    [Senate Hearing 116-346]
    [From the U.S. Government Publishing Office]

    .                                                      S. Hrg. 116-346

     AN EXAMINATION OF FEDERAL REVENUES DERIVED FROM ENERGY DEVELOPMENT ON
    FEDERAL AND INDIAN LANDS AS WELL AS FEDERAL OFFSHORE AREAS AND PROGRAMS
    THAT SHARE THOSE REVENUES WITH STATE, LOCAL AND TRIBAL GOVERNMENTS AND
                        TESTIMONY ON S. 2418 AND S. 2666

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

                                    HEARING

                                   BEFORE THE

                                  COMMITTEE ON
                          ENERGY AND NATURAL RESOURCES
                              UNITED STATES SENATE

                         ONE HUNDRED SIXTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                NOVEMBER 7, 2019

                                   __________

                           Printed for the use of the
                   Committee on Energy and Natural Resources

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

            Available via the World Wide Web: http://www.govinfo.gov

                                  __________

                        U.S. GOVERNMENT PUBLISHING OFFICE
    39-871                     WASHINGTON : 2021

    -----------------------------------------------------------------------------------

                   COMMITTEE ON ENERGY AND NATURAL RESOURCES

                        LISA MURKOWSKI, Alaska, Chairman
    JOHN BARRASSO, Wyoming               JOE MANCHIN III, West Virginia
    JAMES E. RISCH, Idaho                RON WYDEN, Oregon
    MIKE LEE, Utah                       MARIA CANTWELL, Washington
    STEVE DAINES, Montana                BERNARD SANDERS, Vermont
    BILL CASSIDY, Louisiana              DEBBIE STABENOW, Michigan
    CORY GARDNER, Colorado               MARTIN HEINRICH, New Mexico
    CINDY HYDE-SMITH, Mississippi        MAZIE K. HIRONO, Hawaii
    MARTHA McSALLY, Arizona              ANGUS S. KING, JR., Maine
    LAMAR ALEXANDER, Tennessee           CATHERINE CORTEZ MASTO, Nevada
    JOHN HOEVEN, North Dakota

                          Brian Hughes, Staff Director
                         Kellie Donnelly, Chief Counsel
                         John Crowther, Senior Counsel
                    Nick Matiella, Professional Staff Member
                    Sarah Venuto, Democratic Staff Director
                    Sam E. Fowler, Democratic Chief Counsel
              Elliot Howard, Democratic Professional Staff Member

                                C O N T E N T S

                                  ----------

                               OPENING STATEMENTS

                                                                       Page
    Murkowski, Hon. Lisa, Chairman and a U.S. Senator from Alaska....     1
    Manchin III, Hon. Joe, Ranking Member and a U.S. Senator from
      West Virginia..................................................     3
    Cassidy, Hon. Bill, a U.S. Senator from Louisiana................     6
    Barrasso, Hon. John, a U.S. Senator from Wyoming.................    10

                                   WITNESSES

    Gould, Gregory J., Director for the Office of Natural Resources
      Revenue, U.S. Department of the Interior.......................    11
    Brower, Jr., Hon. Harry, Mayor, North Slope Borough, Alaska......    23
    Comay, Laura B., Specialist in Natural Resources Policy,
      Congressional Research Service.................................    29
    Kline, Jr., Kyle R. ``Chip,'' Executive Assistant to the Governor
      of Louisiana for Coastal Activities, and Chairman of the Board
      for the Louisiana Coastal Protection and Restoration Authority.    39
    Luthi, Randall, Chief Energy Advisor, Office of Governor Mark
      Gordon (Wyoming)...............................................    51

              ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

    American Fly Fishing Trade Association, et al.:
        Letter for the Record........................................    76
    American Wind Energy Association:
        Letter for the Record........................................   152
    Association of Oregon Counties:
        Letter for the Record........................................   154
    Barrasso, Hon. John:
        Opening Statement............................................    10
    Brower, Jr., Hon. Harry:
        Opening Statement............................................    23
        Written Testimony............................................    25
        Responses to Questions for the Record........................    98
    Bureau of Land Management, U.S. Department of the Interior:
        Statement for the Record.....................................    12
    Cassidy, Hon. Bill:
        Opening Statement............................................     6
        Chart entitled, ``Disbursements of Federal Energy Leasing
          Revenue, 2018'' created by CRS using data from ONRR........     8
    Clean Water Action, et al.:
        Letter for the Record........................................    67
    Comay, Laura B.:
        Opening Statement............................................    29
        Written Testimony............................................    31
        Responses to Questions for the Record........................   102
    County Supervisors Association:
        Letter for the Record........................................   155
    Gould, Gregory J.:
        Opening Statement............................................    11
        Written Testimony............................................    19
        Responses to Questions for the Record........................    89
    Kline, Jr., Kyle R. ``Chip'':
        Opening Statement............................................    39
        Chart entitled ``Marine Cadastre National Viewer / Pipeline
          Density Comparison (Retrieved 7/18/19),'' created by BOEM..    40
        Written Testimony............................................    42
        Responses to Questions for the Record........................   110
    Large-scale Solar Association:
        Letter for the Record dated July 22, 2019....................    69
        Letter for the Record dated November 4, 2019.................   156
    Luthi, Randall:
        Opening Statement............................................    51
        Written Testimony............................................    53
        Responses to Questions for the Record........................   112
    Manchin III, Hon. Joe:
        Opening Statement............................................     3
    McSally, Hon. Martha:
        List of Endorsements for the Public Land Renewable Energy
          Development Act of 2019....................................    66
    Murkowski, Hon. Lisa:
        Opening Statement............................................     1
    National Association of Counties:
        Letter for the Record........................................    71
    Outdoor Industry Association:
        Statement for the Record.....................................    72
    S. 2418, the COASTAL Act.........................................   113
    S. 2666, the Public Land Renewable Energy Development Act of 2019   124
    Trout Unlimited:
        Letter for the Record........................................    73
    Western Governors' Association:
        Letter for the Record dated August 19, 2019..................    78
        Letter for the Record dated November 5, 2019.................   159
    (The) Wilderness Society:
        Letter for the Record........................................   174

     AN EXAMINATION OF FEDERAL REVENUES DERIVED FROM ENERGY DEVELOPMENT ON
    FEDERAL AND INDIAN LANDS AS WELL AS FEDERAL OFFSHORE AREAS AND PROGRAMS
    THAT SHARE THOSE REVENUES WITH STATE, LOCAL AND TRIBAL GOVERNMENTS AND
                           TESTIMONY ON S. 2418 AND
                                    S. 2666

                                  ----------

                           THURSDAY, NOVEMBER 7, 2019

                                           U.S. Senate,
                     Committee on Energy and Natural Resources,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 10:07 a.m. in
    Room SD-366, Dirksen Senate Office Building, Hon. Lisa
    Murkowski, Chairman of the Committee, presiding.

               OPENING STATEMENT OF HON. LISA MURKOWSKI,
                        U.S. SENATOR FROM ALASKA

        The Chairman. Good morning, everyone. The Committee will
    come to order.
        We are here this morning for three closely related
    purposes. First, we will examine federal revenues that are
    generated from energy development on our federal lands, Indian
    lands and federal offshore areas. Secondly, we will explore how
    that revenue is distributed among federal programs and shared
    with the state, local and tribal governments. And then finally,
    we will hear testimony on two measures that would boost revenue
    sharing from onshore renewable as well as offshore development.
    Both of the bills under consideration are sponsored by members
    of this Committee. Senator Cassidy has introduced S. 2418,
    which is the COASTAL Act, and Senator McSally has introduced S.
    2666, which is the Public Land Renewable Energy Development
    Act.
        As a co-sponsor of the COASTAL Act, I want to thank Senator
    Cassidy for introducing legislation that would bring revenue
    sharing for coastal producing states into parity with onshore
    development. Congress laid the foundation for offshore revenue
    sharing through the passage of the Gulf of Mexico Energy
    Security Act, GOMESA, back in 2006. At that time, the bill did
    not include Alaska. The COASTAL Act that we are considering now
    would establish a revenue sharing program that would include
    Alaska.
        At the current time, our offshore production is pretty
    minimal and, therefore, any returns to the state are equally
    minimal. It is important to address this at this time. In fact,
    some of us would say it is well, well overdue in terms of
    timing to address it. The COASTAL Act would do for Alaska what
    it does for other producing states, such as those in the Gulf
    of Mexico, in terms of being able to provide offshore revenue
    sharing for the state to help meet a number of critical
    purposes including the protection of our coasts, assistance for
    villages that are grappling with the effects of climate change,
    the development of lower cost and clean energy generation which
    is so important for us in the state as well as assistance for
    our university system and just all that comes with our efforts
    to turn our non-renewable resources into long-term assets.
        To me, offshore revenue sharing is a matter of simple
    fairness. The Beaufort and the Chukchi Seas, and Cook Inlet are
    American waters by virtue of Alaska and Alaska alone. We build
    the infrastructure and provide the public services that are
    needed for responsible development, but we also bear the
    impacts. And as we have heard Senator Cassidy say many, many,
    many times before this Committee that for those who shoulder
    much of that burden, it is only right that they should share in
    a greater opportunity for the benefit.
        So let's talk about some of the benefits from revenue
    sharing. A few weeks ago, the Department of the Interior
    announced that it distributed over $11.6 billion in revenue
    from natural resources production in FY 2019. That is
    significantly higher than last year's disbursement of $8.9
    billion. Much of it will be reinvested back into our public
    lands, waters, and Native American and rural communities. For
    example, this year $2.4 billion went to the states and local
    governments that host energy development. Another $1.1 billion
    was dispersed to Native American tribes and tribal members that
    undertake resource extraction on Native American lands, and
    $1.7 billion in mineral royalties and hydropower revenue went
    to the Reclamation Fund which supports federal dam and
    irrigation systems that move and store precious water supplies
    across the West.
        We talk a lot in this Committee about the Land and Water
    Conservation Fund (LWCF) and all that it provides, and programs
    like the American Battlefield Protection Program, the Forest
    Legacy Program and the Cooperative Endangered Species
    Conservation Programs. But LWCF, I think those of us who know
    and understand the program, is really one of the biggest
    beneficiaries of offshore energy development. Since the 1990s
    nearly all revenue credited annually to LWCF has been from
    Outer Continental Shelf receipts. LWCF also receives additional
    mandatory appropriations under GOMESA. During FY 2018, the LWCF
    stateside program received $76 million from GOMESA leases.
    These substantial revenues only exist because we are the
    world's top producer of oil and gas. In recent years we have
    seen new ideas emerge for how to allocate the revenues that
    result from our production, whether to address the parks
    maintenance backlog or to help with the recovery of wildlife.
    But we have also seen proposals to cut off federal oil and gas
    production and some would suggest cut it off immediately
    without any consideration of the economic consequences which
    would prevent us from addressing those needs.
        So as we push for the development of new and cleaner
    technologies which, I think, we certainly encourage that here
    in this Committee, including our renewable energies, we also
    have to consider what it means for federal revenue
    disbursements. When we think about our solar assets, our wind
    assets, I think we recognize that when you look to what they
    have generated in terms of revenues, they are a mere fraction
    of the billions of dollars that are generated by oil and gas.
    So when we think about the benefits of LWCF and how LWCF has
    been structured, certainly historically, I think it is
    important to keep these considerations in mind.
        We will have an opportunity to review some of the proposals
    that Senator McSally has outlined in her legislation to create
    streamlined permitting for renewables while sharing revenues
    from renewable energy development with local governments.
        We have a lot to talk about here today. I am glad that we
    have witnesses today who are from both state and local
    governments that are the beneficiaries of federal revenue
    sharing programs and who can help explain what these revenues
    actually mean for them. I look forward to hearing how they
    would support or how they do support communities with the funds
    that they receive with the development in their backyard.
        I also want to particularly thank Mayor Brower. He has come
    a pretty long way, from the ``top of the world'' as we say in
    Utqiagvik, formerly known as Barrow, but we know it is a long
    haul and we appreciate the fact that you have made this journey
    to be with us today to share your comments.
        With that, I will turn to Senator Manchin, then we will
    have an opportunity to introduce, more fully, all of our
    witnesses today.

