Transcripts For CSPAN3 Hearing Focuses On Oil And Gas Development On Federal Lands 20170715

Subcommittee, this is about an hour and 50 minutes. The subcommittee on energy and Mineral Resources will come to order. The subcommittee is meeting today to hear testimony on examining access to oil and Gas Development on federal lands. I ask unanimous consent that the gentleman from arkansas and mr. Westerman be able to sit with the subcommittee. That objection so ordered. This will allow us to hear from our witnesses sooner and help members keep to their schedules. Therefore i ask unanimous consent that all other members Opening Statements be made part of the hearing record if they are submit today the subcommittee clerk by 5 00 p. M. Today. With that objection so ordered. And i ask there not be any type of disruption regarding the testimony given here today. It is important that we respect the decorum and rules of the committee of the house and to allow the members of the public to hear our proceedings. Today the subcommittee will exam access to oil and gas. Our subcommittee is holding a hearing in several weeks about offshore developments. Federal mineral estates are owned by all americans. And the bureau of management is obligated to responsibly manage and develop these resources. Onshore gas and oil accounts are roughly 20 of the Oil Production and integral to our nations security. Due in large part to the overwhelming administrative burdens of the federal Mineral Development process. Not only has the administration inherited a backlog of 3,000 drill applications but an incredible burdensome legeratory scheme that discourages investment and development. It is critical we develop these obstacles to assess and insure a fair return to the American People. There are many factors that influence an operators decision to release hidrocaydrocarbons. Market conditions are no excuse for poor policies or for the federal government failing to up hold its statutory obligations. In fact many operators avoid federal lands due to quantifiable risk and uncertainty with producing a schematic. The current federal oil and gas leasing and Committee Process are fraught with uncertainty, dupeication, and delay. It can take years and parcels nominated for release were explicitly retracted from the auction. This requirement has not been enforced for years. Furthermore, once an operator has successfully navigated the federal leasing scheme, the leasing must still proceed through the application for permit to drill or apb process, which could setback drilling for over a year. It makes operational and Financial Planning nearly impossible and is a development to the locality, state and the American People. Despite the complications and inefficiencies of leasing under the Previous Administration, we are confident the new administration will take the time to optimize. He shared some of steps hes taken to recommit in up holding its mission. In addition to increasing program folding, hes committed to increase program performance. We look forward to performing Practical Solutions that optimize a responsible developmental process. With that i now recognize the Ranking Member for his statements. Thank you. Thank you, mr. Chairman. First, i want to compliment you and all the members on both sides of the aisle of this committee. Theyve been bipartisan, cooperative. Theyve been instructive. And today i think its going to be a lurlt bit contentious, but i hope that doesnt i do oppose letting oil and gas industry call all the shots on how to manage those lands that are owned by all americans. You know in all of the above policy does not mean we dont set priorities. And i am concerned about our priorities. Its only taken five months and nearly every move on energy this administration has made could have come right outofthe executive boardrooms of the Petroleum Institute or the National Mining association. And that may actually be the case that now occupy high ranking positions at the Environmental Protection agency and in the white house. Rules to protect public health, gone. Rules to protect our land, air and water and cut down on pollution, gone. Rules to protect fish and wildlife, gone. Rules to make sure that companies are paying their fair share, gone. The standard seems to be did the Obama Administration put it in place and did one oil and gas or coal company complain about it . If so, its gone. In no place is it important to balance as well as Economic Development than on American Public lands. But this idea of balance, this idea that some areas should be protected while others can we developed is at least endangered now and soon that could be gone too. To quote the acting assistant secretary to help the free markets help determine when and where Energy Development on public lands is feasible. That means the idea these lands, which belong to all americans, should be managed in a way that ensure they are here for our children and our grandchildren. That idea is now gone. Instead the administration is operating under the idea that the department of the interior should become a service station for the oil and gas industry. Which lands would you like to lease . Where and how was do you want to drill . What regulations do you want us to repeal . Are these National Monuments getting in your way . Just let us know. The department of interior is apparently here to keep you happy. Secretary zincy paid lip service to the idea of supporting all forms of energy, to be in favor of the all of the above policy. But if we look at his budget, it increases oil and gas and coal programs by 34 million while renewables suffer a 16. 3 million cut. Weve seen this movie before. Weve seen an administration where an Energy Policy was literally written by big oil. During the eight years of the Bush Administration the only measure of success was how many drilling permits it could issue. But what did we get interior Department Officials thrown in jail, regulators doing drugs and literally getting into bed with people they should have been regulating and a thirst that put Safety Standards on a back burner according to the president ial oil spill commission. When it comes to giving the keys to our public lands, to our oil and gas industry, President Trump has made the Bush Administration look look, the fact is oil and Gas Companies are doing just fine in our public lands and in our oceans. Despite the misleading statistics theyre going to throw around today. Kind of complete with that that Oil Statistics is up 59 since 2008. Offshore production is at a record high. Companies have more than 7500 approved drilling permits theyre not using and 26 million acres of public land under lease to be developed. Shows you from i believe its the year what, 2008 right through 2015, the federal onshore Oil Production and how its increased every single year up to 2015. And 2016 was slightly below 15 was above all the other years. So in kind of closing, i just want to say our new quest for Energy Dominance, whatever that means, means that never is nothing is enough. We must do more. Hunting, fishing, hiking, camping, boating, offroading, razing, all the use of our public lands are now second class. Oil and gas are dominant. Now, chairman, we have an opportunity in this subkmitdy to ensure the oil and energies reflect the use of public lands for all of our constitchiants not just for the interest of a few billionaires. I understand your desire and you sent out a few days ago the title of this hearing would be focusing on onshore, and i will try to abide by that. However, the title of the hearing was really called examining access to oil and Gas Development on federal lands. And as you know our outer continental shell is really defined as submerge said lands lying seaward of coastline. And ms. Mcgregor is responsible for over seeing offshore and onshore, so there may be some questions coming up. So just letting you know that so you understand. I thank you for that. I want to get to the acting secretary of minerals and Land Development of the u. S. Department of interior. And now im going to yield the man from the department of mexico. I want to introduce the new mexico oil and Gas Association. As director of that hes watched our permitting times increase from around 200 land days to get a permit to something over 400. And he was formerly the secretary of new Mexico Environmental Department where he has a strong reputation for balancing Energy Developments and responsible environmental stewardship. Ryan, appreciate you being here to testify today. Yield back. Thank the gentleman. Our next witness is mr. Mark, the professor of law, governor nelson, utahs energy of office of energy and development. And we want to remind the witnesses they must limit their statements to five minutes. But their entire statement will be applied to the hearing document. I will let the entire panel testify before we ask questions. And now what i do is well recognize ms. Mcgregor for her testimony. Welcome back. Thank you, chairman bisp, chairman gosol, members of the chair committee. My name is Kate Mcgregor and im currently serving as the acting secretary for the energy and Land Development. The bureau of Ocean Energy Management, the bureau of safety enforcement and the bureau of Land Management. I appreciate the opportunity to testify on the oil and gas program, which plays a Critical Role in our Nations Energy economy. The bom manages 200 surface acres and including alaska. Production on managed lands can are 7 of the nations on shore oil, 10 of natural gas and 41 of coal produced domestically as well as approximately 18 megawatts of renewable until. Last year the bom oil and gas energy generated 1. 56 billion in royalties, bonus payments and bonus bids, all of which were shared with states. States and counties used these funds for roads, schools and municipal needs. Public lands are integral to the administrations America First Energy Agenda and the secretarys priority to maintain dominance and generating revenue and creating and sustaining jobs throughout our country. Access to responsible Energy Development on these lands begins with the planning and leasing process. Ten years ago the blm had nearly 45 million acres under oil and gas lease. Today were at 27 million acres. This is nearly identical to the total area currently designate it as areas of critical environmental concern, also known as acecs which stand add over 24 million acres. This is nearly 10 of all blm managed lands in the United States. In 2016 the blm designated 8. 