, and water law and I 
have written extensively on all of these subjects. My professional 
experience with public lands issues also runs deep. As a law student at 
the University of Utah, I worked in the Utah State Office of the BLM as 
a land law examiner--a position that allowed me to review all manner of 
public lands activities and gain firsthand knowledge about the 
operation of our public land laws. Following law school, and before 
entering law teaching, I was hired into the Solicitor's Honor's Program 
at the U.S. Department of the Interior where I gained significant 
additional experience on public lands and mineral law issues. I took a 
leave from teaching and returned to the Solicitor's Office in the year 
2000 as a Special Assistant to the Solicitor where I worked on a wide 
range of special projects involving public lands. All of this 
experience both inside and outside of government has helped to inform 
my understanding about how best to manage oil and gas development on 
our public lands.
    Before sharing my views on this subject, I wish to make an 
observation about congressional testimony. Over the last decade, I have 
had the distinct honor and privilege of appearing before House and 
Senate Committees to lend my expertise on many occasions and on a wide 
range of issues. Increasingly, however, the hearings at which I have 
appeared have seemed largely unproductive. They often devolve into 
efforts to score political points at the expense of learning about and 
trying to solve the complex but important problems that are the subject 
of the hearings. Members often choose to engage only with those with 
whom they agree or think they agree, and a process that is supposed to 
shed light on a problem, often serves instead to harden ideological 
positions in a way that is unlikely to lead to the creative policy 
solutions that are often available if we allow ourselves to see them.
    I appear today with an open mind and a willingness to learn from 
you and from the other witnesses. But we cannot learn if we do not 
engage with each other in a meaningful way. In addressing the hard 
questions before this Committee, we must begin with the facts as best 
we can know them. Information will always be imperfect, both because of 
scientific uncertainty and the time lag between the collection of 
information and the decision point. But we must accept the findings of 
those who by training and expertise provide us with the information 
essential to good government decision making. Once we assemble the best 
information, policy will still play an important role. But good policy 
is stymied if we cannot even agree on the basic facts that inform it.
    My substantive remarks begin with a review of basic data about the 
Federal onshore oil and gas leasing program. This is followed by a 
detailed look at other factors that help to explain this data including 
the economics of public land oil and gas development.
          federal oil and gas development and current blm data

    Federal onshore oil and gas development on our public lands 
involves a multi-stage process. It begins with land use planning 
whereby the BLM determines, among many other things, which lands should 
be made available for possible oil and gas leasing.\1\ This is followed 
by a process for nominating tracts for leasing. Industry, the public, 
and the BLM itself may nominate lands that are then made available 
through an open, competitive auction process. Auctions are typically 
held by individual BLM state offices on a quarterly basis. Leases are 
generally awarded to the highest bidder but if no bids are received the 
BLM makes these lease tracts available for purchase for 2 years at 
$2.00/acre.\2\ Lessees usually have 10 years to develop the lease 
before it expires but leases are automatically extended beyond the 10-
year primary term so long as oil and gas is being produced in paying 
quantities.\3\ Leases may also be extended for 2 additional years 
beyond the primary term where actual drilling is occurring on the 
site,\4\ and they may be suspended for an unlimited period of time ``in 
the interest of conservation.'' \5\ Lessees may drill on a lease site 
for either exploration or development purposes but they must first file 
and receive BLM approval for an application for a permit to drill 
(APD). Environmental analysis in accordance with the National 
Environmental Policy Act is required at most stages of this process and 
is particularly important at the APD approval stage because it is at 
that stage where the government is able to assess site specific impacts 
of development.
---------------------------------------------------------------------------
    \1\ Under current land use plans, more than 90% of BLM-managed 
minerals are open to new oil and gas leasing. http://wilderness.org/
open-business-and-not-much-else-analysis-shows-oil-and-gas-leasing-out-
whack-blm-lands.
    \2\ 30 U.S.C. Sec. 226(b)(1)(A).
    \3\ Id. at Sec. 226(e).
    \4\ Id.
    \5\ Id. at Sec. 209. During the period of suspension, the lessee 
does not pay rentals. See also Copper Valley Machine Works, Inc. v. 
Andrus, 653 F.2d 595 (D.C. Cir. 1981) where the court held that 
``conservation'' was not limited to conservation of the oil and gas 
resources but included measures deemed necessary to protect the 
environment.
---------------------------------------------------------------------------
    Those who support increased oil and gas leasing activities on our 
public lands will likely point to the fact that the total number of 
extant Federal leases, the total number of acres leased, and the total 
number of new leases issued during the year have all declined in recent 
years.\6\ What they may not tell you, however, is that a similar trend 
exists for leasing of state-owned minerals in the West.\7\ 
Additionally, the number of producing leases on Federal land has never 
been higher and, when compared to 2016 fiscal year, the amount of 
Federal land producing oil and gas was higher in only 1 year out of the 
last 10, and only three times in the last 20 years.\8\ According to the 
Congressional Research Service, Federal onshore oil production 
increased by more than 70 percent between Fiscal Year 2006 and 2015.\9\
---------------------------------------------------------------------------
    \6\ BLM Oil and Gas Statistics, Table 1, available at https://
www.blm.gov/programs/energy-and-minerals/oil-and-gas/oil-and-gas-
statistics. State lands leasing, like federal lands leasing, has also 
declined significantly over the past several years. ECONorthwest, Oil 
and Gas Leasing and Permitting on State Lands: Recent Trends in the 
Rocky Mountain West (Aug. 2016) available at http://
westernvaluesproject.org/wp-content/uploads/2016/09/Final-WVP-State-
Lands-Report.pdf.
    \7\ See ECONorthwest, supra note 6.
    \8\ See BLM Oil and Gas Statistics, Table 1, supra note 6.
    \9\ Congressional Research Service, ``U.S. Crude Oil and Natural 
Gas Production in Federal and NonFederal Areas'' (June 22, 2016) at p. 
3, Table I available at https://fas.org/sgp/crs/misc/R42432.pdf.


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


   Moreover, even as production has increased a large surplus of 
unused oil and gas leases and permits on Federal lands remains. Current 
Federal land under production is less than half (46.9 percent) of the 
leased land.\10\ Put another way, more than 14 million acres of Federal 
land currently under lease are not producing any oil or gas.\11\ 
Furthermore, during the 2016 fiscal year, the industry bid on less than 
one-third of Federal acreage offered for lease at auction.\12\ As a 
result, the BLM leased only 577,000 acres for oil and gas development 
during that year, which is substantially less than in prior years.\13\ 
In light of slack demand this reduction in leased acreage is not at all 
surprising and it is actually remarkable that during this period the 
number of producing leases on Federal lands has grown to 23,926--its 
highest level ever.\14\
---------------------------------------------------------------------------
    \10\ See BLM Oil and Gas Statistics, Table 1, supra note 6.
    \11\ Id.
    \12\ Data available upon request.
    \13\ See BLM Oil and Gas Statistics, Table 1, supra note 6.
    \14\ Id.
   
   
   [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

      As for approved drilling permits, at last count in September of 
2015, the BLM had approved more than 7,500 APDs that were not being 
used.\15\ This is an all-time record.\16\ As the number of unused APDs 
grew it should surprise no one then that in 2016 only 2,184 new 
drilling permits were issued by the BLM. This is certainly well below 
the record numbers of approvals from 2007 and 2008 when the BLM 
approved 7,124 and 6,617 permit respectively, but that was a time when 
the industry was applying for far more permits.\17\ But these numbers 
are consistent with the growth in unused drilling permits because 
industry commenced drilling or ``spud'' only 847 new wells in 2016, 
which is less than 39 percent of the number the BLM approved.\18\ By 
contrast in 2007 and 2008, industry spud 75 percent and 76 percent of 
the approved drilling permits respectively.\19\ Ramping up the issuance 
of drilling permit during a time when so many approved permits are not 
being used would thus seem to be irresponsible.
---------------------------------------------------------------------------
    \15\ BLM Oil and Gas Statistics, Table 13 ``Approved Applications 
for Permit to Drill--Not Drilled'' (Sept. 30, 2015) available at 
https://www.blm.gov/sites/blm.gov/files/oiland 
gas_ogstatistics_t13AAPD%20Report.pdf.
    \16\ BLM News Release, BLM Releases Statistics on Oil and Gas 
Activity on Federal, Indian Lands, (April 11, 2016) (``[T]he number of 
approved drilling permits that have not yet been put to use by industry 
is at a record high of 7,500.'') available at https://www.blm.gov/or/
news/files/2015_Oil-GasStats_PR_FINAL_BLM.pdf.
    \17\ Id. See also Congressional Research Service, U.S. Crude Oil 
and Natural Gas Production in Federal and NonFederal Areas, R42432 
(June 22, 2016), at pp. 9-10, available at https://fas.org/sgp/crs/
misc/R42432.pdf. As this report notes, industry requested 12,200 more 
drilling permits between 2006 and 2008 than it requested from 2013 to 
2015.
    \18\ Id.
    \19\ Id.
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
            the policy choices facing the administration
    A key question before this Committee is whether it should support a 
policy to accelerate lease issuance and drilling permit approvals in 
the face of the existing glut. Leasing and permitting activities 
require the BLM to expend considerable time, money, and resources. 
Given the surfeit of existing leases and permits that are going unused 
due to low demand the prudent course, and the only responsible course, 
is to limit leasing and permitting until there is sufficient demand to 
ensure higher bonus bids and a fair return to the public on our 
valuable oil and gas resources. Notwithstanding these facts, the 
Administration's proposed Interior budget would increase funding for 
energy and minerals development while starving other Interior programs 
such as our national parks and other public recreation lands where 
demand is soaring.\20\
---------------------------------------------------------------------------
    \20\ See ``President's Budget FY 2018--Appendix--Detailed Budget 
Estimates by Agency--Department of the Interior'' available at https://
www.whitehouse.gov/sites/whitehouse.gov/files/omb/budget/fy2018/
int.pdf.
---------------------------------------------------------------------------
                the economics of oil and gas development
    So what explains the lackluster demand for Federal oil and gas 
resources? Well, much of it can be traced to low market prices. The 
Energy Information Administration's daily report on the price of West 
Texas Intermediate light crude was $42.46/barrel this past Monday, June 
26, 2017.\21\ While the price dipped to below $30/barrel in the early 
part of last year, it has hovered around or below the $50/barrel mark 
for most of the past year.\22\ Natural gas prices have also remained 
low, ranging from $1.81 in the Mid-Atlantic states to 3.12 in northern 
California.\23\ At these prices, oil and gas companies can still make a 
decent profit, but in many cases, enhancing production at existing 
wells may be more attractive than developing new wells or stockpiling 
more leases.
---------------------------------------------------------------------------
    \21\ U.S. EIA, Today in Energy, June 26, 2017, available at https:/
/www.eia.gov/todayinenergy/prices.php.
    \22\ Id.
    \23\ U.S. EIA, ``Henry Hub Natural Gas Spot Price'' available at 
https://www.eia.gov/dnav/ng/hist/rngwhhdd.htm.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