                  STATEMENT OF HON. JOE MANCHIN III,
                    U.S. SENATOR FROM WEST VIRGINIA

        Senator Manchin. Thank you, Chairman Murkowski. I
    appreciate it very much and all of you all attending and making
    an effort to be here. I have been where you come from, Mayor,
    and you have come a long way and we appreciate that effort you
    have made.
        Today we are discussing two revenue sharing bills which
    Senator Murkowski has mentioned: Senator Cassidy's bill, the
    COASTAL Act, and Senator McSally's bill, the Public Land
    Renewable Energy Development Act.
        My home State of West Virginia is a small state and we have
    more private land than federal land, so I am trying to
    understand, get up to speed, on all these issues and it is
    really quite fascinating. As a result, West Virginia receives
    very little of the revenue that we are going to be discussing
    today. In 2018, West Virginia received $93,000 for the whole
    year. So you can imagine.
        I will explain to you why I have a hard time understanding
    all this. However, we are similarly situated as some of my
    colleagues on the Committee who do receive the lion's share
    when it comes to federal revenue sharing and that we are rich
    in natural resources. Coal and, more recently, natural gas have
    provided funds to my state for a long time. Today these
    resources are still a key source of revenue for our state
    budget through the collection of severance taxes collected from
    coal and natural gas operations.
        The model for disbursement in West Virginia, and I was
    Governor for two terms so we did this in such a fair manner, we
    just treated all 55 counties the same as if they would have
    been the producing counties. A lot of them were not producing
    anything, but they are all part of our great state.
        We are part of this great country. We get very little of
    any of this, and this is owned by the people of the country. So
    I am very interested in this process now that I know more about
    it. It has been very enlightening.
        Each year the Department of the Interior's Office of
    Natural Resources Revenue, which is the ONRR, collects billions
    of dollars in rents, royalties and bonus bids from oil and gas
    leases on federal lands and waters. The geographic location of
    these leases determines the disbursement of the royalty after
    it is collected which makes no sense to me at all but that is
    the way they do it. So I don't know when that bill was written
    or that law and who got that in.
        In Fiscal Year 2019 the ONRR disbursed a total of $11.6
    billion of both offshore and onshore revenue, $11.6 billion. We
    got $93,000.
        There are significant differences between how revenues from
    leases on onshore and offshore lands are divided up, and I
    think it is important that we examine both of these contracts
    and constructs. The Chairman and I have had conversations
    regarding the importance of revenue sharing to coastal states,
    particularly because of the impact of the offshore energy
    production to a coastal state's infrastructure. I get it. It
    all makes sense.
        As we know, before the Gulf of Mexico Energy Security Act,
    or GOMESA as we know it, became law, 100 percent of the oil and
    gas revenues beyond the first three miles of federal waters
    went to the U.S. Treasury, reflecting the belief that these
    resources are federal resources and revenue raised from their
    extraction must benefit all taxpayers because it is federal,
    not state owned. GOMESA established the first revenue sharing
    program for waters managed by the Department of the Interior in
    the Outer Continental Shelf which will be referred to as the
    OCS. Today, four states receive 37.5 percent share of the
    revenue from the federal Gulf of Mexico or Outer Continental
    Shelf.
        Now 27 percent of the revenue is from the fourth through
    sixth nautical mile, which we call 8(g) Zone that was, I think,
    back in the '50s or '60s, I understand. But what they did, just
    common sense, they went to get 100 percent for three, give us
    three more. Well, we will take 27 percent because we got
    nothing before. One hundred percent of nothing is nothing, so
    they got 27. That is how that one was explained to me, how that
    one came about. So that total alone is $223 million of those
    four states in Fiscal Year 2019. This is in addition to the
    states already receiving 100 percent of the revenue from the
    first three nautical miles which are considered state waters or
    part of the state boundary.
        Under GOMESA, LWCF, which is Land and Water Conservation
    Fund, also receives 12.5 percent of the qualified federal Outer
    Continental Shelf revenue beyond the 8(g) Zone which, as I just
    said, is another 200 miles out.
        Onshore revenue sharing is governed by a different law. And
    while I know that this Committee has examined the difference
    between how onshore and offshore revenues were handled in the
    past, I think that issue is worthy of additional attention from
    this Committee. The primary distinction between the two is that
    onshore lands are contained entirely within a state's borders
    while leases offshore are not within a state border.
        Onshore and offshore energy development also have different
    histories with different leasing systems under the management
    of different bureaus within the Department. With that history
    in mind, changing the policy for how revenues are disbursed
    from federal lands and waters, whether it be onshore or
    offshore, requires a factual understanding of the complexities
    of the broader energy market and should not be done without
    careful analysis.
        It is also important that we make sure that these resources
    are being properly managed by the Federal Government in the
    first place. Over the last few years, both the Bureau of Land
    Management, BLM, and the Bureau of Ocean Energy Management
    (BOEM), have come up short in ensuring the taxpayers receive
    fair market value for the resources extracted from the public
    lands and waters those agencies are responsible for managing.
    In September the Government Accountability Office, or GAO,
    published a report discussing how the BOEM conservatively
    estimates the values of the lands it leases and even lowers the
    evaluation of these lands to justify when it awards the bids. I
    repeat, it justifies lowering the evaluation when it awards
    bids.
        I have also long been concerned about the unnecessary
    venting and flaring of natural gas on public lands which we do
    not do when it is an individual or it is a private company
    because that is a value. So we are venting on private lands.
    When gas is vented, you all know what I am talking about there,
    and flared for purely economic reasons, that gas never makes it
    to the market, the royalty is never collected and not one of us
    benefit at all and they give me the excuse that there are no
    pipelines because they don't have a gathering system. We can
    fix that. But we should not be venting this on one easy way to
    increase revenues to ensure that the most gas possible reaches
    the market and a royalty is collected that will require
    conversation about pipeline infrastructure which we will do.
    But these are important conversations because reducing venting
    and flaring on public lands is not only a taxpayer fairness
    issue to all of us, it is a positive step toward addressing
    climate change. It is a big win-win for all of us.
        We are a nation that has been blessed with vast natural
    resources that have helped make our nation the superpower it is
    today and hopefully will remain. While we enjoy these abundant
    federal resources, discussion of how the revenue should be
    shared is an extremely important one. I look forward to
    discussing these two different proposals.
        Thank you, Madam Chairman.
        The Chairman. Thank you, Senator, I appreciate that. It is
    clear that these are issues that are important, important to
    the regions, important to the country, but also understanding
    where one another comes from----
        Senator Manchin. Sure.
        The Chairman. ----is what will allow us to be able to
    really address the intricacies and the complexities.
        I am going to ask Senator Cassidy to speak briefly to his
    bill. Senator Barrasso has indicated that he would like to make
    the introductions for Mr. Luthi this morning which we are happy
    to have him do.
        I would like to acknowledge the presence of our friend to
    the Committee here, Senator Mary Landrieu, from Louisiana.
    Senator Landrieu occupied the position of both Ranking Member
    and Chairman of this Committee and certainly made this issue a
    priority of hers and her state and Senator Cassidy has stepped
    right into that.
        Senator Cassidy, if you would like to speak to your bill
    that you have introduced and that I have co-sponsored, the
    COASTAL Act, and then we will allow for introduction of our
    guests.

                    STATEMENT OF HON. BILL CASSIDY,
                      U.S. SENATOR FROM LOUISIANA

        Senator Cassidy. Thank you, Madam Chair.
        First let me say I enjoyed Senator Manchin's comments but
    there are some things that are a little misleading, and not
    that you intended to.
        Senator Manchin. Not at all.
        Senator Cassidy. But I think it needs to be clarified.
        Senator Manchin. I appreciate that. I thought it was very
    factual, but I appreciate the----
        Senator Cassidy. It was, it was, absolutely, but Louisiana
    and the four Gulf Coast states do not get 37.5 percent of
    everything produced out there. There is a cap of $500 million--
    --
        Senator Manchin. I understand that. And have you all hit
    that cap yet?
        Senator Cassidy. ----and it is also production after a
    certain date--after a certain point in time. So it is not the
    entire----
        Senator Manchin. Sure.
        Senator Cassidy. ----and I will show a graph.
        We are always a little puzzled that federal waters are
    federal land but federal land within a state boundary is not
    federal land for the purposes of how we do this.
        Senator Manchin. I understand.
        Senator Cassidy. That always seems, hmm, a distinction
    without a difference.
        Senator Manchin. Within the boundaries?
        Senator Cassidy. Yes.
        So that said--to continue with my formal remarks.
        Thank you, Madam Chair, for calling this hearing.
        Protecting revenues that go to Louisiana and other Gulf
    Coast states increasing the share we receive for coastal
    restoration, hurricane and flood protection is one of my top
    priorities on this Committee. In our state by our state
    constitution we use that money to rebuild our coastline, a
    coastline which has eroded in large measure because the
    Mississippi River was levied for the benefit of inland ports.
    And when you have a levying of a river which distributes
    sediment and therefore helps to build and rebuild for the
    benefit of the tributaries of the Mississippi River, there
    seems to be some equity involved in terms of helping our state
    rebuild. It also is common sense because if we get whacked by a
    hurricane the Federal Government ends up spending a lot of
    money to rebuild that which was whacked.
        I have introduced legislation with others on this
    Committee, the Conservation of America's Shoreline Terrain and
    Aquatic Life, or the COASTAL Act, which is part of today's
    hearing, to create a more equal revenue sharing treatment for
    states producing offshore energy revenue, a kind of equivalent,
    if you will, to those that produce onshore. Now for context,
    the Gulf accounts for approximately 16 percent of the nation's
    crude oil supply and 3 percent of the nation's natural gas.
    Recently, the EIA reported energy production in the Gulf set a
    record of 1.8 million barrels per day with forecast that
    production will continue increasing as other offshore
    facilities come online and technology evolution allows existing
    sites to become more efficient and productive.
        In 2018, Interior dispersed almost $9 billion to the
    federal Treasury, state and local governments, tribes and the
    Bureau of Reclamation from onshore and offshore energy
    production and funds such as the Land and Water Conservation
    Fund, a historic preservation fund, also receive funding. But
    let's just, kind of, break this down.
        [Showing Disbursements of Federal Energy Leasing Revenue,
    2018 chart.]
    [GRAPHIC] [TIFF OMITTED] T9871.001