2 million acres, the most acec acreage since 1980. This is one example of designations that limit how public lands may be used. Responsible Energy Production and conservation need not be mutual reply exclusive. That is why it is vitally important, secretary zenke, to restore our multiple use mission and strike the appropriate balance in on shore leasing that allows for job creation in rural america. This is about restoring balance. Under secretary zenkes leadership the department and the blm has been proactive in prioritizing responsible Energy Production on public land including by secretarial order. Order 3349 aims to remove burdens on Energy Production while promoting job growth for working american families. And the National Petroleum preserve alaska helping to unleash alaskas Energy Potential and increase input in the trans alas can pipeline. Under secretary zinkes leadership the blm has had more sales, offered more acreage and generated more revenue in the First Six Months of 2017 than the same time last year and were just getting started. The blm plans to hold 14 additional lease sales this year. Still promoting access to public lands does not come without its challenges. Im sure all members of this committee are in close contact with state and local leaders who do not hesitate to communicate their frustration. It is the secretarys goal to restore trust and improve relationships with our state and local partners. Many of whom rely upon the Economic Activity and revenues that come from responsible oil and Gas Production on public lands in the west. For example, the u. S. Census burro found that rural new mexico has one of the highest poverty rates in the country, yet rural new mexico is also home to some of the most Promising Oil and natural gas deposits in the entire world. These resources are tremendous source of jobs, Economic Growth and revenue for these rural communities. This is why the Administration Remains committed to promoting responsible oil and Gas Production that creates jobs, promotes robust economy and contribute to Americas Energy security. There are multitude of factors that affect access to federal oil and Gas Resources, and the department and the blm are reviewing all of these and taking action where possible to encourage Development Opportunities and improve efficiencies without cutting corners on our duty to ensure that these activities are done in a smart and environmentally responsible way. Thank you for the opportunity to testify today, and i will be happy to answer any questions. Thank you, ms. Mcgregor. I now remember mr. Phin for his five minutes. Thank you. Thank you, chairman gosar, chairman bishop, Ranking Member lowenthal, and staff. My name is ryan flynn, executive director for oil and Gas Association of new mexico. Prior to taking over, i was the secretary of environment and Natural Resource trustee in the state of new mexico and worked in State Government for approximately six years, almost six years. Prior to taking this role. I want to thank representative pierce for recognizing me. I want to recognize representative pierce as well, who just had to step out of the room, but he has been a tremendous leader in his district, his home to one of the most resilient and productive oil and gas plays in the world, the great Permian Basin. I want to talk to you a little about new mexicos oil and gas industry and talk to you about challenges to oil and Gas Development on federal land in new mexico and suggest some opportunities for improving blms operations in new mexico. I want to be very clear that my goal here today is not in any way, shape or form to criticize blm individually. We have had a tremendous working relationship with blm staff and leadership and we look forward to continuing that working relationship moving forward. Like any large agency, there are several opportunities for improvement and i believe secretary zenke has inherited a difficult situation but he is more than capable and up to the task for turning things around in a positive direction. New mexicos oil and gas industry is the most important economic industry to the state of new mexico. Last year in 2016 new mexicos oil and gas industry contributed 1. 6 billion to the states general fund, our budget. That equalled roughly 25. 8 of the budget last year in 2016, the total budget was about 6. 2 billion. In the last 10 years oil and gas typically contributes about a third directly to the states general fund. This money goes directly to roads, hospitals, schools, who are that infrastructure in the state would not be possible without the oil and gas industrys contribution. Our industry also employees over 100,000 people in the state of new mexico, a state with about 1. 8 million people. New mexico also has one of the highest poverty rates in the country with almost a quarter of our population living below the federal poverty line. Oil and gas jobs are extremely attractive in our state, even the average wage on the oil and gas rig is about 75,000 a year. Nationally new mexico is one of the top Energy Producing states in the country, ranking fifth in crude Oil Production and eighth in natural Gas Production. Even during a prolonged period of low prices, new mexicos oil and gas industry remained resilient. In the last eight months we have seen major acquisitions and purchases in new mexico totaling over 13 billion. The new mexico portion of the northern Delaware Basin has recently been the focal point of some of the most expensive acreagebase oil and gas acquisition in the world. In calendar year 2016 new mexico was the largest producer of oil and gas from federal lands, accounting for 78 over 78 Million Barrels of oil and over 770,000 cubic feet of natural gas. New mexico, the biggest challenge to oil and Gas Development on federal lanlds in new mexico remains regulatory uncertainty at blm. I think the best illustration of this issue is to look at the Permian Basin and look at the development in west texas compared to development in new mexico. As of june 16th, 2017 there were 59 rigs running in new mexico permian versus 309 in the texas permian. The main difference is the bureau of Land Management. Blms farm and field office takes approximately one year to process a drilling permit, an apd. Blm calls that field office also takes approximately 250 days to process a drilling permit. Rightofways take approximately a year or more depending on the field office. Overall blm suffers from a lack of staffing, a poorly designed and cumbersome system, the asmis 2 program and systematic irregularity in the permit processing protocol. These delays translate into lost revenue for federal and state stakeholders alike. Our estimates are approximately 1. 4 million in federal royalty and 831,000 in state severance tax is deferred each day based on the current backlog at blms offices in new mexico. This Financial Impact is huge in a state like new mexico where we face prolonged budget issues in light of a low market the low Market Pricing for oil and gas. I will conclude by just noting that there are many opportunities to improve blms operations in new mexico such as simple edits to the asmis 2 programs. Agreements with stitt regulatory authorities to transfer some of the processing of permits from blm to state offices like the Oil Conservation division, and blm making use of existing laws such as categorical exclusions to allow for expedited review and approval of permits. Thank you very much, mr. Chair. Thank you, mr. Flynn. The chair now recognizes mr. Sclotchy for his five minutes. Thank you for the opportunity to testify today. My name is mark scolotchy, a professor of law at the colorado law school. I want to note i began my written testimony by asking we each commit to each other we will engage in a meaningful way on the important issues that are the subject of this hearing, and i am offering this testimony today in the hope that we can have a constructive dialogue. I want to make three points regarding oil and gas programs on federal lands. First, oil and Gas Production on federal lands remains strong despite a weak market and lackluster interest in new leases and development. Second, efforts to accelerate leasing and development under current marking conditions are misguided because what they could do is lock up federal oil and Gas Resources even as they deny the public a fair return on these valuable assets. In this regard, by the way, the committees focus really should be on improving and reforming our royalty and revenue policies at the federal level, which are much in need of reform. Finally, if were going to have oil and Gas Development on our public lands, it has to be preceded by appropriate environmental analysis and planning. In my judgment, it is entirely inappropriate to use our federal lands for industrial scale oil and Gas Development. Let me turn to the first question about oil and Gas Production. As i acknowledged in my written testimony, the number of federal leases, the amount of acreage under lease and the number of new leases issued have all declined in recent years, but here is the thing. Federal on shore Oil Production more than doubled between fiscal year 2008 and 2015. The number of federal producing leases has never been higher. If you look just at the year 2016, the amount of federal land producing oil and gas was higher in only one year out of the last ten. Whats remarkable about these statistics is that it is all happening at a time of weakening demand. Just a few figures here to support that claim. First of all, federal land under production amounts to less than 47 of the federal land that is under lease. And in 2016 the industry did not even bid on twothirds of the leases that were offered by the blm. I should note, by the way, in 2015 they bid on only 15 of the leases that were offered. Right now we have 7,500 apds that have been approved and that are not being drilled upon, and thats the most that has ever weve ever had at the blm. If you just look at 2016, the blm issued 2,184 drilling permits, but industry drilled on fewer than 39 of these permits. By the way, that contrasts with most other years when the number of drilling permits that were drilled upon was in the 70 and 80 range. So whats going on here . Well, that takes me to my second point which regards Market Conditions, and here i just want to make two observations. One, when i last looked at the market price for oil on monday, the price was at a very low level. On monday west texas intermediate was at 42. 46 a barrel. That obviously has an impact on the interest of the oil and gas industry. But theres another important point here which the committee needs to recognize. The major place for oil and gas which has really driven development in recent years happened not to be found on federal land. There are exceptions of the Permian Basin which mr. Flynn talked about as one of them, but for the most part these plays are on private lands and in other areas. What happens is the government tries to sell these leases under the current Market Conditions were going to get low ball kind of prices. Essentially we will be giving away these valuable federal resources and that doesnt make sense. What we ought to be doing is looking at leases and improving the apd rather than approving more apds. We need to reform our policies. We now charge just 2 an acre for leases that dont receive a bid, 1. 50 in rental. It doesnt generate much revenue but encourages speculation and that needs to be reformed. We have not reformed our royalty rate since 1920 when the mineral leasing act was passed. We need to increase those royalty rates to reflect Market Conditions. The state of texas twice what the federal government charges. On offshore, it is 18. 