   Commodity prices for oil and gas are notoriously difficult to 
predict, but significant increases in price seem unlikely, and a 
decrease in price is perhaps just as likely as an increase. The U.S. 
Energy Information Administration currently forecasts that Brent crude 
oil prices will increase from an average of $53/barrel to $56/barrel 
during the 2017-2018 fiscal year. The Henry Hub natural gas spot price 
is projected to increase from an average of $3.16/MMBtu in 2017 to 
$3.41/MMBtu.\24\ These modest increases are unlikely to have a 
significant impact on the demand and use of Federal oil and gas leases 
and permits. Devoting more money and resources to public lands oil and 
gas development simply cannot change the global market forces that are 
the primary factor behind whether companies choose to develop.
---------------------------------------------------------------------------
    \24\ U.S. EIA. ``Short Term Energy Outlook'' (June 6, 2017) at 
Table 2 (Energy Prices) available at https://www.eia.gov/outlooks/steo/
tables/pdf/2tab.pdf.
---------------------------------------------------------------------------
 the implications of slack demand for the federal oil and gas leasing 
                                program
    As described above, market forces suggest slack demand for Federal 
oil and gas. Nonetheless, the government can certainly sell some 
additional leases if it is prepared to accept low bids. But pushing oil 
and gas leases at a time when the markets are down will inevitably 
result in far lower revenues for both the state and Federal coffers. 
Oil and gas revenues are generated in three ways--through auction bids, 
royalty payments on production, and annual rental fees.\25\ When oil 
and gas prices are low, bids on Federal leases are also low. Those that 
are sold are often bought by speculators who pay little up front for 
the lease in the hope that the market price will rise and make the 
lease more valuable. But if the market does turn around it is the 
speculator who profits rather than taxpayers. Furthermore, nearly 90 
percent of government revenue from Federal oil and gas development 
comes from royalty payments \26\ and the government receives no 
royalties when low market prices disincentivize production. And as with 
low bonus bids, very little revenue is generated from the modest rental 
payments charged under the current Federal policy.\27\ From a strictly 
revenue generating perspective the government would be wise to wait for 
commodity prices to rise again before even thinking about increasing 
the level of Federal oil and gas leasing. To the extent that leasing is 
allowed to proceed the government should set higher minimum bonus bids 
and higher annual rental fees as a means to increase revenues and 
discourage speculation.
---------------------------------------------------------------------------
    \25\ See Government Accountability Office, Raising Federal Rates 
Could Decrease Production on Federal Lands but Increase Federal 
Revenue, at pp. 10-11 (June, 2017), available at https://www.gao.gov/
products/GAO-17-540.
    \26\ See Congressional Budget Office, Options for Increasing 
Federal Income from Crude Oil and Natural Gas on Federal Lands, at p. 
2, (April, 2016).
    \27\ Id. at p. 11, Figure 1.
---------------------------------------------------------------------------
              the need to reform federal royalty policies
    Federal royalty rates, which were set in the 1920s, are currently 
well below market rates and the government would realize significant 
additional revenue if it increased those rates. Earlier this month, the 
General Accounting Office issued a report that found that increasing 
royalty rates for oil and gas would increase Federal revenue with only 
minimal impacts on production.\28\ The Interior Department itself had 
recognized this problem by issuing final rules in 2016 that were 
designed to bring about much needed reforms to the Federal mineral 
royalty program.\29\ Unfortunately those rules were stayed by the Trump 
administration, which has further announced its intention to repeal 
these rules entirely.\30\ That would be a serious mistake and the 
Administration should reconsider its position before taking final 
action.
---------------------------------------------------------------------------
    \28\ Id. at 16-24.
    \29\ 81 Fed. Reg. 43338 (2016).
    \30\ The Office of Natural Resources Revenue postponed 
implementation of the 2017 valuation reform rule on February 27, 2017. 
82 Fed. Reg. 11823 (2017). The rule had taken effect on January 1, 
2017. On April 4, 2017, Interior further proposed to repeal these rules 
in their entirety. 82 Fed. Reg. 16323 (2017).
---------------------------------------------------------------------------
    While I understand that this hearing is focused on the Federal oil 
and gas leasing program, the Committee should not overlook the parallel 
need to reform Federal royalty policies for coal. For a host of reasons 
including the dire economic circumstances of the domestic coal 
industry, the arguments for reforming the entire coal leasing program 
including royalty policies are even more compelling than they are for 
oil and gas.\31\ One simple but important step that would allow the 
government to assess the options for reforming the coal program would 
be to resume preparation of the programmatic EIS on coal that was begun 
at the end of the Obama administration. This step, which would help 
both the government and the public to better understand their options 
for coal reform, was inexplicably abandoned by the Administration in 
March of this year.\32\
---------------------------------------------------------------------------
    \31\ See Federal Coal Program, Programmatic Environmental Impact 
Statement: Scoping Report, available at https://eplanning.blm.gov/epl-
front-office/.../CoalPEIS_RptsScoping_ Vol1_508.pdf.
    \32\ Secretarial Order 3348 (March 29, 2017).
---------------------------------------------------------------------------
              federal oil and gas leasing and multiple use
    In addition to negative market forces, oil and gas production on 
Federal lands also faces multiple use constraints that govern Federal 
land management.\33\ Aerial photographs from certain parts of the 
country, such as the Permian Basin in west Texas and the Bakken fields 
of North Dakota, which are readily available on the Internet, have seen 
industrial scale oil and gas development, with little advance planning. 
Development at this scale and intensity is antithetical to the notion 
of multiple use. While intensive oil and gas development has sometimes 
occurred on Federal public lands, such as in the Jonah field in 
Wyoming, and near Farmington, New Mexico, such development often 
generates significant opposition from the public beyond what might be 
expected with private land development because it imposes significant, 
long-term costs on our wildlife, water, and recreation resources that 
might otherwise be accessible to the public for activities such as 
hunting, fishing, and hiking. This is especially true when oil and gas 
development threatens our most precious national conservation lands. 
When the BLM proposed to lease lands near the western boundary of Zion 
National Park earlier this year, it received more than 40,000 public 
comments in opposition, including letters of opposition from Governor 
Herbert of Utah, county commissioners and town councils and numerous 
local businesses.\34\ In total, our national parks hosted 330 million 
visitors in 2016, the third record-setting year in a row.\35\ Park 
visitors spent an estimated $18.4 billion in local gateway regions 
while visiting national parks across the country.\36\ Our national 
parks form the backbone of a burgeoning outdoor recreation industry 
that generates hundreds of billions of dollars in consumer spending 
every year.\37\ Oil and gas development puts at least some of this 
economic activity at risk. And even putting aside the aesthetic values 
and moral arguments for preserving our public lands for future 
generations, the significant economic values associated with the 
protection of our conservation lands is sustainable over the long term, 
without compromising the use of those lands for other purposes sometime 
in the future.
---------------------------------------------------------------------------
    \33\ Multiple use management is required by the Federal Land Policy 
and Management Act (FLPMA). 43 U.S.C. Sec. 1732(a) (2017).
    \34\ DOI/BLM Memorandum, ``Recommendation to Defer the St. George 
Oil & Gas Lease Parcels'' (May 25, 2017) available at https://
eplanning.blm.gov/epl-front-office/projects/nepa/69396/108022/132359/
Deferral_recommend_memo_to_SO_052517.pdf.
    \35\ See National Park Service, ``Visitor Use Statistics'' 
available at https://irma.nps.gov/Stats/.
    \36\ See National Park Service, ``Visitor Spending Effects--
Economic Contributions of National Park Visitor Spending'' available at 
https://www.nps.gov/subjects/socialscience/vse.htm.
    \37\ See Outdoor Industry Association, ``The Outdoor Recreation 
Economy'' (2017) available at https://outdoorindustry.org/wp-content/
uploads/2017/04/OIA_RecEconomy_FINAL_Single.pdf.
---------------------------------------------------------------------------
geologic factors and their relevance to federal oil and gas development
    Another important factor in explaining slack demand for Federal oil 
and gas resources has to do with simple geology. The Congressional 
Budget Office, the Congressional Research Service and the Government 
Accountability Office have all reached the conclusion that the major 
shale plays in the United States are located primarily beneath state 
and private, and not on Federal lands.\38\ A GAO report issued just 
last week found that of the six major tight oil and shale gas plays in 
the United States, Federal lands comprise 38, 15, 9, 7, 8 and 0.4 
percent of land ownership within their boundaries.\39\ Put another way, 
the vast majority of all six of the major oil and gas plays in the 
United States are on state and private lands. Increasing Federal 
leasing and permitting activity obviously cannot change the location of 
oil and gas resources relative to Federal lands.
---------------------------------------------------------------------------
    \38\ See Congressional Budget Office, ``Options for Increasing 
Federal Income From Crude oil and Natural Gas on Federal Lands'' (April 
19, 2016) at p. 3 (``. . . shale resources are found primarily on lands 
owned by state governments and private landowners.''), available at     
https: / / www.cbo.gov / sites / default / files / 114th-congress-2015-
2016 / reports / 51421-oil _and_gas_ options-2.pdf; Congressional 
Research Service, ``U.S. Crude Oil and Natural Gas Production in 
Federal and NonFederal Areas'' (June 22, 2016) at p. 4 (``Any increase 
in production of natural gas on Federal lands is likely to be easily 
outpaces by increases on nonFederal lands, particularly because shale 
plays are primarily situated on nonFederal lands and are located where 
most of the growth in production has occurred in recent years and where 
future growth is projected to occur.'') available at https://fas.org/
sgp/crs/misc/R42432.pdf; GAO Report, supra note 24 at Figure 2, 
available at https://www.gao.gov/products/GAO-17-540.
    \39\ See GAO Report, supra note 24 at Figure 2.
---------------------------------------------------------------------------
           climate change and federal oil and gas development
    Finally, the Committee should not ignore concerns about climate 
change that are raised by decisions to accelerate Federal oil and gas 
development. To be sure, the climate-related impacts associated with 
oil and gas development on public lands are complex. Foregoing oil and 
gas development on public lands may result in some decrease in 
CO2 emissions as, for example, where it incentivizes a shift 
toward low carbon transportation fuels such as biodiesel. On the other 
hand, less Federal land oil and gas development might also be 
compensated at least in part by additional development on private lands 
in this country and in other countries. The point, however, is that 
these are issues worthy of critical analysis before major decisions are 
made to increase oil and gas production on Federal lands. Courts have 
begun to require such analysis in other contexts, including for example 
in the related context of Federal coal leasing.\40\ The government 
would be wise to learn from these cases and get out in front of this 
issue. If they fail to do so, it seems likely that courts will require 
it.
---------------------------------------------------------------------------
    \40\ See e.g., Ctr. for Biological Diversity v. Nat'l Highway 
Traffic Safety Admin., 538 F.3d 1172, 1217 (9th Cir. 2008); High 
Country Conservation Advocates v. United States Forest Service, 52 F. 
Supp.3d 1174, 1190-91 (D. Col. 2014).

    To summarize, a wide range of factors influences Federal oil and 
gas production but probably none more so than the commodity markets. 
The sharp decline in the market price for oil and gas over the last 
several years has led to a decline in private sector interest in 
Federal oil and gas development. Nonetheless, Federal oil and gas 
production remains at historically high levels, notwithstanding the 
fact that the BLM has issued and companies have utilized far fewer 
Federal leases and drilling permits. Other complex factors associated 
with managing our public land resources, including the multiple use 
mandate, the protection of conservation lands, the relatively minor 
role of Federal lands to the shale oil and gas boom, and climate change 
all suggest the need for a more cautious approach toward pushing new 
oil and gas development on public lands, and they further suggest that 
the BLM's leasing and permitting policies have not been stifling oil 
and gas development on our public lands. On the contrary, public lands 
oil and gas development remains robust even as the Federal Government 
is receiving far less revenue from our public oil and gas resources 
than the market will bear. Artificially stimulating Federal oil and gas 
development at the present time and under present market conditions 
would not be a rational response and could adversely impact long-term 
government revenues even as it leads to more environmental degradation.
    Thank you again for the opportunity to appear before the Committee 
today. I wish the Committee well as it seeks to address the important 
issues that surround the development of oil and gas on our nation's 
public lands.

                                 ______
                                 

    Dr. Gosar. I thank the gentleman.
    The Chair now recognizes Dr. Nelson for her 5 minutes. 
Welcome.

  STATEMENT OF LAURA NELSON, GOVERNOR'S ENERGY ADVISOR, UTAH 
 GOVERNOR'S OFFICE OF ENERGY DEVELOPMENT, SALT LAKE CITY, UTAH