        Senator Cassidy. So here we see--above here is the federal
    offshore, below is the federal onshore. We can see that
    offshore that the federal--the U.S. Treasury has received about
    $3.1 billion over this timeframe. This is GOMESA there--quite a
    small fraction of the total amount of money disbursed. Here is
    the Land and Water Conservation Fund as authorized and the
    Historic Preservation Fund as authorized and other offshore
    disbursements.
        But here is the onshore. The Treasury gets $0.41 billion
    but state and local governments get almost $1.6 billion with
    Reclamation funds getting 1.2 and then other onshore
    disbursements.
        It should also be noted that in the Land and Water
    Conservation Fund a significant amount of this goes to states
    with onshore federal lands so they are not only receiving
    roughly 50 percent share of the revenue from onshore, but they
    are also receiving dollars from the Land and Water Conservation
    Fund. And so, if you will, this is, you are getting it here and
    you are getting it there and sometimes there is righteous
    indignation when you say that is not fair.
        I would argue that if we are going to have this, we should
    have this as roughly equivalent. I am not saying take from
    here, but I am saying allow the coastal states to use their
    dollars to rebuild the coastline which in large measure has
    been lost in pursuit of policies which benefit inland states.
        I will also say in yesterday's testimony it mentioned in
    New Mexico that these funds can be used for school programs and
    roads and other capital expenses. In our state, it is
    substantially dedicated to coastal restoration. Again, more
    limitations.
        So just to repeat. States and local governments receive
    roughly 50 percent of the federal revenues derived from onshore
    oil and gas and the federal land in that state. And then, Gulf
    Coast states share 37.5 percent from offshore energy
    production.
        The COASTAL Act seeks to address obvious inequity, removing
    an existing cap on the amount of dollars shared among the four
    Gulf States and the Land and Water Conservation Fund raising
    the percent of offshore revenue that can be shared by the Gulf
    States in eligible areas from 37.5 to 50 percent. It protects
    offshore dollars from sequestration and makes leases entered
    into between 2000 and 2006 eligible for revenue sharing in the
    future. Currently, again, only revenues after 2006 are
    considered eligible. It creates a separate revenue sharing for
    the state with the largest amount of coastline which is Alaska.
        My state is dealing with a land loss crisis, threatening
    ecosystems and communities, economies and way of life. Again,
    as I mentioned, in Louisiana's constitution the funds we
    receive from revenue sharing go to protecting and rebuilding
    our coastline.
        I believe Chairman Kline will speak specifically to this
    but all my Gulf colleagues and I are looking for is equity and
    the ability to strengthen environmental protection efforts. The
    states are producing the revenues. The states know how to
    allocate the dollars in ways that will benefit our states and
    also our nation.
        Thank you for holding the hearing. I look forward to
    hearing from our witnesses.
        The Chairman. Thank you, Senator.
        I will go ahead and turn to my colleague, Senator Barrasso,
    for his introduction of Randall Luthi and then I will introduce
    the rest of the panel.
        Senator Barrasso.

                   STATEMENT OF HON. JOHN BARRASSO,
                       U.S. SENATOR FROM WYOMING

        Senator Barrasso. Well, thank you very much, Madam
    Chairman. Thank you for holding this important hearing.
        It is really a pleasure to introduce my friend and
    colleague, Randall Luthi. And I will tell you, Madam Chairman,
    that when I say, colleague, he and I spent time together in the
    Wyoming legislature. I was a Member, and he was the Speaker of
    the House. So he was, really, a good friend and now he is the
    Energy Advisor to Wyoming Governor Mark Gordon.
        An attorney, a rancher, former Speaker, he has fought and
    brought considerable insight and experience to the Governor's
    office. Prior to joining the Governor's office, Randall was
    President of the National Offshore Ocean Industries
    Association. He served in the Department of the Interior as the
    Director of the Minerals Management Service and as Deputy
    Director of the Department's Fish and Wildlife Service.
        So I had the pleasure of serving with him in the
    legislature for many years. I am proud to continue to work with
    him and so grateful for his friendship and working together
    with him on behalf of the people of Wyoming.
        Welcome, Randall, and we all look forward to your
    testimony.
        Mr. Luthi. Thank you, Senator.
        The Chairman. Thank you, Senator. Certainly, Mr. Luthi, you
    have been no stranger to this Committee. We have seen you in
    your various capacities before, so welcome back.
        We are also joined this morning by Mr. Gregory J. Gould,
    who is the Director of the Office of Natural Resources and
    Revenue at the U.S. Department of the Interior. We appreciate
    what you do at Interior.
        I mentioned my friend and a leader from the North Slope
    Borough, Mayor Harry Brower. He has been a leader in so many
    different areas, not only as Mayor of our North Slope Borough
    but a significant whaling captain in his own right and truly a
    significant voice in our northern part of the state.
        Ms. Laura Comay is the Specialist in Natural Resources
    Policy and Natural Resources in Earth Sciences Section at CRS,
    the Congressional Research Service. We appreciate you being
    here and providing a little bit of historical perspective here.
        Mr. Kline has been mentioned. Kyle ``Chip'' Kline, Jr. is
    the Director of Coastal Activities for Governor John Bel
    Edwards from Louisiana and is the Chairman of the Louisiana
    Coastal Protection and Restoration Authority Board. We welcome
    you and your input this morning.
        And of course, Mr. Luthi, welcome.
        With that, we will commence with your opening statements.
    We would ask that you try to limit your comments to about five
    minutes. Your full statements will be included as part of the
    record and then we will have an opportunity to share in a
    little bit of back and forth here this morning.
        Mr. Gould, if you would like to start off, please.

       STATEMENT OF GREGORY J. GOULD, DIRECTOR FOR THE OFFICE OF
       NATURAL RESOURCES REVENUE, U.S. DEPARTMENT OF THE INTERIOR

        Mr. Gould. Chairman Murkowski, Ranking Member Manchin and
    members of the Committee, I'm honored to be here today to
    discuss S. 2418, the COASTAL Act of 2019. I would also like to
    submit this written testimony from BLM on Section 2666 since I
    plan to focus my work today on COASTAL Act.
        The Chairman. We will include that as part of the record.
    Thank you.
        Mr. Gould. Thank you.
        [BLM testimony on S. 2666 follows.]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Gould. The COASTAL Act would change the current revenue
    sharing laws and provide additional revenue from energy
    production from the Outer Continental Shelf to coastal states.
    The Department of the Interior and the Administration are
    committed to ensuring that American taxpayers receive a fair
    return from the sale of these public resources.
        The Department manages the public lands and federal waters
    that provide resources critical to the nation's energy
    security. The Office of Natural Resources Revenue, or ONRR, is
    responsible for the management of revenues associated with
    federal onshore, offshore and American Indian leases.
        The lands and resources managed by the Department are vast.
    Onshore the 34 states where federal leases are located, over
    25.5 million acres are currently under lease. Offshore, the
    Department has made almost 80 million acres available for
    development in each of the past five offshore lease sales. In
    the Gulf of Mexico there are over 13 million acres under active
    lease, and in Alaska there are an additional 275,000 acres
    under lease. These onshore and offshore lands are a huge
    economic engine. In Fiscal Year 2018, one quarter of domestic
    oil production, approximately 15 percent of natural gas
    production and close to half of U.S. coal production occurred
    on Interior-managed lands and waters.
        In Fiscal Year 2016, ONRR disbursed $6 billion. In Fiscal
    Year 2018, that number grew to $9 billion, and in Fiscal Year
    2019, disbursements exceeded $11.6 billion, almost double the
    amount in Fiscal Year 2016.
        The Fiscal Year 2019 disbursements included $5.2 billion to
    the U.S. Treasury, $1.7 billion to the Reclamation Fund, $1.1
    billion to American Indian tribes and individuals, $1 billion
    to the Land and Water Conservation Fund, $150 million to the
    Historic Preservation Fund and $2.4 billion to state and local
    governments. Of the $2.4 billion disbursed to state and local
    governments this year, $2.2 billion was disbursed to states
    with onshore leases on federal lands and the remaining $225
    million was disbursed to states with leases on or adjacent to
    the Outer Continental Shelf.
        Production of oil on federal lands and waters has also
    increased in the same time period. In Fiscal Year 2016, oil
    production totaled 749 million barrels. In Fiscal Year 2017,
    that number grew to 803 million barrels, and in Fiscal Year
    2018, it exceeded 831 billion barrels--million barrels, excuse
    me--an increase of 11 percent from Fiscal Year 2016.
        The U.S. Constitution gives Congress the power to enact
    laws governing the property belonging to the United States. Our
    federal resources are managed on behalf of the American people
    who all share in their ownership. There is a long history of
    Congress making and changing laws pertaining to these federal
    resources on behalf of the states, tribes, local governments
    and U.S. taxpayers. The Administration's policy is to promote
    clean and safe development of our nation's vast energy
    resources and it is ONRR's mission to collect, account for and
    verify natural resource revenues due to the states, American
    Indians and the U.S. Treasury.
        Chair Murkowski, Ranking Member Manchin and members of the
    Committee, I thank you for inviting me here today and I'm happy
    to answer any questions the Committee may have on the COASTAL
    Act of 2019.
        Thank you.
        [The prepared statement of Mr. Gould follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        The Chairman. Thank you, Mr. Gould.
        Mayor Brower, welcome and we appreciate your comments this
    morning.

              STATEMENT OF HON. HARRY BROWER, JR., MAYOR,
                      NORTH SLOPE BOROUGH, ALASKA

        Mr. Brower. Thank you.
        Senator Murkowski, Senator Manchin and members of the
    Committee, thank you very much for giving me the opportunity to
    speak to you this morning, inviting me to speak about
    legislation that would establish offshore oil and gas revenue
    sharing for Alaska and our coastal communities.
        My name is Harry Brower, Jr. I live in Utqiagvik, Alaska,
    and I serve as the Mayor of the North Slope Borough, the
    largest municipality in the United States in size. North Slope
    Borough stretches more than 600 miles from east to west. It's
    home to eight Inupiat villages, the Prudhoe Bay oil field, the
    National Petroleum Reserve, and the Arctic National Wildlife
    Refuge.
        It is appropriate that I have an opportunity to talk to you
    today about revenue sharing for coastal communities. In Alaska,
    November 7 is Eben Hopson Day. Eben Hopson was a leader among
    the Inupiat people of Alaska in the 1960s, at a time when the
    Inupiat people were joined with Alaska Natives from around the
    state to fight for our native land claims.
        Over the past 150 years, the North Slope of Alaska, land
    inhabited by Inupiat people for thousands of years, has been
    sold and divided to serve many interests. The United States
    bought Alaska from Russia in 1867. In 1923, the United States
    set aside 23 million acres of the North Slope--an area the size
    of Maine--as Naval Petroleum Reserve No. 4. Today, that area is
    called the National Petroleum Reserve-Alaska, or NPR-A, and it
    is home to four of our villages.
        In 1960, the Department of the Interior set aside the
    Arctic National Wildlife Range which, in 1980, became the
    Arctic National Wildlife Refuge, or ANWR. ANWR covers an area
    the size of South Carolina, and it was set aside for
    conservation without the consent of the Kaktovikmiut--the
    Native people who are from that place.
        Alaska became a state in 1959, and the Federal Government
    granted the new state an entitlement to 102 million acres of
    land. In 1968, oil was discovered in Prudhoe Bay and the state
    selected the land around Prudhoe Bay over objections of Native
    people who had inhabited the place.
        In 1971, Congress passed the Alaska Native Claims
    Settlement Act which allows Alaska Natives to take title to
    millions of acres of land around the state. However, on the
    North Slope, the state had already selected the area around
    Prudhoe Bay. The Federal Government had already set aside the
    NPR-A and Arctic National Wildlife Refuge. These areas were not
    made available for selection by Native people.
        Because the federal and state governments had already
    claimed the oil and gas resources on the North Slope, the late
    Eben Hopson worked with our Inupiat leaders to create the
    borough, a home-rule municipality, that would give our people
    the ability to tax onshore oil and gas infrastructure and
    thereby benefit from the resources being developed in our
    backyard. Our ability as local government to derive some
    benefits from oil and gas development has, for almost 50 years,
    supported health clinics, schools, water and sewer
    infrastructure in our villages, a tribal college and police and
    emergency services, services that most Americans take for
    granted.
        In a speech he gave in 1976, Eben Hopson talked about a
    discovery by the Federal Government of natural gas near
    Utqiagvik, which was formerly called Barrow. The Federal
    Government had created the National Petroleum Reserve in 1923
    and, within the Reserve, the Navy established a small research
    facility near Point Barrow. Exploratory drilling led to a
    discovery of the natural gas in 1949 and a gas field was
    developed near the community. Natural gas was used to heat
    federal buildings like the hospital, the BIA School and the
    Navy buildings. The government did not allow the community of
    Barrow to use the gas to heat their homes. In his speech, Eben
    spoke about the long, frustrating 12-year struggle to get
    permission to hook up our homes in Barrow to natural gas mains
    that crisscross Barrow through our backyards. Although it
    sounds incredible today, the government refused to let the
    residents of Barrow use the natural gas that comes from our own
    backyard to heat our homes. It took an Act of Congress in 1963
    to allow the Native people of Barrow to buy their own natural
    gas back from the Federal Government.
        The Arctic Ocean is a place where we have hunted for whales
    and walrus, seals, for thousands of years. If, someday, oil and
    gas resources are developed in the Arctic Ocean, those offshore
    resources, just like onshore oil and gas resources, will come
    out from our backyard. The development of that resource is
    going to have an impact on our communities. It is only fair
    that some of the revenue from the development should be
    reinvested in long-term survival of our communities.
        Congress has already authorized revenue sharing in other
    federal laws. The Mineral Leasing Act authorized revenue
    sharing from onshore mineral development. The Gulf of Mexico
    Energy Security Act authorizes revenue sharing from offshore
    oil and gas development in the Gulf.
        Whatever each of you, as individual Members of Congress,
    may think about oil and gas development, it would be
    unconscionable to oppose legislation that extends offshore oil
    and gas revenue sharing to Alaska to provide a fair share of
    resource revenue to communities that are impacted.
        I would like to thank Senator Murkowski for her leadership
    on this issue. I urge members of the Committee to act on this
    legislation.
        Quyanaqpak for an opportunity to speak to you today.
        Thank you.
        [The prepared statement of Mr. Brower follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        The Chairman. Quyanaqpak, Mayor.
        Ms. Comay, welcome.