75 . If were going to use public lands for oil and Gas Development we need to be smart about it. I dont oppose oil and Gas Development on our public lands, but for now at least all of us rely to some extent on Oil Production, on Gas Production for power generation, but we need to recognize that we can accommodate these interests without without doing damage to our public lands. If we could show the slides that i think are on the scheme. Mr. Flynn talked about the Permian Basin and this is a picture of the Permian Basin in texas. For those of you who have not been there, i urge you to go. This kind of Development Goes on for miles and miles in every direction, and it is not the kind of thing that i think we want for our public lands. This is private land, but on our public lands we ought to be doing things like doing appropriate planning, doing appropriate environmental analysis. And if it takes more time, well, we owe that to the American People to make sure that if were going to have development we do it right. I dont oppose development of public lands for some oil and Gas Development, but it is different from our private lands. These are our multiple use lands, and we need to make sure that we do better than we have often done on our public land. By the way, we cant do this if were denying the blm adequate resources in funding and in personnel. Good management requires proper funding. Thanks very much. I look forward to your questions and the discussion of these issues. Thank you, gentlemen. The chair now recognizes dr. Nelson for five minutes. Welcome. Thank you, chairman gosar. Good morning. Thank you, chairman gosar and also i want to thank chairman bishop and Ranking Member lowenthal for the opportunity to be here today. I serve as the Energy Adviser to the governor of utah, governor gary r. Herbert. I want to say this morning i am going to be focusing primarily on our energy resources. Utah is a Natural Resource state, this includes mining and agriculture as critical Natural Resources, but also includes our national and state parks as well. So we truly believe in balancing both use and conservation, and we think that this is the best approach to leveraging all of our resources to generate revenues and create jobs. So focusing on energy in particular though, this is an important aspect of our economy. It contributes 9 to our gross state product. It is 2. 2 of the state wages, although it is only 1. 1 of our employment number. So it indicates that these are very high paying jobs as has already been discussed, and it contributes 673 million in revenues, most recently in 2015. These revenues are really important to utah. They help to provide education to our students, and they also provide many other Critical Community services which had also already been mentioned. Yes saw, like i think much of the country that is dependent on Natural Resource development, experience has been the best in Natural Resource development. Since 2014 utah has been experiencing a decline in production activity specifically related to oil and gas. As has been mention, this is in large part driven by lower Commodity Prices which are really a function of Market Conditions. Just to give you an example of the impact, Oil Production in 2014 was around 41 Million Barrels a year in utah. In 2016 it was 31 Million Barrels, so matching our 2012 levels. Natural Gas Production has also been on the decline since 2012, but we believe nonetheless that if we can access our resources we can create new opportunities for development of these commodities. And if commodity price is rationalized this is going to be critical. What we need to do is create a regulatory path forward that allows for sustained growth in jobs, especially in those communities that have been impacted by the past years decline in oil and gas activities. Our overall rate of unemployment as of may 2017 was 3. 2 . But in our oil and gas counties, duchesne, theyre very depend ent on jobs in these sectors and theyre higher. We believe access to the resources coupled with what we call in all of the above Energy Strategy can create sustained growth in the Development Activity and in the associated jobs and revenues. Utah is a public lands safe with 70 of our land is federally land. So getting it right when it comes to leasing and permitting is key if were going to deliver on the promise of our energy and mineral opportunities. Now, in yu saw as i mentiutah, managed. When theyre compared to permitting schedule for permits to drill of our Utah Division of oil, gas and mining, and were just not convinced that the federal process in fact delivers results that are more robust than those that are provided through our effective and efficient state agency. The Energy Policy act of 2005 of 2005 specifies that the bureau of Land Management must approve applications for permit to drill, apds within 30 days, but we understand that the average permit time is closer to 220 days, and depending on the field office it is not uncommon for it to take years. Our recommendation is very simple, to resolve the lengthy time it takes to approve applications to drill, to allow for it to be allocate willed to our division of oil, gas and mining or generally to states where theyre willing and have shown that they are capable of taking over this process. T this in no way is meant to be disparaging to blm or the department of interior in particular, but really to provide an opportunity for those agencies to focus on their broader mandate of multiple land use. We do recognize currently that boi and blm do not have authority to delegate for regulation, in particular for permitting, inspection and enforcement of oil and Gas Production to the states for production thats occurring on federal land, however we recognize that it may be accomplished by one of two actions. First of all, congressional lil directive legislation or application of the federal permit streamlining Pilot Project that was, in fact, established as part of the Energy Policy act of 2005. In september, in fact, 2014, the u. S. Senate approved s240, the blm permit processing improvement act of 2014 that among other things makes permanent the federal streamlining project program. So we believe that assigning a delegation of oil and Gas Development where appropriate to states would allow for better efficiency and better environmental out comes, and would also free up the resources youre over time. Thank you. Remember, your testimony will be in full. I thank the panel for their testimony, reminding Committee Members there is a five minute limit on questions. Chairman will recognize members for any questions they may wish to ask and i will start with myself. Mr. Flynn, policy change is put in place in 2010, internal memo 2010117 has resulted in a situation in which the blm is not fulfilling the mineral leasing acts requirement to hold a lease sale in every oil and gas state at least quarterly. Only one lease sale was held in new mexico in 2016, and sales in lower areas of the state were cancelled and not replaced by sales in the highly prospective areas of the permian and san juan bases. What does impact does it have in new mexico considering texas permian is just across the border and how does it affect the state of new mexico . Thank you for the question. The impact is profound from both an economic and jobs perspective. As i mentioned before, approximately onethird give or take a couple of Percentage Points from each in any given year of our budget is derived directly from taxes paid by the oil and gas industry. So when the state of new mexico is not attracting activity, we are suffering from an Economic Perspective. Of the federal royalty, nearly 50 of the federal royalty paid comes back to the state of new mexico as well. We derive benefits both from severance tax as well as from our share of the federal royalties that are paid. Each drilling rate constitutes approximately 50 to 100 highpaying jobs. So each rig thats drilled on the texas side of the border means 50 to 100 highpaying jobs that average about 75,000 a year are going to texas instead of new mexico, and that trickles down and has an impact throughout our economy. Those workers are spending money in restaurants, theyre buying goods and theyre paying more taxes to the state when theyre buying different goods and paying for services. So new mexicos budget is dependent on the oil and gas industry. We certainly as an industry support efforts to diversify our budget, however, the fact remains we are the foundation of the budget. And when we suffer, the state suffers. From a budget perspective, we just had a special session to deal with the shortfall because of low market prices where we had to account for about 100 million deficit, and next year we have current projections which are inherently inaccurate at this point to show we are facing another budget deficit of perhaps 2 to 250 million. So this impact is profound in a state like new mexico where our jobs and economy is dependent on the oil and gas industry. You said 50 , it is 48 since the murrayryan budget. So we will be having yeah. Ms. Mcgregor, in your written testimony you state secretary zenke has schedule willed quarterly lease sales in nearly every office. You also highlight the successful 2017 lease sale that generated nearly 129 million. What in your opinion precluded quarterly lease sales during the Previous Administration . Thank you for the question, sir. I cant speak to the Previous Administrations decision on whether to hold lease sales or not hold lease sales. Isnt it statutorily required . It is statutorily it is in the mineral leasing act to conduct quarterly lease sales in each state office. I can speak to the fact weve had more lease sales than last year. 11 lease sales were cancelled or postponed last year alone. We are hoping to continue forward with our scheduled lease sale also. Of course, we believe leasing can be done economically even in these price conditions. Just to touch back on mr. Sclotchy comment, there is no low balling that goes on. The department when we conduct leases ensures every lease sold is reaching a fair market value. Yesterday i believe the bureau of Ocean Energy Management announced we rejected ten bids and 10 million forbids that were made but just did not reach fair market threshold. So we will conduct our lease sales in accordance with federal law and we will make sure that taxpayers are getting fair market value. Thank you. My time is short, so i will acknowledge the Ranking Member for his time. Thank you, mr. Chair. Ms. Mcgregor, as i mentioned earlier when i quoted your testimony when you said Americas Free markets will help determine where and when Energy Development on public lands is feasible. To me that is a trouble statement. This sounds an awful lot like an admission that the oil, gas and Coal Industries will control the location and the timing of Energy Development on our public lands, and then the Energy Counsellor today to the secretary is quoted as saying that we are moving towards an energy dominant public policy. My first question is do you agree with the policy statement in the federal land policy and Management Act that states it is the policy of the United States that public lands be managed in a manner that will protect the quality of scientific, scenic, historical, ecological, environmental, air and atmospheric, Water Resources and archeological values, do you support that statement . Absolutely, and i also support the area