    Dr. Nelson. Good morning. Thank you, Chairman Gosar. And I 
also want to thank Chairman Bishop and Ranking Member Lowenthal 
for the opportunity to be here today. I serve as the Energy 
Advisor to the Governor of Utah, Governor Gary R. Herbert, and 
I want to say this morning that I am going to be focusing 
primarily on our energy resources.
    Utah is a natural resource state. This includes mining and 
agriculture, as critical natural resources, but it really also 
includes our national and state parks, as well. So, we truly 
believe in balancing both use and conservation, and we think 
that this is the best approach to leveraging all of our 
resources to generate revenues and create jobs.
    Focusing on energy in particular, though, this is an 
important aspect of our economy. It contributes 9 percent to 
our gross state product. It is 2.2 percent of the state wages, 
although it is only 1.1 percent of our employment number. So, 
it indicates that these are very high-paying jobs, as has 
already been discussed, and it contributes $673 million in 
revenues, most recently in 2015.
    These revenues are really important to Utah. They help to 
provide education to our students, and they also provide many 
other critical community services, which have also already been 
mentioned.
    Utah, like I think much of the country that is dependent on 
natural resource development, experiences booms and busts in 
natural resource development. Since 2014, Utah has, in fact, 
been experiencing a decline in production activity specifically 
related to oil and gas. As has been mentioned, this is in large 
part driven by lower commodity prices, which are really a 
function of market conditions.
    Just to give you an example of the impact, oil production 
in 2014 was around 41 million barrels a year in Utah. In 2016, 
it was 31 million barrels, so matching our 2012 levels. Natural 
gas production has also been on the decline since 2012, but we 
believe, nonetheless, that if we can access our resources, we 
can create new opportunities for development of these 
commodities. And as commodity prices rationalize, this is going 
to be critical.
    What we need to do is create a regulatory path forward that 
allows for sustained growth in jobs, especially in those 
communities that have been impacted by the past year's decline 
in oil and gas activities.
    For example, in Utah, our overall rate of unemployment as 
of May 2017 was 3.2 percent. But in our oil and gas counties, 
Duchesne and Uintah, they are very dependent on jobs in these 
sectors, and their unemployment rates are 5.9 percent and 6.6 
percent, respectively. So, we truly believe that access to our 
resources, coupled with what we call an all-of-the-above energy 
strategy, can create sustained growth in the development 
activity and in the associated jobs and revenues.
    Utah is a public land state, 70 percent of our land is 
federally owned. So, really getting it right when it comes to 
leasing and permitting is key if we are going to deliver on the 
promise of energy and minerals opportunities.
    In Utah, as I mentioned, 70 percent is federally managed. 
This leads, oftentimes, to lengthy permitting schedules, and 
especially when they are compared to the permitting schedules 
for applications for permits to drill of our Utah Division of 
Oil, Gas, and Mining. And we are just not convinced that the 
Federal process, in fact, delivers results that are more robust 
than those that are provided through our effective and 
efficient state agency.
    The Energy Policy Act of 2005 specifies that the Bureau of 
Land Management must approve applications for permit to drill, 
APDs, within 30 days. But we understand that the average permit 
time is closer to 220 days and, depending on the field office, 
it is not uncommon for it to take years.
    Our recommendation is very simple to resolve the lengthy 
time it takes to approve applications to drill, to allow for 
the primacy to be allocated to our Division of Oil, Gas, and 
Mining, or generally, to states where they are willing and have 
shown that they are capable of taking over this process. This 
in no way is meant to be disparaging to BLM or to the 
Department of the Interior, in particular, but really just to 
provide an opportunity for those agencies to focus on their 
broader mandate of multiple land use.
    We do recognize currently that DOI and BLM do not have 
authority to delegate primacy for regulation, in particular for 
permitting inspection and enforcement of oil and gas production 
to the states for production that is occurring on Federal land. 
However, we recognize that the primacy may be accomplished by 
one of two actions: first of all, congressionally directed 
legislation; or application of the Federal permit streamlining 
pilot project that was, in fact, established as part of the 
Energy Policy Act of 2005.
    In fact, in September of 2014, the U.S. Senate approved S. 
2440, the BLM Permit Processing Improvement Act of 2014, that, 
among other things, makes permanent the Federal streamlining 
project program.
    So, we believe that assigning primacy of delegation of oil 
and gas development where appropriate to states would allow for 
better efficiency and better environmental outcomes, and would 
also free up the resources----
    Dr. Gosar. If the gentlelady will suspend, you are over 
your time.
    Dr. Nelson. Thank you.
    Dr. Gosar. Remember, your testimony will be in full, en 
bloc.
    [The prepared statement of Dr. Nelson follows:]
Prepared Statement of Dr. Laura Nelson, Energy Advisor to Governor Gary 
                               R. Herbert
    I appreciate the opportunity to testify as Governor Gary R. 
Herbert's Energy Advisor and on behalf of the Utah Governor's Office of 
Energy Development. This morning I will be focusing primarily on oil 
and gas leasing and permitting on federally managed lands, and make 
recommendations for how areas of the process might be improved to 
increase efficiency, environmental outcomes, and increased regulatory 
certainty. However, I would be remiss if I did not mention the 
importance of natural resources overall to the state's economy. As a 
natural resource state, our goal is to provide for economic 
opportunities with sound environmental outcomes across all of our 
resources. These include our energy, minerals and agricultural sectors, 
as well as our state and national parks. Each of these represents 
unique and important sectors, providing jobs and revenues for the 
state.
    Energy jobs in particular in Utah account for 1.1 percent of the 
state's jobs, or a total of almost 16,000 direct employees in this 
sector. And these jobs provide some of the highest wages in the state 
accounting for 2.2 percent of the state's total wages. The average 
energy job in Utah pays 194 percent of the state's average wage. With 
respect to the state's energy revenues, they flow through the following 
means: Federal mineral leases, severance taxes, royalties from the 
School and Institutional Trust Lands Administration permanent fund, 
property taxes, sales tax, income tax, and conservation tax. Of these, 
most significant are the property taxes, sales taxes, and Federal 
Mineral Leases, which in 2015 made up over 68 percent of the $673 
million dollars in energy revenue to the state. These revenues support 
the state budget, particularly our state school system. At the local 
level, sales and property taxes fund police, fire, and other essential 
services.
    Utah has seen energy booms come and go in recent decades, and since 
2014 Utah has been experiencing a decline in production activity, in 
significant part related to low commodity prices for oil and gas driven 
by market conditions fueled by a technological revolution in well 
drilling and well-stimulation techniques. To give you an idea of the 
impact, oil production in 2014 was approximately 41 million barrels; in 
2015 production declined to roughly 37 million barrels; and in 2016 it 
was at 31 million barrels, matching 2012 levels. Gas production has 
declined since 2012, when it peaked at 490 million MCF. In 2016 
production was about 365 million MCF. However, we believe that to the 
extent that we can access our resources, we can create a new 
opportunity for development as commodity prices rationalize. This will 
be critical for building sustained growth and jobs, especially in those 
communities have been most impacted by the past years' decline in oil 
and gas activities. While Utah's overall unemployment rate as of May 
2017 was 3.2 percent, the unemployment rates in Duchesne and Uintah 
counties, which are more dependent on oil and gas, were 5.9 and 6.6 
percent, respectively.
    In addition to Utah's core oil, gas and coal industry, Utah 
supports an all-of-the-above approach to energy development and we have 
seen a boom in solar activity in recent years. However, this has been 
limited to state and private lands, largely due to the same onerous 
leasing and permitting conditions that face our hydrocarbon resources. 
Delivering on the promise of all our energy and minerals opportunities 
requires getting regulation right.
    Unfortunately, in a public lands state with close to 70 percent of 
land federally owned, the ability to access and responsibly develop our 
natural resources is dramatically impeded by complex processes and 
lengthy timelines for leasing and permitting, resulting in a general 
reduction in leasing activity. The total number of active onshore oil 
and gas leases in the country has declined over recent decades, and 
that pattern has continued without interruption since 2008.
    Utah is 11th among states in oil production, 12th among states in 
natural gas production, and 13th among states in coal production. When 
it comes to oil and gas development in the state today, regulatory 
compliance on federally managed lands is significantly more difficult 
than what occurs through processes overseen by Utah's highly qualified 
staff at the Utah Division of Oil Gas and Mining. And we have not seen 
evidence that Federal process deliver results that are more robust than 
those provided through our state agency.
    The Energy Policy Act of 2005 specifies that the Bureau of Land 
Management (``BLM'') within the U.S. Department of the Interior 
(``DOI'') must approve Applications for Permit to Drill (APD) within 30 
days, yet the average permit time is 220 days. In fact, depending on 
the field office, it is not uncommon for APDs to take years.
    Our recommendation to resolve lengthy delays in leasing and 
permitting is that a process be established for delegating primacy to 
Utah, and to states generally, for the regulation of oil and gas 
operations on federally managed public lands. We are not alone in 
making this recommendation. This year the Interstate Oil and Gas 
Compact Commissions (IOGCC) passed resolution 17.051 titled ``Urging 
the Congress of the United States, the U.S. Departments of the 
Interior, and the U.S. Bureau of Land Management to Establish Processes 
for Delegating Primacy to the States for the Regulation of Oil and Gas 
Operations on Federal Public Lands.'' The purpose of the resolution is 
to urge the establishment of an administrative process to delegate a 
portion of BLM's responsibilities (specifically the regulation of oil 
and gas activities) through an appropriate primacy delegation mechanism 
to the states that may desire such delegation. The intent of the 
resolution is not to disparage or minimize the current role of the U.S. 
Bureau of Land Management to authorize development on Federal land, but 
it is an attempt to optimize the operations of government at both the 
Federal and state level.
    The IOGCC has a long-established interest in oil and gas resource 
development and the regulation of such activities on public lands 
within the borders of individual states. As evidence of this interest, 
IOGCC has for many years included a Public Lands Committee as one of 
its seven business-related Standing Committees--specifically to 
identify and address issues relevant to the states' interests in public 
lands. The state of Utah became a member state of IOGCC in 1957.
    The initial Utah Oil and Gas Conservation Commission evolved over 
time to become the present-day Division of Oil, Gas, and Mining 
(``DOGM'') within the Utah Department of Natural Resources. DOGM's 
guiding principles include the facilitation of the responsible 
development of oil and gas resources within the state of Utah. 
Specifically, DOGM is the counterpart to the Federal Government's BLM 
in the regulation of oil and gas operations. BLM is tasked to oversee 
the development of oil and gas resources on Federal lands throughout 
the Nation. And like DOGM, BLM performs this task by analyzing, 
approving, and monitoring the drilling, completion, operation, and 
final plugging of wells located on Federal mineral leases.
    We suggest that Utah's DOGM provide the permitting for wells on 
both state and federally managed lands. Today, DOGM permits wells that 
are co-located with other wells on Federal lands. If DOGM is permitting 
similar wells in a similar location, what limits the state from doing 
both?
    Utah's DOGM has a performance measure goal of permitting at least 
80 percent of state or fee APDs within 60 days. Targets may not always 
be realized because approval time is dependent on a number of factors 
that can prolong the approval process. For example, in 2016, the 
average time for approval of state land APDs was 131 days and for 
approval of fee land wells was 81 days. However, in the 8 years prior 
to 2016, average approval time ranged from 66 days to 121 days for 
state lands and 81 to 108 days for fee lands. Our understanding is that 
this is significantly more timely than BLM, which we have heard has an 
approval time in Utah ranging from 150 to 240 days.
    Based on our examination of the relevant statutes, the Department 
of the Interior (DOI) and the Bureau of Land Management (BLM) do not 
currently have statutory authorization to delegate regulation 
(permitting, inspection, and enforcement) of oil and gas production to 
the states for production occurring on Federal land. The primacy 
delegation may be accomplished by one of two actions: (1) 
Congressionally directed legislation, or (2) Application of the Federal 
Permit Streamlining Pilot Project established as part of the Energy 
Policy Act of 2005. In September 2014, the U.S. Senate approved S. 
2440, the BLM Permit Processing Improvement Act of 2014 that among 
other things, makes permanent the Federal Streamlining Project program.
    Examples of primacy delegation of the Federal Government to states 
exist with certain environmental programs of the U.S. Environmental 
Protection Agency and even the coal-mining regulation responsibilities 
of the U.S. Office of Surface Mining, Reclamation, and Enforcement 
within the U.S. Department of the Interior. States have a proven track 
record of success under these delegations, and would do so under 
similar delegation from BLM--if such opportunity were granted.
    History has shown that states have successfully addressed the 
effective and efficient development of hydrocarbon resources, and this 
resolution seeks for continued primary roles for the states in 
conservation of resources, prevention of waste, and promotion of 
responsible development within their jurisdictions. One should note 
that even if a legislative process for primacy delegation for oil and 
gas development were to exist, it would be voluntary for states to 
obtain such primacy, and it would also free up the resources of the BLM 
to focus on its responsibilities of multiple use and appropriate 
leasing of minerals on Federal land.
    In addition, the Utah BLM Mineral Leasing schedule is currently 
structured in a manner that is not conducive to encouraging investment 
and developing resources. The majority of leases offered in Utah are 
currently deferred. Leases that are deferred are not offered again 
until a year has passed. According to the Mineral Leasing Rules under 
CFR 43-3120 this time frame is not necessary and is at the discretion 
of the state BLM Director. Our recommendation is that BLM require a 
quarterly mineral leasing schedule for leases on Federal western lands 
that have been deferred in order to encourage investment and 
development of resources across all available western lands on an 
equitable basis. Consistent BLM practices from state to state would 
also allow efficiencies for companies that operate in multiple states.
    In conclusion, our experience has been that Federal regulation in 
the realm of energy development is steered equally by science and by 
controversy. This unfortunate approach leads to over-zealous regulation 
that is not reasonable from a cost-benefit perspective, and that puts 
an undue burden on companies hoping to invest and create jobs in our 
rural communities. States like Utah, on the other hand, tend to base 
their regulations on a sensible ``best practices'' approach that leads 
to comparable outcomes at far less expense. We urge the Federal 
Government to recognize states with good regulatory track records, 
judging by environmental outcomes not environmentalist outcries, and 
should be prepared to delegate regulatory authority accordingly.

                                 ______
                                 

   Questions Submitted for the Record by Rep. Lowenthal to Dr. Laura 
           Nelson, Energy Advisor to Governor Gary R. Herbert
    Question 1. Under a system where state governments had primary 
responsibility for managing Federal oil and gas operations within their 
borders, how does the state envision working with the Federal 
Government to assure compliance with the myriad Federal laws and other 
requirements that apply to public lands including, for example:

     The Mineral Leasing Act and its regulations, which charge 
            the Secretary of the Interior and BLM with managing Federal 
            minerals leasing and permitting. See 30 U.S.C. Sec. 226(a); 
            43 CFR Sec. 3162.3-1(c).