     STATEMENT OF LAURA B. COMAY, SPECIALIST IN NATURAL RESOURCES
                 POLICY, CONGRESSIONAL RESEARCH SERVICE

        Ms. Comay. Thank you. Chairman Murkowski, Ranking Member
    Manchin and members of the Committee, good morning.
        My name is Laura Comay, and I'm a Specialist in Natural
    Resources Policy at the Congressional Research Service. As
    requested by the Committee, my testimony will focus on the
    revenue sharing provisions of the two bills under discussion.
    CRS takes no position on these bills or on other policy
    matters. My testimony draws on my own area of specialization
    which is federal management of offshore energy and on the input
    of other CRS colleagues who cover onshore energy and broader
    energy policy issues. I will discuss each bill in turn.
        S. 2418 would make changes to offshore oil and gas revenue
    sharing in the Gulf of Mexico and Alaska. Title I would amend
    the Gulf of Mexico Energy Security Act which governs offshore
    revenue sharing with four Gulf producing states--Alabama,
    Louisiana, Mississippi and Texas--and with the state grant
    program of the Land and Water Conservation Fund. The bill would
    provide for a higher portion of the revenues to be shared with
    the states.
        It would do this first by expanding the set of leases
    eligible for revenue sharing. GOMESA currently applies only to
    leases entered into since the law's enactment in December 2006.
    This includes approximately 60 percent of active leases in the
    Gulf but many of these newer leases are not producing. The bill
    would broaden the qualified leases to include those entered
    into since October 2000.
        Second, the bill would increase the percentage of qualified
    revenues shared with the states. Currently, states get 37.5
    percent of the revenues while 12.5 percent are shared with the
    LWCF program and the remaining 50 percent are deposited in the
    General Fund of the Treasury. S. 2418 would change those
    percentages so that 50 percent of the revenues would be shared
    with the states and 37.5 percent would go to the Treasury. The
    12.5 percent for the LWCF would remain the same.
        Also currently, the revenue sharing in most of the Gulf is
    capped at $500 million annually for most years through Fiscal
    Year 2055. The bill would eliminate this cap. It also would
    exempt the state share from budget sequestration. Collectively,
    these changes would have the effect of increasing the portion
    of Gulf revenue shared with the states while decreasing the
    share going to the U.S. Treasury.
        Title II of S. 2418 would establish an offshore revenue
    sharing program in the Alaska region similar in many ways to
    GOMESA's program for the Gulf, though with some differences.
    Whereas current law provides for all Alaska revenues to go to
    the U.S. Treasury, except for projects near state waters, the
    bill would direct that these revenues be split at 50 percent to
    the Treasury and 50 percent to the state and its coastal
    political subdivisions. The state share could be used for
    purposes similar to those in GOMESA such as coastal restoration
    and infrastructure projects to mitigate impacts of offshore
    development and also for some purposes not covered in GOMESA.
        The changes could have relatively limited fiscal impacts in
    the near-term because Alaska has many fewer leases than the
    Gulf and generates much less revenue. Future offshore revenues
    in the region are uncertain and would depend on many factors.
        The second bill, S. 2666, would make changes in Section 9
    related to onshore revenue sharing from solar and wind energy
    siting on public lands. As agreed with the Committee, CRS
    testimony focuses on this revenue sharing provision and does
    not cover other aspects of the bill. The bill would require
    that the Bureau of Land Management and the Forest Service
    disburse 25 percent of solar and wind revenues to states, 25
    percent to counties and the remainder to two programs
    established in the bill to facilitate permitting and promote
    conservation and recreational access.
        BLM and the Forest Service administer wind and solar
    projects through rights-of-way under the Federal Land Policy
    and Management Act. Almost all the current projects are on BLM
    lands. The revenues from solar and wind siting include rents
    and fees.
        Currently other than fees retained by both agencies for
    cost recovery, BLM rents and fees are deposited to the U.S.
    Treasury. Forest Service rents and fees are subject to the
    agency's general revenue sharing requirements whereby 25
    percent of average gross revenue over seven years is shared
    with counties. The remainder of Forest Service revenues go to
    the Treasury. Under S. 2666, no revenue would go to the general
    Treasury as the state sharing and the new programs, the two new
    programs, would account for 100 percent of the funding.
        This concludes my remarks. Thank you and I look forward to
    responding to any questions.
        [The prepared statement of Ms. Comay follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        The Chairman. Thank you, Ms. Comay.
        Mr. Kline, welcome to the Committee.

     STATEMENT OF KYLE R. ``CHIP'' KLINE, JR., EXECUTIVE ASSISTANT
       TO THE GOVERNOR OF LOUISIANA FOR COASTAL ACTIVITIES, AND
    CHAIRMAN OF THE BOARD FOR THE LOUISIANA COASTAL PROTECTION AND
                         RESTORATION AUTHORITY

        Mr. Kline. Well, thank you, Madam Chair and Ranking Member
    Manchin for allowing me to testify on the issue of revenue
    sharing and on the merits of the COASTAL Act. Particularly I
    would like to thank you, Madam Chair, and Senator Bill Cassidy,
    for sponsoring this important legislation.
        Federal lands located within inland states and federal
    waters on the Outer Continental Shelf produce energy that yield
    resources that are used for the benefit of all Americans.
    However, the Federal Government relies on the states for these
    activities to be successful. The passage of the Mineral Lands
    Leasing Act in 1920 determined that the Federal Government
    needed to share revenues derived from oil and gas production
    with the states if the states were going to be successful in
    providing these services.
        Under this legislation, inland producing states share 50
    percent of revenues generated from all leases on federal land
    and their allowable uses have expanded to include any
    governmental activity of the state. This generous revenue
    sharing has become extremely important to the states. In fact,
    according to a Department of the Interior press release issued
    just last week, in Fiscal Year 2019 the Federal Government
    returned $1.1 billion to the State of New Mexico from oil and
    gas production on federal lands there. To be clear, we support
    this revenue sharing for inland producing states.
        However, in the mid-19, excuse me, in the mid-20th century
    when federal mineral production moved offshore, no similar
    revenue share was provided to the coastal states. It was not
    until the passage of GOMESA in 2006 did the Federal Government
    provide any amount of revenue sharing for coastal states.
    Despite this arrangement, the four Gulf states have provided
    the same governmental services that support this activity as
    the onshore states. Coastal states also provide and support the
    vast and extensive infrastructure needed to transport this
    energy across the nation including highways, ports and pipeline
    corridors. All of these activities have helped generate
    hundreds of billions of dollars into the federal Treasury.
        Madam Chair, I would like to draw your attention to the map
    just behind me here that shows the thousands of miles of
    pipelines that cut across our coastline and through our coastal
    wetlands.
        [Showing Pipeline Density Comparison Map]
        [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

        Mr. Kline. These pipelines are essential if federal
    offshore oil and gas is to get to the people, communities and
    industries of America that rely on this energy. Louisiana is
    proud of our working coast and our contribution to the nation's
    energy needs; however, this important energy production for our
    nation comes at a cost to our state. The construction and
    maintenance of these pipelines has contributed to the loss of
    coastal wetlands and that land loss, in turn, places that
    pipeline infrastructure at greater exposure to environmental
    conditions and storm surge.
        Today, GOMESA applies to just five percent of the total
    production in the Gulf of Mexico. It provides for revenue
    sharing only on leases since 2006. Half of that revenue
    produced from those leases remains with the federal Treasury
    and the remaining 50 percent is further subdivided by the Land
    and Water Conservation Fund, the four Gulf producing states and
    their 42 political subdivisions. And these revenues, as Senator
    Cassidy mentioned, are capped at $375 million. The COASTAL Act
    addresses this disparity by applying revenue sharing to a
    larger portion of the federal OCS production in the Gulf. It
    increases the portion of the revenue that is shared with the
    Gulf States to 50 percent rather than the current 37.5 percent.
        These changes would achieve for the GOMESA states of
    Louisiana, Mississippi, Alabama, Texas and for the State of
    Alaska uniformity in revenue sharing with those states that are
    governed by the Mineral Lands Leasing Act. In Louisiana, as
    mandated both by federal law and more importantly by our state
    constitution, we have committed all GOMESA funds to the
    protection and restoration of our coast and to the
    implementation of our state's Coastal Master Plan. Louisiana's
    Coastal Master Plan is our framework for making difficult
    decisions. It is a tool based on the best available science and
    used to confront the analytical challenges of a complex coastal
    environment. It takes into account uncertain future
    environmental conditions, multiple project types and diverse
    community needs. It is our guidebook for implementing
    meaningful restoration and protection projects.
        The bottom line, Madam Chair, is that we are being
    responsible with the dollars that are returned to us from oil
    and gas production. We are reinvesting these dollars back into
    our coast and building projects that protect our homes, our
    communities, our businesses, our environment, our way of life
    and the very infrastructure that continues to help fuel this
    nation.
        Thank you very much.
        [The prepared statement of Mr. Kline follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        The Chairman. Thank you, Mr. Kline.
        Mr. Luthi, welcome.