that also speaks to managing and balancing multiple use of those lands. Thank you. But do you also believe thol ug in that balance that you point out, that balance between that and also exploration and production of oil leases that there are times that it is necessary to override the wishes of the free market . Just to speak to that, i believe that the statement that anyone aside from the secretary and the bureau of Land Management will control where and when leases are held is not true. It will be a measured development that, of course, preserves the multiple use of the lands and the very uses that you so you do believe there will be times when you will over you know, in that you will overstate or protect those values, to override the wishes of mr. Lowenthal, i absolutely do. I know there are areas that will be more treasured and special than others, but i think we can strike that appropriate balance. I think thats what were trying to find on this. Absolutely. We have real concerns the policy has moved us away from that balance and not towards that balance. I understand your concerns, and i think the entire planning process done through rmps at the bureau of Land Management will ensure we manage well and that we find that balance. Well, lets talk about that balance. Lets talk about according to blm budget there were 2,552, 2,552 drilling permits currently pending at the end of the last fiscal year, and it seems taking care of this backlog and issuing permits as quickly as possible is a high priority for the department. I believe it is true, it is good to be efficient. Permit processing shouldnt take longer than needs to do, and i think some of those issues have been raised. But we dont need to tell people out there that theres a huge backlog of permits that need to be addressed and potentially at the risk of not doing thorough environmental reviews, not evaluating protest, not dealing with other activities because is it not true that the number of unprocessed permits is currently the lowest its been since 2005 . So really we have the smallest backlog that weve had in over a decade, is that not true . Im sure thats true, but a backlog is still a backlog and taking care of thank you for stating that it is true. And at the end of 2015 there were over 7,500 of those this is the most in the decade, 7,500 drilling permits that companies have still not used, which is the most. So we have the most drilling permits and the smallest backlog that have not been used, is that not true . It is correct that we have 7,958 apds approved but not yet drilled in this year. And thats all to the that is also the most weve had in this decade. Im not sure if it is the most or not. I can get back to you. Lets get back to the data and i will finish up. Ranking member wrote to the secretary in april looking for number of permits approved but not used at the end of fiscal year 2016. Thats what he has done. He has written to that. Last week the second said there was no need to answer letters because he will simply call us with the information. Im asking you, will you please ask the secretary to either call me or Ranking Member grahabal with the 2016 data or you can call me with that data or you can text me. So youre going to give me your number . Yes, i am. I will be more than happy to work with your office on facilitating that question. Thank you, and i yield back. Thank you. Now i recognize the chairman of the full committee, mr. Bishop. Would you call me if i gave you the number, too . Sure. In the past i got calls, just no information was forthcoming. So if you could actually add the information to it, it would be nice. Let me ask mr. Flynn and dr. Nelson just for a question, because i am there are some questions. If 39 of the leases that are out there, the bids are let, are not being taken, why would a company not bid on something an administration, either this one or a previous one, would actually put out forbid . Why would they not go for that . Very quickly. Chairman gosar, chairman bishop, you know, it is too difficult to provide one single answer. It would really depend on the geology and you have 16 seconds to give me a couple of answers. I think it depends on what youre bidding on first and foremost. So they would be considering the productive potential. Are you telling me there is a possibility the bids for lease would not have enough resources there to make it practical . Yes. Or that those lands would actually be so litigation prone that it would not be worth actually going for them . Yes, absolutely. And that may be one of the reasons why bids were actually, would it be possible for any administration, past or present, to be so devious they would put out bids for lease they knew would be not acceptable. Mr. Chair, you cant answer i will let that go there. Let me dr. Nelson, let me go to you. Weve been talking about how cheap the royalties are on federal lands. Why would a company not go to those lanlds and pay cheaper rates . Why would they go to private lands and pay more money . Think the question can be answer easily. Very few parcels are offered at a single time, and i know you are well aware, chairman bishop, that the Companies Really look to maximize their resource play. If they cant block up a resource play, then theyre simply not going to bid irrespective of what the royalty requirements are. Thank you for the question. I hope that answers the question. The only reason someone would bid on federal land is if they could take money, the longer it takes to permit, to go through litigation, the longer it takes to try to get those areas in, it means it is not profitable. Theyre willing to pay more money if they can be in production, which should be an idea for the federal government. If we can guarantee you will be in production, the permitting process goes forward faster, people would pay more to do that. Dr. Nelson, are there other examples how land can be stopped for production . Could projects be established showing that they are worthy, but all of a sudden they need, lets say, some electricity or power to go into that plant and the federal government could block rights of way for that power going in to make the entire project worthless . Would that actually ever happen . Yes. And in my district . Yes. Infrastructure is critical and oftentimes must cross federally managed lands, and so it does sometimes inhibit the ability to develop a project even after a lengthy leasing process followed by a lengthy apd process, then the need to secure leasing for the infrastructure. Ms. Mcgregor let me go before you. Some native american tribes rely on oil. They were prohibited in prior administrations from implementing the programs they want, the tracking devices, the programs they had which inhibited their ability to do that . Think there were several example also where Energy Producing tribes did reach out and issue Public Comment on some of their concerns for responsible production on their land. And it is not just doi dealing with that as far as permitting, sometimes the epa got involved which basically shut down any kind of production they would have Going Forward. Is doi considering reforms that would delegate permitting process and Regulatory Authority to states . Kate . It is something that i would be more than happy to talk to your staff in your office about. That sounds like an interesting idea that we would be willing to discuss. Dr. Nelson, maybe i can come back to you because i know it was talked about. If, indeed, a company was held to federal standards but the state actually did the permitting process, would such a system actually work and facilitate faster permitting . We believe that it would, and we would like to move forward with assigning that primacy for approval of applications for permits to drill to our Utah Division of oil and mining and to other states that have proven the ability i was unfair. Thats my rule i violated, i was actually 30 seconds over. Thank you for spending here and talking about this. It is a significant issue. Before i recognize the gentleman from massachusetts, mr. Flynn, were having a hard time hearing from you. Can you take your microphone and move it a little closer to you and speak into the microphone, get closer to it . Is that better . That is a little bit better. I recognize the gentle woman from mass chew et cetera. Thank you. While the oil and gas industry wrestles with changing Market Conditions as you all testified to, our nation happens to be in the midst of a clean energy revolution. In massachusetts alone jobs in the Clean Energy Sector have grown by 75 since 2010, and it is now an 11 billion industry across the entire commonwealth. Nationally we met a significant milestone this past march when over 10 of all electricity came from wind and solar. Individual state the percentage of electricity generate willed by wind and solar is even higher. Our nations public land stand to play a significant role in the transition to clean energy. The Obamas Administration of Land Management approved construction on utility lands for wind farms and geothermal plants and set a goal of approving projects that would generate 20,000 megawatts of clean energy by 2020. I believe this committee and the new administration should also be working to ensure that our public lands are supporting renewable Energy Development where it is appropriate and in all of the above framework to help decarbonize our electric grid, support job creation and increase royalty payments to federal taxpayers and local communities. Ms. Mcgregor, welcome back to the committee. On this issue of supporting renewals, the bureau of Land Management fiscal year 18 budget requests includes a 13 million cut to Renewable Energy programs. This is money that was budgeted for activities such as Public Outreach and stakeholder engagement, lease sales and making sure that permits are reviewed in a timely manner. Your written testimony outlines the many steps that this administration is taking to rush approvals of oil and Gas Developments, but no similar steps for renewable development. How will you ensure that Renewable Energy projects have the proper funding and staff levels to ensure timely similarly timely reviews, and are you considering setting similar targets as the Obama Administration did for renewable Energy Development . Thank you for the question. We are definitely supportive of this administration of all energy jobs. We are not engaged in picking winners or losers in any way. When it comes to clean energy, which of course is very important to you, we are remaining supportive of those projects that have already been permitted and will continue to be permitted on federal land in the appropriate areas where it has already been determined. In my Opening Statement when i said we have 18,000 megawatts of approved of approved Renewable Energy, much of that is still remaining to be installed. We are aware that there will be permitting and continued work with the bureau of Land Management to allow these projects to move forward in a responsible manner. I believe by focusing on our permitting process in general and making sure that were looking at efficiencies across the board it will benefit all Energy Producers on federal lands including Renewable