     The National Environmental Policy Act and its requirements 
            for environmental impact analysis;

     The Endangered Species Act including its requirements for 
            consultation with the FWS;

     The National Historic Preservation Act including its 
            requirement for consultation with State Historic 
            Preservation Officer and the Advisory Council on Historic 
            Preservation;

     The Secretary's trust responsibility to Native American 
            tribes;

     The Federal Land Policy & Management Act and it 
            requirements for land use planning, for management of the 
            public lands to ``protect the quality of scientific, 
            scenic, historical, ecological, environmental, air and 
            atmospheric, water resource, and archaeological values,'' 
            and for the prevention of unnecessary and undue degradation 
            of public lands.

    Answer. The proposal outlined in my June 29 testimony is focused on 
permitting. Under this proposal, Utah's Division of Oil Gas and Mining 
(DOGM) would provide the permitting for wells on both state and 
federally managed lands. Through DOGM, Utah already permits wells that 
are near similar wells on Federal lands. Numerous efficiencies would be 
achieved by extending Utah's authority to permit wells to Federal lands 
in Utah. DOGM's expertise and familiarity with the unique attributes of 
Utah's oil and gas resources and industry could be leveraged to drive 
more efficient and effective permitting. As mentioned in my testimony, 
congressional legislation would likely be required to delegate 
regulation (permitting, inspection, and enforcement) of oil and gas 
production to the states for production occurring on Federal land.
    Under a primacy delegation for permitting of oil and gas, leasing 
authority would remain with the Secretary of the Interior and Bureau of 
Land Management (BLM). Although Utah would continue to advocate for and 
support the provision of timely and high quality Federal leases to the 
oil and gas industry, a Federal agent is generally needed to properly 
represent Federal interests in leasing Federal lands.
    Utah's proposal for establishing primacy in the oil and gas sector 
would be initially limited to permitting. As Utah established a 
successful permitting program on Federal lands within Utah, it would 
work closely with its Federal partners to enhance effective, timely and 
affordable industry compliance with all environmental, historic 
preservation, Native American and other Federal requirements. 
Permitting primacy on Federal lands would enable Utah to better 
coordinate with Federal partners to streamline industry compliance with 
the diverse Federal requirements mentioned in your question. 
Furthermore, as state permitting primacy on Federal lands was 
successfully implemented, opportunities for state administration of 
some or all of the Federal requirements mentioned in your question 
could be explored.
    A primacy delegation of Federal responsibilities to a state 
government entity can be creatively crafted in various ways to ensure 
compliance with other applicable Federal laws. The Federal agency 
granting primacy may consider granting all responsibilities or only a 
partial set of duties. Once the Federal agency designates a discrete 
transfer of responsibility to a state, then the primacy granting agency 
retains solely an oversight role, and the state is then required to 
perform any additional necessary functions within the implementing 
Federal statute. A primacy delegation is not a unilateral decision to 
pass all critical decision making from one party to another party. It 
is more of a cooperative partnership to allow each party to recognize 
their strengths and to efficiently and effectively apply their 
resources to mutually acceptable outcomes.
    The functions of oil and gas operations regulation has been 
historically and effectively performed by many states since the early 
20th century. It was decades later that Federal land managers assumed 
the oil and gas regulatory role for Federal lands that states had 
conducted for many years. A negotiated primacy delegation under a 
mutually acceptable cooperative agreement may take time to develop in 
order to satisfy both parties, but still represents an efficient 
delineation of duties with successful outcomes for each party.
    Ultimately, a carefully prepared and executed cooperative agreement 
can be the basis to identify that all Federal needs are met by the 
programs and processes being offered by the states. Either party can 
deny the execution of primacy if they are unsatisfied that their 
individual needs remain unmet. The process models for primacy 
delegation already exist and they can be tailored to suit the roles of 
the Federal Government and states for oil and gas regulation. 
Specifically within the Utah Division of Oil, Gas and Mining, there are 
already two Federal primacy delegations that have been in effect for 
nearly 35 years--these are the primacy delegation from the U.S. Office 
of Surface Mining, Reclamation and Enforcement for coal mining 
regulation and the primacy delegation from the U.S. Environmental 
Protection Agency for oil and gas Class II injection well regulation. 
We understand that there may be interest in ``testing'' this process 
before advancing full primacy delegation to the state for oil and gas 
permitting. This could be accomplished with a pilot project where there 
is a single operator, with a group of similar wells located on both 
state and Federal land. In this pilot study, DOGM would provide oil and 
gas permitting for the test wells located on both state and Federal 
lands. Activities and results could then be used to study the 
effectiveness of the state process.
    DOGM has demonstrated that it can responsibly use delegated primacy 
powers to develop Utah's natural resources, protect the environment, 
prevent waste and work effectively with its Federal partners. We 
recommend improving oil and gas permitting through delegating primacy 
to Utah, and to states generally, for the regulation of oil and gas 
operations on federally managed public lands. This recommendation is 
not intended to disparage or minimize the current role of the U.S. 
Bureau of Land Management or any other Federal agency, but rather an 
effort to identify an effective pathway for optimizing the operations 
of government in the responsible development of oil and gas resources.