      STATEMENT OF RANDALL LUTHI, CHIEF ENERGY ADVISOR, OFFICE OF
                     GOVERNOR MARK GORDON (WYOMING)

        Mr. Luthi. Thank you very much and I appreciate the kind
    introduction of Senator Barrasso but it did make me realize
    that when I probably first started my dealings with your
    Committee, I was much taller and my hair was much browner but
    it's always good to be here.
        Good morning, Madam Chairman Murkowski, Ranking Member
    Manchin and members of the Committee. I'm Randall Luthi, Chief
    Energy Advisor for Governor Gordon. On behalf of the Governor,
    thank you for the opportunity for me to meet with you and
    discuss with you some of my favorite things which are Wyoming,
    energy and revenue sharing. Governor Gordon sends his best
    regards and he is appreciative of the Committee's efforts to
    work with the states.
        Wyoming is an energy producing state. Wyoming ranks third
    in total energy production. It ranks eighth in both oil and
    natural gas production. The oil and gas industry is the single
    largest economic driver in the state with the contribution of
    more than $5 billion to the annual GDP and supplies over 46,000
    jobs. Wyoming is the number one producer of coal supplying
    approximately 40 percent of the nation's coal supply, employs
    over 5,000 people and provides 11 percent of the nation's
    electricity.
        Now, while this isn't a topic of today's hearing, coal
    should remain an important part of that energy mix and we can
    do that through CO2 reducing technologies such as
    carbon capture. On the non-traditional side, Wyoming has
    several wind farms and a commercial scale solar installation.
    Plans are underway to build one of the largest wind farms in
    the world in Southern Wyoming. In total, Wyoming exports 300
    trillion BTUs of energy every year.
        Now the preferred energy fuel source for electricity is
    changing. And while I am concerned that the ``Black Friday''
    like stampede toward non-traditional sources will likely
    actually result in Black-Out Fridays, the future is clear.
    There's going to be more solar and wind. Recently, a large
    utility company revealed its resource plan which included early
    and untimely closure of Wyoming coal-fired plants. The
    replacement power will be 1,800 megawatts of solar and about
    2,000 megawatts of wind, most of which will be built in
    Wyoming.
        Governor Gordon believes that a broad array of energy
    resources is the best guarantee for a consistent, reliable and
    affordable electricity delivery system. We plan to continue our
    legacy as an energy leader and enjoy a good neighbor
    relationship with the Federal Government. The Public Land
    Renewable Energy Development Act is a good base upon which to
    maintain and enhance that good neighbor relationship.
        Thank you, Senator McSally, thank you, Senator Heinrich,
    for introducing the bill. We do have a few minor suggestions.
        We suggest that the language be clarified that when the
    Secretary determines the most appropriate areas that that come
    only after good faith consultation with the states. Said
    consultation should be more than just a check of the box
    function and, of course, preferably through the Office of the
    Governor. Grandfathering projects that are not completed but
    have based their business model on current fees and taxes is
    also very important. We appreciate the bill's efforts to do so.
        While solar and wind projects are considered renewable, the
    habitat impacts are not remote, they're a real cost to state
    and local governments. Per megawatt their footprint is far
    larger than coal, gas or nuclear power plants. Solar
    installations result in a single use of large swaths of land.
    Governor Gordon recognizes that roughnecks, engineers, hunters,
    four-wheel enthusiasts and true environmentalists are often the
    same person or at least in the same family. Multiple uses of
    public land has great support in Wyoming.
        At the end of their life decommissioning of renewable
    energy projects often result in non-useable blades being taken
    to landfills, long periods of attempted regrowth, and disposal
    issues for batteries. Over the life of the projects the job and
    tax revenue connected with these projects do not compare with
    the number of jobs and tax available through traditional
    sources of energy. Thus, the revenue sharing portions of the
    bill is very key.
        Wyoming is not new to revenue sharing. The current revenue
    sharing is 48 percent which I very subtly point out should be
    50 percent--subtle, let me underline subtle there--and it was
    actually introduced by former Senator Cliff Hansen. New Mexico
    and Wyoming are usually the largest recipients. New Mexico
    received $1 billion recently and Wyoming over $640 million.
    Something is a little wrong with that picture, but we can talk
    about that another time.
        The Committee should consider a revenue sharing formula
    identical to the current oil and gas formula or could do so.
    The earmarking at 35 percent of the fund to account for habitat
    promotion for hunting and fishing is great, and we suggest the
    best distribution mechanism would be directly to local and
    state organizations. If a new federal program is established,
    it's very likely those funds will not only miss the bullseye,
    but the entire target of what works.
        As an example, the Wyoming Wildlife Trust Fund has been in
    existence for 15 years. It does projects like underpasses and
    overpasses over highways so wildlife is able to avoid traffic
    all together. It also provides revenue sharing with other
    programs in cooperation with Wyoming landowners and other
    landowners. Existing programs such as Partners for Fish and
    Wildlife also have a good record of working with the states and
    they are usually underfunded. They should be considered in the
    distribution scheme. In addition, any development or land
    disturbance has unintended consequences and generally that
    refers to the introduction of invasive species. So it's
    important to allow maximum flexibility, whatever the
    distribution plan, to allow funds to the local solutions such
    as control of invasive species.
        In summary, Governor Gordon generally is supportive of the
    proposed legislation and looks forward to working with all of
    you as it goes forward.
        Thank you very much.
        [The prepared statement of Mr. Luthi follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        The Chairman. Thank you, Mr. Luthi. Thank you all for your
    comments this morning and your input to this very important
    conversation.
        Mayor Brower, I so appreciate you giving the detail of the
    history that we have seen in Alaska and, most particularly, up
    in our North Slope with the federal ownership of lands and how
    those lands, whether it was within NPR-A or over on the Eastern
    side in the wildlife refuge area where, effectively, the
    Federal Government came in without much discussion to those
    that have lived there for generations, for thousands of years,
    and determined that these federal lands would be available for
    the Federal Government with no sharing with the people within
    the regions.
        As you have pointed out, this measure that we have in front
    of us today is, in part, to help address that lack of parity,
    that lack of sharing and to recognize some of the challenges
    that a borough like the North Slope Borough faces. You have
    shared with us by way of comparison the size that you are
    dealing with--eight villages across an area of 600 miles. The
    National Petroleum Reserve, the size of the State of Maine, the
    1002 area within ANWR, or excuse me, the ANWR area the size of
    the State of California.
        When you think about how services are provided, each one of
    those eight communities is an isolated community. There is no
    road, as we all know, connecting the eight, so that you have
    any level of efficiencies. Everything from search and rescue to
    the power generation within the communities, the transportation
    facilities, small airstrips, everything has to be unique and
    really self-contained. These are truly islanded communities and
    as such, being in the part of the state, the part of the
    country that they are, very, very expensive.
        You have outlined very briefly some of the benefits that
    revenue sharing can help provide, everything from the operation
    of clinics to schools to water and sewer to police and public
    safety to a tribal college to emergency services. Can you share
    some of the threats that you are seeing from an infrastructure
    perspective across the Borough due to the coastal and erosion
    issues that you effectively have to respond to because they are
    threatening the people within the communities? And share with
    us how the Borough deals with the cost of providing for these
    infrastructure upgrades or whatever may be needed to help
    facilitate these communities to remain safe in their homes.
        Mr. Brower. Thank you, Chairman Murkowski. I think these
    are very important subjects to cover as you have identified in
    the oral comments and in the written comments provided. The
    areas I could immediately start communicating on is the coastal
    erosion that's really prevalent in our coastal communities--
    Point Hope, Wainwright, Barrow, Kaktovik.
        We're losing land to the ocean because of the continuous
    wave action, coastal erosion, the less ice presence is causing
    more coastal erosion in an accelerated pace. The funds that the
    Borough provides for these measures to try to protect the
    communities is very costly, in the millions, millions of
    dollars that we provide to these communities to build up a
    small sea wall for the time that it's being impacted from the
    small storms. We have a sea wall that we built out of these
    super sacks, that's what we identify them as, as we learned
    them in the use by the industry to build their islands and
    filling them with gravel to retain that gravel and minimizing
    the effect of coastal erosion to several of our villages.
        So these are things that--and extracting gravel to fill
    those sacks is very costly, and placing these sacks in the
    areas of importance. We've had a military base up in Utqiagvik,
    the Naval Arctic Research Lab was provided, had a station there
    and based out, several miles out of the community. It even had
    a large landfill that it had developed to put its waste into
    this landfill over time, debris of all sorts and hazardous
    waste, in a sense, that were placed in this landfill. Now that
    landfill is near encroachment of the coastal erosion,
    constantly, constantly getting closer. Madam Chair, I was in
    your office several years ago about the observations that we
    were dealing with in terms of that. If that ever gets exposed
    and breaches that site, there's contamination to the Arctic
    Ocean and significant issues will arise from that breach of
    that landfill site. And it's a military site. It's very
    important to continue that conversation, but we do not quite
    have the resources to identify, to help minimize that coastal
    erosion impact that's all along down our North Slope coastline.
        We hope----
        The Chairman. Well, Mayor, my time is expired. But what you
    are speaking to is a very, very present threat. This is not
    something that could be expected decades from now.
        Mr. Brower. Yeah.
        The Chairman. But the impact to the waste site, what we
    have seen with the threat to the water and sewer
    infrastructure----
        Mr. Brower. Yes.
        The Chairman. ----there in Utqiagvik.
        My Ranking Member here, Senator Manchin, was with me in
    Utqiagvik and knows that that airstrip is not the original
    strip. This is a new runway that has had to be built because of
    the coastal erosion there.
        I will come back for a second round and we will have
    further discussion on this, but these are very important to put
    on the record.
        Senator Manchin.
        Senator Manchin. Thank you, Madam Chairman. Thank you, all,
    again.
        This question would probably be to Mr. Gould and maybe Ms.
    Comay could speak on this and then I will have other questions
    too.
        Both the Mineral Leasing Act and the Outer Continental
    Shelf Lands Act were put in place to establish leasing systems
    for resource extraction on our federally-managed public lands.
    Both bills establish royalties and other requirements to ensure
    our public lands are not a total free-for-all, and these
    resources can be made available at times of national need. I
    understand all of that.
        My question would be, with that in mind, if you all could
    speak to what the reasoning was for giving the states a 50
    percent share in the Mineral Leasing Act compared to the 37.5
    percent for GOMESA? As a public policy you might be able to
    tell me a little more about that.
        Mr. Gould. I was not privy to those discussions, obviously,
    and what we do at ONRR is we ensure that whatever that law
    says, we will collect and disburse appropriately according to
    those laws. The underlying reasoning for why those laws were
    passed or how that came about, that's not something that we are
    involved in or were involved in, so----
        Senator Manchin. Do you have any comment on the fairness of
    that or the inequality or equality of that?
        Mr. Gould. I don't have any comment on that, no, not from
    my position as Director of ONRR.
        Senator Manchin. Gotcha.
        Ms. Comay?
        Ms. Comay. So Senator, the question about the Mineral
    Leasing Act would probably be better for some of my colleagues
    who cover the onshore energy side to address.
        In terms of GOMESA's provisions for the 37.5 percent
    revenue share, as is the case today, some of the issues that
    were debated at that time are some of the ones that we've
    talked about. On the one hand, the environmental impacts to
    coastal states of hosting offshore development and the
    investments that they make in infrastructure. On the other
