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

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