                                 ______
                                 

    Dr. Gosar. I thank the panel for their testimony. Reminding 
the Members that the Committee Rule 3(d) imposes a 5-minute 
limit on the questions, the Chairman will recognize Members for 
any questions they may wish to ask. I will start with myself.
    Mr. Flynn, leasing policy changes put in place in 2010, 
Internal Memo 2010-117, has resulted in a situation in which 
the BLM is not fulfilling the Mineral Leasing Act's requirement 
to hold a lease sale in every oil and gas state at least 
quarterly. Only one lease sale was held in the state of New 
Mexico in 2016, and sales in lower interest areas of the state 
were canceled and not replaced by sales in the highly 
prospective areas of the Permian and San Juan Basins.
    What impact does the rotational lease sale schedule have on 
oil and gas development in New Mexico, considering the Texas 
Permian is right across the border? And how does this affect 
the budget of the state of New Mexico?
    Mr. Flynn. Mr. Chair, thank you for the question. The 
impact is profound, from both an economic and a jobs 
perspective. As I mentioned before, approximately one-third, 
give or take a couple of percentage points, in a given year of 
our budget is derived directly from severance taxes paid by the 
oil and gas industry. So, when the state of New Mexico is not 
attracting activity, we are suffering, from an economic 
perspective.
    Of the Federal royalty, nearly 50 percent of the Federal 
royalties paid come back to the state of New Mexico, as well. 
So, we derive benefits both from our severance tax, as well as 
from our share of the Federal royalties that are paid.
    Each drilling rig constitutes approximately 50 to 100 high-
paying jobs. So, each rig that is drilled on the Texas side of 
the border means 50 to 100 high-paying jobs that average about 
$75,000 a year are going to Texas instead of New Mexico, and 
that trickles down and has an impact throughout our economy. 
Those workers are spending money in restaurants, they are 
buying goods, and they are paying more taxes to the state when 
they are buying different goods and paying for services.
    So, New Mexico's budget is dependent on the oil and gas 
industry. We certainly, as an industry, support efforts to 
diversify our budget. However, the fact remains that we are the 
foundation of the budget, and when we suffer the state suffers.
    And, from a budget perspective, we just had a special 
session to deal with the shortfall because of the low-market 
prices, where we had to account for about a $100 million 
deficit. And next year we have current projections which are 
inherently inaccurate at this point that show that we are 
facing another budget deficit of perhaps $2 to $250 million.
    So, this impact is profound in a state like New Mexico, 
where our jobs and economy are dependent on the oil and gas 
industry.
    Dr. Gosar. Yes, you had said 50 percent. It is 48 percent 
since the Murray-Ryan budget.
    Mr. Flynn. It is nearly 50 percent.
    Dr. Gosar. Ms. MacGregor, in your written testimony you 
state that, since taking office, Secretary Zinke has scheduled 
quarterly lease sales in nearly every office. You also 
highlight the successful February 2017 Wyoming lease sale that 
generated nearly $129 million.
    What, in your opinion, precluded quarterly lease sales 
during the previous administration?
    Ms. MacGregor. Thank you for the question, sir. I cannot 
speak to the previous administration's decision on whether to 
hold lease sales or not hold lease sales.
    Dr. Gosar. Isn't it statutorily required?
    Ms. MacGregor. It is in the Mineral Leasing Act to conduct 
quarterly lease sales in each state office. I can speak to the 
fact that we have had more lease sales this year than last 
year. Eleven lease sales were canceled or postponed last year 
alone. We are hoping to continue forward with our schedule of 
lease sales. And, of course, we believe that leasing can be 
done economically, even in these price conditions.
    Just to touch back on Mr. Squillace's comments, I think it 
is important to note that there is no low-balling that goes on. 
The Department, when we conduct leases, actually ensures that 
every lease that is sold is reaching a fair market value 
threshold. And yesterday, I believe, the Bureau of Ocean Energy 
Management announced that we rejected 10 bids and $10 million 
for bids that were made that just did not reach fair market 
value thresholds.
    So, we will conduct our lease sales in accordance with 
Federal law, and we will make sure that the taxpayer is getting 
fair market value.
    Dr. Gosar. Thank you. My time is short, so I will 
acknowledge the Ranking Member for his time.
    Dr. Lowenthal. Thank you, Mr. Chair.
    Ms. MacGregor, as I mentioned earlier when I quoted your 
testimony, where you said, ``America's free markets will help 
determine where and when energy development on public lands is 
feasible''--to me that is a troubling statement because it 
sounds an awful lot like an admission that the oil, gas, and 
coal industries will control the location and the timing of 
energy development on our public lands.
    And then the energy counselor today, through the Secretary, 
is quoted as saying that we are moving toward ``an energy-
dominant public policy.''
    My first question is, do you agree with the policy 
statement in the Federal Land Policy and Management Act that 
states, ``It is the policy of the United States that public 
lands be managed in a manner that will protect the quality of 
scientific, scenic, historical, ecological, environmental, air, 
and atmospheric water resources, and archeological values?'' Do 
you support that statement?
    Ms. MacGregor. Absolutely, and I also support the area of 
FLPMA that speaks to managing and balancing multiple use of 
those lands.
    Dr. Lowenthal. Thank you. But do you also believe, though, 
in that balance that you point out, that balance between that 
and also exploration and production of oil leases, that there 
are times that it is necessary to over-ride the wishes of the 
free market?
    Ms. MacGregor. Just to speak to that, I believe that the 
statement that anyone aside from the Secretary and the Bureau 
of Land Management will control where and when leases are held 
is not true. It will be a measured development that, of course, 
preserves the multiple use of the lands, and the varied uses 
that----
    Dr. Lowenthal. So, you do believe that there will be times 
when you will overstay or protect those values, to over-ride 
the wishes of the----
    Ms. MacGregor. Mr. Lowenthal, I absolutely do. And I know 
that there are areas that are going to be more treasured and 
special than others, but I think that we can strike that 
appropriate balance and find ways----
    Dr. Lowenthal. I think that is what we are trying to find 
on this----
    Ms. MacGregor. Absolutely.
    Dr. Lowenthal [continuing]. Because we have real concerns 
that the policy has moved us away from that balance, and not 
toward that balance.
    Ms. MacGregor. I understand your concerns, and I think that 
the entire planning process done through RMPs at the Bureau of 
Land Management will ensure that we manage well and that we 
find that balance.
    Dr. Lowenthal. Talking about that balance, let's talk about 
that according to the BLM budget--there were 2,552 drilling 
permits currently pending at the end of the last fiscal year, 
and it seems like taking care of this backlog and issuing 
permits as quickly as possible is a high priority for the 
Department.
    I believe that is true, it is good to be efficient. Permit 
processing should not take longer than it needs to, and I think 
some of those issues have been raised. But we do not need to 
tell people out there that there is a huge backlog of permits 
that need to be addressed, and potentially at the risk of not 
doing thorough environmental reviews, not evaluating protests, 
not dealing with other activities, because is it not true that 
the number of unprocessed permits is currently the lowest is 
has been since 2005?
    Really, we have the smallest backlog that we have had in 
over a decade. Is that not true?
    Ms. MacGregor. I am sure that it true, but a backlog is 
still a backlog. And taking care of----
    Dr. Lowenthal. Thank you for stating that it is true. And 
at the end of 2015, there were over 7,500 of those--this is the 
most in a decade--7,500 drilling permits that companies have 
still not used, which is the most. So, we have the most 
drilling permits and the smallest backlog that have not been 
used. Is that not true?
    Ms. MacGregor. It is correct that we have 7,950 APDs 
approved but not yet drilled in this year.
    Dr. Lowenthal. And that is also the most we have had in 
this decade.
    Ms. MacGregor. I am not sure if it is the most or not. I 
can get back to you on that.
    Dr. Lowenthal. Well, let's get back to that data, and I 
will finish up. Ranking Member Grijalva wrote to the Secretary 
in April, looking for the number of permits that have been 
approved, but not used at the end of Fiscal Year 2016. That is 
what he has done, he has written to that.
    And last week the Secretary said there was no need to 
answer letters, because he will simply call us with the 
information. I am asking you, will you please ask the Secretary 
to either call me or Ranking Member Grijalva with the 2016 
data? Or you can call me with that data, or you can text me.
    Ms. MacGregor. So, you are going to give me your number?
    Dr. Lowenthal. Yes, I am.
    [Laughter.]
    Ms. MacGregor. I would be more than happy to work with your 
office on fulfilling that data request.
    Dr. Lowenthal. Thank you, and I yield back.
    Dr. Gosar. I thank the gentleman. I now recognize the 
Chairman of the Full Committee, Mr. Bishop from Utah.
    Mr. Bishop. Would you call me if I gave you the number, 
too?
    Ms. MacGregor. Sure.
    Mr. Bishop. In the past, I got calls, but just no 
information was forthcoming. So, if you could actually add the 
information to it, it would be nice.
    [Laughter.]
    Mr. Bishop. Let me ask Mr. Flynn and Dr. Nelson, just for a 
second, because there are some questions. If 39 percent of the 
leases that are out there, the bids are not being taken, why 
would a company not bid on something an administration--either 
this one or a previous one--would actually put out for bid? Why 
would they not go for that? Very quickly.
    Mr. Flynn. Chairman Gosar, Chairman Bishop, it is too 
difficult to provide a single answer. It would really depend on 
the geology and----
    Mr. Bishop. You have 16 seconds to give me a couple of 
answers.
    Mr. Flynn. Well, I think it depends on what you are bidding 
on, first and foremost. So, they would be considering the 
productive potential----
    Mr. Bishop. Are you telling me that there is a possibility 
that bids for lease would not have enough resources there to 
make it practical?
    Mr. Flynn. Yes.
    Mr. Bishop. Or that those lands would actually be so 
litigation-prone that it would not be worth actually going for 
them?
    Mr. Flynn. Yes, absolutely.
    Mr. Bishop. And that may be one of the reasons why bids 
were--would it actually be possible for any administration, 
past or present, to be so devious that they would actually put 
out bids for a lease that they knew would not be acceptable?
    Mr. Flynn. Mr. Chair----
    Mr. Bishop. You can't answer that. You don't have that 
vision of their heart. I will let that go down there. OK.
    Dr. Nelson, let me go to you, then. We have been talking 
about how cheap the royalties are on Federal lands. Why would a 
company not go to the Federal lands just to pay those cheaper 
royalty rates? Why would they go to state or private lands to 
pay more money?
    Dr. Nelson. I think the question can be answered pretty 
simply. First of all, what we have seen in terms of leases that 
are offered is that there are very few parcels that are offered 
at a single time. And, as I know you are well aware, Chairman 
Bishop, the companies really look to maximize a resource play. 
And if they cannot block up a resource play, then they are 
simply not going to bid, irrespective of what the royalty 
requirements are. So, thank you for the question.
    Mr. Bishop. So, the only reason somebody would actually bid 
on Federal lands is if they can make money. And the longer it 
takes to permit, the longer it takes to go through litigation, 
the longer it takes to try and get those areas--it simply means 
it is not profitable. They are willing to pay more money if 
they could actually be in production, which should be an idea 
for the Federal Government, that if we can actually guarantee 
you are going to be in production, and the permitting process 
goes further faster, that people would be willing to pay more, 
simply to do that.
    Dr. Nelson, are there other examples of how land can be 
stopped from production? For example, would there be projects 
that could be established, shown that they are worthy, but then 
all of a sudden they need, let's say, some electricity or power 
to go into that plant, and the Federal Government could block 
rights-of-way to that power, to make the entire project 
worthless? Would that actually ever happen?
    Dr. Nelson. Yes.
    Mr. Bishop. And in my district?
    Dr. Nelson. Yes. Infrastructure is critical, and oftentimes 
must cross federally managed lands. So, it does sometimes 
inhibit the ability to develop a project, even after a lengthy 
leasing process followed by a lengthy APD process, then the 
need to secure leasing for the infrastructure.
    Mr. Bishop. Ms. MacGregor, let me go to you. As you know, 
there are some Native American tribes who rely upon energy and 
development. They do not have gaming opportunities. Southern 
Utes in Colorado are one. Were there examples in prior 
administrations where they were prohibited from actually 
implementing the programs they want, the tracking devices, the 
programs that they had which inhibited their ability to do 
that?
    Ms. MacGregor. I think there are several examples where 
energy-producing tribes did reach out and issue public comment 
on some of their concerns for responsible production on their 
lands.
    Mr. Bishop. And it is not just DOI that was dealing with 
that, as far as permitting. Sometimes the EPA got involved, 
which basically shut down any kind of production they would 
have, going forward.
    Is DOI considering reforms that would delegate permitting 
process and regulatory authority to states? Kate?
    Ms. MacGregor. It is something that I would be more than 
happy to talk to your staff in your office about. That sounds 
like an interesting idea that we would be willing to discuss.
    Mr. Bishop. Dr. Nelson, maybe I can come back to you, 
because I do know there was a bill out there that talked about 
this.
    If, indeed, a company was held to Federal standards, but 
the state actually did the permitting process, could such a 
system actually work, and facilitate faster permitting?
    Dr. Nelson. We believe that it would, and we would like to 
move forward with assigning that primacy for approval of 
applications for permits to drill to our Utah Division of Oil, 
Gas, and Mining, and also to other states that have proven the 
capability.
    Mr. Bishop. All right, I was unfair. I asked you that 
question with less than 30 seconds remaining, so I am over. 
That is my rule that I violated.
    [Laughter.]
    Dr. Gosar. That is all right.
    Mr. Bishop. Thank you for your answers. Thank you for 
actually being here and spending the time and talking about 
this. This is a significant issue. I yield.
    Dr. Gosar. I thank the Chairman----
    Mr. Bishop. I yield what I don't have.
    Dr. Gosar. Before I recognize the gentlewoman from 
Massachusetts, Mr. Flynn, we are having a hard time hearing 
from you. Can you take your microphone and move it a little bit 
closer to you, and just kind of speak in the microphone? Kind 
of get closer to it, please?
    Mr. Flynn. Is that better, Mr. Gosar?
    Dr. Gosar. That is a little bit better, thank you. I now 
recognize the gentlewoman from Massachusetts, Ms. Tsongas.
    Ms. Tsongas. Thank you, Mr. Chairman. And welcome to our 
guests.
    While the oil and gas industry wrestles with changing 
market conditions, as you all have testified to, our Nation 
also happens to be in the midst of a clean energy revolution. 
In Massachusetts alone, jobs in the clean energy sector have 
grown by 75 percent since 2010, and it is now an $11 billion 
industry across the entire Commonwealth.
    Nationally, we have reached a significant milestone this 
past March, when over 10 percent of all electricity came from 
wind and solar. In many individual states, the percentage of 
electricity generated by wind and solar is even higher. Our 
Nation's public lands stand to play a significant role in this 
transition to clean energy.
    The Obama administration's Bureau of Land Management 
approved permits on public lands for utility-scale solar 