    hand, the position of some that the fact that the waters are
    not in the state would make a difference in terms of the type
    of revenue sharing that might occur.
        Senator Manchin. Okay.
        Mr. Kline, you might be able to answer this one for me. I
    understand the Coastal Master Plan was created to help restore
    coastlines in your state through coordinating--I have spent
    some time in your state, and I enjoyed it very much. Under the
    Louisiana State Constitution, all the funds that the state
    receives under GOMESA go toward the Coastal Master Plan, I
    understand. Are GOMESA funds the only federal funds that are
    going toward projects under Louisiana Coastal Master Plan or do
    you all have state funds matching it or how do you handle that?
        Mr. Kline. Yes, sir.
        So currently the only recurring source of revenue that we
    receive from the Federal Government comes from the Gulf of
    Mexico Energy Security Act. We do have state funds, state
    revenues that are also derived from mineral production on state
    lands and state water bottoms as well as the last three years,
    the State of Louisiana has run budget surpluses and the
    Governor has allocated state dollars to the Coastal Trust Fund
    for hurricane protection and coastal restoration projects
    across our coast.
        Senator Manchin. Is there a certain amount on an annual
    basis, like your GOMESA fund, that all goes toward that I
    understand, but does the state match up or try to match each
    year as much as possible or just what they have available?
        Mr. Kline. As much as we can, yes, sir.
        Historically, that's typically about $35 million per year
    depending on the production on state land and state water
    bottoms, but again, as I've mentioned, in addition to the
    mineral revenues derived on state lands and state water
    bottoms, we have, last year, Governor Ebberts allocated an
    additional $55 million in state dollars and this year we have
    been asked to put together a proposal of up to $120 million for
    hurricane protection and coastal restoration projects across
    our coast.
        Senator Manchin. Mr. Gould, I am concerned about the
    unnecessary venting and flaring, I think you heard me in my
    opening statement, of methane from oil and gas operations on
    public lands. And as I have said, these are public resources
    and when it is vented or flared, the taxpayers lose out and so
    does the environment. Pound for pound, the comparative impact
    of methane is more than 25 times greater than carbon dioxide
    over a 100-year period. So what steps is the Department of the
    Interior taking to reduce the unnecessary flaring?
        Mr. Gould. So from the environmental impacts, I can't speak
    to that, that would be done by the Bureau of Land Management
    when they work with the companies on that.
        Senator Manchin. Well, you know it is not healthy, right? I
    mean, it is just common sense that it is not healthy.
        Mr. Gould. Of course.
        Senator Manchin. Okay.
        Mr. Gould. And the revenue part of it though, is something
    that we do work closely with the Bureau of Land Management on,
    and we work with them to do analysis of whether or not it's
    avoidably lost or not.
        Senator Manchin. Do you have any estimation on how much we
    are losing, how much is being flared on federal lands?
        Mr. Gould. Right now, we don't but we are working closely
    with the Bureau of Land Management to get those numbers so that
    we can accurately collect it----
        Senator Manchin. Could you get that? That doesn't seem like
    a hard number to get because you don't have much production and
    we know how much flaring, based on production, so that would
    not be hard to calculate.
        Mr. Gould. We're working with them on those numbers. They
    have to go through and see what is avoidable and not in the
    production process. So those numbers have to be backed out.
        Senator Manchin. What timeframe do you think, maybe, we
    could get those answers?
        Mr. Gould. We are working with them right now and we're
    hoping to have those answers here soon.
        Senator Manchin. Okay, well, let's say, by the end of the
    month?
        Mr. Gould. I'll work with BLM to see what we can do about
    getting----
        Senator Manchin. Okay, I will have one of my staff members
    work directly with you, sir.
        Mr. Gould. We'd be happy to work with the Committee on
    that.
        Senator Manchin. Thank you.
        The Chairman. Thank you.
        Senator Cassidy.
        Senator Cassidy. Mr. Kline, I will be speaking with you.
        First, again, obviously we are in the Senate, and we always
    want to stick up for our home state and so everybody says that
    your state's problems are unique and of national significance.
    But in this case, I think, I am being more than a homer, I
    think I have actually got something to say to that and you can
    give chapter and verse. But as I understand, we have lost land
    in Louisiana relative to sea level rise greater than the entire
    State of Delaware.
        I think I also know the Central Gulf has the greatest
    amount of elevation loss, relative sea level rise, in the
    entire nation. So Grand Isle, a barrier island off our coast,
    for example, has lost, I think, is it nine feet or six feet of
    elevation?
        Mr. Kline. Approximately eight feet, in between there, yes,
    sir.
        Senator Cassidy. Yes, eight feet. Whereas the Florida
    coastline and Pensacola has been in the order of inches. Now
    this is, in part, in large measure because of the levying of
    the Mississippi River after the 1927 flood and--what is John's
    last name, the guy that wrote ``Rising Tide''?
        Mr. Kline. John Barry.
        Senator Cassidy. John Barry--I hate to say that, this week
    was us playing Alabama--but, you know, about how that was done
    for the benefit of inland ports.
        Now, all that said, let me also complement you because when
    Sheldon Whitehouse, our colleague from Rhode Island, came down,
    he said that our Coastal Master Plan was the best developed of
    any state in the nation. I know that has been going under three
    administrations at least, but just congratulations to the
    State.
        Now, all that to say, let's establish that this is not just
    of local or regional significance, but also of national. Can
    you tell us what national energy assets would be affected
    should we continue to have unabated coastal loss?
        Mr. Kline. First of all, Senator, Go Tigers, big game this
    weekend.
        Senator, whenever we talk about the national economic
    assets that are housed in Coastal Louisiana, I always like to
    start with Port Fourchon. Port Fourchon is on the front lines
    of coastal erosion and land loss in our state. It is a port
    that services 90 percent of the oil and gas production in the
    Gulf of Mexico.
        You also have the Louisiana Offshore Oil Port which
    transports 70 percent of the oil produced in the Gulf of
    Mexico. We have two sites in coastal Louisiana which serve as
    our strategic--housing for our Strategic Petroleum Reserves
    which house hundreds of millions of barrels of oil for
    emergency situations in our coast and, excuse me, across our
    country. Our LNG facilities rank fourth in the entire globe. We
    have major refineries across coastal Louisiana that refine the
    material that is produced on and off the coast.
        Senator Cassidy. By the way, if you include the coastal
    area on the Mississippi River, I would guess that in the United
    States there is no higher concentration of those making the
    refined plastics and petroleum products that we need to create
    jobs and power in modern economy.
        Mr. Kline. That is exactly right, Senator, yes.
        Senator Cassidy. So, and that is leading off, if you will,
    I think after Alaska, we have the greatest amount of seafood
    production in the United States as well.
        Then let me ask you this, because you will know this. What
    is the general flood elevation in the region of our state where
    these energy assets and seafood industries are located?
        Mr. Kline. So flood elevations vary across our coast,
    Senator, but typically, the flood elevation across coastal
    Louisiana is just above five feet above sea level. Now there
    are areas across our coast where, for example, the City of New
    Orleans, that is probably close to five feet below sea level.
    And so, the risk, as a result of those elevations, is that our
    coastal communities, if we experience a hurricane similar to
    the one of Hurricane Katrina or Hurricane Rita, our coastal
    communities could see a storm surge of anywhere from 1 to 15
    feet.
        Senator Cassidy. Now if you rebuild coastline and you have
    those wetlands, if you will, as a bumper against that Cat 4
    hurricane coming on shore----
        Mr. Kline. Yes, sir.
        Senator Cassidy. ----how does that help diminish the impact
    of that hurricane?
        Mr. Kline. So coastal restoration and hurricane protection
    go hand in hand. When you restore the natural environment, your
    natural buffer, your natural wetlands and your marshlands and
    your ecosystems, you are taking the pressure off of your inland
    hurricane protection systems. So when we're restoring our
    environment, that is really our first line of defense in
    coastal Louisiana----
        Senator Cassidy. I remember some statistic for every mile
    of coastline you take a Cat 4 down to a Cat 3.
        Mr. Kline. Well, for every acre of wetland that you create
    or build, you knock down a storm surge by a certain percentage.
        Senator Cassidy. Now, let me ask because, well, folks may
    not be aware, but I am aware, that three of the largest ports
    in the nation by tonnage are in South Louisiana. So for the
    farmer in Iowa to get his goods to the rest of the world then,
    at a competitive price, it is the Port of New Orleans, the Port
    of South Louisiana, et cetera, that allows that to happen.
        Mr. Kline. Yes, sir. Five of the top 15 ports are housed in
    coastal Louisiana.
        Senator Cassidy. Five of the top 15.
        Now, I may have to ask Senator Landrieu to whisper into
    your ear, but I think we spent about $20 billion on Hurricane
    Katrina, right?
        Mr. Kline. I would say well north of $20 billion in a
    government response to Hurricane Katrina was well over, I
    think, $100 billion in total response.
        Now the Hurricane Protection System that was built about
    the Greater New Orleans area was somewhere in the neighborhood
    of about $14 billion that was invested in that area, responding
    to that disaster.
        Senator Cassidy. I am out of time, but let's just say that
    if we spent $100 billion in response, but instead we can have
    enhanced restoration which, in turn, will decrease the
    potential need for another $100 billion so that goods from Iowa
    can get around the world and that oil and gas can get from
    wherever to wherever, that would be a wise, pennywise,
    investment.
        Thank you, Mr. Kline.
        I yield back.
        The Chairman. Thank you, Senator.
        Senator Heinrich.
        Senator Heinrich. Thank you, Madam Chair.
        It occurs to me in your conversation with the Mayor and
    then, obviously, with respect to Louisiana as well, I had a
    chance to look at the coastal erosion in Kaktovik and that is a
    fairly new dynamic. And in all of this, I think it bears
    considering the very real climate impacts because sea level
    rise is accelerating. When you overlay the impacts that the
    lack of ice has had on that coastal erosion, this is going to
    continue to accelerate and we are going to have to figure out
    how to deal with not only communities on the coast, but as the
    Mayor said, a legacy of all sorts of hazardous materials that
    currently sit in low-lying areas, all sort of infrastructure
    associated with energy production that are in low-lying areas.
    And that's going to cost an enormous amount of money. And it's
    going to take an enormous amount of creativity.
        Mr. Gould, you are the unfortunate target of my questions
    because we don't have a witness from the BLM here today, so you
    are the best thing we have from DOI.
        The BLM's written testimony expresses opposition to the
    revenue sharing portion of the Public Land Renewable Energy
    Development Act because of ``concerns with the potential long-
    term costs of diverting those from the Treasury.''
        Now, the cost of that I estimate based on recent numbers to
    be about $22 million per year. Yet in your testimony on the
    COASTAL Act you did not express concern about the long-term
    costs of greater revenue sharing of offshore oil and gas
    revenues.
        Do you know what the projected long-term costs are for the
    COASTAL Act? And this is not a commentary on whether we should
    do it or not do it. I think it is addressing some very real
    concerns, but do you know what it costs?
        Mr. Gould. I do not have those numbers and those numbers
    are numbers that are done with the Bureau of Ocean Energy
    Management. So they do the long-term estimates. They look at
    the economic impacts.
        Senator Heinrich. Do you know enough to know whether they
    would be greater than or less than the $22 million per year?
        Mr. Gould. They'd be greater than that, yeah, potentially.
        Senator Heinrich. My estimate is that----
        Mr. Gould. Again, I don't know that----
        Senator Heinrich. Well, I guarantee it.
        We need to get all these things scored, but I am estimating
    it at roughly $1 billion a year. So $10 billion over the course
    of a ten-year budget window. Why is the Administration not
    concerned about those costs?
        Mr. Gould. At this point, I think, the BLM written
    testimony expressed their concerns. And then from ONRR's
    perspective, what we do is we take what you all feel is the
    best way to disperse revenue and then we make sure that we
    collect every dollar due and then disburse it according to the
    law.
        Senator Heinrich. Right. Well, I only bring that up because