Energy producers. So you are abiding by the Obama Administration goals, is that correct . We will ensure that Renewable Energy is permitted in an appropriate and smart time frame. Are you setting new goals for the Trump Administration in this area . The Trump Administration and the secretary have been very clear on their priorities moving forward, and think it is restoring balance on federal lands which includes all energy and, you know, based on some of the acreage and numbers were looking at that were taken care of in the last administration when it comes to oil and natural gas we are still trying to dig out of a little bit of a hole there to restore that balance. But, yes, we will prioritize all energy jobs on federal lands. Well, the Trump Administration has touted its all of the above Energy Strategy, but renewables are frequently omitted. I think even though youre looking to see through the obama permits, youre not aggressively looking for additional ones. I do think a responsible Energy Production does call for more thought to your plan as to how to maintain some balance given the extraordinary Job Opportunities weve certainly seen in massachusetts and that im sure present a real opportunity across this country. Professor, scolotchy, in your experience are fossil fuels given preferential treatment on public land . Push your button, please. Sorry about that. It various from each administration i would say, but i think the Budget Proposal from the Trump Administration seems to clearly favor fossil fuels over Renewable Energy, so that is one indication. What i would say about that more broadly is that the United States has a responsibility to address the problem of Climate Change in the longterm Going Forward. If it is going to do that, it needs to manage the decline of fossil fuels. Fossil fuels are going to decline because of Market Conditions irrespective of the other issues that weve been talking about, but we need to manage that decline in a responsible way. Because if we dont, we are going to see the kinds of economic dislocations we have seen already with the coal industry and were likely to see Going Forward with oil and gas. As i said your time has expired. The gentlemans time has expired. Thank you, gentlemen. I will acknowledge the gentleman from colorado, mr. Lambborn for his five minutes. Thank you. I have a couple questions for you, ms. Mcgregor, but let me say when you were on this side of the dais, i found you to be one of the most hard working people i ever met. I think the country is fortunate to have you doing what youre doing now. So keep that up. So im going to same the you said in your testimony the blm is adding features to enhance the new electronic apd Processing System, the Automated Fluid Minerals Support System and plans to decommission parts of the prior apd Processing System to improve the automation capacity and better match the blm resources to permit activities. That is what you said. Using internetbased bidding and enhancing the electronic processing of apds is exactly what the subcommittee has been pushing the blm to do for a long time always you know. Could you tell us a little bit more about these efforts. I would be more than happy to talk about that. In speaking of afmis 2 which is the more enhanced internetbased program we are talking about when it comes to filing apds, i do recognize that new mexico in their field offices has a different program. So were still working out the details of how these programs can work Better Together to make sure that overall we have a Better Program to process apds. But processing apds through an internet based needle help us in a lot of different ways, especially in eliminating discrepancy we see when an industry files their permits. Right now the blm has a permitting time frame of 257 days, and in my testimony i said we are trying to get to 90 days and by statue we recognize were supposed to be at 30 days. But we think that utilizing this internetbased means and harnessing that, well be able to find ways you know, our staff, compared with the turbo tax, but allowing folks to fill in the data and make sure that data doesnt get filed until it is, you know, fully complete. Thats one of the areas that i think will be helpful, and also well increase transparency for folks on the committee and the general public who want to have a better understanding of what the absolute workload, our folks on the front lines out in the field are facing on a daily basis, especially in airs like kaspar, wyoming and carlsbad, new mexico. When it comes to interbased leasing, thats something that the Congress Allowed the bureau of Land Management to do in 2015 i believe and we are moving to that model. Our spokesmen internally are noticing we are seeing an up tick in participation as more people can attend the lease sales online and perhaps increased revenue is coming in. But were still analyzing all of the details of what we were seeing in those lease sales and hoping to get something up to the hill eventually that provides more information on that. Okay. Thank you. Now, at the end of fiscal year 2016, the blm oversaw a little more than 40,000 leases across the country. Now, this may sound like a lot, but it is actually the lowest number of federal leases since fiscal year 1985, 30 years ago. Despite the fact that the mineral leasing act requires lease sales to be held in each state at least quarterly or more frequently if the secretary deems thats necessary, the blm has repeatedly cancel or failed to hold the required lease sales. What will the Current Administration do to correct this . We are committing to making sure that we find, you know, to be respectful of Ranking Member lowenthal, were going to find the appropriate areas to conduct lease sales, and we will conduct those lease sales. We are aiming to be doing quarterly lease sales. I think it is important to talk about leasing because, you know, in the example that 2014 was one of our highest producing years, in that year alone in north dakota, an example of a project that came online that initially produced 4200 to 6,000 barrel also of oil a day in 2014. A great project. Got through the process, more wells might be drilled there. It was leased 15 years before in 2001. There are long lead times to get from lease to production. Thats why leasing and having certainty in the leasing process is so key because Companies Take time to develop these resources and have to allocate their own Economic Resources to do that. Thanks for being here today and thanks for your testimony. Mr. Chairman, i yield back. Thank you, gentleman. The gentleman from florida is recognized for five minutes. Thank you, mr. Chairman. I appreciate the discussion today. Obviously we need to make sure were not just focusing on 20th century jobs but 21st century jobs. You know, in our state we have avoided trying to have just an oil and gas economy. I realize theres a big push along a lot of states that are addict to oil and gas jobs because they havent diversified their economy like florida and a lot of other states, so theres a big pressure to maximize as much as possible. We know we will still need gas and oil for homes and cars, so for the near future we need to keep up the demand. But as we look to the future we need to make sure we are addressing Climate Change, we are pushing Renewable Energy, we are making sure we are conserving our parks and our Natural Resources and protecting our coastline. In florida it is more about tourism than agriculture than oil and gas, and thats something that hurt our economy, particularly with the bp oil spill on the gulf that wrecked the western part of the state for a year plus and we are still getting reimbursed for that. I want to focus on the issues that have been addressed by our speakers here. According to our information, the leasing time is from about 2005 to 2015 have been about 190 to 220 days under both the bush and Obama Administration, and now it is at 250. What specifically, ms. Mcgregor, are you recommending to get us from 257 or 250 something that you mentioned back down to the average range of 190 to 220 . Thank you for your question. I know there are few blm lands in florida but i know it is an important issue to you. What were doing is prioritizing, again, areas where there is a good return on investment to the american taxpayer, and one of those areas is an America First Energy Agenda. What weve done so far simply is create priorities and start looking at vacancies out in the field. Two weeks ago i was in carlsbad, new mexico and caspar, wyoming and visiting with some of the folks who actually these are 21st century job, some of the folks out there practicing these permits and talking to them about what they need to help lead permits into a more responsible time frame. To be clear, theres efficiencies that will be forthcoming to us, but there are none today. Doctor, i see we have 192 out of our 213 million acres that are already eligible for leases, so we are talking 10 left. Is this 10 of land thats really even feasible for leases or is this something that we really dont need to be pursuing . Well, so let me answer that in a little bit different way, congressman. I mean the concern is that when youre deciding whether you want to lease oil and gas or any other resource on our public land, you go through a Land Use Planning process. The Land Use Planning process is what has made so much of the land available for leasing. Theres the initial judgment that has to be made. The way the leasing actually occurs is primarily from nominations from industry. It is industry that decides what lands they want put up for leasing and then they come in and bid on them. That process, of course, has not worked very robustly in recent times simply because there hasnt been that much interest frankly. I know were talking there are certain areas where theres interest. Lets get to that. If theres a reduction in leasing, is it supply and demand or a regulatory issue . I would say it is primarily a demand issue. Americans and the world are reducing their demand on oil and that is leading to less desire for leases . Yes, but i emphasize one important point about the regulatory issue because theres been a lot of discussion today about the regulations and the ways government regulation might limit development. As i tried point out in my original testimony is the problem here is we are dealing with public lands. It is necessary, not just that it is legally required, it is necessary that we focus on what the consequences are of full Field Development of Gas Resources on our public lands. That kind of development can be devastating. It has happened on private lands, but think it is more problematic when it happens on public land. Theres a regulatory but necessary component that is designed to make sure we are protecting all of the resources we talked about. Well, right now it is taking 257 days so looks like we will have plenty of time to review them. Thank you so much. Thank you. The gentleman from virginia is recognized for his five minutes. Thank you. I would like to thank our witnesses for joining us today. Mr. Flynn and dr. Nelson, i want to get your perspectives. You both come from states with significant acres of federal