facilities, wind farms, and geothermal plants, and set a goal 
of approving projects that would generate 20,000 megawatts of 
clean energy by 2020. I believe this Committee and the new 
Administration should also be working to ensure that our public 
lands are supporting renewable energy development where it is 
appropriate, and in an all-of-the-above framework to help 
decarbonize our electric grid, support job creation, and 
increase royalty payments to Federal taxpayers and local 
communities.
    Ms. MacGregor, welcome back to the Committee. On this issue 
of supporting renewables, the Bureau of Land Management's 
Fiscal Year 2018 budget request includes a $13 million cut to 
renewable energy programs. This is money that was budgeted for 
activities such as public outreach and stakeholder engagement, 
lease sales, and making sure that permits are reviewed in a 
timely manner. Your written testimony outlines the many steps 
that this Administration is taking to rush approvals of oil and 
gas development, but no similar steps for renewable 
development.
    How will you ensure that renewable energy projects have the 
proper funding and staff levels to ensure similarly timely 
reviews, and are you considering setting similar targets, as 
the Obama administration did, for renewable energy development?
    Ms. MacGregor. Thank you for the question. We are 
definitely supportive--this Administration--of all energy jobs. 
We are not engaged in picking winners or losers in any way. 
When it comes to clean energy, which, of course, is very 
important to you, we are remaining supportive of those projects 
that have already been permitted and will continue to be 
permitted on Federal land in the appropriate areas where it has 
already been determined.
    In my opening statement, when I said that we have 18,000 
megawatts of approved renewable energy, much of that is still 
remaining to be installed. So, we are aware that there will be 
permitting on continued work with the Bureau of Land Management 
to allow these projects to move forward in a responsible 
manner.
    I believe, by focusing on our permitting process in 
general, and making sure that we are looking at efficiencies 
across the board, it will benefit all energy producers on 
Federal lands, including renewable energy producers.
    Ms. Tsongas. So, you are abiding by the Obama 
administration's goals, is that correct?
    Ms. MacGregor. We will ensure that renewable energy is 
permitted in an appropriate and smart time frame.
    Ms. Tsongas. Are you setting new goals for the Trump 
administration in this area?
    Ms. MacGregor. The Trump administration and the Secretary 
have been very clear on their priorities, moving forward. I 
think it is restoring balance on Federal lands, which includes 
all energy. And, based on some of the acreage and numbers that 
we are looking at that were taken care of in the last 
administration when it comes to oil and natural gas, we are 
still trying to dig out of a little bit of a hole there to 
restore that balance. But yes, we will prioritize all energy 
jobs on Federal lands.
    Ms. Tsongas. The Trump administration has touted its all-
of-the-above energy strategy, but renewables are frequently 
omitted. And, I think, even though you are looking to see 
through the Obama permits, you are not aggressively looking for 
additional ones. I do think a responsible energy production 
calls for a more thought-through plan as to how to maintain 
some balance, given the extraordinary job opportunities that we 
have certainly seen in Massachusetts, and that I am sure 
present a real opportunity across this country.
    Professor Squillace, in your experience, are fossil fuels 
given preferential treatment in terms of development on public 
lands?
    Mr. Squillace. Well, it varies from administration to 
administration----
    Dr. Gosar. Push your button, please.
    Mr. Squillace. Oh, thank you. Sorry about that. It varies 
from each administration, I would say. But I think the budget 
proposal from the Trump administration seems to clearly favor 
fossil fuels over renewable energy. So, that is one indication.
    What I would say about that more broadly is that the United 
States has a responsibility to address the problem of climate 
change in the long term, going forward. If it is going to do 
that, it needs to manage the decline of fossil fuels. Fossil 
fuels are going to decline because of market conditions, 
irrespective of the other issues that we have been talking 
about. But we need to manage that decline in a responsible way, 
because if we don't, we are going to see the kinds of economic 
dislocations that we have seen already with the coal industry, 
and that we are likely to see, going forward, with oil and gas.
    As I said----
    Dr. Gosar. The gentlewoman's time has expired. I now 
acknowledge the gentleman from Colorado, Mr. Lamborn, for his 5 
minutes.
    Mr. Lamborn. Thank you, Mr. Chairman. Ms. MacGregor, I have 
a couple of questions for you. But before I ask that, let me 
just go on the record and say that when you were on this side 
of the dais as a professional staff member, I found you to be 
one of the hardest working, most dedicated people I have ever 
met, and I think the country is fortunate to have you doing 
what you are doing now. So, keep that up.
    You said in your testimony, the BLM is adding features to 
enhance the new electronic APD processing system, the automated 
fluid minerals support system, and plans to decommission parts 
of the prior APD processing systems to improve the automation 
capacity and better match the BLM resources to permit 
activities. And that was what you said.
    So, using Internet-based bidding and enhancing the 
electronic processing of APDs is exactly what this Subcommittee 
has been pushing the BLM to do for a long time, as you know. 
Could you tell us just a little bit more about these efforts?
    Ms. MacGregor. Sure, I would be more than happy to talk 
about that. And speaking of AFMSS 2, which is the more enhanced 
Internet-based program that we are talking about when it comes 
to filing APDs, I do recognize that New Mexico, in their field 
offices, has a different program. We are still working out the 
details of how these programs can work better together to make 
sure that, overall, we have a better program to process APDs.
    But processing APDs through Internet-based means is going 
to help us in many different ways, especially in eliminating, 
hopefully, a lot of the discrepancies that we see when industry 
files their permits.
    Right now, the BLM actually has a permitting time frame of 
257 days. In my testimony, I said that we are trying to get to 
90 days. And, by statute, we recognize that we are supposed to 
be at 30 days. But we think that utilizing this Internet-based 
means and harnessing that, we will be able to find ways--our 
staff compares it to TurboTax, but allowing folks to fill in 
the data and make sure that data does not get filed until it is 
fully complete.
    So, that is one of the areas I think will be helpful, and 
also will increase transparency for folks on the Committee and 
the general public, who want to have a better understanding of 
what the absolute workload, what our folks on the front lines, 
out in the field, are facing on a daily basis, especially in 
areas like Casper, Wyoming and Carlsbad, New Mexico.
    When it comes to Internet-based leasing, that is something 
that Congress allowed the Bureau of Land Management to do in 
the 2015 NDAA, I believe. We are moving to that model, and our 
folks internally are noticing that, through online-based 
bidding, we are seeing an uptick in participation, as more 
people can attend the lease sales online and perhaps increase 
revenues coming in.
    But we are still analyzing all of the details of what we 
are seeing in those lease sales, and hoping to get something up 
to the Hill eventually that provides more information on that.
    Mr. Lamborn. OK, thank you. At the end of Fiscal Year 2016, 
the BLM oversaw a little more than 40,000 leases across the 
country. This may sound like a lot, but it is actually the 
lowest number of Federal leases since Fiscal Year 1985, 30 
years ago. And, despite the fact that the Mineral Leasing Act 
requires lease sales to be held in each state at least 
quarterly--or more frequently, if the Secretary deems that is 
necessary--the BLM has repeatedly canceled or failed to hold 
the required lease sales.
    So, what will the current Administration do to correct 
this?
    Ms. MacGregor. We are committing to making sure that we 
find--to be respectful of Ranking Member Lowenthal, we are 
going to find the appropriate areas to conduct lease sales, and 
we will conduct those lease sales. And we are aiming to be 
doing quarterly lease sales.
    I think it is important to talk about leasing, because in 
the example that 2014 was one of our highest-producing years, 
in that year alone, in North Dakota, an example of a project 
that came online that initially produced 4,200 to 6,000 barrels 
of oil a day in 2014, a great project, got through the process, 
more wells might be drilled there, it was leased 15 years 
before, in 2001. There are long lead times to get from lease to 
production.
    That is why leasing and having certainty in the leasing 
process is so key, because companies take time to develop these 
resources, and have to allocate their own economic resources to 
do that.
    Mr. Lamborn. Thank you for being here today, and thank you 
for your testimony.
    Mr. Chairman, I yield back.
    Dr. Gosar. I thank the gentleman. The gentleman from 
Florida, Mr. Soto, is recognized for his 5 minutes.
    Mr. Soto. Thank you, Mr. Chairman. I appreciate the 
discussion today. Obviously, we need to make sure we are not 
just focusing on 20th century jobs, but 21st century jobs. And, 
in our state, we have avoided trying to have just an oil and 
gas economy. I realize there is a big push among a lot of 
states who are addicted to oil and gas jobs because they have 
not diversified their economy like Florida and a lot of other 
states, and so there is a big pressure to try to maximize this 
as much as possible.
    But we know we still have gas and oil that we will need for 
homes and cars and for goods. So, obviously, for the near 
future we will need to keep up the demand. But if we look to 
the future, we need to make sure that we are addressing climate 
change, that we are pushing renewable energy, that we are 
making sure that we are conserving our parks, and conserving 
our natural resources, and protecting our coastline.
    In Florida, it is much more about tourism and agriculture 
than it is about oil and gas, and that has been something that 
has hurt our economy, particularly with the disastrous BP oil 
spill in the Gulf that wrecked the western part of the state 
for a year plus. And we are still getting reimbursed for that.
    But I want to focus on the issues that have been addressed 
by our speakers here. According to our information, the leasing 
times from about 2005 to 2015 have been about 190 to 220 days 
under both the Bush and the Obama administrations, and now it 
is at 250. What specifically, Ms. MacGregor, are you 
recommending to get us from 257 or 250-something that you 
mentioned, back down to that average range of 190 to 220?
    Ms. MacGregor. Thank you for your question. I know that 
there are very few BLM lands in Florida, but I know this is an 
important issue to you.
    But what we are doing is prioritizing, again, areas where 
there is a good return on investment to the American taxpayer. 
One of those areas is an America First energy agenda. What we 
have done so far is simply create priorities and start looking 
at vacancies out in the field.
    Two weeks ago, I was in Carlsbad, New Mexico and Casper, 
Wyoming, visiting with some of the folks out there who are 
processing these permits, and talking to them about what 
exactly they need to help move these permits in a more 
responsible time frame.
    Mr. Soto. So, just to be clear, there are efficiencies that 
will be forthcoming to us, but there are none today.
    Dr. Squillace, I see that we have 192 out of our 213 
million acres that are already eligible for leases, so we are 
talking 10 percent left. Is this 10 percent of land that is 
really even feasible for leases, or is this something that we 
really do not need to be pursuing?
    Mr. Squillace. Let me answer that in a little bit different 
way, Congressman. The concern is that when you are deciding 
whether you want to lease oil and gas or any other resource on 
our public lands, you go through a land use planning process. 
And the land use planning process is what has made so much of 
the land available for leasing, so there is that initial 
judgment that has to be made.
    But then the way that the leasing actually occurs is 
primarily from nominations from industry. It is industry that 
decides what lands they want put up for leasing, and then they 
come in and bid on them. That process, of course, has not 
worked very robustly in recent times, simply because there has 
not been that much interest, frankly. I know we are talking, 
there are certain areas where there is interest, but------
    Mr. Soto. Let's get to that. So, if there is a reduction in 
leasing----
    Mr. Squillace. Yes?
    Mr. Soto [continuing]. Is it a supply, demand, or 
regulatory issue?
    Mr. Squillace. I would say it is primarily a demand issue.
    Mr. Soto. So, Americans in the world are reducing their 
demand on oil, and that is leading to less desire for leases.
    Mr. Squillace. Yes, but I want to emphasize one important 
point about the regulatory issue, because there has been a lot 
of discussion today about the regulations and the ways in which 
government regulation might limit development.
    As I tried to point out in my original testimony, the 
problem here is that we are dealing with public lands, and it 
is necessary. It is not just that it is legally required, it is 
necessary that we focus on what the consequences are of full-
field development of oil and gas resources on our public lands. 
That kind of development can be devastating, and it has 
happened a lot on our private lands. But, I think, it is much 
more problematic when it happens on public lands.
    So, there is a regulatory component, but it is a necessary 
component that is designed to make sure that we are protecting 
all the resources that we have talked about, and that FLPMA 
requires that we protect----
    Mr. Soto. Well, right now it is taking 257 days, so it 
looks like we will have plenty of time to review them. Thank 
you so much.
    Dr. Gosar. I thank the gentleman. The gentleman from 
Virginia, Mr. Wittman, is recognized for his 5 minutes.
    Mr. Wittman. Thank you, Mr. Chairman. I would like to thank 
our witnesses for joining us today.
    Mr. Flynn and Dr. Nelson, I wanted to get your perspective. 
You both come from states that have significant acres of 
Federal lands. And, obviously, that does have an impact on your 
state. The question is, what type of impact?
    You spoke earlier about the economic impacts of what 
happens on those lands, and lack of activity there that 
generates economic activity does have a significant impact. You 
spoke about that, but I wanted to get a little more detail 
about not only how does that affect the state, but how does it 
affect local economies?
    And what do you see, from a standpoint of having to deal 
with, as you talked about, Mr. Flynn, budget deficits keeping 
economies going? How do you deal with these massive amounts of 
public lands, looking at ways to make sure that they generate 
some revenue, and then, looking at the regulatory hurdles that 
are there for energy development on those lands?
    So, I wanted to get both you and Dr. Nelson's perspective 
on it from your state viewpoints.
    Mr. Flynn. Chairman Gosar, Representative Wittman, let me 
give you two quick answers, one that would not really go into 
the economic.
    But from an economic perspective, really, it just boils 
down to infrastructure projects. From a local development 
perspective, roads and sewers are the bread and butter of city 
and council local government officials. They are really on the 
front lines of governing. I know you all interact with them 
constantly in your districts, and I interact with them in my 
prior role and in my current role. And less revenue means less 
infrastructure projects for roads, sewers, for drinking water 
systems, period.
    The second issue I would point out--we have already talked 
about the economic issues, but in processing right-of-ways, if 
climate change is an issue that you believe is important, like 
I do, then one of the key infrastructure challenges we see to 
reducing emissions from venting and flaring is related to 
infrastructure to reduce flaring events. So, right-of-way 
approvals not being processed actually contributes to the 
problem that we see when it comes to greenhouse gas emissions.
    So, beyond the economic issue, there are profound 
environmental impacts that are associated with the difficulties 