    I think that appears to me to also speak to the issue of
    fairness that Senator Cassidy has brought up.
        I would love to ask you some more questions about why the
    BLM has been so slow to move forward on development. We have
    had this ``Smart-from-the-Start'' program. Maybe Senator Cortez
    Masto can address some of this because Nevada seems to be the
    only place where we have really seen some progress in terms of
    those areas of roughly 700,000 acres that were designated as
    high-potential, lower-impact zones for renewable energy
    development. We have seen some good progress in Nevada. We have
    not seen that kind of progress in other Western states, and I
    would love to know from the BLM, why?
        And then I would just make the point as I think a number of
    people have referenced how New Mexico is currently going
    through quite an increase in production and you see that in the
    revenues flowing.
        We are also seeing an enormous issue with methane. And it
    is very frustrating for me to see the Department of the
    Interior roll back its methane rule when NASA documented the
    practically state-sized cloud of methane over the San Juan
    Basin in New Mexico. So if we are going to produce these energy
    resources, we have a public health responsibility to the
    communities where they are produced. It is very frustrating for
    me to see, when we have had states, including Wyoming,
    including Colorado, that have had to step up and fill that
    vacuum because the Department of the Interior hasn't done it,
    to see those rules rolled back. And I will tell you that, as a
    result, New Mexico is in the process of moving forward on rules
    because the Department has simply not met their responsibility
    to public health.
        The Chairman. Senator Heinrich, thank you.
        Senator McSally.
        Senator McSally. Thank you, Chairwoman Murkowski and
    Ranking Member Manchin, for holding this hearing today in part
    to talk about my bill with Senator Manchin, the Public Land
    Renewable Energy Development Act, and this is a really
    important bill for Arizona.
        Renewable energy, particularly solar, is an incredible
    opportunity for Arizona. As I have said before, we have an
    abundance of two things: sunshine and open space. But in a
    state where nearly 70 percent of our land is controlled by the
    Federal Government, burdensome federal permitting processes and
    not competitive prices severely restrict our renewable energy
    potential.
        Our bipartisan bill institutes a commonsense improvement to
    the permitting process to expedite the approval of solar, wind
    and geothermal projects on public land parcels where the type
    of development makes sense from an environmental and economic
    perspective. Most important though is the bill ensures states
    and counties with massive federal footprints receive a fair
    share of the revenue from the renewable energy produced on the
    public lands surrounding their communities. A portion of the
    revenue will be dedicated to conservation activities which will
    improve wildlife habitats and public land access for outdoor
    recreation.
        There is a multitude of benefits that our bill delivers and
    we brought together a very diverse coalition of support from
    industry, state and local governments and environmental and
    recreation stakeholders. I have a list of nearly 50
    endorsements this bill has earned from these organizations, and
    I would like to submit this list and several letters of support
    into the record.
        The Chairman. They will be included.
        [List of endorsements and letters of support for S. 2666
    follow.]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Senator McSally. Great, thank you.
        Mr. Luthi, I appreciate you communicating overall general
    support for the idea of our bill. Wyoming, I think, shares
    similar challenges, not quite 70 percent. I think you are more
    like 48 percent or so federal land in Wyoming. So a large
    federal footprint can present the same challenges for you.
        Can you share how you think the revenue sharing provisions
    of our bill can help local governments and ultimately benefit
    residents of states like yours and ours?
        Mr. Luthi. Madam Chairman, Senator McSally, thank you for
    that opportunity. And yes, Wyoming is already well acquainted
    with revenue sharing on the other energy types of resources.
    And currently, if you do just some rough calculation of our
    general budget, those resources directly from shared revenue
    resources are about, almost, 20 percent of the total state
    budget. So that's a big chunk.
        Over 50 percent of the state's budget is connected with K
    through 12 education. So any revenue sharing that is allowed to
    come back either to the state or directly to the counties or
    cities is going to be used, I think, just for necessary
    programs because as you mentioned, projects do have impacts.
    They have economic benefits, but they also do have impacts.
        And I think on the particulars, as I mention in my
    testimony, renewables as a rule have impacts up front. They
    also have construction costs which actually during construction
    you have some local benefits.
        Senator McSally. Jobs, yes.
        Mr. Luthi. But once that construction is gone, that's
    pretty much it both for the tax base and the overall economic
    benefit. So, and particularly on the area of wind and solar,
    revenue sharing would be particularly helpful to the local
    communities.
        Senator McSally. Got it, thanks.
        So you think in areas like K through 12 it would really
    have an impact. And keep in mind, this revenue sharing is in
    addition to the Payment in Lieu of Taxes which these local
    communities are also really counting on.
        Mr. Luthi. Madam Chairman, Senator McSally, I would say if
    Arizona follows a similar distribution as Wyoming does which is
    actually left up to the legislature as a rule, K through 12
    just takes the lion's share of almost any state budget. So it's
    definitely going to go to help benefit education.
        Senator McSally. Well, that is great to hear. Thanks for
    your perspective on that.
        You also mention in your testimony that the energy worker,
    the sportsman, the environmentalist, they are often the same
    person or live in the same household, so you make a good point
    that we do have shared values. I think these Venn diagrams
    overlap. I don't think they are mutually exclusive. So do you
    see actually how our bill could help Western states strike that
    balance between conservation and economic opportunity and
    access and all those values that you shared are often summed up
    in the same person?
        Mr. Luthi. Madam Chairman, Senator McSally, absolutely. I
    think where you make the difference is, you know, nationally
    these kind of issues become very polarized. They're not
    polarized at the local level because, again, it's often the
    very same person that works at a company and also wants to go
    fishing after work, hunting after work, take the four-wheeler.
    They appreciate the ability to have federal lands that truly
    are multiple use.
        Senator McSally. That is great. I agree with you. Thanks a
    lot, thanks for your time. I yield back.
        The Chairman. Thank you, Senator.
        Senator Cortez Masto.
        Senator Cortez Masto. Thank you. Thank you to the
    Chairwoman and Ranking Member for bringing these bills forward.
        Mr. Gould, let me ask you very quickly about S. 2666, the
    Public Land Renewable Energy Development Act. It sets a
    renewable energy production goal for the Department of the
    Interior to permit 25 gigawatts of renewable energy on public
    lands by 2025. This year Nevada has taken steps to increase its
    own renewable energy goals by increasing its renewable
    portfolio standard to 50 percent by 2030.
        With more than 80 percent of the land in Nevada being
    federally-managed, there will need to be more collaboration and
    work between stakeholders, industry and the BLM in order to
    meet this ambitious goal. Many in Nevada have said that they
    have a good working relationship with local BLM offices but
    admit, and I think this comes to some of the conversation my
    colleague, Senator Heinrich from New Mexico, was talking about.
    But what I hear is that BLM lacks staff resources and that has
    had an impact on renewable energy development in Nevada alone.
    I guess my question to you, is the Department of the Interior
    equipped with the necessary staff in its state and national
    offices to adequately address and process an influx of
    renewable energy project proposals?
        Mr. Gould. Senator, thank you for that question.
        And from the Department's perspective I think we would be
    very happy to work with you and the Committee to make sure that
    the BLM has those discussions that are needed to have with the
    Congress in terms of making those resources available, if those
    resources are needed. So, I think, from my perspective at ONRR,
    we can't really answer questions related to the resources at
    BLM, but I know that the Department would be happy to work with
    the Committee.
        Senator Cortez Masto. I appreciate that, and I appreciate
    the position you are in as well. So thank you, and I look
    forward to that. I think for purposes of our conversation,
    particularly knowing that Nevada works with the BLM on a
    regular basis, I think there is a resource issue that we are
    willing to work with you on to address for not just purposes of
    Nevada but across the other states as well and for that
    benefit.
        Let me jump back to Mr. Luthi. In your testimony, you also
    express support for provisions in S. 2666 but make some
    recommendations to improve the bill. Your recommendations
    include more consultation and cooperation between the Federal
    Government and the Office of the Governor in a given state to
    reduce conflicts. I am a big supporter of that.
        Let me just ask you this, without the appropriate
    consultation among local and state stakeholders and the Federal
    Government, what obstacles might projects on public lands in
    Wyoming experience?
        Mr. Luthi. Madam Chairman, Senator Cortez Masto, I'm
    somewhat speculating but, again, if you have full consultation
    from top to bottom--Federal Government, states, local
    communities--what it is going to hopefully avoid are those
    local issues that are important and things that you don't often
    see from the 30,000 foot level. That might be a migration
    corridor for antelope or deer, it might be a specific use for
    four-wheelers that most people wouldn't know about but is very
    important to the local community and it just gives the
    opportunity for the local community to have a say in what they
    think is important as we work with the Federal Government.
        Nevada, like, well, even more so than Wyoming has a lot of
    public land, meaning owned by the Federal Government. So it
    becomes just so important to be a good neighbor. You've got to
    be able to talk across the fence line and understand where each
    other, where everyone is coming from.
        Senator Cortez Masto. I appreciate that because coming from
    a Western state as well, I think it is important. Listen, the
    federal employees live in our states, hopefully, and/or come in
    and have an impact and we want to develop good relations with
    them and hopefully they are always consulting and working with
    local and state government on issues that impact the individual
    states. So I appreciate your comments.
        Thank you, Madam Chairwoman, for the hearing today. Thank
    you, all of you, for being here.
        The Chairman. Thank you, Senator.
        Senator Hirono.
        Senator Hirono. Thank you, Madam Chair. Aloha to Senator
    Landrieu, thank you for being here. Thank you to all the
    testifiers.
        I was noting your response, Mr. Luthi, to Senator Cortez
    Masto's questions, and I am really glad to know that in Wyoming
    you do talk with all of the affected entities so that you are
    able to make good decisions. I would expect and hope that that
    is what all of the states do.
        This is a question for Mr. Kline. Both Louisiana and Hawaii
    are suffering from climate change and have considered
    management retreat plans in the face of the loss of land due to
    sea level rise and more intense storms caused by climate
    change.
        According to a 2017 Hawaii Sea Level Rise Vulnerability and
    Adaptation Report, 3.2 feet of sea level rise will impact 6,500
    homes and businesses, displace 20,000 residents and cause $13
    billion in property damage and losses. The estimate does not
    include damage to Hawaii's critical infrastructure because if
    you have ever been to Waikiki--have you?
        Mr. Kline. No, ma'am.
        Senator Hirono. It is one of the places that will be under
    water. It is a big part of our revenue generation.
        In your testimony you describe how Senator Cassidy's bill
    would use federal revenues from offshore oil and gas revenues
    to help Louisiana, but Hawaii, Maine and many other states will
    get no money from this bill even though they are already
    dealing with sea level rise. How do you propose the United
    States fund coastal resilience without effectively subsidizing
    the oil and gas emissions that help cause the sea level rise
    and ocean acidification in the first place?
        Mr. Kline. So, thank you for the question, Senator. And
    first of all, I think I would like for the Committee to know
    that the Coastal Master Plan absolutely takes into account
    climate change and utilizes the best available science. So I
    believe our coastlines have a lot of similarities between the
    two and similar sea level rise projections for coastal
    Louisiana as your state.
        Oil and gas exploration in our state is a part of our
    economy and we have found a way to balance living with oil and
    gas production but also addressing the impacts of that
    production on our coast. And so, what we're saying is and why
    we're such proponents of this legislation is, if we're going to