lands, and only that does have an impact on your state. The question is what type of impact and you spoke earlier about the Economic Impacts of what happens on those lands and the lack of activity there that generates Economic Activity, does have a significant impact. You spoke about that, but i want a little more detail about not only how it affects the state, but how does it affect local economies . What do you see from a standpoint having to deal with, as you talked about, mr. Flynn, budget deficits, keeping economies going . How do you deal with massive amounts of public lands, looking at ways to make sure they generate some revenue, and then looking at the regulatory hurdles there for Energy Development on those lands . I want to get both you and dr. Nelsons perspective on it from your state viewpoint. Chairman gosar, representative wittman, let me give you two quick answers, one not really going to the economic, but from an Economic Perspective it boils down to infrastructure. Roads and sewers are the bread and butter and council, local government officials. Theyre really on the front lines of governing. I know you all interact with them constantly in your districts, and i interact with them in my prior role and current role. Less revenue mean less Infrastructure Projects for roads, sewers, for Drinking Water systems, period. The second issue i would point out really from weve talked about the economic issues, but we talk about the delays at blm in processing right of ways. If Climate Change is an issue you believe is important like i do, then one of the key infrastructure challenges we see to reducing emissions from venting and flaring is related to infrastructure, to reduce flaring events. So rightofway approval not being processed actually contributes to the problem that we see when it comes to Green House Gas emissions. So beyond the economic issue there are profound environmental impacts that are associated with the difficulties processing not only permits to drill but also rightofway approvals. Dr. Nelson. Thank you. Thank you for the question. I guess i understand and agree with the things mr. Flynn has said. I will add in utah we had 29 counties and about 23 to 24 of those counties are rural counties, and this is where the preponderance of the federally managed lands are. To the extent that access to development of those lands is limited where it is appropriate really has significant impact. This is where we see the high levels of unemployment and limited opportunities for even diversification because Natural Resources are the backbone for allowing for that Economic Development which in turn does drive the diversity. And the infrastructure that is required to meet the needs for that Natural Resource Development Also lends itself to other industrial and commercial development. So basically youre creating a conundrum when you limit access to those resources for those communities that are dependent on that initial development. Very good. Thank you. Ms. Mcgregor, i will go to you. You heard concerns from both of the states, the state and local level making sure that theres the highest and best use of those lands that are now under federal control. Give me your perspective on what the department of interior can do to help address these concerns and make sure that these states have these federal lands producing to help them deal with the issues they have to deal with. Thank you for the question, sir. Every state has their different infrastructure needs and differ economies and goals. These states represented here today clearly would like to sigh responsible federal and oil natural Gas Development on their lands. The good news for them is thats a priority of this administration very clearly from the top down starting with the white house. So we are allocating our resources and making sure that we are addressing not only Planning Issues and making sure in the planning in the planning side of things that we are finding and striking the appropriate balance to find the right acreage to lease, but also when it comes to permitting, addressing backlogs not just for apds but also for rights of way and making sure we can get through those in a responsible time frame that folks who invest on federal lands, whether it is any building project it dont have to be oil and gas can get through and have a reliable permitting process. Lastly, regulatory certainty, which i believe other folks have already touched upon. Very good. Thank you, mr. Chairman. I yield back. Thank you gentleman. The gentleman from california, misis recognized. Thank you, mr. Chairman. I spent the last several years sitting as a City Council Member where i had an oil company that wanted to come in to my town to drill 34 Oil Injection wells on land and out into the santa monica bay. I have seen time and time again where big oil tries to come in and take over urban areas and take over areas that are just causing more environmental pollution. We read about spills happening all the time, whether theyre on land or offshore. I was very disturbed to hear that the president wanted to open up the coastlines again to drilling. I think today weve heard i would say an assault on our federal lands. Sometimes i take a look at this stuff and i think that this administrations talking points are coming right out of big oil. One of the things im hearing about is something called Energy Dominance. Mr. Squelchy, did i say that right . They talked a lot about this. Can you explain what that means . Do you think it is something we should strive for on our public lands . So, it is an interesting question. I dont know that i can answer what exactly an Energy Dominance means, but i think it is the wrong word. I dont think any of us should be looking at dominance. We ought to be looking at being energy smart. Energy smart to some extent is about what weve been talking about today and all of the above strategy, but one that recognizes the perils of Climate Change and the risks we fay if we continue to develop fossil fuels at a pace that is simply not sustainable given the challenges of Climate Change that we have talked about. So i think that if we think about it in that way, then it is appropriate to allow Oil Fossil Fuel development to decline in an appropriate way, manage that decline in a responsible way and move shift our economy so were relying more and more on renewable and other forms of energy that do not cause the problems that we have seen. What do you think the impact will be if we start doing more oil drilling on public lands, both to the environment and to the global Climate Change problem that we have . So, as i mentioned in my original testimony im not opposed to oil and Gas Development on public lands, but it is fundamentally different from oil and Gas Development on private lands because these are public lands. If were going to have it, we need to have appropriate planning to make sure we are doing it responsibly. With all of the great technologies we have right now, we can do horizontal drilling that allows multiple wells to be put on a single pad and minimize footprint on public land. If we dont do sufficient planning and the kind of environmental analyses required for appropriate development of those resources, then we lose that opportunity to sort of make make these advantages available to us. So i think theres an appropriate way to do it. I do think we need to recognize it cant go on forever, that we do have responsibilities globally to deal with the fossil fuel issue in a timely way. But i think if were going to have it, we can do it responsibly. Thank you. Im proud to be from california where we have been leading the charge and moving toward Renewable Energy, investing and knowing that there is great Economic Development in that as opposed to the fossil fuel industry. Thank you. I yield back. The gentlemanm from new mexico, mr. Pearce is recognized for five minutes. Thank you. I appreciate the conversation were having and thanks to each of our panelists. Mr. Squelchy, you have comments in there about leasing at 2 an acre. That section is in there because you feel it is inappropriate, you feel it is a giveaway . Why is that section there . You are asking about the bonus bids and no, the 2 if they dont sell a lease, then it is available for 2 an acre. Is that sort of a giveaway, the oil and gas in your opinion . If you look at the revenues from federal thats not what im asking. On the 2, is that a giveaway . I think it is, yes. So it is value available for almost nothing. I guess i wonder, 2 is pretty well achievable to people like you and me. Did you ever go and bid 2, it is a giveaway, you think it is unfair. Have you bid on these personally. No, i know okay. Thank you. It might not be as big a giveaway because it was going to require a tremendous investment downstream to actually do something with that lease, that what you feel like is a giveaway might not be as much a giveaway as i suspect people maybe not you, but people who could afford 2 an acre, which is almost all of us, might be out doing that instead of putting money in a lottery. Have a better chance of payoff in this rather than a lottery ticket. You made a comment just a second ago that the decrease in permitting, the decrease in lease sales is a demand issue. I would point out that the American Energy Institute Just put out the 2016 was the highest use of gasoline in our record. So it doesnt sound like a demand issue. It sound like we have drilled enough that were producing enough oil, that the price of gasoline is coming down even though the use is going up, usually it would drive the price up. Instead we have increased the amount of supply. I sense maybe your insertion into the record there was a demand issue should be we have saw at some point. New mexico has 40 , somewhere between 30 and 40 of its revenues to the government established by oil and gas. So, mr. Flynn, i would like your opinion on the blms apd delays that were seeing there in the state . I have worked very much with blm on those, but from the business perspective. Representative pearce, think you know it better than anyone, but just, you know, very bluntly it has a huge impact on our ability from a state to provide basic infrastructure needs. How much are the delays . Well, the delays i mentioned in my testimony we believe are about 1. 5 million in lost federal royalty is deferred each day as a result of the backlog, and approximately 800,000 deferred in state severance. So made the comment yesterday that this this is the interruption in the lease sale that stopped 70 million from coming to the state because of a protest filed by one of the environmental groups that was eventually thrown out. That 70 million was 10 of our shortfall. 