processing not only permits to drill, but also right-of-way 
approvals.
    Mr. Wittman. Very good. Dr. Nelson?
    Dr. Nelson. Thank you so much for the question. I guess I 
understand and agree with the thing that Mr. Flynn has said, 
and I will just add that in Utah we have 29 counties, and about 
23 to 24 of those counties are rural counties. This is where 
the preponderance of federally managed lands are.
    And to the extent that access to development of those lands 
is limited where it is appropriate really has significant 
impact. This is where we see the high levels of unemployment, 
and limited opportunities for even diversification, because 
natural resources are the backbone for allowing for that 
economic development which, in turn, does drive the diversity.
    The infrastructure that is required to meet the needs for 
that natural resource development also lends itself to other 
industrial and commercial development. So, basically, you are 
creating a conundrum when you limit access to those resources 
for those communities that are dependent on that initial 
development.
    Mr. Wittman. Very good, thank you.
    Ms. MacGregor, I will go to you. You have heard concerns 
here from both of these states from the state and local level 
about making sure that there is the highest and best use of 
those lands that are now under Federal control. Give me your 
perspective on what the Department of the Interior can do to 
help address these concerns and make sure that these states 
have these Federal lands producing to help them deal with the 
issues that they have to deal with.
    Ms. MacGregor. Thank you for the question, sir. Every state 
has their different infrastructure needs and different 
economies and goals. These states being represented here today 
clearly would like to see responsible Federal oil and natural 
gas development on their lands.
    The good news for them is that is a priority of this 
Administration, very clearly, from the top down, starting with 
the White House. So, we are allocating our resources and making 
sure that we are addressing not only planning issues, and 
making sure on the planning side of things that we are finding 
and striking the appropriate balance to find the right acreage 
to lease, but also, when it comes to permitting, addressing 
backlogs not just for APDs, but also for rights-of-way, and 
making sure we can get through those in a responsible time 
frame that folks who invest on Federal lands, whether it is any 
building project--it does not have to be oil and gas--can get 
through and have a reliable permitting process and, last, 
regulatory certainty, which I believe other folks have already 
touched upon.
    Mr. Wittman. Very good. Thank you, Mr. Chairman, I yield 
back.
    Dr. Gosar. I thank the gentleman. The gentlewoman from 
California, Ms. Barragan, is recognized.
    Ms. Barragan. Thank you, Mr. Chairman. I have spent the 
last several years sitting as a City Council member where I had 
an oil company that wanted to come into my town, Hermosa Beach, 
to drill 34 oil and water injection wells on land and then out 
into the Santa Monica Bay.
    I have seen time and time again where big oil tries to come 
in and take over urban areas and take over areas that are just 
causing more environmental pollution. We read about spills 
happening all the time, whether they are on land or offshore.
    I was very disturbed to hear that the President wanted to 
open up the coastlines again to drilling. And I think today we 
have heard, I would say, an assault on our Federal lands. 
Sometimes I take a look at that stuff and I think that this 
Administration's talking points are coming right out of big 
oil.
    One of the things I am hearing about is something called 
energy dominance. Mr. Squillace, they have talked a lot about 
this. Can you explain what that means? And do you think it is 
something we should strive for on our public lands?
    Mr. Squillace. It is an interesting question. I don't know 
that I can answer what exactly an energy-dominance means, but I 
think it is the wrong word. I don't think any of us should be 
looking at dominance. We ought to be looking at being energy-
smart. And energy-smart, to some extent, is about what we have 
been talking about today, an all-of-the-above strategy, but one 
that recognizes the perils of climate change and the risks that 
we face if we continue to develop fossil fuels at a pace that 
is simply not sustainable, given the challenges of climate 
change that we have talked about.
    I think that if we think about it in that way, then it is 
appropriate to allow fossil fuel development to decline in an 
appropriate way, manage that decline in a responsible way, and 
shift our economy so that we are relying more and more on 
renewable and other forms of energy that do not cause the 
problems that we have seen.
    Ms. Barragan. What do you think the impact is going to be 
if we start doing more oil drilling on public lands, both to 
the environment and to the global climate change problem that 
we have?
    Mr. Squillace. As I mentioned in my original testimony, I 
am not opposed to oil and gas development on public lands, but 
it is fundamentally different from oil and gas development on 
private lands, because these are our public lands. If we are 
going to have it, we need to have appropriate planning to make 
sure that we are doing it responsibly.
    With all the great technologies that we have right now--we 
can do horizontal drilling in ways that allows multiple wells 
to be put on a single pad and minimize the footprint on the 
public land. But if we do not do sufficient advance planning, 
and if we do not do the kinds of environmental analyses that 
are required for appropriate development of those resources, 
then we lose that opportunity to sort of make these advantages 
available to us.
    So, I think there is an appropriate way to do it. I do 
think we need to recognize it cannot go on forever, that we do 
have responsibilities, globally, to deal with the fossil fuel 
issue in a timely way. But I think, if we are going to have it, 
we can do it responsibly.
    Ms. Barragan. Well, thank you. I am proud to be from 
California, where we have been leading the charge in moving 
toward renewable energies and investing, and knowing that there 
is great economic development in that, as opposed to the fossil 
fuel industry.
    Thank you, I yield back.
    Dr. Gosar. The gentleman from New Mexico, Mr. Pearce, is 
recognized for his 5 minutes.
    Mr. Pearce. Thank you, Mr. Chairman. And I appreciate the 
conversation that we are having today, thanks to each one of 
our panelists.
    Mr. Squillace, you have comments on the second page of your 
testimony about the leasing, $2 an acre.
    Mr. Squillace. Right.
    Mr. Pearce. That section is in there because you feel like 
it is inappropriate? You feel like it is sort of a giveaway? 
Why is that section there?
    Mr. Squillace. So, you are asking about the bonus bids and 
the----
    Mr. Pearce. No, the $2 an acre if they don't sell a lease, 
then it is available for $2 an acre.
    Mr. Squillace. Right.
    Mr. Pearce. Is that sort of a giveaway to oil and gas, in 
your opinion?
    Mr. Squillace. If you look at the revenues that come in 
from Federal----
    Mr. Pearce. No, that is not what I am asking. I am asking 
on the $2, is that a giveaway to oil and gas?
    Mr. Squillace. I think it is, yes.
    Mr. Pearce. Yes, it is value that is available for almost 
nothing. So, I wonder, $2 is pretty achievable to people like 
you and me. Did you ever go and bid $2 on any of these? It is a 
giveaway. Have you bid on these, personally?
    Mr. Squillace. No. I know Terry Tempest Williams did bid on 
one.
    Mr. Pearce. OK, thank you. I appreciate that. It might not 
be as big a giveaway, because it was going to require 
tremendous investment downstream to actually do something with 
that lease, that what you feel like is a giveaway might not be 
as much of a giveaway. And if it were, I suspect people--maybe 
not you, but people who could afford $2 an acre, which is 
almost all of us--might be out doing that, instead of putting 
money in the lottery. You have a lot better chance of payoff in 
this, rather than on a lottery ticket.
    And you had made a comment just a second ago that the 
decrease in permitting, the decrease in lease sales, is a 
demand issue, and I would point out that the American Energy 
Institute just put out that 2016 was the highest use of 
gasoline in our record. So, it does not sound like a demand 
issue. It sounds like we have drilled enough that we are 
producing enough oil that the price of gasoline is coming down, 
even though the use is going up. Usually, increased use would 
drive the price up, but instead we have increased the amount of 
supply. So, I think that maybe your insertion into the record 
that it was a demand issue should be rethought at some point.
    Now, New Mexico has about 40 percent, somewhere between 30 
and 40 percent of its revenues to the government established by 
oil and gas. Mr. Flynn, I would like your opinion on the BLM 
APD delays that we are seeing there in the state. And I have 
worked very much with BLM on those. But from the business 
perspective?
    Mr. Flynn. Representative Pearce, I think you know it 
better than anyone, but just very bluntly, it has a huge impact 
on our ability, from a state, to provide basic infrastructure 
needs.
    Mr. Pearce. How much of the delays?
    Mr. Flynn. Well, the delays, as I mentioned in my 
testimony, we believe, about $1.5 million in lost Federal 
royalty is deferred each day, as a result of the backlog. And 
approximately $800,000 deferred in state severance----
    Mr. Pearce. Yes. Just the interruption in a lease sale that 
stopped $70 million from coming to the state because of a 
protest filed by one of the environmental groups. It was 
eventually thrown out, but that $70 million was 10 percent of 
our shortfall. Ten percent of the shortfall for the state of 
New Mexico--so, yes, we get a little bit energetic when we are 
talking about the issues.
    Now, many people are saying in the agency that they just 
need more staff. Can you address that question for New Mexico?
    Mr. Flynn. Sure. Representative Pearce, I think briefly, 
first of all, a previous study showed that a pilot program that 
had been enacted a few years ago to provide Federal permit 
streamlining pilot project created additional funding that 
allowed 140 additional staff members to be hired for seven 
pilot offices, including two offices in New Mexico: the 
Farmington office and the Carlsbad office.
    And while they were able to increase the amount of 
applications, the APDs that they processed, by 10 percent, the 
number of days it took to actually process the APDs increased. 
So, they got less efficient by 40 percent.
    Mr. Pearce. And the same people working in the same agency 
took much longer. My study showed it took about double.
    Ms. MacGregor, I know that you recently--and whatever Mr. 
Lamborn from Colorado said about your performance, it seemed to 
go well, so I am going to identify with that also, but thanks 
for visiting our state. I look forward to working with you, 
because these delays really do affect us.
    I live 3 miles from the Texas border. I can see all those 
rigs running over there in Texas that should be running in New 
Mexico, but they cannot get the APDs permitted. Just the 
companies that got the option to drill there are here. And I 
can see the effect of the permitting delays.
    So, it is not quite a level playing field. People just 
choose the best economic opportunity. That is, we will go drill 
on private land instead of trying to wrestle around with the 
government. And that hurts states like New Mexico, and it hurts 
the Federal Government, and it hurts our job base in New 
Mexico.
    Mr. Chairman, I have extended past my time. Thanks for your 
indulgence. I yield back.
    Dr. Gosar. I thank the gentleman. The gentleman from 
Virginia, Mr. Beyer, is recognized for his 5 minutes.
    Mr. Beyer. Thank you, Mr. Chairman, very much.
    Ms. MacGregor, I have seen reports that the Interior 
Department is considering recombining the Bureau of Ocean 
Energy Management (BOEM) with the Bureau of Safety and 
Environmental Enforcement (BSEE). The reason BOEM and BSEE 
exist was because of the Deepwater Horizon tragedy of 2010. The 
agency that existed at that time was the Minerals Management 
Service, and when that agency was not mired in scandal, it was 
dealing with a sharply conflicting mission: both promoting and 
regulating offshore drilling.
    So, the creation of a dedicated offshore safety regulator 
separate from a leasing agency was one of the key 
recommendations of the President's Oil Spill Commission. 
Senator Bob Graham, who is one of the co-chairs of the 
Commission, was quoted as saying, when he heard of this news of 
the potential BOEM-BSEE combination, ``I have heard no 
indication of why we are doing this. It is just 7 years after 
this enormous disaster, and this was one of the key steps in at 
least mitigating the chances of repetition.''
    And I believe it cannot be to address problems with 
permitting. Just look at the first 5 months of this year, 
January through May--BSEE has approved 324 permits with only 20 
permits pending, so it sounds like firing on all cylinders.
    What is the evidence that you have that shows that 
combining BOEM and BSEE would be in the public's interest?
    Ms. MacGregor. Sir, thank you for that question. When it 
comes to the offshore, we obviously want to make sure that we 
are ensuring that the bureaus that both lease and conduct 
inspections are doing their jobs and doing them well.
    When it comes to the split of the former MMS into, 
actually, three agencies, the original split broke out the 
Office of Natural Resources Revenue, known as ONRR, which was 
split, and then left BOEMRE, which eventually was itself split 
into two separate agencies.
    As we look at reorganization broadly within the Department, 
the discussion on splitting BOEM and BSEE, and whether or not 
they should be recombined is still ongoing and internal. But I 
hear your comments and I am more than happy to take those back 
with me today.
    Mr. Beyer. Great, thank you. And Secretary Zinke, when he 
was here last week, talked about thinking massive 
reorganizations, and everything should be on the table. But 
please remember the reason they were split in the first place, 
because you do not have the fox guarding the hen house.
    Utah Governor Gary Herbert sent a letter to Ed Robertson, 
the Utah Director of the BLM, asking the Bureau not to sell 
certain oil and gas leases next to Zion National Park. In his 
letter, Governor Herbert said, ``Visitors come from around the 
world to see the lush landscape surrounded by towering, iconic 
sandstone slips at Zion National Park. And the preservation of 
this unique experience is important to the surrounding 
communities. Their economy is dependent upon recreation and 
tourism.''
    So, Dr. Nelson, do you believe that other local communities 
and economies and communities in Utah that similarly depend on 
recreation and tourism should have a say in how the oil and gas 
leases in their local communities are made?
    Dr. Nelson. Thank you for that question. Yes. I provided in 
both my written testimony and my opening remarks today, Utah is 
a natural resource state, and that includes our national and 
state parks. We absolutely believe in balancing use and 
conservation, and we also are a very collaborative state, 
working with local communities.
    I think our key position here is that this occurs best when 
permitting happens at the state level, that you have that local 
interest, you have that local control. So, assigning primacy 
for the permitting process associated with APDs is best managed 
through the state. And not to diminish the importance of BLM or 
DOI in the overall management of multi-use of our Federal 
lands, but just to provide for that more efficient, local 
assessment for these permitting processes.
    Mr. Beyer. Well, I heartily agree with you on the need for 
local input and local engagement. How do you balance the rights 
of Americans who live across the country, the other 49 states, 
who own that land and have, essentially, their rights 
represented by the Federal agencies?
    Dr. Nelson. That is a big question to answer. I guess that 
one thing I would point out is that federally managed lands, 
the preponderance of those lands are different across the 
country. Utah is 70 percent; you go up to Alaska, it is even 
higher. So, we are limited in our ability to create revenues 
across those federally managed lands. It is a condition that 
does not exist for all states across the country. I think that 
we have to take that into consideration, as well.
    Mr. Beyer. And part of that taking into consideration is 
those lands were federally owned at the time Utah was admitted 
as a state, and Alaska, too.
    Thank you, Mr. Chairman. I yield back.