    support that activity that is occurring off of our coast and if
    our coastline is providing access to those oil and gas revenues
    off of the Gulf of Mexico, then those dollars ought to be
    reinvested into our coastline to protect our communities, to
    protect our business, our way of life and to sustain the very
    infrastructure that allows for that production to take place to
    begin with.
        Senator Hirono. Excuse me for interrupting but what is
    going on in, with the oil and gas activities is causing sea
    level rise in places like Hawaii. So what do we get for--what
    kind of help can we get? Should we get? I mean, obviously, I
    think that we should get some of this help even if we are not
    right there in the Gulf.
        Mr. Kline. Well Senator, I would offer to you that you
    could go after the other 50 percent that goes into the Federal
    Treasury to help implement restoration projects in your state
    that could address the impacts of climate change. And so, the
    reason why we're here today, Senator, is that our state does
    suffer impacts due to oil and gas exploration.
        Senator Hirono. Yes.
        Mr. Kline. And that's why we feel that we deserve a larger
    share of revenues that are coming from our coast and
    reinvesting them in our coast to address those issues.
        Senator Hirono. You are obviously advocating for Louisiana
    and that is fine and good. And I think what this Committee
    needs to do is to look at the impact of climate change and sea
    level rise affecting all of the states, including states like
    Hawaii, and you mentioned the 50 percent of the revenues. I
    have absolutely no idea how much of that would go to places
    like Hawaii and other states similarly situated. I would want
    to look at that, Madam Chair, and make sure that we have a fair
    allocation.
        Another question for you. You do know that Louisiana's
    coastal loss has been exacerbated, you just talked about that,
    now by offshore oil and gas development. If oil and gas
    development has damaged coasts of Louisiana and other states,
    shouldn't the companies that made money from extracting oil and
    gas pay more to help restore the coast? I mean, why should the
    American people pay to offset the oil and gas company's impacts
    because, you know, there is the argument that there should be
    additional federal revenues to the Gulf States.
        Mr. Kline. So Senator, I would agree that oil and gas
    exploration is a contributing factor of land loss in our state;
    however, it is not the overwhelming driver of land loss in
    coastal Louisiana. There are other factors at play that are
    contributing to that land loss.
        Our Governor, Governor John Bel Edwards, has taken the
    position to pursue some of these oil and gas companies for the
    damage that they have done to our coast and to hold them
    responsible for some of that damage.
        Senator Hirono. Well, we probably should do more.
        Madam Chair, I just want to shout out and thank Ms. Comay,
    to you and your colleagues at the Congressional Research
    Office, for the high quality of research that you provide to
    us. Mahalo to you.
        Thank you, Madam Chair.
        Senator Cassidy. Madam Chair, could I just, at the
    discretion of Senator Cantwell, just make a 30 second
    clarification?
        The Chairman. Go ahead, Senator.
        Senator Cantwell. You could make a five-minute questioning.
        [Laughter.]
        Senator Cassidy. Thank you, Senator Cantwell.
        By raising the cap under our bill there would be more money
    going to the Land and Water Conservation Fund, and so Hawaii
    would directly benefit.
        I am also working with Senator Whitehouse on a revenue
    sharing bill related to wind energy because we also think that
    there should be an incentive for states to do that, and I
    believe Hawaii would benefit from that.
        And by the way, as we are speaking of the equity, between
    the 50 percent that goes for onshore federal tax and 50 percent
    that goes for offshore, it may be that the Senator from Hawaii
    would want to look at that as a way to generate more dollars
    coming more directly to Hawaii.
        Lastly, I will say the environmental standards used by our
    companies to develop oil and gas in the Gulf exceed by far that
    in developing countries. And so, since there is clearly a
    demand for fossil fuel for things like plastics, that would--I
    would rather be down where there is the higher environmental
    standards of our nation as opposed to those of, say, a country
    like Nigeria. But anyway, thank you for your----
        The Chairman. Thank you, Senator.
        Senator Cantwell, would you like to proceed or do you need
    a couple minutes?
        Senator Cantwell. Did the Chair have questions?
        The Chairman. I will just ask a quick one here and give you
    a few minutes to formulate your thoughts. It kind of follows on
    this discussion between Senator Hirono and the points that
    Senator Cassidy has just raised. I noted in my opening
    statement that since the 1990s nearly all revenue credited
    annually to LWCF has been from the OCS receipts, I think, and
    LWCF also gets additional mandatory appropriations under GOMESA
    and I think we saw that in Senator Cassidy's chart that he had
    up there.
        But I guess the question, and it may be directed to you,
    Ms. Comay, and maybe you, Mr. Gould, but some have suggested
    that we need to either dramatically restrict or even eliminate
    fossil fuel production in federal areas. I know several of the
    individuals that are in the running for the Presidency right
    now, said look, the first thing I am going to do, the first
    thing that they would do, if elected, is to completely
    eliminate fossil fuel production on federal lands.
        Tell me what happens then to programs like the Reclamation
    Fund or Land and Water Conservation Fund because right now, it
    is a correct statement is it not that they are getting their
    funding, funding that comes to LWCF to help with whether it is
    federal land acquisitions or whether it is stateside
    improvements, is coming from the offshore OCS receipts. Am I
    accurately stating that? Mr. Gould?
        Mr. Gould. Yes, thank you for the question, Madam Chair.
        That's an accurate statement. Those, the $900 million that
    goes into the fund and then the additional $125 million that
    goes in from the GOMESA funds comes directly from the offshore.
    A very small percentage comes from motorboat fees and some
    federal land acquisition, but that's a very small percentage.
    Over $850 million is deposited from the revenues that ONRR
    receives from the oil and gas industry in the Gulf of Mexico
    and the full $125 million comes from that same fund.
        The Chairman. So there has been some discussion around
    here. Last year we made permanent the authorization of the Land
    and Water Conservation Fund. That was something that many of us
    thought was an important thing to do in terms of permanent
    authorization. Now the discussion is mandatory funding for
    LWCF. But if you don't have these OCS receipts, how do you meet
    that, that now mandatory requirement?
        Mr. Gould. That's another good question. And again, it
    would have to be from some other place within Treasury that
    would have to then be appropriated funds for that mandatory
    part of the process and Ms. Comay----
        The Chairman. Ms. Comay, any further comments on that?
        Ms. Comay. No, that seems correct, as Mr. Gould said the
    money currently for the LWCF comes almost entirely on both the
    mandatory state program side and the money coming in, the
    almost $900 million under the LWCF Act, that's almost all from
    offshore revenues.
        There are these other two sources, a couple of sources for
    the main LWCF funding, but they have not been sufficient to
    provide more than a very small fraction.
        The Chairman. So then, when those who are not in the, they
    are not part of the GOMESA states, they are not producing
    states on the offshore, when they question whether or not there
    is any benefit that comes to them, it is a fair and accurate
    statement to say that with the LWCF funds that come and go out
    to all 50 states, that all 50 states enjoy the benefit from
    those receipts that are then made part of the LWCF
    distribution?
        Mr. Gould. That's correct.
        The Chairman. Okay, okay.
        Senator Cantwell, go ahead.
        Senator Cantwell. Thank you, Madam Chair.
        On that point, I am sure you recognized our former
    colleague here in the audience who has played such a big role,
    but I want to just thank her for her continued long-time
    support of the Land and Water Conservation Fund. She was always
    a very, very supportive member on those issues.
        Mr. Kline, I think, and Mr. Gould, I have a few questions.
        One, anytime we talk about expanding offshore drilling, I
    am reminded of those horrible pictures we saw from the Deep
    Water Horizon blowout preventer and the impact that it has had.
    There is a study that was released in August by a Louisiana
    University Marine Consortium. I am not sure all the people that
    were involved in that, but they found that decomposing oil from
    the 2010 spill was mimicking having problems with crustaceans
    and unfortunately it is showing lots of problems in those crab
    and shelling issues and parasites.
        Are you familiar with this study and its impacts on marine
    life?
        Mr. Kline. I am not, Senator, to be honest. I'm not
    familiar with this study. Do you know what year it was issued?
        Senator Cantwell. Recently, recently, this is August. So,
    we will get that to you.
        But I think part of the issue here is the unbelievable
    impacts that are still there related to oil. I know the Chair
    knows this well, because I have been with her up to Alaska and
    there are certain species that are still being impacted by the
    Exxon Valdez. These are long-term impacts, and we definitely
    want to make sure that we understand them as we discuss these
    issues.
        Secondly, Mr. Gould, the Politico had a story about the
    Department of the Interior email, showed the Department
    considering using a regulatory loophole to free oil and gas
    companies from drilling standards created after the Deep Water
    spill. This was a big concern to me as it related to blowout
    preventers and the standards by which we wanted to make sure
    were there in the future on those kinds of hazards.
        Career employees reportedly balked at being told by, you
    know, trying to raise these questions. Are you familiar with
    that incident and how do we protect the safety of our system
    and stop rolling back some of the provisions that Congress in a
    very bipartisan effort put in place after this accident?
        Mr. Gould. Thank you for that question. And no, I'm not
    familiar with the, those emails. We don't deal with the safety
    side. The Office of Natural Resource Revenue deals with the
    revenue side.
        Senator Cantwell. Okay.
        I have a feeling you were sent here because you could
    answer the question that way so I get that you are not the
    person in charge, but these issues and rolling back provisions
    that, again, were just so necessary after the neglect, we just
    don't think the Administration is going in the right direction
    here and we are going to continue to voice our concerns,
    particularly as it relates to them moving forward. If we are
    going to have an Administration that is going to roll back
    safety procedures then, no, we are not going to be for
    expanding these ideas, and we definitely need to understand the
    science.
        Thank you, Madam Chair.
        The Chairman. Thank you, Senator.
        Thank you for your comments this morning, the testimony
    that you have provided and the insight. Certainly for those of
    you who come from producing areas, as you do, Mayor Brower, as
    you do, Mr. Kline, and certainly as you do, Mr. Luthi,
    different areas, whether it is offshore or onshore, a
    recognition that our federal lands have much to offer us. I
    think we recognize that.
        We also recognize the incumbent responsibility that we have
    to make sure that as we gain the benefit from these lands, we
    do so wisely with solid stewardship. That is an important part
    of our responsibility as well.
        But I think you have helped us start this conversation
    publicly about how we can ensure that the benefits that we
    receive from these lands and waters are shared fairly and that
    those benefits then are utilized whether it is as Mayor Brower
    has noted, to help with infrastructure that is threatened by
    erosion or the resources necessary to provide for search and
    rescue in an incredibly challenging landscape or as Mr. Kline
    has noted, the impacts that the State of Louisiana and other
    Gulf States are seeing.
        It is very real and very challenging and a day-to-day
    reminder that while we access these extraordinary resources
    that we want and need and benefit from as a nation, there is a
    cost to that. And how we are able to balance that, how we are
    able to ensure that those who are providing so much for the
    good of the country, do not do so at greater sacrifice.
        These are issues that need to be advanced in a conversation
    that is respectful of where one another comes from. I think you
    see on this Committee we have our Westerners and we have our
    Easterners and we have our far Westerners that are out on an
    island surrounded by the great ocean out there. How we are able
    to engage in these discussions is very, very important and know
    that we will continue in this dialogue going forward.
        I appreciate the members of the panel being with us and the
    members of the Committee being with us.
        I will note that votes have started, so we will go over and
    attend to those, but thank you all for being here today and for
    traveling some distances.
        We stand adjourned.
        [Whereupon, at 11:53 a.m. the hearing was adjourned.]

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