10 of the shortfall for the state of mexico. So i would get a little bit energetic when talking about the issues. Now, many people are saying in the agency they need more staff. Can you address that question for new mexico . Sure. Representative pearce, i think briefly first of all, a previous study showed that a Pilot Program that had been enacted a few years ago to provide federal permit streamlining Pilot Projects, created additional funding and allowed 140 additional Staff Members to be hired for seven pilot offices including two offices in new mexico, the Farmington Office and the carlsbad office. And while they were able to increase the amount of applications, the apds they processed by 10 , the number of days it took to actually process the apds increased. So they got less efficient by wh 40 . So we helped out and the same people working at the same agency took much longer, and my study showed it to about double. So i know that you recently and whatever mr. Lamburn from colorado seemed to say it went well. Thanks for visiting my state and i look forward to working with you. I live three miles from the texas border and so i can see all of the rigs running over there in texas that should be running in new mexico but they cant get the apds permitted, and so people just the Companies Got the option to drill there or here. I can see the effect of the temperaturing delays so it is not quite a level playing feel. People will drill on private land rather than trying to wrestle with the federal government and it hurts the states of new mexico and the federal government. Thanks for your indulge enls. I yield back. Thank you, mr. Chairman, very much. Ms. Mcgregor, i have seen reports that the department is considering recombining bureau of Ocean Management wednesday the bureau of environment safety and enforcement. The reason it existed was the deep water horizon tragedy in 2010. The agency that existed at that time was minerals service, when that agency was dealing with the scandal was promoting and regulating offshore drilling. Offshore separate from the Leasing Agency was one of the key recommendations of the president ial oil spill commission. Senator bob graham, one of the cochairs of the commission, was kwoepted as saying when he heard of this news of the accommodation, i heard no indication why were doing this. It is seven years after this enormous disaster and it was one of the key steps in at least mitigating chances of a repetition. I believe it cant be to address problems with permitting. January through may, approved 324 permits with only 20 permits pending. Sounds like firing on all cylinders. Whats the evidence that you have that combining bom and bsee would be in the publics interest . Thank you for the question. When it comes to the offshore, we obviously want to make sure that were ensuring that the bureaus that both lease and conduct inspections are doing their jobs and doing them well. When it comes to the split of the former mms into actually three agencies, the original split broke out the office of Natural Resources revenue known as honor, which is split and then left bomr which eventually split into two separate agencies. Always we look at reorganization broadly within the department, the discussion on splitting it and whether or not they should be recombined is still ongoing and internal, but i hear your comments and im more than happy to take those back with me today. Great. Thank you very much. I know secretary zenke, we talked about thinking massive reorganizations and everything should be on the table. Please remember the reason they were split in the first place, so you wont have the fox guarding the hen house. Utah governor gary herbert sent a letter to robertson asking the bureau not to sell certain oil and gas leases next to Zion National park. In his letter he said, visitors come from around the world to see the lush landscape surrounding by towering iconic sand stone. And the preservation of this unique experience is important to the surrounding communities, their economy is dependent on reb recreation and tourism. Do you believe that other communities should have a say in how the oil and gas leases in their local communities are made . Thank you for the question. Yes, utah and i provided in both my written testimony and my opening remarks today we are a Natural Resource state, and that includes our natural and state parks. We absolutely believe in balancing use and conservation. We are a collaborative state in working with local communities. I think our key position here is that this occurs best when permitting happens at the state level, that you have that local interest, you have that local control. So assigning primacy for the permitting process is best managed through the state and not to diminish the importance of blm or doi in the ultimate management of our federal lands use but provides for a local assessment for the permitting processes. Well, i heartily agree with you on the need for local input and local engagement. How do you balance the rights of americans who live across the country, the other 49 states who own that land and have essentially their rights represented by the federal agency . Thats a big question to answer. I guess one thing i would point out is that federallymanaged lands, the preponderance of those lands are different across the country. Utah is 70 . You go up to alaska where it is even higher. So we are limited in our ability to create revenues across though federally managed lands. So it is a condition that doesnt exist for all states across the country. So i think that we have to take that into consideration as well. And part of that to take into consideration is those lands were federally owned at the time utah was admitted as a state, and alaska, too. Thank you, mr. Chairman. I yield. Want to answer the gentlemans question. It was also multiple use and that was one of the dictations on having public lands that are very different east of the mississippi. Gentleman from colorado is recognized for five minutes. Thank you, mr. Chairman. Thank the panel for taking the time to be able to be here. Ms. Mcgregor, i would like you to speak a little bit to dr. Nelsons suggestion of maybe having some permitting going over to the states. Right now when the department of interior, blm, when you issue a permit do all environmental requirements have to be complied with if theres a choice to be able to move forward with drilling . Absolutely. So, ms. Nelson, if you had the right to be able to did what youre suggesting, that would still be up to you as well . Absolutely. Still have the responsible Energy Development, making sure we are doing it in an environmentally sensitive way. You know, think i was interested when i was reading your testimony, ms. Mcgregor, talking about the multiple use. I have a bill planning for Americas Future Energy act which enumerates all of the above in the bill. Chairman gosar has a bill for dream lining some of the permitting we are seeing. We are seeing now multiple use, not just traditional fuel sources but i also believe you noted some of the nontraditional sources being developed on public lands as well. But i do find it interesting looking at some of the comments from our colleagues, the Ranking Member is an example, talking about multiple use on the lands. If you lease 1,000, 5,000 acres, do they put up a big tent so nobody can hike, hunt, fish on those lands . Not to my knowledge. So theres still multiple use even while we have responsible energy develop, be it traditional or nontraditional resources . Yes, there is, sir. I think some of my colleagues sitting here today or other witnessesque speak mo witnesses can speak about minimizing sur impacts to surface acreage. My friend from colorado was talking about lessening the impact. Have we developed technologies to be able to not only responsibly access resources but to be able to minimize the impact on public lands . Yes, i would say those same technologies that really have led to the oil and natural gas revolution that we have today significantly limit surface impacts. In fact, utah is currently looking at how it applies rules for horizontal drilling to ensure we have all of the same environment standards in place. But what were seeing is absolutely fewer drilling rigs and fewer pads being developed for drilling as a result of the advent of these technologies. And i appreciate that. I had the opportunity to be in colorado and we were looking up on to blm land. They said, we have a lease. Said, when are you planning on drilling . They said, were already producing but it was from one well pad. No Surface Development was going on, but still being able to responsibly develop that resource. Ms. Mcgregor maybe on a little different topic, going to the mlps and thats your leasing programs. Essentially thats if you do the narrow mlp, intended to be able tie dress some of the specific planned use conflicts prior to leasing and drilling, would you maybe describe a little bit for us in what ways are the mlps and the rmps . What i can show you, sir, is in the wake of the United States Congress Making a determination and passing legislation to throwback the planning 2. 0 regulation, we are taking an indepth look at our planning process because we recognize no matter what project members have on either side of the aisle, the planning process at the Department Takes on average five to seven years, often often more. As we look at planning in the department and consider how to do things more efficiently, we are evaluating whether the Master Leasing Program is an added step on top of an existing planning process. Does it actually increase efficiencies or is it another step . We are looking at that as well as many other issues. Great. I was a little encouraged because that is one thing that we have heard out of a number of our constituents in terms of some of the different time frames. We have duplicate regulations, and i believe it is your bill im cosponsoring to look at streamlining and look at the duplicate overlap and do it in a responsible way. I appreciate you taking time to be here. My time is expired. I yeel back. Thank you, gentleman from colorado. Gentleman from louisiana, mr. Grace, is recognized, mr. Graves is recognized. Thank you. The contribution of federal lands to our overall Energy Production, particularly in the oil and gas portfolio, it is my understanding that we have seen a reduction let me be clear what im saying in the percentage of oil and gas that our federal lands are providing to the overall domestic Energy Production . Is that your understanding, a lapse over the years . Specifically in fiscal year 16 we saw a down tick in oil and Gas Production on federal lands. Federal crude production fell from 26 of total production to 21 of total production. Again, i want to make sure im getting this right and making reference to the memo. At the end of fy 2016 blm oversaw 40,143 leases across the country. This is the lowest number of federal leases since fy 1985. Is that your understanding . That is correct. Thank you. Mr. Flynn, changing gears a little bit, could you comment or respond perhaps to comments ive heard in the past about folks saying that federal lands is something that allamericans should enjoy, therefore states that host Energy Production on federal lanlds should not benefit from the mineral leasing act revenue sharing formula . Mr. Chair, representative, i think states that are burdened with the production should be deriving benefits from it, and should and honestly while everyone should be part of the debase, i think the People Living closest to the activity should have the loudest voice in moving forward. I think from an Energy Perspective we whole heartly respect and work collaboratively