    Dr. Gosar. I just want her to answer the gentleman's 
question that it is also multiple use, and that was one of the 
dictations on behalf of having public lands in the West that 
are very different than east of the Mississippi.
    The gentleman from Colorado is recognized for his 5 
minutes.
    Mr. Tipton. Thank you, Mr. Chairman, and thank the panel 
for taking the time to be able to be here.
    Ms. MacGregor, I would like maybe you to be able to speak a 
little bit to Dr. Nelson's suggestion of having some of the 
permitting going over to the states.
    Right now, when the Department of the Interior or the BLM, 
when you issue a permit, do all environmental requirements have 
to be complied with if there is a choice to be able to move 
forward with drilling?
    Ms. MacGregor. Absolutely.
    Mr. Tipton. So, Dr. Nelson, if you had the right to be able 
to do what you are suggesting, that would still be applicable 
to you, as well, wouldn't it?
    Dr. Nelson. Absolutely.
    Mr. Tipton. So, we would still have the responsible energy 
development, making sure that we are doing it in an 
environmentally sensitive way.
    I was interested when I was reading your testimony, Ms. 
MacGregor, talking about some of the multiple use. I have the 
bill, ``Planning for America's Energy Future Act,'' which 
enumerates all of the above, literally, in the bill. Chairman 
Gosar has a bill for streamlining some of the permitting that 
we are seeing. We are seeing now multiple use, not just 
traditional fuel sources, but also, as I believe you noted, 
some of the non-traditional sources being developed on the 
public lands, as well.
    But I do find it interesting, listening to some of the 
comments from our colleagues. The Ranking Member is an example, 
talking about multiple use on the lands. If you lease 1,000, 
5,000 acres, do they put up a big fence so that nobody can 
hike, hunt, or fish on those lands?
    Ms. MacGregor. Not to my knowledge.
    Mr. Tipton. So, there is still multiple use, even while we 
have a responsible energy development, be it traditional or 
non-traditional resources?
    Ms. MacGregor. Yes, there is, sir. And I think some of the 
witnesses can speak more to the technologies that are available 
from multi-well pads to do extended-reach drilling and minimize 
impacts to surface acreage.
    Mr. Tipton. Dr. Nelson, maybe you would like to be able to 
speak to that, as well, in terms of lessening the impact. My 
friend from Colorado, a fellow Coloradoan, was talking about 
lessening the impact. Have we developed technologies to be able 
to not only responsibly access resources, but to be able to 
minimize the impact on public lands?
    Dr. Nelson. Yes. I would say the same technologies that 
really have led to the oil and natural gas revolution that we 
have today significantly limit surface impacts. In fact, Utah 
is currently looking at how it applies rules for horizontal 
drilling to, of course, assure we have all of those same 
environmental standards in place. But what we are seeing is 
absolutely fewer drilling rigs required, and fewer pads being 
developed for drilling, as a result of the advent of these 
technologies.
    Mr. Tipton. And I appreciate that. I had an opportunity to 
be on the Piceance in Colorado. And we were looking up to BLM 
land. They said, ``We have a lease up there.''
    And I said, ``Well, when are you planning on drilling?''
    They said, ``We are already producing.'' But it was from 
one well pad. No surface development was going on, but still 
being able to responsibly develop that resource.
    Ms. MacGregor, on a little different topic here, it is 
going to the MLPs, Master Leasing Programs. Essentially, that 
is viewed as a narrow RMP, intended to be able to address some 
of the specific land-use conflicts prior to leasing and 
drilling.
    Would you maybe describe a little bit for us in what ways 
are the MLPs duplicative of the RMPs?
    Ms. MacGregor. What I can say, sir, is in the wake of the 
U.S. Congress making a determination and passing legislation to 
throw back the Planning 2.0 regulation, we are taking an in-
depth look at our planning process, because we recognize, no 
matter what project members have on either side of the aisle, 
the planning process at the Department takes, on average, 5 to 
7 years, often more.
    As we look at planning in the Department, and consider how 
we can do things more efficiently, we are evaluating whether 
the Master Leasing Program is an added step on top of an 
existing planning process. Does it actually increase 
efficiencies, or is it another step? And we are looking at 
that, as well as many other issues.
    Mr. Tipton. Well, great. And I was a little encouraged, 
because that is one thing that we have heard out of a number of 
our constituents, in terms of some of the different time 
frames. We have duplicative regulations, Mr. Chairman, that I 
believe your bill that I am co-sponsoring will be able to 
streamline those regulations, look at the duplicative overlap, 
and be able to do that in a responsible way.
    I appreciate all of you taking the time to be able to be 
here. My time has expired.
    I yield back.
    Dr. Gosar. I thank the gentleman from Colorado. The 
gentleman from Louisiana, Mr. Graves, is recognized for 5 
minutes.
    Mr. Graves. Thank you, Mr. Chairman.
    Ms. MacGregor, I would like to clarify some comments that I 
made earlier from the dais up here. The contribution of Federal 
lands to our overall energy production, particularly in the oil 
and gas portfolio, it is my understanding that we have seen a 
reduction--and I want to be clear in what I am saying--in the 
percentage of oil and gas that our Federal lands are providing 
to the overall domestic energy production.
    Is that your understanding, for example, over the last 
several years?
    Ms. MacGregor. Specifically in Fiscal Year 2016 we did see 
a downtick in both natural gas and oil production on Federal 
lands.
    Mr. Graves. I am looking at the memo here for the 
Committee--between Fiscal Year 2010 and Fiscal Year 2015, 
Federal crude production fell from 36 percent of total 
production to 21 percent of total production.
    Number two, again, just want to make sure I am getting this 
right. I am making reference to the memo. At the end of Fiscal 
Year 2016, the BLM oversaw a total of 41,143 leases across the 
country. This is the lowest number of Federal leases since 
Fiscal Year 1985. Is that your understanding?
    Ms. MacGregor. That is correct.
    Mr. Graves. Thank you.
    Mr. Flynn, changing gears a little bit, could you comment 
or respond perhaps to comments I have heard in the past about 
folks saying that Federal lands are something that all 
Americans should enjoy, therefore states that host energy 
production on Federal lands should not benefit from the Mineral 
Leasing Act revenue-sharing formula?
    Mr. Flynn. Mr. Chair, Representative, I think states that 
are burdened with the production should absolutely be deriving 
benefits from it. In all honesty, while everyone should be part 
of the debate, I think that people who are living closest to 
the activity should have the loudest voice, in moving forward.
    I think, from an industry perspective, we wholeheartedly 
respect and work collaboratively with the communities that we 
operate in.
    Mr. Graves. So, the communities that host it and those that 
are closest should have the biggest voice and should share in 
the revenues. Is that accurate, I am restating what you said?
    Mr. Flynn. Yes.
    Mr. Graves. Ok. And number two, the United States benefits, 
I think, to the tune of approximately 10 percent under the 
Mineral Leasing Act, because of the 40 percent that goes to the 
reclamation fund. Do you think that that is an appropriate 
return on investment for the Federal Government?
    Mr. Flynn. Mr. Chair, it is really not my place to 
determine. I will leave it up to you to figure it out.
    Mr. Graves. All right. That is fine.
    Mr. Flynn. We want to do our fair share to make sure you 
are getting a fair return on the investment.
    Mr. Graves. All right. Dr. Nelson, do you care to comment 
on that same question?
    Dr. Nelson. I think I share the same sentiment as Mr. 
Flynn. I guess the one thing I would add is that in states that 
are heavily burdened with Federal lands--and I say burdened 
because just often the economic opportunities are limited 
because of those lands--that consideration needs to be given to 
how royalties are assigned to states that have more limited 
economic opportunities.
    Mr. Graves. But you also have benefit from tourism and 
other things, as a result of national parks and other Federal 
facilities.
    Dr. Nelson. Correct, yes.
    Mr. Graves. OK. And, by the way, the entrance fees from 
those national parks, as I understand, go right back into those 
national parks, and are reinvested in maintaining those 
resources.
    So, Ms. MacGregor, can I ask you a question? I think that 
Mr. Flynn and Dr. Nelson just made very convincing comments 
about the relationship between production and revenue sharing. 
Can you help me understand or distinguish between offshore 
production and onshore?
    Just applying Mr. Flynn's comment about proximity and 
hosting and the loudest voice, should offshore states be 
treated in a disparate manner?
    Ms. MacGregor. Congressman Graves, I think I know where you 
are going with this.
    [Laughter.]
    Mr. Graves. I am pretty sure you recognized it about 5 
minutes ago, but go ahead.
    Ms. MacGregor. Federal revenues from oil and natural gas 
development are absolutely critical to our budget, and in so 
many different ways lend themselves to various initiatives 
throughout the government. I believe also with the Land and 
Water Conservation Fund, acquisition of Federal lands, as well.
    Mr. Graves. Which is derived from offshore energy 
production, which means that other states are benefiting more 
from offshore energy production off the coast of Louisiana than 
actually the state of Louisiana.
    Ms. MacGregor. I think the entire United States benefits 
from offshore energy production.
    Mr. Graves. And other states disproportionately benefit 
from it.
    Ms. MacGregor. I can't speak to that. But, tough choices 
were made in this budget. This is what a balanced budget looks 
like. But I am aware that revenue sharing is really important 
to coastal restoration and a variety of activities in the state 
of Louisiana, and we are committed to----
    Mr. Graves. Under our state's constitution, any revenue 
sharing dollars are committed to the restoration of the coast.
    And I know that you are sitting there smiling, because that 
red light is on----
    [Laughter.]
    Mr. Graves. I have so much more to talk about, but I want 
to thank you all for your comments. I yield back.
    Dr. Gosar. I thank the gentleman. I like the tact that he 
eventually got back to where we thought he was going to go with 
that question.
    The gentlewoman from Wyoming is now recognized for 5 
minutes.
    Ms. Cheney. Thank you, Mr. Chairman. I would like to thank 
all the witnesses for being here today. And, in particular, Ms. 
MacGregor, I wanted to thank you. I can't tell you how 
refreshing it is to have somebody who is in the executive 
branch, who clearly has such a firm understanding of these 
issues, and to know that you have been out in Casper and in 
Carlsbad, looking at the challenges we are facing, that is very 
appreciated.
    As you well know, we have spent a large part of the last 8 
years, and even beyond, dealing with a real disconnect between 
Washington and the policies that were made here and what is 
happening on the ground.
    I wanted to ask if you could continue a little bit in terms 
of the question that Mr. Soto asked, but then you were cut off, 
and that is I appreciate hearing both from Secretary Zinke and 
from you today about the steps that are being taken to deal 
with the backlog of APDs. Could you talk about, in terms of in 
the field offices, as you are looking at the electronic 
permitting process, some of these Internet-based solutions, how 
is that translating on the ground? What steps will also include 
perhaps moving people?
    In Wyoming, in particular, I know we have shifted folks 
from our Buffalo office to the Casper office. We really 
appreciate the change in policy, but have yet to see a real 
breaking of the backlog. Could you talk a little bit more 
specifically about, on the ground, how this will affect the 
movement of the APDs?
    Ms. MacGregor. Absolutely. And getting out there was so 
helpful, to see what our folks and what the state is doing--you 
know, Wyoming is an energy powerhouse, and we want to see it 
stay that way. But we recognize that we need to work better 
with our state and local partners to make sure that we are 
reducing time frames when it comes to the permitting backlog, 
and dealing with a variety of the different processes we deal 
with that manage the lands that border your state and local 
communities.
    When it comes to staffing, I think that is part of the 
recipe to dealing with some of this. BLM-wide, we have 325 
people working on permitting across all BLM offices, but there 
are currently 90 vacancies.
    So, what we are doing, in accordance with the Secretary's 
priorities when it comes to energy exploration and production 
on Federal lands, we are looking right now at our top-five 
busiest offices, and one of those is Casper. Casper, I think, 
is perhaps close to number one. And we are recruiting right now 
to fill vacancies that are needed, to make sure that we are 
getting staffing out to the front lines--another one of 
Secretary Zinke's priorities. We are trying to hire out where 
we need the individuals to get through this workload.
    And, I find the workload to be inspiring, because that is 
just good news for the people of Wyoming and for our entire 
country. But we also recognize that when folks talk about 
permits not being used, they do expire after 2 years, and we do 
receive a $9,500 fee for every single permit that is filed.
    So, we are looking to make sure those resources stay where 
they are needed, and that we have some mobility within field 
offices so that, if we are doing things online, maybe Buffalo 
folks who might not be as busy can help folks in Casper, or we 
could maybe grow that to even more nationwide movement, so that 
folks do not have to fly in just to help fix backlogs, and we 
can be more nimble to the variety of development that occurs in 
accordance with the economics and geology of a different area.
    Ms. Cheney. Thank you. And in terms of a related issue, the 
planning process--I was very pleased that we were able to pass 
the repeal of Planning 2.0 and have the President sign it. 
Could you talk a little bit more about how that planning 
process is going to be focused on ensuring we get more local 
voices into the whole land use management process, as well?
    Ms. MacGregor. Absolutely. Another priority of the 
Secretary is restoring trust, especially in the West, for state 
and local communities that we have to work with, day in and day 
out, because they actually feel the brunt of the choices made 
in Washington on lands out in the West.
    The Planning 2.0 process aimed to do a lot of things, but 
did reduce some of the time frames for those communities to 
have public comment. So, I think, from the get-go, we are going 
to work with our state and local communities, get their 
feedback--they clearly will have thoughts on how we can improve 
our Federal planning process.
    But we are also asking our team to think broadly and think 
differently, and come up with bold new ideas that we can take 
and get help with other Federal partners to make things happen 
a little bit more quickly.
    I am hoping that we can be successful here, because, 
frankly, having a planning process that takes 5 to 7 years--and 
in some cases there are examples of much more--that is not a 
workable solution for anyone. We need to be better at working 
with these communities, so that we can get these uses up and 
have the land managed better.
    Ms. Cheney. Great. Thank you very much.
    Thank you.
    Dr. Gosar. I thank the gentlewoman from Wyoming, and thank 
you for bringing up, Ms. MacGregor, that there are plenty of 
vacancies that need to be filled. In order to do the work 
properly we need to get those filled, so I would nudge a notice 
to our Senate colleagues to get those actually confirmed and 
filled.
    I thank the witnesses for their valuable testimony and the 
Members for their questions. The members of the Committee may 
have additional questions for the witnesses, and we will ask 
you to respond to those in writing.
    Under Committee Rule 3(o), the members of the Committee 
must submit witness questions within 3 business days following 
the hearing, and the hearing record will be held open for 10 
days for these responses.
    If there is no further business, without objection, the 
Subcommittee stands adjourned.

    [Whereupon, at 11:49 a.m., the Subcommittee was adjourned.]

                                 [all]