with the communities we operate in. So the communities that host it and those that are closest should have biggest voice and share in the revenues, is that accurate what you are saying . Okay. And, number two, the United States benefits i think to the tune of approximately 10 under the leasing, the 40 goes to the reclamation fund, do you think it is an appropriate return on investment for the federal government . Mr. Chair, it is not my place to determine that. I will leave it up to you to figure it out. Thank you. Thats fine. We want to do our fair share to make sure youre getting a fair return on the investment, but i dont want to all right. Dr. Nelson, do you care to comment on that same question . I think i share the same sentiment as mr. Flynn. I guess the one thing that i would add is that in states that are heavily burdened with federal lands and i say birdied because just often the Economic Opportunities are limited because of those lands that consideration needs to be given to how royalties are assigned the states that have more limited Economic Opportunities. But you also have benefits from tourism and other things that result from National Parks . Right. Good. By the way, the intra fees in those natural parks as i understand goes into the natural parks and invested in maintaining the resources. So, ms. Mcgregor, could i ask you a question . I think mr. Flynn and dr. Nelson made very convincing comments about the relationship between production and revenue sharing. Can you help me understand or distinguish between offshore production and onshore. The distinction between well, so just applying mr. Flynns comments about proximity and hosting and the loudest voice, should offshore states be treated in a disparate manner . Congressman graves, i think i know where youre going with this. Im sure you recognized it about five minutes ago, but go ahead. Federal revenues are absolutely federal revenues from oil and natural Gas Development are absolutely critical to our budget, and in so many different ways lend themselves to various initiatives throughout the government. I believe with the land and Water Conservation fund, acquisition of federal lands as well. Derived from offshore, if other states are benefitting more from offshore off the coast of louisiana than the state of louisiana. I think the entire United States benefits from offshore Energy Production. And other states disproportionately benefit from it. I cant speak to that. As a result i mean tough choices were made in this budget. This is what a balanced budget looks like, but i am aware that revenue sharing is really important to coastal restoration, a variety project veritas activities in the state of louisiana, and we are committed to we are under our states constitution any revenue sharing dollars are committed to restoration, and i know you are smiling because in the commonwealth of virginia. I have so much more to talk about but i want to thank you for your comments. I yield back. Thank you, gentleman. I like the fact he eventually got to where we thought he was going with the question. The gentle woman from wyoming is our final witness. Thank you, mr. Chairman. I would like to thank all of the witnesses for being here today. In particular, ms. Mcgregor, i wanted to thank you. I cant tell you sort of how refreshing it is to have somebody in the executive branch who is clearly got such a Firm Understanding of these issues, and to hear know you have been out in caspar and carlsbad looking at the challenges were facing. Thats very appreciated. As you know, we have spent a large part of these last eight years and even beyond dealing with a real disconnect between washington and the policies that were made here and what is happening on the ground. So i wanted to ask if you could continue a little bit in terms of the question mr. Soto asked but then you were cut off. That is i appreciate hearing both from secretary zenke and from you today about the steps being taken to deal with the backlog of apds, but could you talk about in terms of in the field offices as you are looking at the electronic permitting process, some of these internetbased solutions, how is that translating on the ground . What steps will also include perhaps moving people, in wyoming in particular i notice we shifted people from our Buffalo Office to the casper office. We appreciate the change in policy but have yet to see a real breaking of the backlog. Could you talk more specifically about on the ground, how it will affect the movement of the apd . Absolutely. Getting out there was so helpful to see what our folks and what the state is doing to keep you know, we olympicing yoming power house and we want to see it stay that way. We need to work better with our partners to make sure we are reducing time frames when it comes to the backlog and dealing with the variety of different processes we deal with that manage the lands that border your state and local communities. When it comes to staffing, i think, you know, that is part of the recipe to dealing with some of this. We have 325 million working on all permitting across all bm offices but currently 90 vacancies. What we are doing in accord answer with the secretarys priorities when it comes to energy Exploration Production on federal lands, we are looking at our top five busiest offices, and one of those is caspar, which is close to number one. We are recruiting to fill vacancies that are needed to make sure that we are getting staffing out to the front lines again, which is another one much secretarys priorities. We are trying to hire out where we need the individuals to get through this workload. You know, i find the workload to be inspiring because that means you know, thats just good news for the people of wyoming and for the entire country. We also recognize that permits, when folks talk about permits not being used. They do expire after two years and we do receive a 9,500 fee for every single permit that is filed. So were looking to make sure those resources stay where theyre needed and that we have some mobility within field offices so that if we are doing things online, maybe buffalo folks might not be as busy can help folks in caspar or we could grow it to more nationwide movement so folks dont have to fly in, just help fix backlogs and we could be more nimble to a variety of development that occurs in the course of the economic and geology of the different area. Thank you. And in terms of a related issue, the planning process, and, you know, i was very pleased we were able to pass repeal planning 2. 0 and have the president sign it. Could you talk a little bit more about how that planning process will be throwing this down, ensuring we get more local voices into the whole land youth management process as well. Absolutely. Another priority of the secretary is restoring trust, especially in the west, for state and local communities we have to work with day in and day out because they feel the brunt of choices made in washington on lands out in the west. The planning 2. 0 process aimed to do a lot of things but did reduce some of the time frame for those communities to have Public Comment. So i think from the getgo were going to work with our state and local communities, get their feedback on how we can they clearly will have thoughts on how we can improve our federal planning process. But were also asking our team to think broadly and think different and come up with bold, new ideas that we can take and get help with other federal partners to make things happen a little more quickly. Im hoping we can be successful here because, frankly, having a planning process that takes five to seven years and in some cases there are example also of much more, thats not a workable solution for anyone. We need to be better at working with these communities so we can get these uses up and have the land managed better. Great. Thank you very much. Thank you. I thank the gentleman woman from wyoming. Thank you for bringing up, ms. Mcgregor, theres plenty of vacancies that need to be filled to do the work properly. We need to get those fill, so a nudge and notice to our Senate Colleagues to get those confirmed and fill. I thank the witnesses for valuable testimony and members for the questions. The members of the committee may have additional questions for the witnesses and we will ask you to respond in writing. Under Committee Rule 30, members of the committee must submit witness questions within three Business Days following the hearing. The hearing record will be held open for ten days for these responses. If theres no further business, without objection the subcommittee stands adjourned. Thank you. With the help of our comcast partners, this weekend the cspan cities tour takes book tv and American History tv to concord, massachusetts where the first shots of the American Revolution are fired. And then less than a century later a writers revolution takes place as the town becomes home to these. Saturday at noon eastern on book tv well take you inside Orchard House where Louisa May Alcott lived and broke the Ground Breaking work little women. And then explore walden pond, where ravel Waldo Emerson lived and wrote nature which set the tran sen dental movement. This house watched through its windows down the hill it watched the start of the revolution. It is really a house that has such great history to it. On sunday at 2 00 p. M. Eastern on American History tv we will take you the north bridge where the battle of concord began in 1775. This is what is considered to be the beginning of the American Revolution because it was here that americans, colonial militia if you will, and the british regulars will encounter one another, shots will be fired, lives will be lost on both sides. But more importantly, it is where the colonial militia was ordered to fire upon the kings troops, creating in essence an act of treason. Then see the Worlds Largest collection of materials used during the earliest days of the revolution displayed at the con core museum. Watch cspans cities tour of concord, massachusetts saturday at noon eastern on book tv and sunday at 2 00 p. M. On American History tv on cspan3. Working with our cable affiliates and visiting cities across the country. Cspan where history unfolds daily. In 1979 cspan was created as a Public Service by americas com is brought to you today by your cable or satellite provider. The senate is planning on debating its Health Care Replacement measure neck week with live coverage on cspan 2. As the Washington Post reports, it would change the way people use their Health Savings accounts by allowing them to use funds to pay for insurance premiums. Currently the accounts can be used only for outofpocket expenses like deductibles and copays. The American Enterprise institute hosted a discussion recently on Health Savings accounts. This is about two hours. Good afternoon, everyone. Welcome to the American Enterprise institute. Im tom miller, resident fellow at aei. Were in a bit of a low week where things are not moving as theyve pretended to move for the last couple of months, the efforts in the senate for repeal and replace ended up in delay and depart for the recess week, and perhaps more to come. What first let me just